The Weekly Rap! Friday Nov 22nd, 2013

Happy Friday everyone,

The National Debt is currently: $17,175,096,615,579.00  I post this so we will be aware of what we are leaving the next generation.

The Dow last traded at 16,025 another all-time high.  The S&P 500 is trading at 1,802 also another all-time high.  Gold is trading at $1,244 an ounce, while oil futures at $95.06 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $3.25/Gal.

Yields on 10-year Treasury notes, which move inversely to prices, last traded at 2.75%.  30-year Treasury Bond yields last traded at 3.83%.  Rates on 30-year fixed-rate mortgages are a hair above 4.375% this week. MBS yields are interest rates at which banks sell their loans into Fannie Mae and Freddie Mac bond programs. Rising yields mean higher consumer-mortgage rates.

The FNMA 30-year fixed 3.5% coupon, containing 3.75% – 4.125% mortgages, pretty much the benchmark or how rate sheets are priced these days  is currently trading at 101.15 about a .25 points (fee) worse in price than where we were last Friday at this time.  Basically each percent change in the price of the security translates to the price (or points paid or credited) of the mortgage rate.  The higher the number (price), the better the rate.

In economic news this week; the reader’s digest version is the economy is still crawling forward albeit at a snail’s pace.  Manufacturing slowed a bit, inflation fell slightly, retail sales inched a bit higher, employment seems to be improving, and housing is pulling back a bit.

The Philadelphia Fed’s manufacturing index slowed to a reading of 6.5 in November from 19.8 in October. Readings on general activity, new orders, shipments, and employment were positive but slowed from October. The index has been in positive territory for six straight months.

Lower gasoline prices likely freed up some cash for consumers in October, and they appear to have tuned out the drama in DC and gone shopping.  Apparently the government shutdown in October did not deter consumers from showing up in auto showrooms and other stores:  Retail sales rose 0.4% last month at the fastest pace since July.  Retail sales account for about one-third of consumer spending, the main engine of economic growth.  Yet over the past year retail sales have risen at a mild 3.9% pace, less than the 6.3% annual average in the U.S. going back to 1980.

On the inflation front:  Consumer or Retail prices in the U.S. fell slightly in October because of a decline in energy costs, pulling down the annual pace of inflation to the lowest rate since 2009.   The decline in consumer prices, the first since April, is yet another sign that inflationary pressure in the economy is largely absent for now.  Over the past 12 months consumer prices have risen just 1%, the smallest increase since October 2009.  Although low inflation is good for an economy, severe economic distress can occur when inflation turns into deflation, or falling prices. The core CPI, which excludes volatile food and energy costs, rose 0.1% in October.

Wholesale prices fell 0.2% in October, marking the second straight decline and reflecting the lack of inflationary pressure in the economy.  Over the past 12 months wholesale costs have risen a scant 0.3%, the same as in September. Energy costs fell 1.5% last month, led by declines in gasoline and natural gas. Yet the food index rose 0.8% in what was the biggest monthly gain since March. Excluding the volatile categories of food and energy, core wholesale prices rose 0.2%, and they are up just 1.4% over the past 12 months.

On the Real Estate front:  The National Association of Home Builders/Wells Fargo housing-market index , a gauge of home-builder confidence, was 54 in November, matching a downwardly revised reading for October, the lowest in four months, as sales expectations for single-family homes slightly declined .  Results above 50 signals that builders are generally optimistic about sales trends.  November’s pause comes after the index declined for two months, though the confidence gauge is still up 20% from a year ago.

The National Association of Realtors reported that sales of existing homes fell 3.2% in October, marking a second month of declines to the slowest pace in four months as rising mortgage rates and prices cut affordability.  The sales pace in October was up 6% from the year-earlier period, a sharp drop from annual growth of more than 10% in September.

Although mortgage rates have been trending higher over the past six months, they remain relatively low. The average rate for a 30-year fixed rate mortgage recently hit 4.35%, up one percentage point from early May, but below an average of almost 7% over the decade leading up to the housing bubble’s peak.

On the Employment front:  The Labor Department reported the number of new applications for unemployment benefits fell by 21,000 to 323,000 last week, putting new claims at their lowest level since late September.  The average of new claims over the past month, a more reliable gauge than the volatile weekly number, dropped by 6,750 to 338,500.

