Market Update April 2015

Market Update April 2015

>> Market UpdateQUOTE OF THE WEEK... "A good garden may have some weeds."--Thomas Fuller, English churchman and historianINFO THAT HITS US WHERE WE LIVE... As the housing market garden sprouted this spring, we saw some wonderful growth, along with what seemed like a few bothersome weeds. The growth came in the form of Existing Home Sales, up a solid 6.1% in March, to a 5.19 million annual rate. This was their highest level since September 2013. Plus, sales are up 10.4% versus a year ago, with the median home price up 7.8%. Significantly, non-cash sales, where the buyer uses a mortgage loan, are up 25.3% from a year ago. In addition, the existing homes inventory shot up by 100,000 in March, the biggest increase for any March since 2006. But the months' supply dipped to 4.6, thanks to the faster sales pace.The weeds in our garden appeared as New Home Sales, which were down 11.4% in March, dropping to a 481,000 annual rate. But if we pick through the undergrowth, we find that new home sales are still up a robust 19.4% versus a year ago. Even with the March dip, the upward trend in new home sales remains, thanks to the boom we enjoyed in February. And single family housing starts have picked up, so builders clearly expect this trend to continue. The new home inventory is still quite low, although March did see a gain of 4,000 units. Finally, the FHFA price index of homes financed with conforming mortgages was up 0.7% in February and is up 5.4% over a year ago.BUSINESS TIP OF THE WEEK... Be honest. Be trustworthy. Be helpful. Nothing is more important than your personal reputation. >> Review of Last WeekBACK TO SETTING RECORDS... Wall Street returned to its bullish ways, as investors pushed stocks up to solid weekly gains. When all was said and done, the Nasdaq Composite and the S&P 500 indexes set new all-time highs, while the Dow posted a not-too-shabby 1.4% weekly gain, as it climbed back over the 18,000 threshold. The good mood on the trading floor was inspired by some better-than-expected corporate earnings reports, particularly from the technology and consumer-discretionary sectors. The economic news was mixed as usual, beginning with the up-and-down housing data covered above.Durable Goods Orders delivered opposite messages in the same report. Orders overall rose 4.0% in March over February. But that headline number was all driven by transportation demand, specifically in the defense-related aircraft sector. Durable Goods Orders ex-transportation fell for the seventh month in a row and are now down 1.9% from a year ago. Economists say these "core orders" are the key measure of the state of business investment. Weekly Initial Unemployment Claims inched up by 1,000, to 295,000, but the four-week moving average is just 284,500, and that was the seventh week in a row it's under 300,000. The week ended with the Dow UP 1.4%, to 18080; the S&P 500 UP 1.8%, to 2118; and the Nasdaq UP 3.2 %, to 5092.The disappointing underlying data in Friday's Durable Goods report sent some investors to the safe haven of bonds. The 30YR FNMA 4.0% bond we watch finished the week UP .71, to $107.01. Freddie Mac's Primary Mortgage Market Survey for the week ending April 23 saw national average fixed mortgage rates down slightly, remaining near 2015 lows. Their deputy chief economist called this "positive news for potential home buyers in the market this spring." Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up to the minute information. DID YOU KNOW?... The Mortgage Bankers Association reported purchase mortgage applications rose for the fourth time in five weeks, increasing 2.3% for the week ending April 17. >> This Week’s Forecast PENDING HOME SALES SLOW, CONSUMERS SPEND, FACTORIES HUM, BUT LET'S FOCUS ON THE FED... Lots of key economic data on tap. Pending Home Sales are forecast off a tick for March, which could foretell a small dip in Existing Home Sales in the May-June time frame. Personal Spending is expected to grow in March, just like manufacturing in April, according to the Chicago PMI and the national ISM Index. But all this will be eclipsed by the Fed's meet on Wednesday. The FOMC Rate Decision should leave rates as they are. However, the Fed Policy Statement will be carefully studied to see if things may change come June. Pundits will no doubt have a field day.>> 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 Apr 27 – May 1 DateTime (ET)ReleaseForConsensusPriorImpactTuApr 2810:00Consumer ConfidenceApr102.2101.3ModerateWApr 2908:30GDP–AdvancedQ11.1%2.2%ModerateWApr 2908:30GDP Deflator–AdvancedQ10.5%0.1%ModerateWApr 2910:00Pending Home SalesMar1.6%3.1%ModerateWApr 2910:30Crude Inventories4/25NA5.315MModerateWApr 2914:00FOMC Rate Decision4/290%–0.25%0%–0.25%HIGHThApr 3008:30Initial Unemployment Claims4/25290K295KModerateThApr 30 08:30Continuing Unemployment Claims4/182.318M2.325MModerateThApr 3008:30Personal IncomeMar0.2%0.4%ModerateThApr 3008:30Personal SpendingMar0.5%0.1%HIGHThApr 3008:30Core PCE PricesMar0.2%0.1%HIGHThApr 3008:30Employment Cost IndexQ10.6%0.6%HIGHThApr 3009:45Chicago PMIApr50.046.3HIGHFMay 110:00ISM IndexApr52.051.5HIGHFMay 110:00U. of Michigan Consumer Sentiment–FinalApr96.095.9Moderate >> Federal Reserve Watch Forecasting Federal Reserve policy changes in coming months... In the absence of strong economic data, now more economists expect the Fed to leave rates alone until well into the second half of the year. Note: In the lower chart, a 2% probability of change is a 98% certainty the rate will stay the same.Current Fed Funds Rate: 0%–0.25%After FOMC meeting on:Consensus Apr 290%–0.25%Jun 170%–0.25%Jul 290%–0.25%Probability of change from current policy:After FOMC meeting on:Consensus Apr 29 0%Jun 17 2%Jul 29 9%


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Dated: April 27th 2015
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About Ralph and Karen: THE CHIODO TEAM - Ralph Chiodo Broker / Owner 610-792-4800 x 111 K...

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