The Weekly Rap! Friday Nov 14th, 2014

I’m Baaaaaak!  Sorry for the hiatus but as many of you know I accepted a dream job as General Manager of a Winery and Bed & Breakfast in Fairplay Ca.  My passions have been (if you follow my blog) Food, Wine, and Finance, and this puts them all together.  We have 40 acres (30+ of which are under Vine), a log lodge with five remodeled rooms, a full commercial kitchen and a wood fire pizza oven on a deck overlooking the vineyard and Sierra Foothills. 

I am still doing loans but getting to make wine and run a business was too good to pass up.  Please check out our website (it’s a work in progress) at http://www.fitzpatrickwinery.com .  We are under new ownership and progressing toward our new name “Gold Mountain Winery & Lodge.”  Our address is 7740 Fair Play Rd, Fairplay, Ca, 95684.  We are open Thursday through Sunday 11:00 AM to 5:00 PM and serve lunch.

The National Debt is currently: $17,907,809,132,587.00  is Higher by another 200 BILLION.  The interest pay-out alone on the debt is 268 Billion per year!  I post this so we will be aware of what we are leaving to our children.

The Dow last traded at 17,634 about 75 pts higher than where it was last Friday.  The S&P 500 is trading at 2,039.  Gold is trading at $1,187 an ounce, while oil futures at $75.93 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $2.85/Gal. 

Mortgage Backed Securities or “MBS” yields are interest rates at which banks sell their loans into Fannie Mae and Freddie Mac bond programs. 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 103.375 about .125 worse than where we were last week.  We have been trading in a fairly tight range since May with the low being 101.75 and the high being 103.00 but on Oct 15 we broke out to higher prices/ lower rates.  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 continues to improve but at a very slow pace.  Consumer confidence is at its highest in seven years.  Retail sales is higher and the Government is still spending more money than its taking in.

A measure of small-business optimism rose to a two-month high in October, helped by optimism over capital spending plans and sales, according to a survey released Tuesday. The National Federation of Independent Business said its small-business optimism index rose 0.8 points to 96.1. The NFIB said a record low percentage of small business owners reported problems getting access to capital and an unusually high number of owners say they have no interest in borrowing.

On one of my favorite topics to comment on; the federal government’s budget gap widened in October, but the higher figure was a result of calendar shifts and not a worsening fiscal picture.  In October, the deficit was $122 billion, an increase of $31 billion, or 34%, from the same month a year ago. October is the first month of the 2015 fiscal year.  A Treasury official said the October deficit would have been $84 billion, or $6 billion lower than the October 2013 shortfall of $91 billion, if not for calendar adjustments. For example, $41 billion in benefit payments that would normally have been made in November were made in October because Nov. 1 fell on a Saturday.  Either was IT’S STILL A DEFICIT!  The government finished fiscal 2014 with a budget deficit of $483 billion, the lowest of Barack Obama’s presidency. The deficit has fallen from a peak of $1.4 trillion in 2009, the year Obama took office. When will we stop spending more money than we bring in???

Retail sales rose 0.3% in October, bouncing back from the first decline in eight months. Sales minus autos increased 0.3%, the Commerce Department reported. In September, sales were unrevised to show a 0.3% decline. The rise in spending last month, especially when gasoline is stripped out, suggests households could be prepared to spend more during the holiday season than they have in years. That would be a boon for the economy because retail sales account for one-third of consumer spending, the main engine of U.S. economic activity.

Consumers are feeling pretty good about the economy as a gauge of consumer sentiment rose this month to the highest level since mid-2007, as gas prices and the unemployment rate dropped.  The preliminary November reading on the University of Michigan/Thomson Reuters consumer-sentiment index increased to 89.4 — the highest level since July 2007 —from a final October reading of 86.9.  Readings on confidence can provide clues to economists about the direction of consumer spending, the backbone of the economy. Earlier Friday, the government reported that retail sales rose last month, a welcome sign as the holiday shopping season nears.

There are a number of factors working in favor of consumer sentiment and spending. For one, gasoline prices have been dropping for months, with the price for a gallon of regular recently hitting below $3, down almost 27 cents from four weeks earlier.

