February 28, 2017
The S&P/Case-Shiller 20-city Home Price Index saw a 5.6% annual gain from December 2015 to December 2016, as low housing inventory continued to fuel rising home prices. Within the index it showed that Seattle, Washington; Portland, Oregon; and Denver, Colorado had the largest year-over-year gains. “With all 20 cities seeing prices rise over the last year, questions about whether this is a normal housing market or if prices could be heading for a fall are natural,” said David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices.
Consumer confidence hit levels not seen since July of 2001 in February as current business and labor market conditions were more favorable this month than in January. The Conference Board’s Consumer Confidence Index rose to 114.8, above the 111.5 expected and up from the 111.8 recorded in January. The report also stated that consumers expect the economy to continue to expand in the months ahead.
Manufacturing activity in the Chicago area surged to highs not seen since January 2015 and had the largest monthly gain since January 2016. The Chicago PMI jumped 7.1 points in February to 57.4, above the 53 expected and up from 50.3 recorded in January. Any reading above 50 indicates improving conditions. Within the numbers it showed that new orders, production, and prices paid all had gains.
February 28, 2017
Monday- The National Association of REALTORS© reported today that potential buyers signed fewer contracts to purchase homes in January due in part to rising mortgage rates and low inventories. Pending Home Sales in January fell 2.8% from December, the lowest level in a year. The index represents signed contracts for existing single-family homes, condos, and co-ops. Pending Home Sales rose 2.3% in the Northeast, fell 5% in the Midwest, near unchanged in the South and down almost 10% in the West.
Orders to purchase products lasting at least three years rose in January from December signaling companies remain upbeat on the economy to begin the year. January Durable Orders rose 1.8% from the -0.8% recorded in December, which was in line with estimates. The 1.8% gain was seen in strength for commercial and military aircraft.
Investors will be closely watching President Trump’s address to a joint session of Congress Tuesday evening for any clues on his “phenomenal” tax announcement that he said would be coming. Stocks have enjoyed an unprecedented rally higher since the presidential election. The Dow posted its 11th straight record high close on Friday of 20,821. The Stock markets have recently hit record highs due to President Trump’s promises of lower taxes and regulatory reforms.
February 23, 2017
The Dow Jones Industrial Average began the day with nine straight record high closes beginning at 20,775.60, while the S&P and NASDAQ are right near record highs. The major indices have been driven higher by positive corporate earnings, better-than-expected economic data, and President Donald Trump’s election promises of lower taxes, reduced regulations and higher infrastructure spending. In comparison, the Dow closed at 6,547.05 back on March 9, 2009, the height of the great Recession.
The Federal Housing Finance Agency reported on Thursday that its Home Price Index rose 0.4% from November to December, despite the rise in mortgage rates since early November. The Home Price Index is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac. In addition, U.S. house prices rose 1.5% in the fourth quarter of 2016, and are up 6.2% from the fourth quarter of 2015 to the fourth quarter of 2016. Although interest rates rose sharply during the fourth quarter, our data show no signs of a home price slowdown,” said FHFA Deputy Chief Economist Andrew Leventis.
Mortgage rates edged higher in the latest week, though still remain historically low. They seem to have topped out for now after the sharp rise since the presidential election. Freddie Mac reported that the 30-year fixed conventional mortgage rate ($424K or less) rose to 4.16 this week from 4.15% with 0.5 in points and fees. The 15-year fixed-rate mortgage averaged 3.37%, up from 3.35%. Back in the early 1980’s, the average rate was around 18%.
February 22, 2017
The National Association of REALTORS® reported on Wednesday that Existing Home Sales in January surged by 5.69 million annualized units. This was up 3.3% from December to highs not seen since February 2007 (5.79 million). All major regions across the nation saw gains, with the exception of the Midwest. The median existing home price rose 7.1% from January 2016 to $228,000. Inventories remained low at just a 3.6-month supply. Lawrence Yun, NAR chief economist, says January’s sales gain signals resilience among consumers even in a rising interest rate environment.
