>> Market Update QUOTE OF THE WEEK... "Success is often just an idea away." --Frank Tyger, American cartoonist, columnist, and humorist
INFO THAT HITS US WHERE WE LIVE... One idea that could lead to some success is to let people know that home prices and home sales both posted strong annual growth in the third quarter, according to the National Association of Realtors (NAR). The national median existing single-family home price was UP 7.6% versus a year ago, the best year-over-year quarterly price boost since Q1 of 2006 when prices were up 9.4%. And existing home sales were UP 10.3% over Q3 last year, to a 4.68 million annual rate.
The NAR's chief economist said rising prices and tight inventory indicate the housing recovery is settling in. He added, "We expect fairly normal appreciation patterns in 2013, but there is a risk of price acceleration if builders are unable to meet the needs of our growing population and household formation." The Mortgage Bankers Association forecasts purchase loan originations will be UP 16% next year. They expect this will come from growth in new home sales, modest home price gains, and more financed, owner-occupied sales.
BUSINESS TIP OF THE WEEK... John D. Rockefeller said, "A friendship founded on business is better than a business founded on friendship." Keep this in mind when seeking to develop rapport with prospects and partners. >> Review of Last WeekPOST-ELECTION PLUNGE... Following the re-election of Barack Obama as President, the Dow and S&P 500 suffered their worst weekly losses since June. It was the Dow's third straight losing week, while the tech-heavy Nasdaq ended down for the fifth week in a row. With the "no change" election (Democrats still control the Senate, Republicans the House), investors remain uncertain about Washington's ability to deal with the "fiscal cliff": the $607 billion in automatic tax hikes and government spending cuts which start in January unless lawmakers come to a deficit-cutting deal .
Before the election, the ISM Non-Manufacturing Index came in with a decline for October, but remained in expansion territory above 50. Thursday, the trade deficit for September was much smaller than expected, at $41.5 billion, with export growth nicely outpacing the gain for imports. The big positive surprise came Friday when the University of Michigan Consumer Sentiment Index rose to its highest level in more than five years and stocks avoided posting a third losing day.
For the week, the Dow ended down 2.1%, to 12815; the S&P 500 was down 2.4%, to 1380; and the Nasdaq was down 2.6%, to 2905.
Bonds were helped by the two-day stock swoon, but as equities recovered a bit on Friday, the buying interest in bonds subsided. The FNMA 3.5% bond we watch ended the week up a modest .05 to $106.22. National average mortgage rates continued to hover near their record lows of the past six weeks in Freddie Mac's Primary Mortgage Market Survey. The Mortgage Bankers Association purchase loan demand index was up 1% for the week, to its highest level since June.
DID YOU KNOW?... Monetary policy is the regulation of the money supply and interest rates by the Fed to control inflation and stabilize currency. By impacting the cost of money, the central bank can affect the amount of money spent by consumers and businesses. >> This Week’s Forecast RETAIL, INFLATON, MANUFACTURING... No economic reports on Veteran's Day Monday, but then four days of key readings. October Retail Sales should show the consumer a lot quieter on the spending front. Inflation is expected to remain tame, with both wholesale PPI producer prices and CPI consumer prices well under control for October.
Manufacturing in the New York and Philadelphia areas is forecast to continue to show contraction as measured by the Empire Manufacturing Index and the Philadelphia Fed Index. We'll also watch FOMC Minutes from the Fed's October 24 meeting for any useful prognostications. >> The Week’s Economic Indicator CalendarWeaker 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 Nov 12 – Nov 16 Date | Time (ET) | Release | For | Consensus | Prior | Impact | Tu
Nov 13 | 08:30 | Federal Deficit | Oct | –$113.0B | -$98.5B | Moderate | W
Nov 14 | 08:30 | Retail Sales | Oct | –0.2% | 1.1% | HIGH | W
Nov 14 | 08:30 | Retail Sales ex-auto | Oct | 0.1% | 1.1% | HIGH | W
Nov 14 | 08:30 | Producer Price Index (PPI) | Oct | 0.0% | 1.1% | Moderate | W
Nov 14 | 08:30 | Core PPI | Oct | 0.1% | 0.0% | Moderate | W
Nov 14 | 10:00 | Business Inventories | Sep | 0.6% | 0.6% | Moderate | W
Nov 14 | 14:00 | FOMC Minutes | 10/24 | NA | NA | HIGH | Th
Nov 15 | 08:30 | Initial Unemployment Claims | 11/10 | 388K | 355K | Moderate | Th
Nov 15 | 08:30 | Continuing Unemployment Claims | 11/03 | 3.125M | 3.127M | Moderate | Th
Nov 15 | 08:30 | Consumer Price Index (CPI) | Oct | 0.1%% | 0.6% | HIGH | Th
Nov 15 | 08:30 | Core CPI | Oct | 0.1% | 0.1% | HIGH | Th
Nov 15 | 08:30 | NY Empire Manufacturing Index | Nov | –9.3 | –6.2 | Moderate | Th
Nov 15 | 10:00 | Philadelphia Fed Manufacturing Index | Nov | –1.0 | 5.7 | HIGH | Th
Nov 15 | 11:00 | Crude Inventories | 11/10 | NA | 1.766M | Moderate | F
Nov 16 | 09:15 | Industrial Production | Oct | 0.0% | 0.4% | Moderate | F
Nov 16 | 09:15 | Capacity Utilization | Oct | 78.2% | 78.3% | Moderate |
>> Federal Reserve Watch Forecasting Federal Reserve policy changes in coming months... Virtually all economists expect the Fed to keep the Funds Rate where it is, well into 2015. 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 | Dec 12 | 0%–0.25% | Jan 30 | 0%–0.25% | Mar 20 | 0%–0.25% |
Probability of change from current policy:
After FOMC meeting on: | Consensus | Dec 12 | <1% | Jan 30 | <1% | Mar 20 | <1% |
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