On the Employment front:  Labor-market momentum continued in October as the unemployment rate fell to a six-year low.  The Fed’s new labor market conditions index stayed at a reading of 4 in October — a level consistent with the average change during an expansion.  The index is made up of 19 different jobs market indicators, including the unemployment rate, the labor-force participation rate and the number of workers who are working part-time for economic reasons. Fed Chairwoman Janet Yellen says this approach allows for a better assessment of the jobs market than relying on the unemployment rate alone.  Last week, the Labor Department reported that 214,000 jobs were added in October, driving the unemployment rate to a six-year low of 5.8%.

Separately, the Conference Board’s employment trends index rose to a level of 123.09 in October, which is up 7.7% from a year earlier. “The index is signaling solid job growth through the winter. As a result, we could see the unemployment rate reach its natural rate of 5.5% by early spring,” said Gad Levanon, managing director of macroeconomic and labor market research.

The number of people who applied for unemployment benefits last week posted the biggest increase in two months, but initial claims are still exceedingly low with a rise in hiring and relatively few layoffs.

While one person hesitates because he feels inferior, the other is busy making mistakes and becoming superior. – Henry C. Link

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!

 Bill Bartok ESIG 9-25-13

         4601 Post St., El Dorado Hills, Ca  95762

         (916) 941-3426 Direct | (916) 952-1400 Cell (916) | 724-3626 Fax

         Download my own personal mobile phone App from your smart phone:

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The Weekly Rap! Friday Sept 5th, 2014

The National Debt is currently: $17,717,809,132,587.00  is Higher by another 32 BILLION.  The interest pay-out alone on the debt is 234 Billion per year!  I post this so we will be aware of what we are leaving to our children.

The Dow last traded at 17,089 right about where it was a week ago.  The S&P 500 is trading at 2,000.  Gold is trading at $1,266 an ounce, while oil futures at $93.06 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $3.47/Gal. 

Mortgage Backed Securities or “MBS” yields are interest rates at which banks sell their loans into Fannie Mae and Freddie Mac bond programs. 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 102.72 about .20 worse than where we were last week.  We have been trading in a fairly tight range since May with the low being 101.75 and the high being 103.00.  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 continues to plug along keeping its head above water.  It was a light week with the holiday.  Manufacturing and non-manufacturing were both reported higher. New job growth slowed a bit but the anticipation is that it is a temporary slowdown.

A survey of executives reported that manufacturing companies grew in August at the fastest pace since March 2011. The Institute for Supply Management said its manufacturing index climbed to 59% last month from 57.1% in July. Readings over 50% indicate more companies are expanding instead of shrinking. The ISM’s new-orders index rose to 66.7% from 63.4%, and production advanced to 64.5% from 61.2%. The employment gauge dipped to still-high 58.1% from 58.2%. Seventeen of the 18 industries tracked by ISM reported growth last month. Only textile makers reported a decline.

Services and other non-manufacturing companies also reported faster growth for August, with a gauge of their activity hitting the highest pace since 2008. The Institute for Supply Management said its gauge of non-manufacturers rose to 59.6% last month from 58.7% in July. Meanwhile, the employment barometer rose 1.1 points to 57.1%, and the gauge of business activity/production rose 2.6 points to 65%.

Employers in nearly all of the 12 Federal Reserve districts reported difficulties finding skilled workers, according to the latest Beige Book report on economic conditions released by the central bank.  There were shortages of skilled information technology workers in Boston, truck drivers in New York and construction workers in Atlanta.  While overall, the Fed districts reported little change in wages, there was stronger wage pressure for specific categories.  The Beige Book, designed to give the Fed Gods a feel for conditions in the economy, is a collection of reports from business contacts in the 12 Fed districts.

On the Real Estate front: no major real estate news was reported this week.

On the Employment front:  The pace of hiring downshifted in August to the slowest rate of the year, but the disappointing employment report did little to stunt a sense among most investors and economists that it’s a temporary blight unlikely to tarnish the nation’s improved growth outlook.  The deceleration in hiring last month ended a six-month streak in which the U.S. added at least 200,000 jobs a month, the best streak of job creation since 2006.

