Where Is Market Headed?
Why a question? Haven't I said the market has been improving every month for months on end(since mid 2012)? So why start here?
You only have to read Jim Belote's MMG Weekly update to understand. As has been reported for the past two months, February and March followed a January that fell off the December pace.
Though rising interest rates(Jim talks about the pressure on rates once again) had an impact, it really wasn't the big impact.
Just like retail and auto sales, it was the weather!
Yes, home sales can tank when it is more important to dig out the car for the 15th time or having to deal with house bond kids home for another day off school.
As one Lowe's ad boldly states, the snow was a great novelty for the first couple of snowfalls but then became a pain. And if you didn't live were there was much snow, it was bitter cold(yes, Michigan...28 degrees in bitter in Atlanta!). And both cold and snow made buyers and sellers like you think, "I will wait until in warms a bit". Fortunately the Lowe's ad goes on to say Spring temps are here!
As a result, you will get moving to make the move! And so will a thousand if not hundreds of thousands other people will get the move on.
April and May should turn the market upside down. Everybody will be wondering why the the market shoot up!!!
I wonder.
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Provided to you Exclusively by Jim Belote
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For the week of Apr 28, 2014 | Vol. 12, Issue 17
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582 Lynnhaven Parkway, Suite 300
Virginia Beach, VA 23452
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 In This Issue...
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Last Week in Review: Housing reports were front and center, and tensions from overseas impacted the markets.
Forecast for the Week: Look for key reports on housing, inflation, manufacturing and jobs. Plus, the Fed meets.
View: Build stronger connections on LinkedIn with these power-user tips.
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Last Week in Review
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"Reality is the leading cause of stress amongst those in touch with it." Lily Tomlin. The reality of the 2014 housing market is quite different than last year's, according to recent housing reports. New Home Sales for March plunged by 14.5 percent from February to an annual rate of 384,000 units. This was far below the 455,000 expected and the lowest level since July. New Home Sales in March were down 13.3 percent from the same period last year. Existing Home Sales for March didn't fare much better, as they declined by 0.2 percent from February to an annual rate of 4.59 million, just below expectations. This was the slowest pace since July 2012.
In other housing news to note, the Federal Housing Finance Agency (FHFA) reported that its February Home Price Index (HPI) rose by 6.9 percent from the same period last year. This was the weakest reading in 13 months.
What does this mean for home loan rates? Typically good news helps Stocks improve at the expense of Bonds, including Mortgage Bonds (the type of Bonds on which home loan rates are based). However, Bonds and home loan rates were able to benefit last week from the increased tensions between Russia and the Ukraine. This caused investors to move their money into the safe haven of Bonds, helping Mortgage Bonds and home loan rates improve.
Whether these improvements continue could be contingent on several potentially market-moving items in the coming week, including the Jobs Report for April and the Fed's next meeting of the Federal Open Market Committee. Remember that the Fed is now purchasing $30 billion in Treasuries and $25 billion in Mortgage Bonds to help stimulate the economy and housing market. This is down from the original $85 billion per month that the Fed had been purchasing. It will be important to see if the Fed announces additional tapering of these purchases at its upcoming meeting.
The bottom line is that now remains a great time to consider a home purchase or refinance, as home loan rates remain attractive compared to historical levels. Let me know if I can answer any questions at all for you or your clients.
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Forecast for the Week
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This week's economic reports will touch on a large sector of the economy, with several key reports to note.
- Economic data kicks off on Monday with Pending Home Sales for March, followed by the S&P Case-Shiller Home Price Index for February on Tuesday.
- Tuesday also features Consumer Confidence for April.
- In the manufacturing sector, look for Chicago PMI on Wednesday and the ISM Index on Thursday.
- Also on Wednesday, the first reading of Gross Domestic Product for the first quarter of 2014 will be released.
- Thursday brings Personal Income, Personal Spending and Personal Consumption Expenditures, the Fed's favorite measure of inflation. Weekly Initial Jobless Claims will also be delivered as usual.
