Happy New Year

Dated: 01/05/2015

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For the week of January 5, 2014 – Vol. 13, Issue 1>> Market UpdateQUOTE OF THE WEEK... "What's past is prologue."--William Shakespeare, "The Tempest"INFO THAT HITS US WHERE WE LIVE... In the end, the past year provided a pretty decent prologue to this one. Let's start with 2014's final bit of housing data, in which the National Association of Realtors (NAR) reported Pending Homes Sales up 0.8% in November, a nice reversal from the prior month's dip. Even better, that reading is 4.1% ahead of November 2013, the highest year-over-year gain since August a year ago. The NAR's chief economist added, "With rents now rising at a seven-year high, historically low rates and moderating price growth are likely to entice more buyers to enter the market in upcoming months."An equally positive prologue to 2015 came when mortgage rates ended last year a whole percentage point below the original forecasts. An online publisher of financial data reported: "Even with average home price appreciation of 5%, housing is more affordable now, with lower monthly payments on a larger loan than one year ago, by virtue of lower mortgage rates." They feel stagnant consumer incomes have held back the market and that "if wage growth materializes as expected in 2015, home sales will pick up as buyers' reluctance slips away." Finally, the S&P/Case-Shiller Home Price Index posted a 4.6% annual gain in October.BUSINESS TIP OF THE WEEK... For your 2015 growth plan, set reasonable goals. Then keep an eye on industry trends and make adjustments as needed. Fund any increased costs by first trying to cut expenses. >> Review of Last WeekWEEK DOWN, YEAR UP... The holiday-shortened trading week on Wall Street ended down for the three major stock indexes, breaking their two-week winning streaks. But for the year that ended Wednesday, it was UP for them all. In 2014, the Dow gained 7.5%, the broadly-based S&P 500 grew 11.4%, and the tech-heavy Nasdaq shot up 13.4%. Many analysts predict these market advances will continue in 2015, as they believe an improving economy will overcome both trading volatility and expected interest rate hikes. But the week just ended slipped, thanks to continuing Eurozone concerns and disappointing U.S. reports.European issues ranged from manufacturing data that missed estimates to Greece's third failed vote for the prime minister's preferred presidential candidate. We're economically connected across the globe today, so Greek political shenanigans do grab the attention of U.S. investors. Negative vibes were also generated here in the U.S. when both the ISM Index of manufacturing and Construction Spending fell short of forecasts. But Pending Home Sales were up, the Case-Shiller Home Price Index reported year-over-year gains, and the four-week average of Initial Unemployment Claims continued to trend about 10,000 lower than a month ago. The week ended with the Dow down 1.2%, to 17833; the S&P 500 down 1.5%, to 2058; and the Nasdaq down 1.7%, to 4727.Over in the bond market, risk averse investors sent prices up. Treasuries gained on the first trading day for the fourth year in a row. The 30YR FNMA 4.0% bond we watch finished the week UP .14, at $106.30. For the week ended December 31, Freddie Mac's Primary Mortgage Market Survey reported national average fixed mortgage rates up a tick. Their chief economist observed, "While mortgage rates edged up this week, they remain near 2014 lows." Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up to the minute information. DID YOU KNOW?... Buying a home is twice as affordable as renting. A national housing website reports home buyers spent about 15% of income on the monthly payment (excluding insurance and taxes), while renters spent nearly 30% of income on rent in Q3 2014. >> This Week’s Forecast WHAT THE FED SAID AND JOBS LOOK OK... The New Year brings us tidings from the Fed in the form of FOMC Minutes from their December 17 meeting. These will be scrutinized for signs of when this year the central bank might begin to raise the Funds Rate. Another big focus will be the December Employment Report, with Nonfarm Payrolls expected down from November's surprising number, but still above the 200,000 threshold. This should be enough to nudge the Unemployment Rate down to 5.7%.>> 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 Jan 5 – Jan 9 DateTime (ET)ReleaseForConsensusPriorImpactTuJan 610:00ISM ServicesDec58.559.3ModerateWJan 708:30Trade BalanceNov–$42.0B–$43.4BModerateWJan 710:30Crude Inventories1/3NA–1.754MModerateWJan 714:00FOMC Minutes12/17NANAHIGHThJan 808:30Initial Unemployment Claims1/3290K298KModerateThJan 808:30Continuing Unemployment Claims12/272.365M2.353MModerateFJan 908:30Average WorkweekDec34.634.6HIGHFJan 908:30Hourly EarningsDec0.2%0.4%HIGHFJan 908:30Nonfarm PayrollsDec250K321KHIGHFJan 908:30Unemployment RateDec5.7%5.8%HIGH >> Federal Reserve Watch Forecasting Federal Reserve policy changes in coming months...Well, folks, 2015 is the year many economists think the Fed will begin raising the Funds Rate. A few see this as early as March, but most estimate it will happen in the second half. Note: In the lower chart, the probability of change is rated "Low" if few economists think the rate will rise, "Moderate" or "High" if more think it will go up.Current Fed Funds Rate: 0%–0.25%After FOMC meeting on:Consensus Jan 280%–0.25%Mar 180%–0.25%Apr 290%–0.25%Probability of change from current policy:After FOMC meeting on:Consensus Jan 28 LowMar 18 LowApr 29 Low

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Ralph and Karen Chiodo

THE CHIODO TEAM - Ralph Chiodo Broker / Owner 610-579-9514 Karen Chiodo Realtor / Owner 610-579-9514 Together Ralph and Karen (and their dedicated Team) have success....

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