The U.S. created just 142,000 jobs last month to mark the smallest gain since December. That fell well short of the expected 228,000 gain.  Employment gains for July and June were also revised downward by a combined 28,000, the Labor Department reported.  The unemployment rate, meanwhile, fell a tenth to 6.1% to match a six-year low.  Although more people found work, a somewhat larger number of Americans also dropped out of the labor force.

I come from the school of thought is that there is no such thing as a mistake – it is just a great learning experience.   It looks like I am in good company at that school!

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

                                                       
Sincerely,

Bill Bartok

Personal Chef

Mortgage Advisor MLO# 445991

 

“Cooking your meals, and closing your deals”

 

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

Thank you!

The Weekly Rap! Friday Aug 22nd, 2014

The National Debt is currently: $17,660,164,295,587.00  is Higher by another 7 BILLION.  The interest pay-out alone on the debt is 225 Billion per year!  I post this so we will be aware of what we are leaving to our children.

The Dow last traded at 17,025 about 350 pts higher than where it was a week ago.  The S&P 500 is trading at 1,991.  Gold is trading at $1,280 an ounce, while oil futures at $93.38 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $3.55/Gal. 

Mortgage Backed Securities or “MBS” yields are interest rates at which banks sell their loans into Fannie Mae and Freddie Mac bond programs. 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 102.59 about .20 worse than where we were last week.  We have been trading in a fairly tight range since May with the low being 101.75 and the high being 103.00.  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.   

If you have any potential buyers looking for a home, it’s time to get them “approved by an Underwriter” not just “pre-approved.”  Most pre-approval letters are not worth the paper they’re printed on, but “underwriter approved” will make your buyers almost as strong as a cash buyer and significantly speeds up the loan process.  I just closed a loan that was 25 days from contract to funded/recorded.  Think about it; you won’t have to deal with the 17 day removal of the loan contingency because your offer will not have one and you can have a shorter escrow.  If you have clients on the MLS watch list get them approved, and they will be a stronger client and more loyal to you when the time comes to purchase.  Call me today and I will have your clients approved for you. 

In economic news this week; the reader’s digest version is the economy continues to plug along keeping its head above water.  Inflation remains tame.  Construction of new homes is on the rise.  And resale of homes is also on the rise.

Consumer prices rose slightly in July 0.1%, led by highest costs of food and housing, but the overall pace of inflation cooled slightly after a sharp run-up earlier in the year. The core CPI, which excludes volatile food and energy costs, also increased 0.1%.  Consumer prices have risen just 2% over the past 12 months, down slightly from June.  The core rate has risen 1.9% in the same span, unchanged from the prior month.

The Federal Reserve views core prices as a more accurate barometer of underlying inflationary trends. Real or inflation-adjusted hourly wages, meanwhile, were unchanged for the second straight month. Real hourly wages have either been flat or lower for five straight months, so consumers don’t have much more to spend despite an improving labor market. Over the past 12 months inflation-adjusted hourly wages have risen a scant 0.3%. Americans are working somewhat longer hours, however, to bring home a bit more money.

The Fed Gods say the labor market is improving faster than expected, but the majority are still not convinced it’s strong enough to alter their approach on interest rates anytime soon. According to Federal Reserve’s policy meeting minutes released this week they agreed to state that labor market conditions improved … while also stating that a range of labor market indicators suggested that there remained significant underutilization of labor resources.” Officials seemed concerned by the housing market’s weak performance stating the housing market’s recovery has remained slow and “persistent weakness” could hurt the economic outlook.  Officials cited factors such as low expectations for income, high student debt and trouble obtaining mortgages.  At the July 29-30 meeting, the Fed voted 9-1 to maintain its current policy of slowly withdrawing stimulus from the economy. The majority also reiterated the Fed is likely to keep the short-term federal funds rate below what is considered normal for “some time.”

