The Weekly Rap! Friday Feb 14th, 2014

Happy Valentine’s Day to all you star-crossed lovers out there and to those of you who may not have a Valentine to celebrate with, here’s hoping you find yours.

The National Debt is currently: $17,291,805,201,598.00  this is actually lower by about 34 BILLION.  I post this so we will be aware of what we are leaving the next generation.

The Dow last traded at 16,115 400 pts higher than where it was last Friday.  The S&P 500 is trading at 1,835.  Gold is trading at $1,319 an ounce, while oil futures at $100.24 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $3.23/Gal.

Yields on 10-year Treasury notes, which move inversely to prices, last traded at 2.72%.  30-year Treasury Bond yields last traded at 3.69%.  Rates on 30-year fixed-rate mortgages are about 4.50% 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 4.0% coupon, containing 4.25% – 4.625% mortgages, pretty much the benchmark or how rate sheets are priced these days  is currently trading at 104.22 about .75 worse 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 it looks like the economy is taking a breather tin the first part of the new year with retail sales falling and employment slowing.  We have a new Fed Chief Janet Yellen and she spoke out this week for the first time since taking over.

A gauge of optimism among small businesses rose slightly to 94.1 in January, led by sales expectations and hiring plans. Among the 10 components of the National Federation of Independent Business’s gauge, three rose last month, five fell and two were unchanged. The index remained lower than an average reading of 100 before the recession.

New Federal Reserve Chairwoman Janet Yellen said Tuesday that markets should expect the central bank to continue to follow the low-interest-rate path laid out by her predecessor Ben Bernanke. “Let me emphasize that I expect a great deal of continuity in the Federal Open Market Committee’s approach to monetary policy,” Yellen said in remarks prepared for a hearing of the House Financial Services Committee. “I served on the Federal Open Market Committee as we formulated our current policy strategy and I strongly support that strategy,” Yellen said.

Yellen’s remarks closely tracked the language of the Fed’s last policy statement. She said that the central bank would taper the pace of its asset purchases at future meetings if the economy continued to improve as expected, although the pullback was not on a preset course. The Fed’s decisions about the pace of tapering are data dependent, she added.  She added the Fed plans to hold short-term interest rates at zero “well past” the time the jobless rate falls below 6.5%. Her first semi-annual monetary policy testimony was about as bland as one could imagine. But then that’s no doubt by design, as she has no reason to say anything that would upset the current market consensus.

The government posted a budget deficit of $10 billion in January, the Treasury Department reported, as spending outpaced revenue in the month.  Including the January deficit, however, the government’s red ink at least continues to contract from the year-ago period.  For the first four months of the current fiscal year, the deficit has fallen 37%, ($184 billion, which is $107 billion lower than the same period a year ago) reflecting the economy’s continued improvement, rising tax revenue and modestly lower spending.   What scares me is how long if ever it will take to stop spending more than we bring in in revenue.

Retail Sales fell 0.4% in January and the final two months of 2013 turned out weaker than initially reported, offering more evidence the economy may have softened toward the end of the year.  What’s more, an originally reported increase in sales in December was wiped out to show a small decline.  The increase in sales in November was also trimmed a notch.  Consumers are the main source of economic growth and retail sales account for a large slice of their spending. The drop in sales in January and December suggests consumers still aren’t willing to splurge, a potentially worrisome sign for businesses and the broader economy.

Consumer sentiment was unchanged in February, with a preliminary reading of 81.2, which matched January’s final level, according to today’s report from the University of Michigan and Thomson Reuters.  Details of the consumer-sentiment report show that a gauge of “expectations” increased to 73 in February from 71.2 in January. Meanwhile, the gauge of “current economic conditions” fell to 94 from 96.8.  Sentiment levels are watched to get a feeling for the direction of consumer spending, which is the backbone of the economy.

On the Real Estate front:  I know this is a repeat of last week but some bay not have seen the recent trend report.  In our local area of Eldorado Hills to and including Placerville through January 15 2014: new listings are up 2% and 41% for the past year.  Sales are down 8.6% for the month and down 28% for the year.  Average price per sq foot is down 1.7% from December but higher by 10.8% for the year.  Homes on average are selling for 94% of original list price.  Average sales prices are down 6.2% from December but higher by 11.8% from last year.  Based on closed sales we are currently at 4 months of inventory, the highest of the past year.  Based on pending sales we are at 2.8 months.  It would make sense then that we are also at the highest days-on-market of the year at 65.  This number is higher by 58% over December.

