The Weekly Rap! Friday Feb 27th 2015

The National Debt is currently: $18,138,885,132,587.00  is Higher by another 6 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.

Stocks traded slightly lower this morning, but are still on track to post their biggest monthly percentage gains since 2011.  The Nasdaq is within striking distance of hitting 5000, a level last touched nearly 15 years ago. The Dow last traded at 18,155 about the same compared with where it was last Friday.  The S&P 500 is trading at 2,105.  Gold is trading at $1,213 an ounce, while oil futures at $49.51 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $2.73/Gal.  That’s 0.62 cents higher a gallon in just 27 days!  See below.

The FNMA 30-year fixed 3.0% coupon (interest rates at which banks sell their loans into Fannie Mae), containing 3.25% – 3.625% mortgage rates, the benchmark or how rate sheets are priced these days is currently trading at 101.81 better by 0.75 over where we were last week.  Our current trading is about 101 to about 102.00.  We were just at 103.35 on Feb 1.  Basically the 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 lower the rate.     

If you like this commentary please visit and “Like” my Facebook pageAs rates drop more prospective buyers will qualify and competition will arise for the properties for sale.  I put all of my prospective buyers through underwriting so that when they place their offer it is as close to “cash” as you can get.  So to get your clients underwriter approved, please contact me and get your offer accepted!

In economic news this week; the reader’s digest version is the economy is still trudging along.  Inflationary pressures remain tame, with spring bringing a boost to the real estate market. 

The thieves are at it again!  Gasoline is 0.62 cents higher per gallon over a 27 day period while oil prices have risen just $2.20 in the same period. The seasonal lift in gasoline prices remains well underway across the country, with the West Coast seeing the most excruciating rate of price increases. 

Here are a few of the “excuses” I’m hearing regarding the dramatic rise.  An explosion at an Exxon Mobil oil refinery in Torrance last week, California companies begin scaling back production to convert to the mandated and more expensive summer blend of fuel, California’s carbon-emissions mandate for transportation fuels has added more than a dime in costs to a gallon, and demand is starting to rise with fuel consumption reaching its highest levels since Obama entered the White House in 2008. The summerlike weather California and parts of the West have enjoyed this winter also puts more people on the road, burning more gas. So basically it’s because they can!

According to the Chicago Fed’s national activity index, the economy resumed above-trend growth in January.   The indicator, a weighted index of 85 different economic reports, rose to positive 0.13 in January from negative 0.07 in December. The three-month moving average meanwhile slowed to 0.33 in January from 0.34 in December.

Consumers expressed less confidence in the economy in February, worrying a bit more about the availability of jobs and outlook for business in the months ahead.  The consumer confidence index fell to 96.4 this month from 103.8 in January, the nonprofit Conference Board reported.  The index topped the 100 mark in January for the first time since an economic recovery began in mid-2009, setting a seven-and-a-half-year high in the process. Consumer confidence has been climbing in fits and starts since the end of 2011, helped by a sharp pickup in hiring and, more recently, a plunge in gasoline prices.

Consumer prices fell again in January and inflation turned negative compared to 12 months ago, a reversal fueled by sharply lower oil prices that’s offered financial relief to workers and households.  The consumer price index dropped 0.7% last month, marking the third decline in a row, the Labor Department reported. Over the past year prices have actually declined by 0.1%, the first time consumer inflation has been negative since the fall of 2009.  

Energy prices dropped 9.7%, as the cost of most fuels including gas decreased.  Food prices were unchanged. Excluding food and energy, so-called “core” consumer prices rose 0.2% in January. Core prices are also up 1.6% in the past year, mainly reflecting rising prices for housing, the single biggest expense for consumers. Real hourly wages, meanwhile, rose 1.2% in January, a combination of higher pay and lower inflation. Real hourly wages have climbed 2.4% in the past 12 months.

Orders for durable goods rose 2.8% in January.  Orders minus transportation edged up 0.3%, the Commerce Department reported. Orders for core capital goods – a proxy for business investment – rose 0.6%. Shipments of core capital goods, a category used to help determine quarterly economic growth, fell 0.3% in January. Orders for all durable goods fell 3.7% in December, newly revised data show.

