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 

You can visit my corporate website at:


Bill Bartok

Mortgage Advisor MLO# 445991

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

Thank you!

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