Market Update September 2015

Market Update September 2015

>> Market Update QUOTE OF THE WEEK... "The secret of getting ahead is getting started." --Mark Twain, American author and humorist INFO THAT HITS US WHERE WE LIVE...For the housing market to get ahead, we need more homes to get started, but that's not happening fast enough. A recent study by the National Association of Realtors (NAR) noted that job market growth is powering a strong housing market, but it's also linked to declines in new home starts. The study revealed that in 146 metro areas with big employment gains, new home construction is "underperforming." The NAR's chief economist explains, "as the labor market began to strengthen, homebuilding failed to keep up." This "lagging new home construction -- especially single-family -- has kept available inventory far below balanced levels."The NAR study also noted that low inventory has been a persistent problem in recent years. Home builders, however, should be eager to pick up the slack, as another study reported new homes are selling at their highest rate since February 2007, before the financial crisis. Oh, well, at least consumers, though cautious, remain upbeat, according to Fannie Mae's new monthly Home Purchase Sentiment Index (HPSI). Its first reading shows respondents a bit concerned about rising mortgage rates and unstable economic conditions. But they're also optimistic about the job market and their own household finances, so they aren't turning away from the housing market.BUSINESS TIP OF THE WEEK... Texting and other technologies are convenient ways to connect. But remember, to build relationships, you also need to actually talk to people. >> Review of Last WeekWAITING UP... The theme for the holiday-shortened trading week was, "let's wait and see if the Fed raises rates September 17, before we decide whether the bulls or the bears will prevail." It's this kind of mindset that results in the ton of volatility we've been seeing on Wall Street. The prior week, the Fed waiting game sent stock prices down, but last week, waiting sent the markets up. All three major indexes scored solid weekly gains, though it's hard to say this shows investors feel positive. The fact is, with everyone fixated on this week's Federal Reserve meeting, analysts expect the markets will remain volatile right up to the policy statement Thursday at 2 p.m..After that, who knows? Meanwhile, we can all reflect on last week's small grouping of economic data. Initial Unemployment Claims stayed under 300,000, dropping for the week by 6,000, to 275,000, while Continuing Unemployment Claims came in at a not-too-shabby 2.260 million. But the preliminary Michigan Consumer Sentiment read for September plummeted to 85.7, its lowest level in a year, and a huge 6.7% monthly drop from the final 91.9 measure for August. Observers think this reflects consumer reaction to the crazy stock market. The Producer Price Index (PPI) showed wholesale price inflation went nowhere in August, which might give the Fed pause.The week ended with the Dow UP 2.1%, to 16433; the S&P 500 UP 2.1%, to 1961; and the Nasdaq UP 3.0%, to 4822.In spite of Friday's stock rally, bonds by and large held up, with Treasuries enjoying their own surge. The 30YR FNMA 4.0% bond we watch finished the week down .07, at $106.08. National average fixed mortgage rates were virtually unchanged according to Freddie Mac's Primary Mortgage Market Survey for the week ending September 10. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up to the minute information. DID YOU KNOW?... A leading provider of data to the mortgage market reports that total home equity in July grew by almost $1 trillion, reaching its highest level since 2007. It is now 2.5 times bigger than it was at the end of 2011. >> This Week’s Forecast RETAIL UP, HOUSING STARTS DOWN, INFLATION MILD, SO WHAT WILL THE FED DO?... What will the Fed's September FOMC Rate Decision be? We get the answer on Thursday. Most economists still say the central bank won't start hiking rates until end of year, but the truth is, no one knows. The economy keeps giving mixed signals. Retail Sales are forecast to grow slower in August. Housing Starts should be down, Building Permits up. Overall Consumer Price Index (CPI) inflation is expected to contract, with Core CPI barely going up. The Fed wants to see inflation at 2% before raising rates. >> 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 Sep 14 – Sep 18 DateTime (ET)ReleaseForConsensusPriorImpactTuSep 1508:30Retail SalesAug0.3%0.6%HIGHTuSep 1508:30NY Empire Manufacturing IndexSep0.3-14.9ModerateTuSep 1509:15Industrial ProductionAug-0.2%0.6%ModerateTuSep 1509:15Capacity UtilizationAug77.8%78.0%ModerateTuSep 1510:00Business InventoriesJul0.1%0.8%ModerateWSep 1608:30Consumer Price Index (CPI)Aug-0.1%0.1%HIGHWSep 1608:30Core CPIAug0.1%0.1%HIGHWSep 1610:30Crude Inventories9/12NA2.570MModerateThSep 1708:30Initial Unemployment Claims9/12275K275KModerateThSep 1708:30Continuing Unemployment Claims9/52.254M2.260MModerateThSep 1708:30Housing StartsAug1.160M1.206MModerateThSep 1708:30Building PermitsAug1.159M1.119MModerateThSep 1710:00Philadelphia Fed IndexSep6.58.3HIGHThSep 1714:00FOMC Rate Decision9/170%-0.25%0%-0.25%HIGHFSep 1810:00Leading Economic Indicators (LEI)Aug0.2%-0.2%Moderate >> Federal Reserve Watch Forecasting Federal Reserve policy changes in coming months... The majority of economists still don't see a rate hike coming out of this week's FOMC meeting, but a growing majority do expect a small rise in December. Note: In the lower chart, a 23% probability of change is an 77% certainty the rate will stay the same.Current Fed Funds Rate: 0%–0.25%After FOMC meeting on:Consensus Sep 170.00%-0.25%Oct 280.00%-0.25%Dec 160.25%-0.50%Probability of change from current policy:After FOMC meeting on:Consensus Sep 17 23%Oct 28 39%Dec 16 58%

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Phone: 610-517-4117
Dated: September 14th 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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