In mortgage news, the Mortgage Bankers Association’s (MBA) Market Composite Index, a measure of total mortgage loan application volume, fell 2% in the latest week as rates edged higher. The refinance index declined 1% and the purchase index fell 2.8%. The 30-year fixed rate conventional mortgage ($424K or less) rose to 4.36% from 4.32%. In addition, the MBA reported that the refinance index fell 1%, while the purchase index declined 2.8%.
Gas prices at the pumps remained unchanged this week as drivers gear up for higher prices in the coming months. The national average price for a regular gallon of gasoline is at $2.28 this week, unchanged from the previous week and down from $2.31 a month ago. However, the price is up from $1.71 a year ago. Motor club AAA said as refinery maintenance season begins and driving demand increases, we could expect to see some of the gasoline supply in the U.S. soaked up and higher gas prices in the March and April.
February 21, 2017
Web-based real estate database company Redfin says home prices and sales rose last month while inventory continued to decrease. U.S. home prices increased 7.9% while sales were up 5.6% from January 2016 to January 2017. In the same time, home inventories fell 12% over the past year, which was the biggest annual decline in the supply of homes since April 2013. “Buyers jumped through three hurdles last month: rising prices, low inventory and a fast market,” said Redfin Chief Economist Nela Richardson.
Strong earnings from the retail sector are fueling higher stock prices today to begin the holiday shortened week. Profits from Home Depot, Walmart and Macy’s all topped profit estimates. The headlines pushed the Dow (20,743), Nasdaq (5,864) and the S&P 500 (2,365) to record high intraday levels as the rally that began after the presidential election marches on. In comparison, the S&P hit 666 back on March 6, 2009 at the height of the Great Recession.
The Federal Bank of New York reported on Monday that total household debt increased by 1.8% in the fourth quarter of 2016, up $226 to a staggering $12.58 trillion, just $99 billion below its peak in the third quarter of 2008. Broken down, there was a 1.6% increase in mortgage balances, a 1.9% increase in auto loan balances, a 4.3% increase in credit card balances, and a 2.4% increase in student loan balances this quarter. Mortgage balances, the largest component of household debt, stood at $8.48 trillion as of December 31, 2016, up $130 billion from the third quarter of 2016.
February 17, 2017
Government sponsored entity Fannie Mae reported solid earnings on Friday as the secondary mortgage market provider has rebounded sharply from when the housing bubble burst back in 2008. Fannie Mae reported fourth quarter net income of $5 billion and a positive net worth of $6.1 billion. The company said it will pay the treasury a $5.5 billion dividend in March, which is part of the bailout put forth when Fannie Mae was in severe trouble back in 2008 when the government stepped in and saved it from going under.
In this day and age of telecommuting workers and heavy workloads, the once precious eating out for lunch is declining. NPD Group Industry analyst there are a lot more people working from home nowadays. In addition, the shift to shopping online means that many more people don’t head to the malls on their lunch hours and don’t hit the fast-food joint on their way back to the office. Fast food visits for lunchtime fell by 2% in 2016. In addition, more people are watching their finances and bringing lunch. The old days of the two-martini lunch is decreasing.
February 16, 2017
The Commerce Department reported that Housing Starts declined 2.6% in January from December to an annual rate of 1.246 million; this was above the 1.220 million expected. December’s numbers were revised higher to 1.279 million from 1.226 million. Within the report it revealed that starts declined 41% in the West and 18% in the Midwest but increased 55% in the Northeast and 20% in the South. Housing Starts were up 10.5% from January 2016. Breaking the numbers down, single-family starts rose 2% from December, while multifamily dwellings declined by 8%.
U.S. Stocks have been on a tear hitting record highs. The S&P closed higher for seven straight days on Wednesday after President Trump ignited the rally last Thursday saying that a “phenomenal” tax announcement will be coming in the next few weeks. In addition, strong economic data is also boosting Stocks, while bank shares also chipped in on prospects of an upcoming interest rate hike.
