The Weekly Rap! Friday July 27, 2012

The Dow is currently trading at 13,010 up 67 pts over last week, a level not seen since May.  The S&P 500 is trading at the same level at 1,376.   Gold is trading at $1,621 an ounce, while oil futures at $89.99 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $3.41/Gal. 

Yields on 10-year notes, which move inversely to prices, are trading at 1.49%.  30-year bond yields are trading at 2.59%.  Mortgages or FNMA 3.5% MBS (Mortgage Backed Security) is currently at 105.875, amazingly holding these levels all week.  It’s a great time to lock in a rate if you can, while we’ve through the top of the current range (104 to 105) if we can’t sustain higher levels we will likely correct to the middle of the range.  Basically each percent change in the price of the security translates to the price (or points paid or credited) of the mortgage rate. 

In economic news this week; I’ve been saying this for oh a year or so; “less negative is the new positive.”  There’s an index that the Chicago Fed puts out that comprises the weighted averages of 85 economic indicators.  Both the three- and one-month indexes of the Chicago Fed’s national activity index were “less negative” in June. The three-month average “rose” to -0.20 from -0.38 in May, while the one-month index rose to -0.15 from -0.48 in May. A zero reading is associated with trend growth, while a reading below -0.70 signals the increasing likelihood a recession has begun.  So according to this we’re not growing but not retracting either.

The number of people who filed applications for unemployment benefits fell sharply last week, marking the third straight week of big swings related to changing employment patterns in the auto industry. The economy took a turn for the worse in the spring as consumers slowed spending and businesses invested at a slower pace, with little sign growth will sharply accelerate anytime soon.  Gross domestic product, the value of all goods and services produced in the U.S., rose at a sluggish 1.5% clip in the second quarter. The sluggish economy, combined with falling gas prices, kept inflation in check. A measure of inflation linked to consumer prices fell to 1.8% from 2.4% in the prior quarter.

Home prices climbed 0.8% in May, following a revised 0.7% increase in April. From May 2011 to May 2012, prices rose 3.7%, although the index is still 17% below its all-time peak set in April 2007. The FHFA purchase-only index is based on transactions bought or guaranteed by Fannie Mae or Freddie Mac. Although I don’t put much credibility in Zillow, they said home prices rose 0.2% in the second quarter compared to one year ago, marking the first year-over-year increase since 2007.  Zillow also said it believes the housing market hit bottom earlier in the year and is now on the rise.

On a national level, pending home sales slipped 1.4% at 99.3 in June. Buyer interest remains strong but fewer home listings mean fewer contract signing opportunities.  With so many home owners owing at or more that their home is worth, even if they would like to make a move they are restricted by their current loan and value of their home.  Also delays in the foreclosure process are holding up sales. Compared to the same period in 2011, pending home sales were up 9.5%, marking the 14th straight month of year-on-year gains. A sale is listed as pending when the contract has been signed but the transaction has not closed, and an index of 100 is equal to the average level of contract activity during 2001.

And now for the Rant:  Really?  Did you know that is against many schools policy to apply sunscreen to children while at school?  So many rules are created to keep from being sued by a parent, but common sense has gone out the window!  According to most statewide laws, teachers are not allowed to apply sunscreen to students and students can only apply it to themselves if they have a doctor’s note.  Luckily California is the only state that allows application of sunscreen.

One child remarked that their teacher used sunscreen in her presence and that it was ‘just for her.’ So, is this an issue of passive, inactive supervision? Where is the collective awareness for student safety?” At the very least, a hat might have protected the girls, but, alas, hats are not allowed at school, even on field day.  Even if you were to apply sunscreen to your child before heading off to school it wouldn’t be effective (the AAP recommends applying sunscreen with an SPF of at least 15 every two hours). 

We have no many laws that in my opinion are written to keep from being sued as opposed to safety.  There is a point of diminishing returns even in the disclaimers of products.  Have you noticed that the disclaimers and disclosures have gotten so long that no one bothers to read them?  This is my reality show!  It’s my opinion and I’m sticking to it!

If you know anyone who can benefit from having a trusted Mortgage Advisor, please call me.  My greatest goal is to see clients and friends happy.  I guess that’s why I love providing mortgage financing.  It’s an immediate gratification when you can help someone purchase a home, or lower their payment on their existing home.

