March 31, 2017
Today marks the end of a strong first quarter that started with all major Stock indexes posting new record highs on the promise of tax, healthcare and other regulatory reforms. While the day is starting out in the red, the end of the day will wrap up a great kick off to 2017 nonetheless. Volatility will likely mark the second quarter as Britain enters into negotiation with the EU on its exit from the union, the French head to the polls to elect a new president, and here at home we continue to watch what unfolds in Washington D.C. No doubt, politics will fuel volatility as we head into April.
In economic news, inflation remained in check in February and just below the Fed’s target range of 2 percent. Core Personal Consumption Expenditures, the Fed’s favorite inflation gauge, rose 1.8 percent year-over-year in February from 1.7 percent in January. The Fed would like Core PCE, which strips out volatile food and energy prices, to stay above 2 percent, something it has not done in 9 years. If inflation stalls at current levels, it will be tough for the Fed to justify hiking interest rates this year as rate hikes are designed to stave off inflation. February Personal Income rose 0.4 percent, which was in line with estimates, while spending Personal Spending was up 0.1 percent versus the 0.2 percent expected.
Zillow Group is targeting services to millennial homebuyers with its new website set to launch in May 2017: RealEstate.com. According to HousingWire, the website will pull from multiple listings services, real estate brokerages and franchisors. Zillow conducted a study showing 70% of millennials report using a real estate agent, find their real estate agent online and evaluate agents using online reviews. Zillow will announce more details when it launches. The new URL was acquired as part of Zillow’s acquisition of Trulia. The domain name currently redirects to Trulia.com but will redirect in May.
March 30, 2017
Final fourth quarter 2016 Gross Domestic Product (GDP) rose 2.1% from the second reading of 1.9% after a 3.5% increase in the third quarter. For all of 2016, GDP rose an anemic 1.6%, the worst since 2011 and below the 2.6% in 2015. There were some bright spots with the latest numbers. Consumer spending rose 3.5% from the previous reading of 3%, while corporate profits were up 9.3% year-over-year, the most in four years due in part to a recovery in the energy sector.
Mortgage rates continued to edge lower for the second straight week after the run up in home and refinance borrowing costs since the U.S. presidential election in November. Freddie Mac reported that the 30-year fixed conventional mortgage rate fell to 4.16% this week from 4.23% in the previous week. To obtain that rate, a potential borrower would have to pay 0.5 in points and fees. Freddie Mac said that despite the recent mortgage rate fluctuation, new home sales far exceeded expectations.
Americans filing for first time unemployment benefits continue to hover near lows not seen since the early 1970’s as the labor market continues to strengthen. Weekly Initial Jobless Claims came in at 258,000, above the 245,000 expected. Jobless claims have now remained below the 300,000 level for 80 straight week, the longest streak since 1970, and this is associated with a healthy jobs market.
March 29, 2017
The spring buying season is well underway and due to unseasonably warm weather in February, potential buyers signed more contracts to purchase homes than expected. The National Association of Realtors® (NAR) reported that Pending Home Sales in February jumped 5.5% from January to 112.3. This was the highest level in nearly a year and the second highest level in over a decade. The NAR said the stock market’s continued rise and steady hiring in most markets fueled the increase.
Mortgage rates decreased in the latest week, while the refinance sector of the mortgage industry fell to a near nine-year low. The Mortgage Bankers Association (MBA) reported that the 30-year fixed conforming mortgage rate fell to 4.33% in the latest week, down from 4.46% in the previous week. Jumbo fixed rates also declined falling to 4.26% from 4.40%, while FHA fixed rates fell to 4.24% from 4.33%. The MBA went on to report that the refinance index fell nearly 3% and fell to 44% of total applications. The purchase index rose 1.2% last week and is 4% higher than the same week a year ago.
