>> Market Update
QUOTE OF THE WEEK... "It is only in sorrow bad weather masters us; in joy we face the storm and defy it."--Amelia Barr, British novelist
INFO THAT HITS US WHERE WE LIVE... We hope that in the face of the tragedy of superstorm Sandy, those affected will find joy: in neighbors coming together showing strength in community; in the armies of emergency workers, both professionals and volunteers, toiling around the clock; in the heartfelt support of people across the country, expressed on social networks, via emails, on radio and TV.Our thoughts and prayers go out to all those now struggling to recover. If you'd like to contribute to the relief effort, a good place to start is the American Red Cross at http://www.redcross.org/charitable-donations.
The week, however, was not devoid of housing news. The August 10- and 20-city S&P/Case-Shiller home price indexes showed monthly increases for the fifth month in a row. 17 of the 20 metros tracked also registered annual gains in August, up an average of 2.0% from a year ago. The Federal Housing Finance Agency home price index was up 4.7% from a year ago.This shows prices for homes financed with conventional mortgages returning to June 2004 levels, although still down 15.9% from their April 2007 peak.
BUSINESS TIP OF THE WEEK... Be determined. Most pursuits have so many variables, it's impossible to control how things will unfold. What matters are your end vision and your determination to get there.
>> Review of Last Week
EVERYTHING ON HOLD... The New York Stock Exchange shut down Monday and Tuesday due to superstorm Sandy. The markets stayed on hold in the remaining three days of trading, with stock prices kept in check by lower corporate earnings. Some feel investors are staying quiet as they wait to see which way the election goes. Economic data was mixed, giving no advantage to either candidate. We gained 171,000 jobs in October, slightly better than forecast, and got another 84,000 from upward revisions to prior months.
But the unemployment rate headed back up to 7.9%, and "U-6" unemployment, which includes involuntary part-time workers, is still 14.6%! In addition, hourly earnings fell a bit, and have risen only 1.6% in the last year, not keeping up with inflation. The ISM Manufacturing Index continued to show slight expansion at 51.7, but the Chicago PMI, at 49.9, revealed manufacturing in the Midwest is now contracting. Not surprisingly, Consumer Confidence came in lower that expected.
For the week, theDow ended down 0.1%, to 13093; the S&P 500 was up 0.2%, to 1414; and the Nasdaq was down 0.2%, to 2982.
With mixed economic data and the stock market in a holding pattern, bond prices did not move up much if at all. The FNMA 3.5% bond we watch ended the week up .05 at $106.17. National average mortgage rates remained historically low for all types of conventional loansin Freddie Mac's Primary Mortgage Market Survey. The Mortgage Bankers Association saw purchase loan demand up for the week and up 6% from a year ago.
DID YOU KNOW?... As superstorm Sandy battered the East Coast, tweets and images with the hashtag #Sandy racked up 4 million Twitter mentions with a potential reach of 3 billion people, according to a leading social media monitoring company.
>> This Week’s Forecast
QUIET BUT FOR AN ELECTION... This week doesn't feature many economic reports, but many observers feel the Presidential election on Tuesday will reveal much about where the economy and financial markets are heading. Experts say the contest is too close to call. Prior to the election, the October ISM ServicesIndexshould be down a tick from the prior month but still just over 50, in expansion territory.
After the vote, we'll see Initial Weekly Unemployment Claims andContinuing Claims, expected to be in the elevated territories where they've remained for so long. The September Trade Balance is forecast to increase by over a billion, showing we're still buying their stuff way more than they're buying ours.
>> 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 Nov 5 – Nov 9
| Date |
Time (ET) |
Release |
For |
Consensus |
Prior |
Impact |
M
Nov 5 |
08:30 |
ISM Services Index |
Oct |
55.0 |
55.1 |
Moderate |
W
Nov 7 |
10:30 |
Crude Inventories |
11/3 |
NA |
–2.045M |
Moderate |
Th
Nov 8 |
08:30 |
Initial Unemployment Claims |
11/3 |
370K |
363K |
Moderate |
Th
Nov 8 |
08:30 |
Continuing Unemployment Claims |
10/27 |
3.250M |
3.263M |
Moderate |
Th
Nov 8 |
08:30 |
Trade Balance |
Sep |
–$45.4B |
–$44.2B |
Moderate |
F
Nov 9 |
09:55 |
Univ. of Michigan Consumer Sentiment |
Nov |
83.0 |
82.6 |
Moderate |
>> Federal Reserve Watch
Forecasting Federal Reserve policy changes in coming months... October 24, members of the Fed's Open Market Committee said they expect to keep their target for the Funds Rate at "exceptionally low levels" at least through mid-2015. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.
Current Fed Funds Rate: 0%–0.25%
| After FOMC meeting on: |
Consensus |
| Dec 12 |
0%–0.25% |
| Jan 30 |
0%–0.25% |
| Mar 20 |
0%–0.25% |
Probability of change from current policy:
| After FOMC meeting on: |
Consensus |
| Dec 12 |
<1% |
| Jan 30 |
<1% |
| Mar 20 |
<1% |
|