On the Real Estate front:  A gauge of confidence among home builders rose two points to 55 in August, the highest level in seven months, according to National Association of Home Builders/Wells Fargo report. Readings above 50 signals that builders are generally optimistic about sales trends.  August marks the second consecutive month of above-50 readings. Recent optimism among builders is likely due to job growth and low mortgage rates, among other factors, according to NAHB.  NAHB’s gauge of builders’ views on upcoming sales of single-family homes also rose two points to 65 in August, while a barometer of builders’ views on present sales rose two points to 58.  A gauge of prospective-buyer traffic increased three points to 42.

Construction on new homes jumped 15.7% in July to reach the highest level in eight months, offering another piece of evidence that the housing market is recovering after an early-year lull.  What’s more, the decline in new construction in June was much smaller than previously reported.  Initially, the government had reported a 9.3% decline in starts in June, but revised figures show just a 3.9% drop. At the time, the report stoked concerns that the housing market might be weakening because of higher mortgage rates and real-estate prices.  The housing starts report is notorious volatile and often subject to large changes. New construction rose in all regions except the Midwest.

Americans are renting more in part because they cannot afford to buy new homes, a reminder that the economy is still not fully healed after the deep recession of 2007-2009. In a normal economy, the U.S. should be building about 1.7 million new homes a year.  We’re currently at an annual rate of 656,000.

Sales of previously owned homes in July hit the fastest pace in 10 months, suggesting that the housing sector is picking up after a rough start to the year.  The National Association of Realtors said sales of existing homes rose 2.4% in July to an annual rate of 5.15 million, the fourth consecutive month of gains.  “More people are buying homes compared to earlier in the year and this trend should continue with interest rates remaining low and apartment rents on the rise,” said Lawrence Yun, NAR’s chief economist.

On the Employment front:  The number of people applying for unemployment benefits fell by 14,000 to 298,000 in the week of Aug. 10, below 300,000 for the third time in five weeks, signaling once again that layoffs remain at a post-recession low amid a rise in hiring in most major U.S. industries.  The average of new claims over the past month, meanwhile, climbed by 4,750. Although that’s a four-week high, the monthly average is still near the lowest level in eight years. The monthly average is less erratic than the weekly figure and offers a better look at underlying trends in the labor market. Also, the government said continuing claims decreased by 49,000 2.5 million in the week ended Aug. 9. Continuing claims reflect the number of people already receiving benefits.

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!

image

The Weekly Rap! Friday Aug 8th, 2014

The National Debt is currently: $17,635,473,436,587.00  is Higher by another 28 BILLION.  The interest pay-out alone on the debt is 225 Billion per year!  I post this so we will be aware of what we are leaving to our children.

The Dow last traded at 16,440 about 20 pts lower than where it was a week ago.  The S&P 500 is trading at 1,917.  Gold is trading at $1,312 an ounce, while oil futures at $97.39 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $3.63/Gal. 

In economic news this week; The reader’s digest version is the economy seems to be picking up a little steam with increases in productivity, factory orders, consumer credit, and manufacturing. 

Banks are seeing broad-based demand for loans but are not altering their standards in a major way, a Federal Reserve survey released Monday showed.  The survey of 75 domestic and 23 foreign banks operating in the U.S. shows that banks are responding by continuing to slowly ease standards for various commercial and industrial loans.  Banks reported stronger demand for prime residential mortgages for the first time since last summer and for home equity lines for the first time since October 2013.  The July survey also shows that new qualified mortgage rules has reduced approval rates on applications for prime jumbo home-purchase loans and nontraditional mortgages but have not impacted prime mortgages.

Factory orders in June rose 1.1%, the Commerce Department said Tuesday.  That’s the fourth gain in five months and the level of $503.2 billion is the highest on record.  Durable-goods orders rose 1.7%, higher than the initially estimated 0.7% gain.

U.S. service-sector companies grew in July at the fastest pace in nine years, according to a survey of senior executives. The Institute for Supply Management said its nonmanufacturing index rose to 58.7% last month from 56.0% in June.  That’s the highest rate since December 2005. Reading over 50% indicate more companies are expanding instead of shrinking. Sixteen of the 18 industries tracked by Tempe, Ariz.-based ISM reported growth last month. The ISM’s new-orders index climbed 3.7 points to 64.9% – also the highest in nine years – while the employment gauge advanced 1.6 points to 56.0%. The employment index is the highest since January.