A recent survey conducted by staffing firm Accountemps revealed that injecting some humor at work could advance employees careers. The survey said that 78% of CFOs interviewed showed that an employee’s sense of humor is at least somewhat important for fitting into the company’s corporate culture, while 22% said that humor is very important. But that doesn’t mean that employees should perform stand up comedy while in the office, and humor doesn’t always fit into every aspect of daily work routines. There are some guidelines that workers should adhere to: show your personality, consider the circumstances, use the right medium, laugh with workers, not at them or at your colleagues expense and last but not least, keep it G-rated.
March 28, 2017
Home prices continued to follow their positive upward trend in January due in part to tight inventories of homes for sale across the nation. The January S&P/Case Shiller 20-city Home Price Index rose 5.7% year over year, just above the 5.6% expected. From December to January, prices increased nearly 1%. Of the nation’s 20 largest cities, three reached their all-time highs in January: Seattle, Portland, and Denver. And 12 cities reported greater price increases in the year ending January 2017 versus the year ending December 2016, the report said.
The Conference Board reported today that Consumer Confidence rose to the highest level since December 2000. Consumers expressed greater optimism regarding short-term outlook for business, jobs and personal income prospects. The March Consumer Confidence Index rose to 125.6 from 116.1 in February and well above the 113.3 expected. “Consumers feel current economic conditions have improved over the recent period, and their renewed optimism suggests the possibility of some upside to the prospects for economic growth in the coming months,” said Lynn Franco, Director of Economic Indicators at The Conference Board.
Stocks continued to grind lower yesterday as the exuberance from the presidential election loses some of its luster and after the new healthcare reform act was pulled on Friday due to a lack of votes. If the Dow Jones Industrial Average were to close lower today, it would be nine straight losing sessions, something it has not done since 1978. However, the strong Consumer Confidence numbers have pushed Stock prices higher today.
March 27, 2017
The new American Health Care Act (AHCA) was pulled on Friday for lack of votes. The AHCA was supposed to replace the Affordable Care Act, nicknamed Obamacare, but due to lack of support from Congress, President Trump asked that the bill be pulled before it reached the House of Representatives. This news has sent U.S. Stocks lower today as investors take some profits with Stocks near all-time highs. House Speaker Paul Ryan and President Trump will now try to regroup and work on the rest of the president’s agenda of tax reform and a new budget.
Real estate listing and rental property information company Trulia, reported on Monday that housing inventory across the U.S. declined to new lows in the first quarter of 2017. Trulia went on to say that inventories are down partly because investors are buying up many foreclosure units. Also, due to the slow recovery of home values, homeowners are waiting to sell until they can gain enough equty to break even on their homes.
Fannie Mae reports that mortgage lender expectations for the economy and home prices reached survey highs in the first quarter of 2017. Lenders of all sizes are optimistic about the direction of the economy and are saying that the U.S. economy is on the right track reaching its highest level since the survey’s inception in the first quarter of 2014. Fannie Mae went on to say that purchase mortgage demand growth over the prior three months has steadily declined, while refinance activity has also declined.
March 24, 2017
Mortgage rates edged lower this week due to some uncertainty surrounding the healthcare reform act vote on Capitol Hill this week. Freddie Mac reported that the 30-year fixed conventional mortgage rate fell to 4.23% this week from 4.30% in the previous week. The rate does come with an additional 0.5 in points and fees. This week’s decline was the largest week-over-week decline in two months and rates remain just above historical lows.
The Mortgage Bankers Association (MBA )reported this week that the spring homebuying season is off to a good start due in part to strong employment numbers. The MBA that applications to purchase new homes jumped 16% in February from January rising to 51,000 from 44,000. The average loan size for new homes rose to $330,860 to $330,208 month over month. The MBA stated that lower inventories and high demand make could make 2017 a sellers market.
March 23, 2017
Filings for U.S. unemployment benefits rose to a seven-week high, increasing by 15,000 to 258,000 in the week ended March 18, the Labor Department reported. Despite the uptick, the latest reading marked 80 straight weeks of filings below 300,000, the level economists consider a healthy labor market.
