December 29, 2014
The end of year “Santa Claus” stock rally is being stifled a bit, while investors mull over geopolitical headlines. Mortgage Bonds are trading in positive territory, looking to rally on investor concerns and light volume. This short trading week with lacking volume can magnify moves and appear as market volatility.
Geopolitical headlines are running the market today. Greece is in the spotlight, once again. The Greek Parliament was unable to pull off a successful presidential election, thus creating a great deal of concern surrounding their current “bail out” agreements. Investors are concerned that if the Syriza party wins in January’s snap election, their overall opposition to austerity measures could result in failure to pay back debt owed to the other European countries. The conflicts in Libya are supporting commodity/energy stocks, with firefights depleting the county’s supply by an estimated 800,000.
Libyan conflict is pushing crude oil prices higher. This slowed daily production, as it does not take much excitement to move oil prices. The turmoil in the area has cut the nation’s output from 1.6 million barrels a day, in 2011, to a current average of 128,000 barrels a day.
December 26, 2014
With the end of the year drawing close, headlines are riddled with forecasts of the upcoming year. Today, Wall Street trading is positive while die hard investors push stocks higher. Mortgage Bonds remain flat and are not expected to have much movement all day.
This year has seen a 5% growth in the U.S. Economy. For the first time in several years, the majority of Americans are feeling confident in our recovery. Freddie Mac’s recently released MiMi report found the housing market stabilizing at year’s end, although still weak. The index showed a 4.48% improvement from a year ago.
The Federal Housing Administration announced enhancements to the Home Affordable Modification Program. Subject to U.S. Treasury guidelines, borrowers may be eligible to earn $5,000 in the sixth year of their performing loan modification. This incentive is in conjunction with other annual incentive payments during the first five years of loan modifications that are performing. These incentives could reduce an FHA borrower’s unpaid principal balance by as much as $10,000.
December 23, 2014
Economic growth across the U.S. rose to its fastest pace in 11 years led by a surge in consumer spending. The Bureau of Economic Analysis (BEA) reported on Tuesday that the final reading on third quarter 2014 Gross Domestic Product (GDP) rose by a blistering 5.0%, up from the prior reading of 3.9% and an initial estimate of 3.5%. Each quarter the BEA releases three readings on GDP. The data revealed that consumer spending rose by 3.2%, led by purchases of durable goods. In addition, business investments also saw a sharp rise.
Consumer Sentiment in the U.S. jumped to its highest level in more than seven years led by lower gas prices coupled with better job and wage prospects. The University of Michigan’s Consumer Sentiment survey came in at 93.6, above the November reading of 88.8. The survey’s director said, “consumers held the most favorable long-term prospects for the national economy in the past decade.”
The Dow Jones Industrial Average hit a new milestone on Tuesday as the 118 year Stock index topped 18,000 for the first time in its history. The Dow surged after the strong results from the Gross Domestic Product report. The closely watched index hit a multi-year low of 6,547 back on March 9, 2009 at the height of the Great Recession. But since then, the meteoric rise has been fueled by a recovering economy, job market along with a stabilizing housing sector. In addition, the U.S. Federal Reserve Bank has also been instrumental in the rising Stock markets due to its various stimulus programs.
December 22, 2014
Sales of previously owned homes unexpectedly fell in November from October to a six month low. The National Association of REALTORS® (NAR) reported today that Existing Home Sales in November fell by 6.1% from October to an annual rate of 4.93 million units, which was well below the 5.20 million expected. The housing market continues to remain in a somewhat choppy trend, despite an improving economy and job market. In addition, the NAR said, “rising home values are causing more investors to retreat from the market.”
Super Saturday, the Saturday before Christmas, came and went this past weekend and is shaping up to be the biggest shopping day of the year. Sales are expected to hit $10 billion for December 20, compared to $9 billion for Black Friday. Many stores were reported to have been running deep discounts along with crowded stores across the nation. The National Retail Federation said that sales in the 2014 holiday shopping season are expected to be solid and with Christmas falling on a Thursday, many will be off on Friday, which will be another key day for retailers.
