Market Update November 2015

Market Update November 2015

QUOTE OF THE WEEK... "What's the use of happiness? It can't buy you money." --Henny Youngman, British-born American comedian and violinistINFO THAT HITS US WHERE WE LIVE ... Neither money nor happiness played a big role in last week's housing market reports. New Home Sales in September dropped 11.5%, sinking to a 468,000 annual rate. However, these sales are still up 2.0% compared to a year ago. Other positive news included a 9,000 unit increase in inventories, a good sign in the current supply strained market. The median price of new homes sold was up 13.5% from a year ago. It should also be remembered that new home sales surged in August. With this monthly volatility, the trend is what's key, and even with September's slide, new home sales in the last year averaged the fastest pace since 2008. The Pending Home Sales index of contracts signed on existing homes headed down 2.3% in September after a 1.4% slide in August. These will be counted as existing home sales when they close, which should make that number drop in October. But existing home sales shot up in September, so this is just another example of housing market volatility. And homes still look like a good investment, as prices continue to head up. The national Case-Shiller home price index was up 0.4% in August, its biggest gain in six months. This closely watched measure is 4.7% ahead of a year ago. At that time, it was up 5.1% for the year, so price gains have slowed some. BUSINESS TIP OF THE WEEK... Be a self-starter. If something needs to be done, don't wait for someone to give you permission--start doing it! Set the parameters for the project and make sure it stays on course. >> Review of Last Week ROCKTOBER... Stocks rocked the month of October, and when the festivities ended on Friday, equities logged their biggest monthly gains since October four years ago. In addition, all three major stock indexes posted weekly gains for the fifth week in a row. Nicest part of this? Wall Street's rockin' October rally followed two miserable months of market performance when investors feared global economic growth might stall. Well, things economic have stabilized in China, as their central bank cut borrowing rates, while the European Central Bank hinted they were ready to pump a ton of money into the system to support growth in the Eurozone. Our central bank, the Fed, seems to be feeling good enough about the U.S. economy to entertain the possibility of an interest rate hike at their next meeting in December. Investors took this in stride, realizing things are improving, as more than 70% of Q3 corporate earnings reports beat estimates. We still had some hiccups, as the GDP Advanced estimate for Q3 showed economic growth at just a 1.5% annual rate. But weekly Initial Unemployment Claims rose by just 3,000, and remained below 300,000 for the 33rd week in a row, with the 4-week moving average at its lowest level since 1973. Continuing Unemployment Claims increased by 6,000, but are at a very low 2.17 million level. The week ended with the Dow UP 0.1%, to 17664; the S&P 500 UP 0.2%, to 2079; and the Nasdaq UP 0.4%, to 5054. The up week in stocks didn't hurt bonds too badly, as economic data like the anemic Q3 GDP number stemmed price declines. The 30YR FNMA 4.0% bond we watch finished the week down just .06, at $106.15. For the week ending October 29, Freddie Mac's Primary Mortgage Market Survey reported national average fixed mortgage rates slightly lower. 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 estimates purchase mortgage originations will be up 15% this year, reaching $731 billion. Overall originations should hit $1.19 trillion, coming closer to a normalized market of $1.5 trillion. >> This Week’s Forecast FACTORY AND SERVICES SECTORS SLIP, JOBS GROW A BIT ... Analysts aren't predicting this week to be a good one for seeing any strong signs of economic growth. The October ISM Index of manufacturing is expected to slip to 50, indicating that sector is neither expanding nor contracting. October ISM Services should also slip, but remain north of 50, showing continued slow growth in that sector. The big focus of the week will be on Friday's October jobs report, and the prediction there is also for slow growth: 181,000 new Nonfarm Payrolls. >> The Week’s Economic Indicator Calendar Weaker 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 Oct 26 – Oct 30 DateTime (ET) ReleaseForConsensusPriorImpactM Nov 2 10:00ISM IndexOct50.050.2HIGHW Nov 4 08:30Trade BalanceSep-$43.0B-$48.3BModerateW Nov 4 10:00ISM ServicesOct56.656.9ModerateW Nov 4 10:30Crude Inventories10/31NA3.38MModerateTh Nov 5 08:30Initial Unemployment Claims10/31262K260KModerateTh Nov 5 08:30Continuing Unemployment Claims10/242.145M2.144MModerateTh Nov 5 08:30Productivity-Prelim.Q3-0.2%3.3%ModerateTh Nov 5 08:30Unit Labor Costs-Prelim.Q32.2%-1.4%ModerateF Nov 6 08:30Average WorkweekOct34.534.5HIGHF Nov 6 08:30Hourly EarningsOct0.2%0.0%HIGHF Nov 6 08:30Nonfarm PayrollsOct181K142KHIGHF Nov 6 08:30Unemployment RateOct5.1%5.1%HIGH >> Federal Reserve Watch Forecasting Federal Reserve policy changes in coming months... The policy statement coming out of last week's FOMC meeting indicated the Fed would seriously consider starting to raise rates in December. But the majority of economists still feel the Fed won't hike until January. Note: In the lower chart, a 47% probability of change is a 53% certainty the rate will stay the same. Current Fed Funds Rate: 0%–0.25% After FOMC meeting on: Consensus Dec 160.00%-0.25%Jan 270.00%-0.25%Mar 160.00%-0.25%Probability of change from current policy: After FOMC meeting on: Consensus Dec 16 47% Jan 27 55% Mar 16 69%

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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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