Job openings at U.S. workplaces rose 1.82% in September from August, the U.S. Department of Labor reported.. Compared with same period in the prior year, September’s job openings rose 8.6%.  With 11.26 million unemployed people in September, there were about 2.9 potential job seekers per opening.  In September 2012, there were 3.4 potential seekers per opening.  When the recession began in December 2007, there were less than two potential job seekers per opening.  Employment seems to be getting better but at a snail’s pace.

You can visit my corporate website at: http://bill.bartok.stanfordloans.com
Sincerely,

Bill Bartok

Mortgage Advisor MLO# 445991

The nicest compliment I can receive is the referral of your family, friends and co-workers.

Thank you!

The Weekly Rap! Friday Nov 15th, 2013

Happy Friday,

The National Debt is currently: $17,143,678,369,783.00 I post this so we will be aware of what we are leaving the next generation.

The Dow last traded at 15,924.  The S&P 500 is trading at 1,792.  Gold is trading at $1,288 an ounce, while oil futures at $93.90 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $3.29/Gal.

Yields on 10-year Treasury notes, which move inversely to prices, last traded at 2.71%.  30-year Treasury Bond yields last traded at 3.80%.  Rates on 30-year fixed-rate mortgages are a hair above 4.375% this week. MBS yields are interest rates at which banks sell their loans into Fannie Mae and Freddie Mac bond programs. Rising yields mean higher consumer-mortgage rates.

The FNMA 30-year fixed 3.5% coupon, containing 3.75% – 4.125% mortgages, pretty much the benchmark or how rate sheets are priced these days  is currently trading at 101.43 about a .50 points (fee) better in price than where we were last Friday at this time.  Basically each percent change in the price of the security translates to the price (or points paid or credited) of the mortgage rate.  The higher the number (price), the better the rate.

In economic news this week; the reader’s digest version is there was no much in the way of news this week other than the U.S. dollar fell, while gold and Treasurys rose, after the nominee to head the Federal Reserve Janet Yellen suggested that the central bank needs to continue supporting the economy with stimulus.  Stocks also edged higher, after benchmarks closed the trading day at record highs.  In a statement released late Wednesday, she said that the job market and economy are “performing far short of their expectations.

According to the National Federation of Independent Business’s small-business optimism index, (now that’s a mouthful), small-business optimism dropped to 91.6 in October from 93.9 in September following the government shutdown.  This is the lowest reading since April with seven of the ten components negative. The biggest drop came from those who expect the economy to improve, which dropped 7 percentage points to a net negative 17%.  The average value since the recovery started is 91.

Our government began its latest fiscal year (from October to September) in the red, posting a budget deficit of $92 billion for the month of October.  The government spent $291 billion and brought in $199 billion in receipts.  OK so October, the first month of the government’s fiscal year, is usually a deficit month since there are no major payments due.  Even so, receipts or income was a record for October, up 8% from the same month a year ago on stronger individual and corporate taxes. The government is operating on a budget that expires on Jan. 15 based on their “kicking-the-can” down the road fiscal policy used to get the government back open and avoiding default on our debt.  Without new spending approved before then, the government would partially shut down AGAIN.  Lawmakers have pledged to avoid a shutdown like the one that occurred from Oct. 1-16, and a bipartisan group of lawmakers has been meeting to hammer out a deal.  Really???

On the Employment front:  The number of people who filed new applications last week to receive unemployment benefits fell for a fifth week in a row, but they remained above end-of-summer levels.  Initial jobless claims dropped by 2,000 to 339,000 last week.  Claims are seen as good proxy for layoffs, though they reveal less about hiring trends.

Mini Rant for the week: The plot line goes like this: The economy slows due to falling excessive debt burdens, and debt deleveraging.  Our politicians step in with increasingly aggressive monetary and fiscal stimulus.  The stimulus works for short period, after which it wears off, and the economy slumps again.  Then governments stimulate again, upping the ante.  We’re now in QE3 (That’s quantitative easing #3).  With each reiteration of the story, someone throws a different dress on the pig, and adds more lipstick before pushing it back out in front of the people like it’s the next best thing since sliced bread.  We’re now into year 5.  But none of them bother to ask the question: How long can this go on?