For additional information please visit my Stanford Mortgage website:

http://bill.bartok.stanfordloans.com/agents/Blog

Sincerely,

Bill Bartok

Mortgage Advisor

The Weekly Rap! Friday July 20, 2012

The Dow is currently trading at 12,943 up 208 pts over last week The S&P 500 is higher as well by 23 pts at 1,376.   Gold is trading at $1,582 an ounce, while oil futures at $92.12 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $3.41/Gal.

Yields on 10-year notes, which move inversely to prices, are trading at 1.49%.  30-year bond yields are trading at 2.59%.  Mortgages or FNMA 3.5% MBS (Mortgage Backed Security) is currently at 105.96, amazingly holding these levels all week.  It’s a great time to lock in a rate if you can, while we’ve through the top of the current range (104 to 105) if we can’t sustain higher levels we will likely correct to the middle of the range.  Basically each percent change in the price of the security translates to the price (or points paid or credited) of the mortgage rate.

In economic news this week; U.S. retail sales fell 0.5%in June for the third straight month as consumers cut spending on most goods and services, reflecting a sharp slowdown in economic growth in the second quarter.  The last time the U.S. experienced three straight monthly drops in retail spending was in the second half of 2008. Without stronger retail sales, the economy can’t expand faster and dramatically lower the nation’s high 8.2% unemployment rate. Retail spending accounts for more than two-thirds of our economic growth.

Consumer prices or inflation, flattened out in June as declining energy costs offset an increase in the price of meat, vegetables and other foods.  Excluding food and gas, core consumer prices rose 0.2% in June.  Lower inflation gives the Fed more room to adopt additional measures to boost the economy. Consumer prices have eased considerably as the spike in energy costs earlier in the year unwinds.

Home-builder sentiment in July is higher, the most in close to a decade to bring the level to the highest point since the recession. Builder confidence for newly built, single-family homes climbed 6 points to 35, the highest level since March 2007. The index is designed so that a reading of 50 is considered to be good, which hasn’t been the case since April 2006.  Housing starts rose 6.9% to an annual rate of 760,000 last month from 711,000 in May.

On the national level, sales of existing homes fell in June to the slowest pace since October, a decline that goes against the grain of more positive indicators from the housing market.  There are millions of homes either still tied up in the legal process surrounding foreclosure or which at some stage will likely be in foreclosure (mortgage delinquencies, while declining, are still very high), and these units are not yet recorded as available for sale.  We know inventories are down, my guess is that while many people might like to sell many are under water or would have to short sell and that’s keeping them from listing.

In testimony to the Senate Banking Committee Fed Chief Bernanke sketched out for members of Congress the weaker economic outlook and stressed that the central bank was prepared to take further action to try to give the recovery a jolt. Bernanke said that the reduction in the unemployment rate will likely be “frustratingly slow.”  The Fed pushed rates down to a range between 0% and 0.25% in December 2008 and since then has had to rely on extraordinary steps to help the economy. The Fed’s balance sheet consists of nearly $3 trillion in Treasurys and housing-related assets as the central bank has bought securities to try to lower long-term interest rates.  At the moment, the Fed says it is likely to keep rates extraordinarily low until late 2014.

And now for the Rant:  Siri, can I text while driving in California?  Not yet, but starting next year it will be legal – as long as you don’t touch your phone.  And there’s where it gets fuzzy.  I recently upgraded to an iPhone 4s mostly because of Siri.  I hate texting personally.  My thumbs are too big and it takes me longer to complete a conversation than if I’m talking.  Call me old- school.  I like the fact that I can use my Bluetooth and tell Siri to text or read a text without taking my eyes off the road.

Starting Jan. 1, a new revision to the texting law (which I wholly support) will allow you to send, dictate and listen to text message while driving, but only if you’re using a separate, voice-activated device that’s connected to your phone – something like a headset or Bluetooth earpiece or a program inside your car like OnStar.  Just turn on the device, say “text mom” and talk out the message.

But the “grey area” here seems to be what constitutes “hands free.”   The CHP says that just the act of turning on the phone or selecting the phone’s hands-free text app, like pushing the Siri button or Google apps on Android phones, is enough to warrant flashing lights in your rear-view mirror and a $100-plus ticket. Same thing goes for using your phone to read texts.

Apparently your phone is off limits, don’t touch it.  But it’s legal to touch fancy digital stuff in your car including the radio and GPS devise and behind your ear that connect to your phone – and apps like Siri – to talk and soon text by voice.  Apparently there’s an App called “Hands-free Control” that when you say a keyword like “Siri” it will activate.  When I find it I will pass it along.  This is my reality show!  It’s my opinion and I’m sticking to it!