Americans traveling at the end of the year for the holidays are set to hit record highs as AAA predicts 98.6 million people will journey 50 miles or more from home. Airports and passenger trains will be very busy along crowded highways so leave extra time to get to and from your destination. The 98.6 million will be up 4% from the 94.8 million people who traveled last year. “Tis the season for holiday travel, and this year more Americans will join with friends and family to celebrate the holidays and ring in the New Year than ever before,” said Marshall L. Doney, AAA President and Chief Operating Officer.
December 19, 2014
Government sponsored agency Freddie Mac released its Economic and Housing Market Outlook for December this week revealing that expectations were calling for healthy gains in home sales, but a weaker than expected economy and a harsh winter early in the year caused a significant drag on sales. The economy and home sales did recover in the second half of the year and Freddie Mac expects this trend to continue into 2015. In addition, Freddie Mac sees home price gains moderating to an annualized growth rate of 3% in 2015.
Traveling by auto for the holiday season will be even cheaper than it was at Thanksgiving due to the continued drop in gas prices at the pumps. The national average price for a regular gallon of gasoline is at $2.45, down from $2.83 a month ago. Motor Club AAA predicts that prices can go even lower to $2.25 and $2.40 by the time 2014 comes to an end. AAA says gas prices have fallen 84 days in a row for a total of 87 cents per gallon, representing the second-longest consecutive streak on record. Gas prices have dropped $1.22 per gallon since reaching a 2014 average high of $3.70 per gallon on April 28.
December 18, 2014
The Federal Reserve Bank of the U.S. held its final meeting of the year yesterday in Washington, D.C. and coined a new phrase of “can be patient in beginning” regarding raising short term interest rates next year. The current time frame for higher rates from economists are expected to come in the middle of 2015 and may even come later in the year, if the economy slows a bit. The news sent U.S. Stock markets soaring and are trading higher again on today.
Americans filing for first time unemployment benefits declined in the latest week signaling that the job market continues to recover. The Labor Department reported that Weekly Initial Jobless Claims fell by 6,000 to 289,000, the lowest level since late October. U.S. companies continue to cut fewer jobs as the economy expands and as hiring has ramped up. At yesterday’s Federal Reserve meeting the members raised their outlook on the labor and expects full employment in 2015.
With the holiday shopping season well underway, the National Federation of Retailers (NRF) reported on Wednesday that the average holiday shopper has completed nearly 53% of their shopping as of December 10. The NRF further reported that nearly one-third of shoppers plan to buy their last holiday gift before Thursday, December 18, 14.5% will finish up on super Saturday, the Saturday before Christmas (12/20), while 9% will wait until the last minute. It is reported that more men than women will wait until Christmas Eve to buy their last gifts.
December 17, 2014
Plunging gas prices at the pump led consumer prices lower in November, as reported by the Bureau of Labor Statistics. The November Consumer Price Index (CPI) fell by 0.3% when economists were looking for a decline of 0.1%. The -0.3% was the largest monthly drop in six years. The price of gas fell 6.6% in November, the most since 2008 with the current national average price for a regular gallon of gas at $2.50. On a year-over-year basis, CPI fell to 1.3% signaling that inflation pressures are subdued.
Big news out of Washington, D.C. today were headlines that the U.S. may be easing the embargo of Cuba that began in 1961. The U.S. will also look to open an embassy on the island of 13 million Cuban people. The news comes after Cuba released American citizen Alan Gross, who has been held in prison in Cuba for the last five years, as he was accused of espionage for trying to bring Internet services to Jewish communities in Cuba. However, Cuba would have to pay back $5 billion to the U.S. due to the illegal seizure of American businesses in the late 1950s.
On the lighter side, Toys “R” Us announced it will extend its operating hours for 39 straight hours from 6 a.m. Tuesday, December 23, through 9 p.m. on Christmas Eve. Just last week, Kohl’s said that it will keep its 1,100 stores open around the clock for five days leading up to Christmas. Retailers are pulling out all the stops to increase sales this season as they look to make the most out of holiday sales.