Given slowing demographic trends (we have an aging population) and ever higher debt burdens, governments will have to continue upping stimulus programs for another 10 years!  This is simply not sustainable.  We’re talking about the government growing its debt to $30 trillion by 2023… a Fed balance sheet of $15 trillion versus $4 trillion today.  The thing is that stimulus is Americans’ drug of choice, and like any drug, the more you use, the less effective it is.  Stay tuned…

I have been working with a great credit repair specialist for some time and she shares a “tip or the week” that I thought I would also share.  Please let me know what you think.  Her name is Pamela Standlee, Owner of Credit ComeBack and can be reached at Pam@CreditComeBack.org in Folsom Ca.

Does a divorce decree automatically sever joint accounts?

NO.  A judge may have rubber-stamped your plans to divide credit card, car and house payments, but that carries absolutely no legal weight with the creditors themselves.  Divorcing parties must contact the creditors and either close current accounts or have the ex-wife/husband sign a letter of consent for this action. Creditors typically do a credit check on your name and if they don’t deem you financially stable to assume that $30,000 car loan, for instance, they won’t agree to remove the other person from the account.

You can visit my corporate website at: http://bill.bartok.stanfordloans.com

Sincerely,

Bill Bartok

Mortgage AdvisorMLO# 445991

The nicest compliment I can receive is the referral of your family, friends and co-workers.

Thank you!

The Weekly Rap! Friday Nov 8th, 2013

Happy Friday,

The National Debt is currently: $17,135,306,836,783.00  I post this so we will be aware of what we are leaving the next generation.

The Dow last traded at 15,703.  The S&P 500 is trading at 1,734.  Gold is trading at $1,284 an ounce, while oil futures at $94.68 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $3.29/Gal.

Yields on 10-year Treasury notes, which move inversely to prices, last traded at 2.75%.  30-year Treasury Bond yields last traded at 3.84%.  Rates on 30-year fixed-rate mortgages are a hair above 4.25% this week. MBS yields are interest rates at which banks sell their loans into Fannie Mae and Freddie Mac bond programs. Rising yields mean higher consumer-mortgage rates.

The FNMA 30-year fixed 3.5% coupon, containing 3.75% – 4.125% mortgages, pretty much the benchmark or how rate sheets are priced these days  is currently trading at 100.93 about a 1.25 points (fee) worse in price than where we were last Friday at this time mostly due to the better than expected jobs report this morning. Basically each percent change in the price of the security translates to the price (or points paid or credited) of the mortgage rate.  The higher the number (price), the better the rate.

In economic news this week; the reader’s digest version is we saw a good jobs report this morning based on past reports. That is based on the last years jobs numbers this one looks good.  But we still have a long way to go.  We should be seeing double or triple these numbers to truly see an economic recovery.

The Commerce Department reported that Factory orders rose (the report used the term “jumped” but I like to be more realistic) 1.7% in September to $490.8 billion. The agency also revealed for the first time that August orders fell 0.1% — that release was shelved due to the government shutdown.

A survey of 73 domestic and 22 foreign banks operating in the U.S. shows that lending terms eased up, but due to increased competition.  The Fed’s senior loan officer survey shows that banks made it easier to get commercial real-estate loans but did not substantially ease their terms to households.

Consumers spending tapered off slightly in September.  Consumer spending rose 0.2% in September, down from a 0.3% gain in August.  The rise in consumer incomes is barely outpacing inflation.

A gauge of consumer sentiment fell this month to the lowest level in almost two years, surprising economists who had expected sunnier views now that the government shutdown is over, according to data released Friday. The preliminary November reading of the University of Michigan/Thomson Reuters consumer-sentiment index hit 72, the lowest level since December 2011, from a final October reading of 73.2.

On the Real Estate front:  On a national level: Home prices ticked up in September, pushing annual growth to the fastest pace since early 2006.  In September, about five years after the housing crisis started, home prices rose 0.2%, while the annual pace reached 12%, according to CoreLogic. National home prices in September were about 17.4% below a peak level, but continued to increase, supported by pent-up demand and relatively low inventory.