On the Employment front:  A gauge of competition for jobs fell in December to the lowest level in more than five years, but the labor market remains weak and it’s still too soon for workers to celebrate.  There were 10.35 million jobless workers at the end of 2013, compared with 4 million job openings, translating to about 2.6 would-be workers per spot, according to the U.S. Labor Department. That ratio, down a bit from 2.7 in November, was the lowest since August 2008.

The number of Americans who applied to receive unemployment benefits rose last week and the gradual decline in claims since last year appears to have halted, perhaps another sign the labor market is not healing as fast as it was toward the end of 2013.

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 Feb 7th, 2014

The National Debt is currently: $17,325,279,110,849.00  this might be a first but it is actually lower by about 16 BILLION.  I post this so we will be aware of what we are leaving the next generation.

The Dow last traded at 15,722 right where it was last Friday.  The S&P 500 is trading at 1,787.  Gold is trading at $1,262 an ounce, while oil futures at $98.67 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $3.19/Gal.

Yields on 10-year Treasury notes, which move inversely to prices, last traded at 2.66%.  30-year Treasury Bond yields last traded at 3.64%.  Rates on 30-year fixed-rate mortgages are about 4.50% 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 101.53 about 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 we are beginning to see what looks to be another slowdown in the economic recovery at the end of last year and the beginning of this year.

U.S. stock mutual funds and exchange-traded funds last week together saw withdrawals of $18.8 billion, their biggest weekly outflows on record.  Most of this flowed into Bonds.  A correction in the stock market usually means a “flight-to-quality” where money flows from stocks to bonds, which in turn drives down rates.

American manufacturers said orders from customers declined in January after hitting a more than four-year high in December, but they blamed it largely on unusually cold and snowy weather last month.  The Institute for Supply Management index dropped to 51.3% from 56.5% in December, marking the lowest level in eight months.  Read ISM report. On a positive note, any reading over 50 indicates that more manufacturers are expanding instead of contracting. The index has been above 50% for 14 straight months.

Construction spending rose 0.1% in December, led by private projects, the Commerce Department reported. Private-construction spending rose 1% in December, with a 2.6% increase for residential projects and a 0.7% decline for nonresidential projects. Meanwhile, public-construction spending fell 2.3% in December.

The trade deficit climbed 12% in December, reversing the sharp drop in November, mainly because the U.S. sold fewer heavy-duty goods such as airplanes to other countries. A larger trade deficit, generally a negative for the economy, results when the U.S. buys more goods and services from trading partners and sells fewer to them. U.S. exports dipped 2.2% in December to $191.3 billion while imports rose 1.6% to $230 billion. U.S. petroleum exports, meanwhile, hit another record high of $13.5 billion. The U.S. is quickly becoming an oil-exporting giant again thanks to new technologies, and the surge in production has been one of the chief reasons for a declining U.S. trade gap.

On the Real Estate front:  In our local area of Eldorado Hills to and including Placerville through January 15 2014: new listings are up 2% and 41% for the past year.  Sales are down 8.6% for the month and down 28% for the year.  Average price per sq foot is down 1.7% from December but higher by 10.8% for the year.  Homes on average are selling for 94% of original list price.  Average sales prices are down 6.2% from December but higher by 11.8% from last year.  Based on closed sales we are currently at 4 months of inventory, the highest of the past year.  Based on pending sales we are at 2.8 months.  It would make sense then that we are also at the highest days-on-market of the year at 65.  This number is higher by 58% over December.Jobs report chart 2-7-2014

On the Employment front:  The U.S. added 113,000 jobs in January and the unemployment rate dipped to 6.6% from 6.7%, the Labor Department reported.  The expectation was for an increase of 190,000 non-farm jobs.  The second straight disappointing employment report suggests that unusually cold and snowy weather in the past two months is not the chief cause of a slowdown in job creation.  In December, the economy added just 75,000 jobs, a meager gain that many economites had initially blamed on bad weather. The Government also eliminated the most jobs in 15 months falling by 29,000 in January, including a 9,000 decline in Postal workers. It was the biggest drop in government jobs since October 2012.

The private sector once again generated all the employment growth, adding 142,000 jobs in January. That’s up sharply from 89,000 in December but well below the norm over the past year.  One worrisome sign is a sudden freeze in hiring in health care, one of the nation’s fastest growing industries over the past two decades.  Health-care providers cut jobs for the first time on record, raising questions about whether the roll-out of Obamacare is roiling the industry.

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!