December 16, 2014
Groundbreaking for construction of new homes eased from October to November according to the Commerce Department on Tuesday. Housing Starts fell by 1.6% last month from the previous month to an annual rates of 1.03 million units from the 1.05 million recorded in October and below the 1.04 million expected. Within the report it revealed that single-family starts fell 5.4%. Building Permits, a sign of future construction, fell by 5.2% to an annual rate of 1.035 million, the biggest decline since January.
Americans traveling over the holiday season are set to break records in 2014 due to an improving economy, low gas prices and a favorable calendar. AAA predicts that nearly 99 million Americans will travel more 50 miles by air or auto, up 4% from 2013 and the highest since records began in 2001. Gas prices have fallen to $2.52 nationally, the lowest in five years, which puts extra dollars to travel in the pockets of consumer. This year, Christmas and New Year’s Day both fall on a Thursday, which will most likely lead to extended weekend travel.
Holiday shopping is well underway and with consumer confidence rebounding coupled with low gas prices, Americans are a bit better off this year financially than in 2013. A few highlights for this year: The average consumer is expected to spend $757.57 compared with $721.96 in 2013. 82% of shoppers plan to make their purchases with either credit cards or via a layaway plan. 59% of shoppers plan to use cash. 37% plan to treat themselves to a major purchase this holiday season.
December 15, 2014
Home builder sentiment across the nation edged lower in December, but still remains robust as 2014 comes to an end. The National Association of Home Builders Housing Market Index fell to 57 this month, which was just below the 58 expected and down from the 58 recorded in November. Any number above 50 indicates that more builders view conditions as good rather than poor. Within the report it showed that current sales conditions and expectations for future sales declined, while the traffic gauge of prospective buyers held steady.
In another sign that the U.S. economy has improved from the depths of the Great Recession, the Federal Reserve reported on Monday that factory production rose by 1.1% in November from October. Output at factories has risen 4.8% over the past year, which is above levels seen before December 2007. Despite a global slowdown, the U.S. has continued to recover, led by a boost in auto sales, food, wood, plastics and rubber products.
Today is the busiest day of the shipping season for the U.S. Post Office and FedEx with just 10 days until Christmas. The nation’s largest shipper, the Post Office, says it will process 640 million pieces of mail on Monday, up 33 million from last year. The Post Office further reported that between Thanksgiving and Christmas, it expects to deliver 12.7 billion cards, letters and packages. FedEx reports that it will ship 22.6 million packages on Monday while it will deliver 290 million packages during the same period, up 9% from 2013.
December 12, 2014
The prospect of an improving job market and higher wages, coupled with plunging gas prices at the pump led Consumer Sentiment to near eight year highs this month. The December Consumer Sentiment Index rose to 93.8 in the first of two readings this month, well above the 89.5 expected, and up from the 88.8 recorded in November. Within the report it showed that Americans’ expectations of the economy in six months also rose to its strongest level since January 2007.
The International Energy Agency has forecasted weaker demand for oil in 2015, which is lending fears that global economic growth will weaken. The news has sent world Stock markets lower and the weak sentiment is spilling over to the U.S. equity markets. Plunging oil prices continue to push gas prices at the pump lower as the national average price for a regular gallon of gasoline is at $2.60. An analyst from gas-tracking site GasBuddy said that we can see “at least one station in the nation at $2 by Christmas.”
In a sign that there are still Americans out there that care for those who are less fortunate, Layaway Angels have been popping up around the country. Lee Karchawer has been dubbed “the Jewish Santa” by his mom. Mr. Karchawer has been paying off the layaway plans of strangers during the holiday season. Layaway plans let people pay off their holiday shopping items over a period of time before taking it home. Layaway Angels then swoop in, motivated by the spirit of the season, and pay off the layaway plans of total strangers!