Federal Reserve Chairwoman Janet Yellen on Tuesday took another step closer to the first rate hike since 2006.  In testimony to the Senate, Yellen signaled to financial markets the Fed would soon drop the word “patient” from its forward guidance.  She softened the blow with several dovish comments that suggest no hurry about actually moving.  Markets have expected that when the Fed dropped “patient” from its policy statement that it would mean that a rate hike would follow in the next couple of meetings. That interpretation came from signals Yellen sent in December.

Now, however, Yellen stressed that the Fed wasn’t on automatic pilot and only wanted the flexibility to move “on a meeting-by-meeting basis.”  Several analysts said a June rate hike remains on the table if the Fed decides to drop the word “patient” from its policy statement on March 17-18. Yellen’s summation of the current economic environment suggests she is in no hurry to raise rates. “Too many Americans remain unemployed or underemployed, wage growth is still sluggish, and inflation remains well below our longer-run objective,” despite the falling unemployment rate, she said.

On the Real Estate front:  Existing-home sales in January fell 4.9% in January, a larger than forecast decline, the National Association of Realtors reported.  In our local El Dorado County area existing sales were down by 43% from Dec to Jan.  Lawrence Yun, chief economist for the NAR, attributed the decline to a lack of housing supply and rising prices at the end of last year.  The median existing-home price was $199,600, which is 6.2% above January 2014 levels. Inventory edged up 0.5% to 1.87 million homes, or a 4.7 month supply at the current sales price. 

Other factoids from the January report:

• All-cash sales were 27% of all transactions, up from 26% in December but down from 33% in January 2014.

• Distressed sales were 11% of all sales, unchanged from December.

• Properties typically stayed on the market slightly longer in January (69 days) than December (66 days) and a year ago (67 days).

• The share of first-time buyers declined to 28% in January, the lowest since June.

Sales of “new” homes avoided a winter dip in January, with prospects growing for a surge in demand as spring approaches.  New homes sold at annual rate of 481,000 last month, essentially unchanged from December, the Commerce Department reported.  Sales were 5.3% higher in January compared to a year earlier, another signal the housing market is continuing its long, slow recovery from its worst bust ever.  One worrisome sign: The median price for a new home was up 9% from a year ago, and a steady rise in prices could act as a potential drag on sales.  Mortgage rates, on the other hand, have fallen back near record lows (October 2012) and lenders appear to have loosened very strict requirements on how to qualify for a loan. That could make it easier for buyers to get a mortgage and afford a home.

The housing market seems to be getting off to a great start in 2015 though with “Pending” home sales rising in January to the highest level since Aug. 2013, the National Association of Realtors reported. Its pending home sales index rose 1.7% from an upwardly revised December level, and sales were up 8.4% from Jan. 2014 levels.  In our local El Dorado County area pending sales were higher by 65% from Dec to Jan. The NAR forecasts a 6.4% gain in existing home sales this year and a nearly 5% rise in median prices.

On the Employment front: The number of people who applied for U.S. unemployment benefits jumped by 31,000 to 313,000 in the seven days from Feb. 15 to Feb. 21, continuing a recent pattern of sharp up-and-down movements.

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 20th 2015

The National Debt is currently: $18,132,885,132,587.00  is Higher by another 12 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.

Stocks rose to fresh all-time highs today as the Eurozone approved a four-month extension on Greece’s bailout.  The Dow last traded at 18,140 about 200 pts higher than where it was last Friday.  The S&P 500 is trading at 2,110.  Gold is trading at $1,200 an ounce, while oil futures at $49.91 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $2.55/Gal. 

The FNMA 30-year fixed 3.0% coupon (interest rates at which banks sell their loans into Fannie Mae), containing 3.25% – 3.625% mortgage rates, the benchmark or how rate sheets are priced these days is currently trading at 101.09 worse by 0.75 over where we were last week.  Our recent trading was 102.25 to about 103.50 and we’ve broken through the low end (Support) of it meaning higher rates.  We’re now looking to see if we’ve started a new range or will go back.  Basically the 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 lower the rate.     

If you like this commentary please visit and “Like” my Facebook page.  As rates drop more prospective buyers will qualify and competition will arise for the properties for sale.  I put all of my prospective buyers through underwriting so that when they place their offer it is as close to “cash” as you can get.  So to get your clients underwriter approved, please contact me and get your offer accepted!