- That leads us to Friday when one of the most closely-watched economic reports will be released—the Jobs Report for April, which features Non-farm Payrolls and the Unemployment Rate.
In addition, the Fed's next regularly-scheduled meeting of the Federal Open Market Committee begins on Tuesday, with the Policy Statement being delivered Wednesday. It will be important to see if the Fed announces additional tapering to its Bond buying program—and how Bonds and home loan rates react.
Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.
When you see these Bond prices moving higher, it means home loan rates are improving—and when they are moving lower, home loan rates are getting worse.
To go one step further—a red "candle" means that MBS worsened during the day, while a green "candle" means MBS improved during the day. Depending on how dramatic the changes were on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.
As you can see in the chart below, Bonds and home loan rates rebounded late last week. With a potentially volatile week ahead, I'll be watching the markets closely.
Chart: Fannie Mae 4.0% Mortgage Bond (Friday Apr 25, 2014)
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The Mortgage Market Guide View...
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Power-user Tips for LinkedIn
Chances are you know how powerful LinkedIn can be for networking, but like most everything in business there are secrets power-users know to help them stand out from the crowd. Keep these tips in mind as you use LinkedIn to start building stronger connections, even faster.
Be specific! When you ask someone to connect, change the default message, which reads: "I'd like to add you to my professional network on LinkedIn." Instead, personalize your invitation to say something more inviting, or succinctly explain how you know the person or why you want to connect.
It's not personal, it's business. Because LinkedIn is a social media platform for professionals, keep your activity strictly business. If you get into heated discussions frequently, create controversial posts, or act overly casual in your comments, just remember that potential employers or customers could notice.
Give a little bit. The greatest networking principle is to always give first. Endorsing your connections is a quick and easy way to do just that. Not only will endorsing give your connections well-deserved virtual kudos, but it can also help them rank higher in search results—having you to thank for helping them score their next big deal or reach more people!
Timing is everything. Asking a favor immediately after making a connection is as much a faux pas in the virtual world as the real one. Make connections (and then nurture them) well before you need something from them.
Be sincere. Write only genuine recommendations, and write without expecting anything in return. If your connection returns the favor, good for you!
Click here for even more LinkedIn power-user tips and, as always, please feel free to pass these tips along to your team, clients and colleagues.
Economic Calendar for the Week of April 28 - May 02
Date
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ET
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Economic Report
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For
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Estimate
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Actual
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Prior
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Impact
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Mon. April 28
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10:00
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Pending Home Sales
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Mar
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NA
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-0.8%
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Moderate
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Tue. April 29
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09:00
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S&P/Case-Shiller Home Price Index
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Feb
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NA
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13.2%
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Moderate
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Tue. April 29
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10:30
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Consumer Confidence
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Apr
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83.0
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82.3
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Moderate
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Wed. April 30
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02:00
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FOMC Meeting
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Apr
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NA
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0.25%
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HIGH
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Wed. April 30
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09:45
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Chicago PMI
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Apr
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55.4
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55.9
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HIGH
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Wed. April 30
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08:30
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Employment Cost Index (ECI)
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Q1
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NA
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0.5%
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HIGH
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Wed. April 30
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08:30
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GDP Chain Deflator
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Q1
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NA
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1.6%
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HIGH
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Wed. April 30
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08:30
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Gross Domestic Product (GDP)
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Q1
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NA
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2.6%
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HIGH
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Wed. April 30
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08:15
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ADP National Employment Report
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Apr
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NA
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191K
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HIGH
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Thu. May 01
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10:00
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ISM Index
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Apr
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54.3
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53.7
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HIGH
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Thu. May 01
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08:30
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Personal Consumption Expenditures and Core PCE
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YOY
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NA
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1.1%
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HIGH
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Thu. May 01
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08:30
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Personal Consumption Expenditures and Core PCE
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Mar
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NA
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0.1%
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HIGH
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Thu. May 01
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08:30
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Personal Spending
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Mar
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0.6%
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0.3%
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Moderate
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Thu. May 01
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08:30
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Personal Income
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Mar
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0.5%
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0.3%
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