U.S. consumer credit growth increased sharply in June, a possible sign spending could ramp up in coming months.  Consumers increased their debt in June by $17.3 billion, down only slightly from a $19.6 billion gain in the prior month, the Federal reported.  Non-revolving category of debt, especially federal student loans, led the monthly increase, rising $16.3 billion or 8.4% in June. Once again, credit-card debt rose only slightly, rising a slim $941 million or 1.3% after a gain of 2.4% in the prior month.

U.S. productivity rebounded modestly in the second quarter after it fell sharply in the prior three months.  Productivity in the April-June quarter increased 2.5%, compared with a revised 4.5% drop in the prior quarter, according to a preliminary reading by the Labor Department.  The first-quarter reading was the lowest since the fourth quarter of 1981.  Higher productivity is regarded as the key to a rising standard of living over time because it tends to lead to higher pay for workers and larger profits for companies.  In the short run, though, many factors can affect productivity.  One of the reasons productivity has been subdued in recent quarters is because hiring in the U.S. has been strong.

On the Real Estate front:  Nothing to report this week.

On the Employment front:  The number of people who applied for unemployment benefits fell below 300,000 for the second time in three weeks, solidifying a picture of an improving U.S. labor market in which layoffs remain low and companies are hiring at the fastest pace in years. Initial jobless claims fell by 14,000 to 289,000 in the week of July 27 to Aug. 2.  Continuing claims decreased by 24,000 to 2.52 million in the week ended July 26. Continuing claims reflect the number of people already receiving benefits.

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!

Bill Bartok ESIG 9-25-13

The Weekly Rap! Friday July 25th, 2014

The National Debt is currently: $17,600,771,776,587.00  is Higher by another 6 BILLION.  The interest pay-out alone on the debt is 225 Billion per year!  I post this so we will be aware of what we are leaving to our children.

If you are looking for a new home or know of any potential buyers looking for a home, it’s time to get  “approved by an Underwriter” not just “pre-approved.”  Most pre-approval letters are not worth the paper they’re printed on, but underwriter approved will make you almost as strong as a cash buyer and significantly speeds up the loan process.  Think about it; you won’t have to deal with the 17 day removal of the loan contingency because your offer will not have a loan contingency and you can have a shorter escrow. Call me today and get approved before you go shopping. 

The Dow last traded at 16,940 about 160pts lower than where it was a week ago.  The S&P 500 is trading at 1,977.  Gold is trading at $1,304 an ounce, while oil futures at $101.99 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $3.75/Gal. 

Mortgage Backed Securities or “MBS” yields are interest rates at which banks sell their loans into Fannie Mae and Freddie Mac bond programs. 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 102.34 about .10 worse than where we were last week.  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, not much change this week.  The economy continues to grow albeit at slow levels.  It looks like more home buyers prefer purchasing an existing home over an newly built one as sales of existing homes were higher while new home sales declined.  Consumer inflation is still in check.

Economic activity edged down to 0.12 in June, from 0.16 in May according to the Chicago Fed national activity index released Monday.  This is still the fourth month above zero. A reading of zero is equal to trend growth. The index is a weighted average of 85 indicators of national economic activity.  The three-month average slowed to 0.18 in June from 0.33 in May.

Consumer prices gained again in June but the rise was not as broad-based as in the prior month and was driven mainly by the rising cost for gasoline.  The Labor Department said the consumer price index increased 0.3% in June after a 0.4% gain in May.  The gasoline index rose 3.3% in June, and accounted for two-thirds of the increase in overall June prices.  Food and so-called core prices slowed in June.  Food prices rose 0.1% in June, the smallest monthly increase since January, after a steep 0.5% gain in May.  Excluding volatile food and energy prices, “core” prices rose just 0.1% after three straight gains of 0.2% or more.

June’s relatively tame reading should alleviate concerns that inflation is beginning to break to the upside.  While the Fed’s favorite measure of inflation, the personal consumption expenditure index, has been more moderate that the CPI, there is some concern the central bank is falling behind the curve on inflation.  The Fed is meeting next week and is expected to take another step toward ending its bond-buying program. After that program ends in October, the Fed has said it will wait a “considerable period” before raising rates.

