S & P/Case Shiller 20-City Index Rose, Consumers less confident, Chicago PMI Fell

January 31, 2017

The S&P/Case-Shiller 20-city Index rose by 5.3% from November 2015 to November 2016, up from October’s annual increase of 5.1%. Within the index it showed big gains in Seattle, Portland and Denver. A spokesperson for Case-Shiller said that housing has recovered from the boom-bust cycle that began a dozen years ago. The housing market continues to be a solid sector for the U.S. economy.

Consumers were less confident about the economy in January led by a decline in optimism for business conditions and income prospects. The Conference Board released its Consumer Confidence Index on Tuesday as it fell to 111.8, which was below the 15-year high of 113.3 in December. Despite the income worries, those surveyed felt that jobs are plentiful, while also saying that the “jobs are hard to get” component has decreased.

Business activity in the Chicago area declined in January to the lowest reading in 11 months, just a tick above contraction levels. The Chicago PMI fell to 50.3 this month, below the 55 expected and down from the 53.9 recorded in December. A reading above 50 indicates expansion, below 50, contraction. Within the report it showed that three of the five components declined. In addition, respondents felt that interest hikes in 2017 won’t have much of an impact on business.

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Signed contracts to purchase homes in December rose, Personal Consumer Spending, Gas Prices

January 30, 2017

Signed contracts to purchase homes in December rebounded from the previous month with solid increases in the South and West offsetting weakening activity in the Midwest and Northeast. The National Association of Realtors® (NAR) reported that Pending Home Sales in December rose 1.6% from November and above the 1.3% expected. The NAR said that potential home buyers shrugged off rising mortgage rates and limited housing inventory to sign home purchase contracts.

Consumers spent their hard-earned dollars in December on a variety of goods along with purchases of motor vehicles due in part to rising wages. The Commerce Department reported that Personal Spending grew by 0.5% in December, up from 0.2% in November. Personal Incomes increased by 0.3% last month and above the 0.1% recorded in November. Within the numbers it showed that the inflation gauge, the Core Personal Consumption Expenditures (PCE), fell to 0.1% from 0.2%, while the year-over-year Core PCE, the Federal Reserve’s favorite inflation number, came in at 1.7%, below the 2% level that the Fed is looking for.

Gas prices at the pumps fell in the latest week as oil prices stall after the recent increase. The national average price for a regular gallon of gasoline fell to $2.27 on Monday, January 30. That price is down from $2.32 a week ago, though well above the $1.80 seen last year this time. The highest recorded average was $4.11 back on July 17, 2008. The recent decline in demand coupled with a big supply, are key reasons for the drop in prices at the pumps. Experts see the price in gas continuing to decrease in the coming weeks and starting to edge higher in March and April.

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New Home Sales in December, Mortgage rates edged higher, Cash Sales for Home Purchases Rose

January 26, 2017

New Home Sales in December fell 10.4% from November to an annual rate of 536,000 versus the 589,000 expected. Higher mortgage rates and increasing home prices are the culprits. This was the lowest level since February of 2015, down 0.4% from December 2015. Within the report it showed that the median sales price rose nearly 8% from a year ago to $325,500. In addition, there is a near six-month supply of new homes for sale, which is viewed as a healthy balance between supply and demand.

Mortgage rates edged higher this week after the surge in rates as investing dollars shifted out of the Bond markets and into Stocks, which usually has a negative effect on rates. The 30-year fixed conventional mortgage rate ($424,000 or less) rose to 4.19% this week from 4.09% last week with 0.4 in points and fees, as reported by Freddie Mac. However, to put it in historical perspective, mortgage rates were near 19% back in the early 1980s.

Analytics firm CoreLogic reported on Thursday that cash sales for home purchases rose again in October, the fourth consecutive monthly increase, but are lower than they were in October 2015. Cash sales made up 31.8% of total home sales in October, down 2.7% from October 2015. Before the housing crisis began in 2008, cash sales averaged around 25% of total home sales. The 25% mark could be reached again by mid-2018if the share of cash sales continues to decline at the same annual rate it as it did in October.

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Mortgage Rates Edged Higher, Dow Jones Industrial Average hit 20,000 mark, Home Prices edged higher in November

January 25, 2017

Mortgage rates edged higher in the latest week as Bond yields rose after investors pulled investing dollars out of the Bond markets and into riskier assets, such as Stocks. The Mortgage Bankers Association reported that the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,000 or less) increased to 4.35% from 4.27%. Within the report it showed that the Market Composite Index, a measure of total mortgage loan application volume, rose 4% in the latest week.