If you know anyone who can benefit from my services, please call me.  My greatest goal is to see clients and friends happy.  I guess that’s why I love providing mortgage financing.  It’s an immediate gratification when you can help someone purchase a home, or lower their payment on their existing home.

Bill

The Weekly Rap! Friday July 6, 2012

The Dow is currently trading at 12,735 up just 17 pts over last week The S&P 500 is lower as well by 2 pts at 1,353.   Gold is trading at $1,590 an ounce, while oil futures at $86.80 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $3.44/Gal. 

Yields on 10-year notes, which move inversely to prices, are trading at 1.49%.  30-year bond yields are trading at 2.58%.  Mortgages or FNMA 3.5% MBS (Mortgage Backed Security) is currently at 105.72, having hit an all time high of 106.06 midweek.  It’s a great time to lock in a rate if you can, while we’ve through the top of the current range (104 to 105) if we can’t sustain higher levels we will likely correct to the middle of the range.  Basically each percent change in the price of the security translates to the price (or points paid or credited) of the mortgage rate. 

In economic news this week; U.S. consumers increased their debt in May by a seasonally adjusted $17.1 billion, the largest increase since last December.  This is the ninth-straight monthly gain in consumer borrowing. Consumer sentiment is the lowest since December, with job concerns hitting results.  The consumer-sentiment index fell to a preliminary July reading of 72 from 73.2 in June. The sentiment gauge, which covers how consumers view their personal finances as well as business and buying conditions, averaged about 87 in the year before the most recent recession.

The U.S. government ran a budget deficit of $60 billion in June, pushing the deficit to $904 billion for the first nine months of fiscal 2012. The Federal government spent $320 billion in June, 9.2% above the year-ago period. Receipts rose 4% to $260 billion.  I’m fighting the urge to rant about this but then again it’s nothing new.  It’s month after month and no one seems to care.

Wholesale prices rose slightly in June as higher costs of food, trucks and appliances offset another decline in energy costs.  The producer price index rose 0.1% last month. Energy costs, thankfully, fell again, the fourth straight month decline, as the cost of electric power, home heating oil, diesel and propane all declined. The energy index dropped 0.9%.  The lower cost of fuel is a plus for the economy at large, giving consumers more money to save or spend on other things. Energy is a major household cost.

The big news, if you can call it that, was the release of the Fed minutes from their meeting three weeks ago.  Only a few Fed Gods thought that more asset purchases would be necessary, and several others said more action could be warranted if economic conditions deteriorated. The Fed Gods generally agreed that economic growth would remain moderate over coming quarters and then pick up very gradually. Since the meeting, there has been weak reports for manufacturing and unemployment for June, which may have pushed more Fed officials to support more easing.

On another note, Our oldest daughter turned 18 today so we are off you watch her “skydive” into adulthood literally, and then she’s off to the tattoo parlor to get her first “tat.”  She says it’s her first adult decision that no one can tell her she can’t do.  Normally I’d be scared but she’s an honors student, very well grounded (other than today’s skydiving stunt) and headed off to Western Washington University in September.  We’re very proud of her.  By the way our other daughter who’s 12 has a can of paint ready for her room the minute she’s gone.

If you know anyone who can benefit from having a great Mortgage Advisor, please call me.  My greatest goal is to see clients and friends happy.  I guess that’s why I love providing mortgage financing.  It’s an immediate gratification when you can help someone purchase a home, or lower their payment on their existing home.

Bill

Hello World! First Blog 7-11-12

So I’ve finally decided to write a blog.  Why not, everybody’s doing it in one form or another, right?  Facebook is for silly stuff your friends are doing, Linkedin is more on the serious side, and twitter, well lets just say some folks just have too much time on their hands.

We all have things we are interested in, they’re called passions.  I happen to have three; Food, I’ve been cooking since I was 12, Wine, I’ve been drinking since…,  and Finance, I’ve been an Advisor for 20 years.  So I’ve decided to share these passions with you my readers.

I will be picking a different topic; New recipes I’ve created or found, Wines that I’ve tasted and pairings I’ve put with them, and financial topics that I believe you can benefit from.  Each Friday I post a “Weekly Rap” piece that summarizes the weeks economic events with an occasional rant on a random subject.  Please feel free to leave a reply.

So stay tuned.  The best is yet to come.  You can almost taste it!

Bill