Orders for durable goods such as computers, aircraft and heavy machinery rose 0.7% in June, but the details of the report suggest the rebound in business investment in the second quarter will not be as strong as previously hoped.  The increase in orders for big-ticket items last month was the fourth increase in the last five months, with gains in most major categories.

On the Real Estate front:  Nationally, home prices rose 0.4% in May, and April’s price move was revised to show 0.1% growth from a previously estimated no change, the said Tuesday. The FHFA (Federal Housing Finance Agency) house price index is based on mortgages bought or guaranteed by Fannie Mae and Freddie Mac.  Compared to May 2013, prices were up 5.5%, led by 9.6% growth in the Pacific region. Prices are 6.5% below the April 2007 peak, FHFA added.

Rising for a third consecutive month, sales of existing homes in June hit the fastest pace in eight months, signaling that the housing market’s recovery hasn’t petered out.  The National Association of Realtors reported Tuesday that sales of existing homes grew 2.6% in June to an annual rate of 5.04 million.

The sales pace of new single-family homes fell 8.1% in June to a three-month low, according to the Commerce Department adding to worries over the housing market’s recovery.  New-home sales in June were down 11.5% from a year earlier. The supply of new homes rose to 5.8 months from 5.2 months in May. This metric measures how long the number of homes on the market would last at the current sales rate, assuming that builders did not add to inventory.

On the Employment front:  The number of people who applied for regular state unemployment-insurance benefits last week tumbled by 19,000 to 284,000, the lowest level since February 2006, signaling that companies have further slowed down the pace of layoffs and are letting go of few workers.  The average of new claims over the past month declined by 7,250 to 302,000, the lowest level since May 2007, the U.S. Labor Department reported. The government also said that continuing claims in the week that ended July 12 dropped by 8,000 to 2.5 million, the lowest level since June 2007. Continuing claims reflect the number of people already receiving benefits.

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!

Bill Bartok ESIG 9-25-13

The Weekly Rap! Friday July 4th, 2014

The National Debt is currently: $17,581,866,962,587.00 is Higher by about 43 BILLION.  The interest pay-out alone on the debt is 246 Billion per year!  I post this so we will be aware of what we are leaving to our children.

The Dow last traded at 17,068 about 100pts higher than where it was a week ago and establishing another all time high.  The S&P 500 is trading at 1,985.  Gold is trading at $1,321 an ounce, while oil futures at $103.77 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $3.82/Gal. 

Mortgage Backed Securities or “MBS” yields are interest rates at which banks sell their loans into Fannie Mae and Freddie Mac bond programs. 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 102.09 about .75 worse than where we were last week.  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 Employment has picked up, pending home sale are higher as are home prices, and manufacturing is trudging along.

There are 2 million “missing households” in the US – which represents pent up demand for new residences.  These are Millennials who are living with their parents or rooming together in an apartment. That represents 2 years of housing starts at the current pace. Rents are increasing, jobs are tough to get, and student debt is high. Fun fact – we haven’t been building this few homes since World War II, according to the NAHB.

In the manufacturing sector; Chicago PMI retreated to 62.6 in June after hitting a seven-month high in May. A fall in new orders led the decline in June. But the index remains above 60 for the third straight month, signaling a bounce-back in the second quarter after a sharp decline in first quarter gross domestic product. Any reading above 50 indicates expansion.  

The final Markit reading of U.S. manufacturing conditions in June totaled 57.3. Despite the slight decline, this is still the highest reading of the index since May 2010.  The Institute for Supply Management said its manufacturing index registered 55.3% in June, just a hair below May’s reading of 55.4%. Any number above 50% signals expansion.

Fed Chairwoman Janet Yellen was at the podium again this week saying Federal Reserve monetary policy should continue to focus on jobs and inflation and leave stability concerns to regulation.  “I do not presently see a need for monetary policy to deviate from a primary focus on attaining price stability and maximum employment, in order to address financial stability concerns,” Yellen said in a speech at the International Monetary Fund.