On the Employment front:  The Labor Department reported total non-farm payroll employment increased by 204,000 in October.  Job growth averaged 190,000 per month over last 12 months. In October, job gains occurred in leisure and hospitality, retail trade, professional and technical services, manufacturing, and health care. Federal government employment continued to trend down. There were no discernible impacts of the partial federal government shutdown on the estimates of employment, hours, and earnings. Hiring for September and August was revised up by a combined 60,000 jobs,. The revised gains along with the big increase in hiring in October suggested the economy might have more strength than previously thought.  But again this is one month and we need to see a better trend in order to truly see economic growth.

The unemployment rate ticked up to 7.3% from 7.2% in what was likely a residue of the government shutdown. Federal workers were classified as unemployed under the government’s method for calculating the unemployment rate.

Being the cynic that I am, (I tend to question most things) the surprising increase in overall jobs raises questions about whether the shutdown distorted the government’s normal process of collecting data. Read: How believable is the jobs report?

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.

Sincerely,

Bill Bartok

Mortgage Advisor MLO# 445991

The nicest compliment I can receive is the referral of your family, friends and co-workers.

The Organic Movement and our right to know what we’re eating!

Happy Friday,

I must say that I am really excited to see the expansive nature of the “Organic Movement” (for lack of a better term).  Many years ago we scoffed at “the Co-opp” labeling the people who shopped there as “hippies.” Maybe because it was a familiar feeling.  But now more and more of us are realizing that there is more to this “Organic Movement” that previously thought.

Let’s see if we understand this; Organic means the food is grown without being genetically modified (more on this later in the rant), it has been grown without any pesticides, chemicals, antibiotics, or non-natural processes… in other words healthy?

Being a trained Chef and having cooked all my life it is my firm belief that our bodies are designed to digest and process foods that are made naturally.  They have been conditioned to do so for centuries. When you introduce a foreign substance (GMO foods. processed and chemically altered) the body has to stop, and figure out how to process and what to do with the new substance.  The only way around this is to either grow your own or eat organically grown meat and produce.

The problem with this is that it is more expensive.  Why is that you ask?  Well if you really think about it, if we hadn’t processed our food so the producing companies could make more money we wouldn’t be in this predicament.  I’ve stated this before, that everything in our society if you think about it revolved around two things; Money and power.  The more money you have the more power you get and vice versa.  The food companies live by this principal.  It’s all about making a product faster, easier, and cheaper.  That way they make more money.  Now there’s nothing wrong with this principal as long as it does no harm to anyone.

Way back when…  I was a college student at UC Davis majoring in Genetic Engineering before there was a Genetic Engineering major.  I had to go to the Dean and write my own.  But I digress…  I point this out because part of the reason I changed my major was that I would have dreams of curing Cancer, and at the same time creating blond-haired blue-eyed babies.  You see there is a Ying and Yang or balance to everything we do.  There are consequences to our actions.

I’m sure you’ve no doubt used a product called Crisco Shortening.  Crisco is a brand of shortening, which is basically making oil into a solid through hydrogenation, and was introduced in June 1911 by Procter & Gamble.  It was the first shortening to be made entirely of vegetable oil.  Consumption of trans-fats through “partial” hydrogenation we have recently learned, increases the risk of coronary heart disease by raising levels of “bad cholesterol”) LDL, and lowering levels of the “good cholesterol” HDL.  The point of this is that back in 1911 this was not known and Crisco pretty much replaced Butter and Lard (natural Pork Fat) as the “safe” alternative.  Crisco is now made without Trans-Fat.

Here’s the problem with genetically altered plants.  They alter them so they will be resistant to pesticides and herbicides or poisons that kill weeds and insects.  When a plant is resistant you spray or soak the plant with Roundup or multiple pesticides and herbicides.  But you can’t wash off what gets into the plant or the poison that was injected into the plant to make it resistant in the first place.

You’ve no doubt heard of the company Monsanto.  Well they are pretty much at the center of all of this mess.  They have been altering the DNA of many plants and substances for many years. They are the leading producer of genetically engineered (GE) seed and of the herbicide labeled “Roundup” and In 2007 Roundup was the most used herbicide in the United States agricultural sector, with 180 to 185 million pounds.  The company also formerly manufactured controversial products such as the insecticide DDT, PCBs, Agent Orange, and recombinant bovine somatotropin (a.k.a. bovine growth hormone).