Investors are honing in on Washington D.C. and the lead up to the healthcare reform vote in the House, which is expected to take place this evening. If the bill does not pass, it will bring on more uncertainty about promised reforms on healthcare, taxes and the regulatory environment and appear to stall President Trump’s agenda. If this initial vote in the House passes, Stock markets could rally as some of the uncertainty is lifted.
Sales of new single-family houses in February 2017 were up 6.1 percent from January to a seasonally adjusted annual rate of 592,000, according to the U.S. Census Bureau and the Department of Housing and Urban Development. New Home Sales in January also were revised up to rate of 558,000. February’s sales are 12.8 percent above the February 2016 estimate and a welcome sign to prospective homebuyers who have struggled with limited inventory and rising home prices throughout the country.
March 22, 2017
Stocks had their biggest one-day loss yesterday, and the effect was felt around the world. At the start of trading today, they are slipping lower again. Uncertainty around the ability for Congress to reform healthcare and tax policy and deregulate has taken center stage. Investors don’t love uncertainty, but Bonds certainly do, and right now it is not clear what plans, if any, will get through to passage.
Meanwhile, Britain’s plan to pull the official trigger on its exit from the European Union March 29 has financial organizations making plans of their own. Goldman Sachs and Morgan Stanley are the first to announce they are seeking alternative locations for staff and operations currently housed in London. The city’s reign as the financial center of Europe is likely coming to an end, and a successor city will be crowned. But where?
Finally, oil prices hit four-month lows after recent data showed U.S. production is much higher than expected. The ramped up production only adds fuel to the fire of a global oil supply that is overstocked and undervalued in the eyes of investors (consumers do see lower prices at the pump, which is a benefit).
March 21, 2017
When a politician speaks in France, can it move U.S. markets? Oui. Markets reacted to the first French Presidential debate, where the more centrist candidate, Emmanuel Macron, appeared to beat far-right wing candidate Marine Le Pen. A win by Macron could lead to more certainty and more consistency in immigration policies, so investors see this as good news. Stock markets opened on positive footing, while Bonds were lower in price.
The use of small, portable electronic devices is now … mostly prohibited. At least on flights from ten airports in the Middle East and North Africa. Anything other than a mobile phone must be checked. The latest travel restriction out of Washington D.C., made in efforts to limit national security threats, was issued early today, and carriers have 96 hours to comply.
Apple is making headlines again with the introduction of its least expensive iPad to date and special edition red iPhone. The 9.7-inch iPad has a brighter Retina display and starts at $329. The (Product)Red iPhone 7 was developed in partnership with (RED). Both will be available starting March 24.
March 17, 2017
Improved household finances lifted consumers spirits in March as incomes and wealth were at the strongest levels in a decade. The University of Michigan’s Consumer Sentiment Index rose to 97.6 this month, up from 96.3 in February and above the 96.8 expected. The 97.6 is down from the 13-year high of 98.5 hit in January. The report went on to read that “The overall level of consumer sentiment remained quite favorable in early March due to renewed strength in current economic conditions as well as the extraordinary influence of partisanship on economic prospects.”
A recent survey conducted by the National Association of Realtors® revealed that respondents feel that the U.S. economy is improving. The survey said that 62% of respondents said they feel the economy in improving, while 72% said that now is a good time to purchase a home. In addition, 69% of those surveyed said it is a good time to sell a home. Rounding out the report, 60% said that home prices in their communities have gone up in the past 12 months.
Gas prices at the pumps edged lower in the past few weeks, though well above prices seen last year this time. Motor club AAA reports that given high oil supplies and a well supplied gasoline market, prices could continue to move lower in the coming weeks. The national average price for a regular gallon of gasoline is at $2.29. The all-time high was hit back July 17, 2008 when the price surged to $4.11 a gallon, while last year the price was $1.96.