In economic news this week; the reader’s digest version is the economy is still trudging along.  Inflationary pressures remain tame, with many areas pulling back a bit.

The survey of manufacturers by the New York Fed called the “Empire State manufacturing index” moved slightly lower but remained in positive territory in February, falling to 7.8 from 10.0 in January.  Any reading above zero indicates improving conditions.

Inflationary pressures remained tightly under wraps in the first month of 2015, a residue of the big slump in oil prices since last summer.  The producer price index, an indication of wholesale costs, fell a record 0.8% in January, the Labor Department reported. It was the third decline in a row and the fifth in the past six months. Once again, the story is all energy. The plunge in crude oil prices to just a little over $50 a barrel from more than $100 last July has offered widespread relief to most businesses outside the energy sector.

Overall energy prices tumbled 10.3% in January, spearheaded by a 24% plunge in the price of gasoline. That’s the biggest drop in gas since 2008.  The result: The producer price index has shown zero change in the past 12 months. Just a month earlier, producer prices had been rising at 1.1% annual pace. Even if energy is excluded, wholesale costs remain largely tame, a sign there’s little inflationary pressure building. So-called core producer prices that strip out the volatile food, energy and trade categories fell a smaller 0.3% last month. Core prices have risen a scant 0.9% in the past year.

The LEI (Leading Economic Indicators) a weighted gauge of 10 indicators designed to signal business-cycle peaks and valleys, edged up 0.2% in January but the index pointed to some moderation in growth, according to the Conference Board. “While the LEI suggests a positive short-term outlook in 2015, the lack of strong momentum in residential construction, along with a weak outlook for new orders in manufacturing, poses a downside risk for the economy,” said Ataman Ozyildirim, economist at the nonprofit organization that produces the report.

More of the Fed Gods were leaning toward keeping rates at zero “for a longer time,” than wanted an earlier move, according to minutes from the January meeting released Wednesday that suggested the majority is in no real hurry to hike interest rates. More of them said a premature rate hike would harm the recovery, while only a few thought a later move would risk high inflation.  The minutes show deep concern among Fed officials about dropping the guidance that it can be “patient” in hiking rates. Many Fed officials worried that when the word “patient” is dropped, markets will think the Fed is poised to move on “an unduly narrow range of dates,” the minutes said. This could create “undesirably tight” financial conditions. There was some discussion about possible changes to the guidance that might keep markets from overreacting, but no details were provided. The minutes show Fed officials had different ideas about the economic conditions that would be appropriate for the first rate hike.

On the Real Estate front:  A gauge of confidence among home builders fell in February to a four-month low but continues to point to a higher level of construction in the months ahead. The National Association of Home Builders/Wells Fargo housing-market index slipped 2 points to 55 in February from 57 in the first month of the year.  It’s the lowest level since October. Still, readings above 50 signal that builders are generally optimistic.

Construction on new homes dropped 2% in January to an annual rate of 1.07 million units, as heavy snowfall hindered builders in some regions such as the Midwest and Northeast.  Permits also declined slightly but indicated that the pace of construction is likely to remain at or near current levels heading into the spring, according to Commerce Department.  

On the Employment front: The number of people who applied for unemployment benefits sank by 21,000 to 283,000 last week, signaling that layoffs remain low and the pace of the hiring in the U.S. is still strong.

Fun for the day: 

A word to the wise ain’t necessary – it’s the stupid ones that need the advice!

Please check out my Blog site: BartoksBlog “Food, Wine and Finance; Recipes for success” at http://www.bartoksblog.com 

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 13th 2015

Friday the 13th comes three times this year, and this is one of them.

The National Debt is currently: $18,120,885,132,587.00  is Higher by another 12 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.

Stocks are retreating after earlier reaching above 18,000 for the first time in 2015.  The Dow last traded at 17,932 about 150 pts higher than where it was last Friday.  The S&P 500 is trading at 2,090.  Gold is trading at $1,228 an ounce, while oil futures at $52.60 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $2.39/Gal. 