The Dow Jones Industrial Average hit the 20,000 mark for the first time in its 131-year history on Wednesday as the Trump rally resumes after a brief halt in early to mid-January. The rally resumed after President Trump signed numerous executive orders, which included construction of two oil pipelines, which lifted the energy sector and spread to the broader markets. The Nasdaq and the S&P also hit record highs in Wednesday’s trading session.

Home prices edged higher in November as reported by the Federal Housing Finance Agency (FHFA). The FHFA reported that prices rose 0.5% from October to November, with a 6.1% annual increase from November 2015 to November 2016. Overall prices are now more than 6.0% above the 2011 low point seen following the Great Recession. Prices were up in six of the divisions with the biggest increase seen in the Pacific region with a gain of 1.5%.

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Existing Home Sales closed out 2016 best year in decade, Kroger Co announcing hiring, US Manufacturing sector solid start for 2017

January 24, 2017

Existing Home Sales closed out 2016 as the best year in a decade, though December’s numbers were a bit below expectations. December Existing Home Sales declined 2.8% from November to an annual rate of 5.49 million units, which was below the 5.55 million expected. November was revised higher to 5.65 million from 5.61 million. The National Association of REALTORS® reports that sales in 2016 were 5.45 million units, above the 5.25 million in 2015 and the highest since the 6.48 million in 2006.

Retail food chain Kroger Co. announced on Monday that it plans to hire up to 10,000 new permanent employees in 2017, which would be focused at the store level. The announcement follows a series of hiring through the past few years for Kroger; where it added 12,000 new workers in 2016 and a total of 86,000 jobs in the past eight years. The new positions at Kroger will be in part-time clerks, cashiers, department heads and store managers.

The U.S. manufacturing sector got off to a solid start in 2017 as overall operating conditions improved at the fastest pace in almost two years. Improvement was seen from better business conditions, which was fueled by sharper increases in output and new orders. The Markit Flash U.S. Manufacturing Purchasing Managers Index (PMI) rose to 55.1 in January, up from 54.3 in December. Within the report it showed that manufactures reported increased production for the eighth month running in January, while the rate of expansion picked up to its sharpest since March 2015. In addition, the employment component continued to increase.

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President Trump to sign executive order to renegotiate NAFTA, US Stocks declining, No economic Reports due today

January 23, 2017

President Trump plans to sign an executive order to renegotiate NAFTA, the North American Free Trade Agreement, between the U.S., Canada and Mexico. NAFTA is a comprehensive agreement that sets rules for international trade and investment between the aforementioned countries. Mr. Trump’s goal is to put American workers and businesses first when it comes to trade and to return millions of jobs to the U.S.

U.S. Stocks are declining to begin the new week as investors worry about the lack of details from President Donald Trump’s proposals for tax and regulatory reforms and higher infrastructure spending. The major indices, S&P, Dow, and Nasdaq, all hit record highs after the presidential election in early November. Investors appear to be doing a little “buy on the election, sell on the inauguration” while booking some profits.

There are no economic reports due for release today. This week’s calendar includes December Existing Home Sales on Tuesday, Weekly Initial Jobless Claims and December New Home Sales on Thursday. On Friday, the closely watched Gross Domestic Product (GDP) will be released, which is the monetary value of all the finished goods and services produced within a country’s borders in a specific time period. GDP is a key metric for economic activity here in the U.S.

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President Donald Trump, Closing rates for mortgage loans rose, Student Loan sector sore spot

January 20, 2017

President Donald Trump has taken the oath of office today in Washington D.C. Mr. Trump is now become the 45th president of the United States after resting his hand on his family bible and the Abraham Lincoln bible at 12:00 p.m. ET in Washington D.C. The transfer of power from Mr. Obama to Mr. Trump will be seen around the globe, which is broad casted from the steps of the U.S Capitol that houses Congress.

Closing rates for mortgage loans rose to their highest point in December for all of 2016, reported loan origination software company Ellie Mae. Ellie Mae reported that closing rates for all loans rose to 73.2% in December, while refinance closings increased to 69.6%, and purchases increased to 77% in December. “As rates began to increase we saw purchases tick back up in December, signaling the start of a trend we expect to continue into 2017,” Ellie Mae president and CEO Jonathan Corr said.