Monsanto’s genetically engineered, herbicide-resistant alfalfa is virtually guaranteed to contaminate the alfalfa fed to even organic animals; guaranteed to lead to massive poisoning of farm workers and destruction of the essential soil food web by the toxic herbicide, Roundup.

This past Saturday thousands took to streets across the world’s cities to protest the use of GMO products, with giant Monsanto being the main target. Over 50 countries have been taking part in the march for world food day, and across 47 different US states.  Costco now has a whole section of the store devoted to Organic products.  If you’ve ever been in a Whole Foods Market you know it is an amazing place to shop and it’s getting busier every day as we realize how important it is to eat healthy.

Whole Foods has recognized consumers’ right to know about GMOs.  In March, Whole Foods Market set a deadline that all products in their US and Canadian stores must be labeled to indicate whether they contain genetically modified organisms (GMOs) by 2018.

We have for far too long been denied basic information which would enable us to make safe, healthy food choices.  Monsanto and the rest of the biotech industry have been deceiving consumers since they first conspired more than 20 years ago with the U.S. Food & Drug Administration to falsely convince consumers that genetically modified foods are no different than foods that don’t contain organisms created by manipulating DNA in laboratories or by injecting seeds with bacteria and pesticides.

As was the case in California’s Proposition 37 campaign, biotech companies funneled cash into Washington to support the no on I-522 side of things.  Bayer Crop Science, DuPont, Dow, Grocery Manufactures Association and, of course, Monsanto, have all pitched in. Dow’s contribution of just $23,531 is at the low end of the spectrum, just a slight percentage of the $4,834,411 Monsanto has kicked in—the top donation.  To no surprise the measure was defeated.  Money and power wins again.

I think it will come down to this: Those with clean products will voluntarily label them and those with GMO processed ingredients will not.  That is the only way we will know.

I’ll get off my soapbox now.  Eat healthy!

Sincerely,

Bill Bartok

The Weekly Rap! Friday Nov 1st, 2013

Happy Friday,

The National Debt is currently: $17,075,739,815,861.00

Daylight Saving Time is one of the universe’s great mysteries, like the afterlife, or who really killed JFK. It’s one of the things you assumed you’d never understand.  Then again do we really need too?  It’s this weekend (Saturday night going into Sunday, to be exact). And since we spring forward and fall back, we’ll all be setting our clocks back Sunday fall morning to get an extra hour of sleep or whatever you choose to do with it. Like all great mysteries, the answers only beget more questions: Does your iPhone automatically update for Daylight Saving Time?

The Dow last traded at 15,556.  The S&P 500 is trading at 1,754.  Gold is trading at $1,315 an ounce, while oil futures at $95.09 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $3.37/Gal.

Yields on 10-year Treasury notes, which move inversely to prices, last traded at 2.60%.  30-year Treasury Bond yields last traded at 3.69%.  Rates on 30-year fixed-rate mortgages are a hair above 4.25% this week. MBS yields are interest rates at which banks sell their loans into Fannie Mae and Freddie Mac bond programs. Rising yields mean higher consumer-mortgage rates.

The FNMA 30-year fixed 3.5% coupon, containing 3.75% – 4.125% mortgages, pretty much the benchmark or how rate sheets are priced these days  is currently trading at 102.68 about a .68 point (fee) better in price than where we were last Friday at this time.  We were able to break out of the recent trading range we’ve been in for the last few months meaning we are seeing lower rates with the potential to go even lower.  Basically each percent change in the price of the security translates to the price (or points paid or credited) of the mortgage rate.  The higher the number (price), the better the rate.

In economic news this week; the reader’s digest version is there is a plethora of economic news released this week mostly delayed due to the Governments shutdown so get your popcorn ready.

Industrial production in September had a 0.6% increase in September, but the reality is this is the biggest monthly gain in seven months. Overall industrial production increased at a 2.3% annualized growth rate in the third quarter. While not strong, it’s better than the 1.1% gain in the second quarter.  These gains are at least on the positive side but still anemic compared to where we should be if we are in an economic recovery.