The FNMA 30-year fixed 3.0% coupon (interest rates at which banks sell their loans into Fannie Mae), containing 3.25% – 3.625% mortgage rates, the benchmark or how rate sheets are priced these days is currently trading at 101.84 worse by 0.50 over where we were last week.  Our recent trading was 102.25 to about 103.50 and we’ve broken through the low end (Support) of it meaning higher rates.  Basically the 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 lower the rate.     

If you like this commentary please visit and “Like” my Facebook page.  With FHA reducing the monthly mortgage insurance rate from 1.35% down to 0.85% and a rate of 3.25% for a 30yr fixed mortgage, even those with low credit scores and foreclosures, bankruptcies, and short sales can qualify.  As rates drop more prospective buyers will qualify and competition will arise for the properties for sale.  I put all of my prospective buyers through underwriting so that when they place their offer it is as close to “cash” as you can get.  So to get your clients underwriter approved, please contact me and get your offer accepted!

In economic news this week; the reader’s digest version is the economy is gaining strength but at a moderate pace with small business sentiment slipping a bit, Retail Sales pulling back a bit, and inflation correcting higher.  Improvement in the jobs market continues but at a slower pace than last month.

Small-business sentiment slipped 2.5 points in January with seven out of 10 components declining on a decline in optimism over sales growth and business conditions, according to the National Federation of Independent Business’s small-business optimism index.  He report said January’s decline was mostly due to owners being less optimistic about sales growth and business conditions, not spending and hiring plans.  Ahead of the Labor Department’s job-openings data, the index measuring whether job openings were hard to fill rose 1 percentage point to 26%.

The Federal government ran a budget deficit of $18 billion in January, the Treasury Department reported. The monthly deficit compares to the $10 billion shortfall the government ran in January 2014, and brings the deficit for the fiscal year to date to $194 billion.  

Retail sales fell in January for the second month in a row as consumers appeared to pocket most of the savings from sharply lower gasoline prices.  Retail sales declined by 0.8% last month after a 0.9% drop in December. The slow start to sales this year suggests the economy is likely to grow more slowly in the first quarter after a 2.6% gain in the final three months of 2014.

Inflation expectations rebounded in February, which the Fed may view as a positive development given fears surrounding deflation after the slide in oil prices.  The University of Michigan’s consumer sentiment poll put one-year inflation expectations at 2.8% in February after falling to 2.5% in January.  Consumer prices have fallen sharply as gasoline prices have tanked. The Cleveland Fed’s “nowcast” expects a monthly drop of 0.7% for January, after the Labor Department reported a 0.4% decline for December.  Consumer sentiment slipped in February to a three-month low of 93.6 from 98.1 in January, which had been an 11-year peak.

Consumer sentiment 2-13-15                                Job openings since 2001

On the Employment front: Improvement in the jobs market continued in January, but at a slower pace falling to 4.9 from 7.3 in December, according to the Fed’s labor market conditions index which weighs 19 different economic indicators.  This is the lowest reading since September. The Fed doesn’t offer commentary on monthly moves in the series. In a separate reading, the Conference Board said its employment trend index basically remained the same at 127.9 in January, up from 127.2 in December, a 7.6% gain from the same month one year ago.  

Job openings in rose in December to the highest amount since 2001 and the pace of hiring returned to prerecession levels, but companies are still taking their time before adding new workers.  Job openings in the final month of the year rose 3.7% from November to 5.03 million, the Labor Department reported. New job postings surged 28.5% for all of last year, as faster economic growth spurred companies to add workers to keep up with rising demand for their goods and services.  At the same time, the number of people hired climbed 1.9% in December to 5.05 million, according to the report, known as the Job Openings and Labor Turnover report.  The last time that many people found jobs was just a few months before the Great Recession started in December 2007.

Fun for the day:  In honor of Valentine’s Day

Love is Blind?

Phil, a smart and handsome young man, dressed in the latest fashion, walked into this local pub. He noticed a woman gazing at him without blinking her big eyes. Phil felt flattered so he walked up to the woman and said in his deepest voice, ‘I’ll do anything you wish, beautiful lady, for just $10 but on one condition.’

The woman appeared to be trapped in the moment and asked as if in a trance, ‘What’s your condition?’

Phil answered, ‘Tell me your wish in just three words.’

There was a long pause, the woman opened her purse, counted out the money and handed it to the man along with her address.  She then looked deeply into his eyes and whispered, ‘Clean my house.’

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!