The student loan sector of the economy continues to be a sore spot for lenders as well as borrowers. It is believed that there are far more students that have defaulted on their loans than previously reported. Of the 1,000 colleges or trade schools surveyed, it is believed that half the students have defaulted or have failed to pay down at least $1 on the loans within seven years. There is nearly $1.3 trillion in student loan debt in the U.S., which made up of 44 million borrowers. The average student loan debt for the class of 2016 is around $37,000, up 6% from 2015.

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Housing Starts in December surged, Manufacturing activity in Philadelphia region rose, Mortgage rates continued to edge lower this week

January 19, 2017

The Commerce Department reported on Thursday that Housing Starts in December surged 11.3% from November to an annualized rate of 1.226 million units, above the 1.193 million expected. The numbers signal that the pull back in November from the nine-year high in October could have been an anomaly. Within the report it revealed that multi-family dwellings rebounded in December, while single-family starts were modestly lower. For all of 2016, Housing Starts of 1.17 million units were the best since 2007 due in part to a strong labor market and rising wages.

Manufacturing activity in the Philadelphia region rose in January as general activity, new orders and the employment components all increased during the month. Within the report it showed that manufactures have grown more optimistic in their forecasts over the past two months. The Philadelphia Fed Index rose to 23.6 in January from the revised 19.7 in December and well above the 15.3 expected. In addition, firms’ optimism about future manufacturing growth continued to improve this month.

Mortgage rates continued to edge lower this week after the surge in rates, which occurred soon after the presidential election results in early November. The 30-year fixed conventional mortgage rate ($424,000 or less) hit a multi-year high of 4.32% on December 29 of 2016, up from 3.54% on November 3. This week, the rate fell to 4.09% with 0.5 in points and fees, down from 4.12% in the previous week. To put it in historical perspective, mortgage rates were near 19% back in the early 1980s.

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Mortgage rates continued to decline in latest week, Home builder confidence slipped in January, Consumer Prices rose in December

January 18, 2017

Mortgage rates continued to decline in the latest week to the lowest levels not seen since early December. Rates have pushed higher as Mortgage Bond prices plunged and as yields soared after the presidential election results. Investors see the new Trump administration bringing softer regulations, and more pro-growth for the U.S. economy, which pushed investing dollars out of the Bond markets and into Stocks. The Mortgage Bankers Associations reported that the 30-year fixed conventional mortgage ($424,000 or less) fell to 4.27% from 4.32%.

Home builder confidence slipped in January after a sharp rise in December, though it remains in positive territory and well above year-ago levels. The lower numbers this month can be attributed toward higher mortgage rates as well as a lack of lots and access to labor. The National Association of Home Builders Housing Market Index fell two points to 67 in January from the 69 reported in December. All three components in the index declined, which include current sales conditions, sales expectations and buyer traffic. A year-ago, the index was at 61.

The Bureau of Labor Statistics reported on Wednesday that consumer prices rose in December from January led by higher costs for gasoline and housing. The December Consumer Price Index (CPI) rose 0.3% last month, which was in line with expectations and up from the 0.2% gain recorded in December. When stripping out volatile food and energy, the so-called Core CPI was also in line at 0.2%. However, the year-over-year headline CPI rose to 2.1% for all of 2016, well above the 0.7% expected as inflation pressures begin to heat up.

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Walmart to hire 10,000 new workers, GM planning to invest $1B in US, Moody’s will settle with DOJ

January 17, 2017

Giant retailer Walmart announced on Tuesday that it plans to hire 10,000 new workers in the U.S. in soon-to-be-opened stores. In addition, the retailer will also expand existing stores and its e-commerce site. The construction of new stores and the remodeling of existing stores will also produce 24,000 new construction jobs. The news comes in a time when president-elect Trump emphasizes commitments to bolster U.S. jobs for many companies who may have been looking for cheaper locales outside of the U.S.

General Motors is planning to invest $1 billion in the U.S. after some pressure from president-elect Trump’s criticism of the automaker’s Mexican car production. GM said it will bring back 7,000 jobs to the U.S. in the form of IT positions and new manufacturing jobs. A spokesperson from GM said that the plans had been in the works for some time and felt no pressure from Mr. Trump in the president-elect’s quest to bring jobs back to the U.S.

Credit ratings agency Moody’s said it will settle with the Department of Justice (DOJ) to the sum of $864 million in its role in providing shaky credit ratings for Residential Mortgage Backed Securities and Collateralized Debt Obligations. The settlement will resolve litigation in pending state courts of Connecticut, Mississippi and South Carolina as well as potential claims by the DOJ, 18 states and the District of Columbia.

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