The Chicago purchasing managers index, while limited to the Chicago area, rose to 65.9% in October from 55.7% in September, to mark the best performance since March 2011.  Any reading above 50 indicates expansion. This is an indication that companies were seemingly unaffected by the government shutdown.  The gain in the headline index is the biggest in 30 years. On a national level, the Markit’s U.S. manufacturing purchasing managers’ index increased slightly to 51.8 in October below 52.8 in September.

Prices of wholesale goods fell slightly (0.1%) in September because of a sharp drop in the cost of food and inflation at the producer level fell to the lowest annual rate in four years. Excluding the volatile categories of food and energy, core wholesale prices edged up 0.1%.  My take on this is that inflation is taking a very, very long nap.

On the consumer side, prices rose slightly in September because of higher costs for medical care, shelter and all forms of fuel, but there was barely a whiff of inflationary pressure in the broader economy.  Separately, the Labor Department said the CPI gauge on which the annual cost-of-living adjustment to Social Security is based rose 1.5%.  The Social Security Administration confirmed on Wednesday that the increase for 2014 will be 1.5%, down from 1.7% for 2013.

Retail sales fell 0.1% in September for the first time in six months, but the decline mostly stemmed from a drop-off in auto purchases that could prove temporary.  Sales in most other retail businesses rose, indicating that consumers did not cut back much on spending in the month prior to the government shutdown.

Not surprisingly, the bottom fell out of consumers’ economic expectations this month, plunging a gauge of their confidence to the lowest level in half a year, as Washington’s partisan bickering shut down the government and worried global investors. The Conference Board, a research association, reported that its gauge of consumer confidence fell to 71.2 in October from 80.2 in September.

On the Real Estate front:  Pending sales of homes dropped 5.6% in September, and were down 1.2% from a year ago, according to the National Association of Realtors. September is the first period in more than two years that pending sales weren’t greater than year-earlier levels. Lawrence Yun, NAR’s chief economist stated; “This tells us to expect lower home sales for the fourth quarter, with a flat trend going into 2014.”  At the local level Pending sales in the Eldorado Hills/Cameron Park/Diamond Springs areas was down 4.2% in September but up 10.8% from the same time a year ago. The good news for buyers is that rates have declined in recent weeks, with the average rate for a 30-year conventional fixed-rate mortgage recently hitting 4.25%. Still, NAR reported that housing affordability has hit a five-year low.

Even as annual home-price growth in August hit the fastest pace in more than seven years, recent data shows that monthly gains are slowing down.  Home prices in August were up 12.8% from the year-earlier period, the fastest pace since early 2006, according to S&P/Case-Shiller’s gauge that tracks 20 cities. Of the 20 cities, 13 posted double-digit annual gains. Most likely pent-up demand and limited inventory have been supporting home prices. Some of that pent-up demand was unleashed in August when buyers rushed to lock in low mortgage rates and home sales spiked.  Locally average price /sqft has averaged about 188 hitting a high of 193 in June.    The median home price is $445,000.

Privat job growth slows

On the Employment front:  The number of Americans filing for unemployment benefits declined by 10,000 for the third week in a row, but claims are still above end-of-summer levels even though California said it fixed computer problems that kept thousands of applications in limbo. The good news is that businesses aren’t slashing jobs at a rapid pace.  The bad news is that they also aren’t hiring fast enough.

Private-sector employment growth slowed in October, as firms adding the fewest jobs in six months and Washington’s partisan bickering over spending hit the labor market, payrolls processing firm Automatic Data Processing Inc. reported Wednesday.  Private employers added 130,000 jobs this month, the fewest since April and down from 145,000 in September. The broader trend also shows a weakening: Over the three months through October, the economy gained an average of 142,000 jobs per month, down from an average of 220,000 at the start of the year.  “Any further weakening would signal rising unemployment. The weaker job growth is evident across most industries and company sizes,” said Mark Zandi, chief economist of Moody’s Analytics, which prepares the report using ADP’s data.

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.

Bill Bartok

Mortgage AdvisorMLO# 445991

The nicest compliment I can receive is the referral of your family, friends and co-workers.