On the Real Estate front:  Pending home sales jumped 6.1% in May to reach the highest level in eight months, signaling that upcoming closings of existing homes are likely to speed up, the National Association of Realtors reported Monday. The index of pending home sales hit 103.9 in May, compared with 97.9 in April. Low mortgage rates, a growing number of homes on the market and stronger job creation will all likely fuel more sales.  Although pending sales have risen three months in row, first-quarter closings were weak enough that NAR expects them to drag down 2014’s total sales tally below last year’s result. In May the pending-sales gauge was down 5.2% from a year earlier. An index reading of 100 equals 2001’s average contract activity level.

As spring sales continued, home prices in May rose 1.4%, and 10 states set record highs.  Record prices were hit in states such as Texas, New York and North Dakota.  Despite the monthly gain, annual growth slowed down as more homes were put on the market. Annual home-price growth hit 8.8% in May, down almost three percentage points from a quarter earlier. Looking forward, CoreLogic expects annual growth to slow to 6% by May 2015. Including May 2014’s increase, national home prices were about 13.5% below a 2006 peak.

Jobs Growth June 2014

On the Employment front:  The U.S. produced another big batch of jobs in June and the unemployment rate fell to a nearly six-year low as more people entered the labor force and found work, another strong signal that economic growth has rebounded after a dismal first quarter.  The economy created 288,000 jobs last month, posting a fifth straight gain of 200,000 or more, according to the government’s survey of worksites. The last time that happened was in 1999.  The unemployment rate, meanwhile, fell to 6.1% from 6.3%, based on a separate Labor Department survey of Americans households. That’s the lowest jobless rate since September 2008.

The strong jobs report is further indication that the economy continues to build momentum after a surprising rough patch in the first quarter, when growth contracted by 2.9%.  The first-quarter decline marked the steepest drop in growth outside of a recession since 1947, but the economites chalk it up to an a particularly harsh winter and other unusual factors that are unlikely to be repeated soon.The better-than-expected employment report pushed the Dow above the 17,000 mark for the first time ever and Bond yields higher.

Curb your enthusiasm folks… while the increase is good news, the year-over-year acceleration is still small, arguing that this has been catch-up.  Hours worked and average hourly earnings do not imply much momentum for the economy.  The number of people who had to take on a part-time job for financial reasons jumped by 275,000, offsetting a similarly sized decline in Americans who’ve been without a job six months or longer. And the fewest young adults entered the labor market in June in four years, though that could be the result of a longer school year.

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!

Bill Bartok ESIG

The Weekly Rap! Friday June 20th, 2014

The National Debt is currently: $17,538,072,962,587.00 is Higher by about 6 BILLION.  The interest pay-out alone on the debt is 246 Billion per year!  I post this so we will be aware of what we are leaving to our children.

The Dow last traded at 16,947 about 200pts higher than where it was a week ago.  The S&P 500 is trading at 1,962.  Gold is trading at $1,314 an ounce, while oil futures at $106.62 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $3.79/Gal. 

Mortgage Backed Securities or “MBS” yields are interest rates at which banks sell their loans into Fannie Mae and Freddie Mac bond programs. 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 105.50 about .30 better than where we were last week.  We’ve broken out of the past trading range and rates are still trending lower at this point.  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 inflation is higher, layoffs are lower, manufacturing is steady, and there were no surprises of major changes from the Fed at their regular meeting.

The Federal Reserve Bank of New York reported this week that Manufacturing activity in their “Empire State” general business conditions index basically held steady in June after hitting an almost four-year high in May. The Philadelphia Fed’s manufacturing index jumped to a reading of 17.8 in June from 15.4 in May. This is the highest reading of activity since last September.

Industrial production bounced back in May, according to Federal Reserve which also showed that April output wasn’t as bad as initially estimated. Production climbed 0.6% in May, after falling 0.3% in April and rising 0.8% in March.

Signaling that economic growth could pick up in coming months, the leading economic index for the U.S. rose 0.5% in May to 101.7, the Conference Board reported. “Recent data suggest the economy is finally moving up from a 2% growth trend to a more robust expansion,” said Ken Goldstein, economist at the Conference Board, in a statement.  I want to be an economist when I grow up.  They get paid to guess and whether they’re right or wrong, kind of like the weather man.