Manufacturing activity in the Philadelphia region soared in February to levels not seen since 1984. The Philadelphia Fed Index rose to 43.3 in January, well above the 17.5 expected and up from the 23.6 recorded in January. It was the biggest one-month increase since June 2009. Any reading above zero indicates improving conditions. Within the report it showed that the employment component fell two points, but has registered its third consecutive positive reading. The report signals that the U.S. continues to improve and move into greener pastures.
February 15, 2017
Retailers enjoyed a solid January as consumers seemed more upbeat on the economy and as the labor market continues to move into greener pastures. Retailers across the board reported positive numbers with the exception of auto dealers. Retail Sales rose 0.4%, above the 0.2%, while the December reading was revised higher to 1% from 0.6%. From January 2016 to January 2017, Retail Sales were up 5.6%.
The National Association of Home Builders (NAHB) reported on Wednesday that builder confidence in February, but still remains firmly in positive territory. The NAHB said that regulatory concerns are one of the main reasons for the slide in confidence. The NAHB Housing Market Index fell two points in February to 65, below the 68 expected. Any number over 50 indicates that more builders view conditions as good than poor. “While builders remain optimistic, we are seeing the numbers settling back into a normal range,” said NAHB Chairman Granger MacDonald, a home builder and developer from Kerrville, Texas.
The January Consumer Price Index (CPI) came in hotter than expected at 0.6% versus 0.3%. Core CPI, which strips out food and energy, came in at 0.3% versus 0.2%. In addition, year-over-year CPI rose to 2.5%, up from 2.1% in December, Core 2.3% from 2.2%. The headline CPI was the biggest increase since February 2013, which was fueled by a sharp rise in the gasoline index and advances in the indexes for shelter, apparel, and new vehicles also were major contributors, said the Bureau of Labor Statistics.
February 14, 2017
Fed Chair Yellen is in front of the Senate Banking Committee beginning this morning at 10:00 a.m. ET for her semi-annual Humphrey-Hawkins speech, named for the 1978 law requiring the Fed update to Congress. The markets were looking for any clues as to the path of future interest rate hikes. Ms. Yellen still says gradual rate hikes to come at upcomg meetings. She will deliver the same speech tomorrow in front of the House Financial Services Committee. Ms. Yellen went on to say that fiscal policy is uncertain and that long term housing reform is an important issue.
In economic news, the January Producer Price Index (PPI) came in hotter than expected at 0.6% versus the 0.3% estimated, due to higher gasoline prices, the highest reading since the fall of 2012. Core PPI rose 0.4%, above the 0.2% expected. Year-over-year PPI was unchanged at 1.6%, Core 1.2% from the 1.6% recorded in December. The push-pull PPI data had little impact on the markets.
The National Federation of Independent Business (NFIB) reported this morning that it’s small business optimism index rose to 105.9 in January, the highest point since December 2004. Nearly one-third of those surveyed reported having job openings they could not fill. “Small business owners like what they see so far from Washington,” the NFIB said in a release. In addition, the net percentage of small business owners expect to increase worker compensation rose by four points.
February 10, 2017
After hitting a 10-year high in January, Consumer Sentiment declined in early February, which was centered around the expectations index. However, confidence remains quite favorable, with only five higher readings in the past decade. The preliminary February University of Michigan Consumer Sentiment Index fell to 95.7 from the final reading of 98.5 in January and below the 97.9 expected.
A new approach to grocery shopping is taking place at on line retailer Amazon. Amazon is getting into the brick-and-mortar supermarket space, but things will be a bit different from your local grocer. A test store opened on December 5 in Seattle where customers walk in and grab groceries from the shelves and walk out without going to the checkout lines. When to customer walks in, they would go through a turnstile and tap their cell phones, which logs them into the store’s network and connects to their Amazon account through an app. The new store is called Amazon Go and there are just a few employees at the store. Once the customer leaves the store, items purchased are charged to their Amazon account.
President Trump said on Thursday that within a few weeks, a big league announcement will come “that will be phenomenal in terms of taxes.” Those words touched off a rally in Stocks that pushed the Dow (20,172), Nasdaq (5,715) and the S&P (2,307) to record highs at the close of trading. It remains to be seen how much tax reform will be seen as there are opponents to deep cuts on both sides of the aisle.