News for Prescott AZ - AmericanTowns.com

Monday, October 25, 2010

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Inside Lending from Theron Wall

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Theron Wall

Theron Wall
Branch Manager
3615 Crossings Dr, Suite A
Prescott, AZ 86305
Phone: (928) 778-7167
Mobile: (928) 533-7473
Fax: (928) 445-5308

Wallick & Volk Mortgage

For the week of October 25, 2010 – Vol. 8, Issue 43

>> Market Update 

INFO THAT HITS US WHERE WE LIVE  Last week saw September Housing Starts UP 0.3% to an annual rate of 610,000 units, well ahead of the expected 580,000 unit pace. Even better, starts are UP 4.1% over a year ago. Interestingly, the September gain was totally driven by a healthy 4.4% rise in single family starts, while multi-family starts dropped 9.7%. But multi-family starts are volatile month to month, and are actually up 100.0% compared to a year ago, while single family starts are off 10.8% during the same time frame.

Builders remain cautious, as new Building Permits for September dropped 5.6%, to a 539,000 annual rate. This number of course reflects plans for builder activity a few months out. Nonetheless, the National Association of Home Builders (NAHB) reported builder confidence rose in October for the first time in five months. This brings it to a level not seen since June. The NAHB's chief economist feels the new home market is now past the quiet period that followed the expiration of the home buyer tax credits and the summer slowdown in the economy.

>> Review of Last Week

UP WITH VOLATILITY... It was not a quiet week on Wall Street, with a big move down in stock prices, which then came back up. But the markets did close up four out of the five days, so the week ended with all three major indexes ahead once again. Investors focused on a pile of pretty good corporate earnings results, but there were some less than stellar economic reports to get through too.

Industrial Production was off 0.2% in September, below estimates, though production is up at a 4.9% annual rate for the last six months. Capacity Utilization also dipped down to 74.7% for September, although it's still 6.5 percentage points above the low it hit back in June 2009. Countering these figures, the Philadelphia Fed Index for manufacturing in that region was back into positive territory. Leading Economic Indicators were up 0.3% for the month and weekly jobless claims fell a bit, though they're still well above 400,000.

The good news came in corporate earnings, with more than 100 S&P 500 companies reporting including 12 of the Dow components. The financials did well, with 21 out of 27 reporting better than expected earnings per share. In the tech sector, Apple and IBM also did nicely in the earnings department. Coca-Cola, Caterpillar, and airlines also showed gains. Even though the recovery has slowed, the vast majority of public companies continue to make good profit numbers.

For the week, the Dow ended UP 0.6%, to 11132.56; the S&P 500 was also UP 0.6%, to 1183.08; and the Nasdaq was UP 0.4%, to 2479.39.


Trading ranges in the bond market didn't go too wide, as investors stayed interested enough to keep prices up. The FNMA 30-year 4.0% bond we watch ended UP 12 basis points for the week, closing at $103.12. Freddie Mac's weekly survey showed national average mortgage rates for most mortgages remaining at historically low levels. 

>> This Week’s Forecast

NOTHING SCARY... As we head into Halloween this week, it looks like nothing too frightening will be reported on the economic front. Monday's Existing Home Sales are projected up for September, just like September New Home Sales are expected to report come Wednesday. Friday, we get the Advanced Q3 GDP numbers, which economists are forecasting to be modestly positive.

Consumer Confidence on Tuesday and Michigan Consumer Sentiment on Friday are both projected to be up a tiny bit. Friday's Employment Cost Index should continue with modest growth, while the Chicago PMI is predicted to show a small decline in manufacturing in that region of the country. 

>> The Week’s Economic Indicator Calendar

Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.

Economic Calendar for the Week of October 25 – October 29

 Date

Time (ET)

Release

For

Consensus

Prior

Impact

M
Oct 25

10:00

Existing Home Sales

Sep

4.25M

4.13M

Moderate

Tu
Oct 26

10:00

Consumer Confidence

Oct

49.0

48.5

Moderate

W
Oct 27

08:30

Durable Goods Orders

Sep

1.7%

–1.3%

Moderate

W
Oct 27

10:00

New Home Sales

Sep

295K

288K

Moderate

W
Oct 27

10:30

Crude Inventories

10/23

NA

0.667M

Moderate

Th
Oct 28

08:30

Initial Unemployment Claims

10/23

455K

452K

Moderate

Th
Oct 28

08:30

Continuing Unemployment Claims

10/16

4.418M

4.441M

Moderate

F
Oct 29

08:30

GDP–Advanced

Q3

2.0%

1.7%

Moderate

F
Oct 29

08:30

GDP Chain Deflator–Advanced

Q3

2.0%

1.9%

Moderate

F
Oct 29

08:30

Employment Cost Index

Q3

0.5%

0.5%

HIGH

F
Oct 29

09:45

Chicago PMI

Oct

57.50

60.40

HIGH

F
Oct 29

09:55

Univ. of Michigan Consumer Sentiment–Final

Oct

68.0

67.9

Moderate

 

>> Federal Reserve Watch   

Forecasting Federal Reserve policy changes in coming months  As economists debate how big the second round of quantitative easing (QE-2) will be, they're all in agreement that the Fed Funds Rate will stay at its rock bottom level for quite a bit more time. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.

Current Fed Funds Rate: 0%–0.25%

After FOMC meeting on:

Consensus

Nov 3

0%–0.25%

Dec 14

0%–0.25%

Jan 26

0%–0.25%


Probability of change from current policy:

After FOMC meeting on:

Consensus

Nov 3

     <1%

Dec 14

     <1%

Jan 26

     <1%

 

This e-mail is an advertisement for Theron Wall. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice, or a commitment to lend. Although the material is deemed to be accurate and reliable, there is no guarantee of its accuracy. The material contained in the newsletter is the property of Wallick & Volk Mortgage and cannot be reproduced for any use without prior written consent. It is designed for real estate and other financial professionals only. It is not intended for consumer distribution. The material does not represent the opinion of Wallick & Volk Mortgage. BK 0018295 NMLS #256412



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