Consumer prices, CPI, rose sharply in May for the second straight month and the rate of inflation over the past year reached its highest level since late 2012, an upward trend that could worry the Fed Gods unless it pulls back soon.  The consumer price index jumped 0.4% last month following a 0.3% gain in April, the Labor Department said Tuesday.  Annualized over the past 12 months, consumer inflation is at 2.1%.  Just eight months ago, inflation was running at just a 1% pace.  

The Fed has been aiming to boost inflation to around 2% or so from what it considered an economically damaging low level, but the sudden surge could set off alarm bells. While I doubt that it will, this could cause “market” concern that the Fed might be forced to raise interest rates earlier than it planned.  Excessive inflation appears unlikely in the absence of stronger growth, further tightening in labor market conditions, and greater pressure on wages.  Historically speaking, on an annual basis inflation is still very low. Once annual inflation gets above 5% it becomes extremely troublesome for the economy. But with inflation so low in spite of the Fed’s efforts to print money some are saying that Deflationary forces are stronger than the Fed.  Long term average inflation is about 3.2.  The core CPI, which excludes volatile food and energy costs, rose by 0.3%, the biggest gain since August 2011. The cost of housing, new cars, airline tickets, medical care and prescription drugs all increased.

inflation_by_decade_sm   Housing starts May 2014

On the Real Estate front:  Home builders’ confidence rose four points to 49 in June, the highest level in five months, but respondents were still a bit pessimistic, according to the National Association of Home Builders/Wells Fargo housing-market index released Monday.  The index has been below 50 since February, indicating that builders, generally, are pessimistic about sales trends. “Consumers are still hesitant, and are waiting for clear signals of full-fledged economic recovery before making a home purchase. Builders are reacting accordingly, and are moving cautiously in adding inventory,” said David Crowe, NAHB’s chief economist. Construction on new homes fell by 6.5% in May and builders trimmed plans for future projects in another sign that a hoped-for spring revival in the housing market remains elusive.

On the Employment front:  With layoffs at very low levels and more jobs available, the number of Americans seeking unemployment benefits continues to hover near a post-recession bottom.  Initial jobless claims declined by 6,000 to 312,000 in the week ended June 14.   Yet despite the decline in jobless claims, millions of Americans still cannot find work and the number of long-term unemployed remains higher now than at any time before the 2007-2009 recession struck.  The unfinished recovery in the labor market is the chief reason why the Fed plans to keep interest rates low for the foreseeable future, a point reiterated by Chairman Janet Yellen on Wednesday after the bank’s latest gathering in Washington.

The economy has now recovered all the jobs it lost from the Great Recession. It’s only taken seven years.  Industrial production is now higher.  But consumer confidence is, depending on your measure, somewhere between 10% to 25% below its 2007 peak.  It turns out; Fed Chairwoman Janet Yellen feels pretty much the same way as other Americans. For example, this is what the world’s most powerful central banker had to say Wednesday when asked if, finally, she’s confident the economy is running above its long-run potential.  “When you say confident, I suppose the answer is no, because there is uncertainty,” she said. Yes, she continued, there’s accommodative policy from her Fed, there’s diminished fiscal drag, easing credit conditions, improving household debt finances, rising home prices, rising equity prices. But she returned to the word “uncertainty,” and it didn’t seem like just obligatory caution.

In the Fed’s statement following their meeting on Wednesday, Yellen was more kitten than lion, sticking to her guns that the central bank can hold short-term interest rates steady until the middle of next year and then raise them gradually, and downplaying recent strong inflation readings.  As expected, the central bank trimmed bond purchases by another $10 billion, staying on track to end its long-running stimulus program before the end of the year. This is the fifth straight meeting with a $10 billion cut in the asset purchases. The Fed will now buy $35 billion a month in Treasuries and mortgage-related assets, starting in July.  At the same time, the Fed lowered its forecast for “longer run” interest rates to 3.75% from closer to 4%. The last change is important because it signals the central bank won’t push up interest rates all that high during this recovery phase.

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!

Bill Bartok ESIG 9-25-13