Wednesday, December 17, 2014

Stock Market Willies and Real Estate

Real Estate
in an
Upset Stock Market

The stock market has almost been in a free fall in the past week.  It is kind of like it doesn't like the improving real estate sales and upbeat retail sales and related Consumer Confidence.  Normally these factors will push the market higher as all indicate the economy is on the upswing.

Unfortunately, the great fuel prices we are enjoying has investors skiddish about the global economy.  It makes no sense to the rational investor:  high supplies with slight lower demand(due to increase energy efficiency or alternative fuels??) will always depress the price of anything.

The U.S. is pumping more oil than it ever did.  OPEC and other suppliers like Russia are finding that the flush of oil in the market is depressing prices and their economy.  Yet rather than tap the supply as has happened in other periods, OPEC and others are continuing to pump oil, hoping to outlast the low prices and not lose market share.   

It is almost like every one is waiting for someone to blink!!! It will happen and someone will cut off the supply so prices recover! Oh and then there is the concern that the Fed will raise interest rates.

We will yell when the price pops to $3.65 a gallon again.  But we really shouldn't.  We should simply enjoy the low prices at the pump and know the economy is going on fine.

And as Jim Belote notes in his newsletter, interest rates stay near historical lows on mortgages.  Thus, no time like the present to
make a move!!   One never knows with these economy fluctuation if the rates will not get caught up in the "hysteria" and take a bounce up.





Provided to you Exclusively by Jim Belote  
For the week of Dec 15, 2014 | Vol. 12, Issue 50
Jim Belote
Jim Belote
Branch Manager, MBA
Union Mortgage Group
Phone: (757) 395-LOAN
Fax: (757) 351-6471
E-Mail: jim@jimbelote.com
Union Mortgage Group
582 Lynnhaven Parkway, Suite 300
Virginia Beach, VA 23452
In This Issue...
Last Week in Review: Consumer sentiment and retails sales are on the rise, while oil and wholesale inflation are moving lower. What about home loan rates?

Forecast for the Week: The last Fed meeting of the year is ahead, plus news on housing, inflation and manufacturing.

View: Start 2015 right with these great tips for developing your personal brand.
Last Week in Review
"Up, up and away." Consumer sentiment and retail sales may have soared higher, but both wholesale inflation and oil prices are on the decline. What does all of this mean for the markets and home loan rates? Read on for the breakdown.
Consumer sentiment surged to 93.8 in December, reaching the highest level since January 2007 and the recent recession. In line with that sentiment, consumers also opened their wallets in November, spending money on goods ranging from cars to clothing as the holiday shopping season got underway. Retail Sales rose by 0.7 percent in November, which was the fastest rate in eight months.

One thing helping both consumer sentiment and retail sales of late is the continued decline in prices at the pump. In fact, the International Energy Agency recently cut its outlook for global oil demand growth in 2015. The markets have been especially volatile in recent weeks, and this news only added to the volatility. Despite the choppy trading in both Stocks and Bonds, home loan rates (which are tied to Mortgage Bonds) remain near historic lows.

Also of note, thanks to the decline in oil, the November Producer Price Index showed that inflation declined at the wholesale level. This is Bond-friendly news, since inflation reduces the value of fixed investments like Bonds, meaning this is also good news for home loan rates.

The bottom line is that home loan rates remain near some of their best levels of the year, and now is a great time to consider a home purchase or refinance. Let me know if I can answer any questions at all for you or your clients.

Forecast for the Week
Look for key reports on housing, manufacturing and inflation. Plus, the Fed meets.        
  • Monday's Empire State Index and Thursday's Philadelphia Fed Index will be the last major reports from the manufacturing sector in 2014.  
  • In housing news, look for the National Association of Home Builders Housing Market Index on Monday, followed by Housing Starts and Building Permits for November on Tuesday. 
  • On Wednesday, we'll get a read on inflation with the Consumer Price Index
  • As usual, Weekly Initial Jobless Claims will be delivered on Thursday
In addition, the last Federal Open Market Committee meeting of 2014 begins on Tuesday, ending Wednesday with the monetary policy statement being released at 2:00 p.m. EST. Stay tuned, as market volatility is always possible when the Fed meets!

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, the markets have been volatile of late but home loan rates are still hovering near historic lows.  
Chart: Fannie Mae 3.5% Mortgage Bond (Friday Dec 12, 2014)
Japanese Candlestick Chart


The Mortgage Market Guide View...
Build Your Personal Brand
Heading into a new year is the perfect time to think about your personal brand and what you want to be known for.

Get to Know Yourself First
Define the core values that guide your priorities and actions. These could be personal, like balance, family, financial stability or health. Core values are also professional, like accountability, dependability, expertise or innovation. Make a list and pick your top five.

Next, think about your talents and what you enjoy. Think about your expertise. Also identify what you are passionate about.

Once you have your lists, group related items together to find commonalities. For example, you may have identified expertise and professional development as your core values. Your personal brand could be that you are the go-to trainer in your field. If your top values included family, education and accountability, and you are a good leader, your personal brand could be an advocate for quality education.

Understanding what you want to be known for—and building your brand around that—allows you to focus your energy on activities that are meaningful to you.

Promote Your Brand
There are a number of steps you can take to promote your brand. Get involved in civic or professional organizations that allow you to demonstrate and further build your brand. Take on leadership roles in these organizations.

Give presentations in your community or through your associations to reinforce the expertise behind your brand. Blog or submit op-ed pieces to the local newspaper or trade publications.

Make sure your website bio, LinkedIn profile and resume highlight key attributes, certifications and experiences that reinforce your brand.

And finally, network.

Please feel free to pass these great tips along to your team, clients and colleagues!
Source: Inc.com
Economic Calendar for the Week of December 15 - December 19
Date
ET
Economic Report
For
Estimate
Actual
Prior
Impact
Mon. December 15
08:30
Empire State Index
Dec
NA

10.2
HIGH
Mon. December 15
10:00
Housing Market Index
Nov
NA

58
Moderate
Tue. December 16
08:30
Housing Starts
Nov
NA

1009K
Moderate
Tue. December 16
08:30
Building Permits
Nov
NA

1080K
Moderate
Wed. December 17
08:30
Consumer Price Index (CPI)
Nov
NA

0.0%
HIGH
Wed. December 17
08:30
Core Consumer Price Index (CPI)
Nov
NA

0.2%
HIGH
Wed. December 17
02:00
FOMC Meeting
Dec
NA

0.25%
HIGH
Thu. December 18
08:30
Jobless Claims (Initial)
12/13
NA

294K
Moderate
Thu. December 18
10:00
Philadelphia Fed Index
Dec
NA

40.8
HIGH

The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is without errors.
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