The Weekly Rap! Friday June 26th 2015

The National Debt is currently: $18,281,639,132,587.00  is Higher by another 9 BILLION.  The interest pay-out alone on the debt is 244 Billion per year!  I post this so we will be aware of what we are leaving to our children.

The Dow last traded at 17,900, lower by 950pts over where it was last Friday.  The S&P 500 is trading at 2,096.  Gold is trading at $1,173 an ounce, while oil futures at $59.54 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $2.85/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 98.63 worse in price by about 1.40 over where we were last week.  Our current trading range has now shifted lower and is about 98.5 to about 100.5 and we are testing the bottom.  Each .50 change in the price of the security translates to about 0.125 in rate.  Todays’ drop appears to be related to the massive sell-off in the Chinese stock market. There is some talk about a liquidity crisis that could occur in China. It that were to happen, it could force the Chinese government to sell some of the $1.7 trillion in US Bonds they are holding. That is a big potential overhang for US to digest. 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 pageI 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!

I just learned of a great home improvement loan from Home Depot that is not secured.  In other words it is not a lien on your home.  Loan amounts are up to $40,000 and are based on qualifying with no documentation.  You have 6-months to spend the money (interest only payment period) and then the balance is amortized over 7 years at a fixed rate of 7.99%.  There are no loan fees or annual fees.  This is a great program for both Buyers who would like to do some improvements after purchasing the home, as well as Sellers who need to improve the home prior to selling.  Installation and labor can even be part of the project.  Contact me for additional information or click on the link above.

You really have to read not just the whole article, but between the lines.  An article in today’s Wall Street Journal is titled “The Mansion Bedroom Boom.”  In the article it says that real-estate agents say there is a pickup in activity for extreme second homes with 15 or more bedrooms. It goes on to say that reflecting this confidence is an uptick in listings of luxury homes loaded with bedrooms.  Excuse me, but when did an “uptick in listings” mean there is a boom in the market?  Now if they had said that there was a rise in sales, or even pending sales, or even offers being made, I “might” buy into it.  And another thing, an “uptick” is a writer’s term for a rise when there is barely any.   

The article uses an example that Real-estate developer Jeff Greene has his roughly 53,000-square-foot, 12-bedroom home in Beverly Hills, Calif., listed at $195 million. The property, called Palazzo di Amore, also includes 23 bathrooms, a guesthouse and 50-seat theater, a bowling alley, game room and ballroom with a revolving dance floor.  Ok that’s all well and good.  It goes on to say Mr. Greene spent more than $50 million expanding and renovating the estate, which he purchased in 2007 for $35 million.  Now let’s see…  Just when did $35 million (at the height of the recent RE boom by the way) and $50 Million add up to $195 million!  Really?  Ok on to the economic news.

In economic news this week; It was a lighter week of economic data, and the reader’s digest version is the economy is still trudging along.  Consumer spending is higher.  The housing market showed that total home sales are running at the fastest pace in eight years.  GDP was revised higher in the first quarter than previously estimated.  And Inflation is still running lower than normal.

Apparently the economy didn’t do as badly in first quarter as previously reported contracting in the first quarter by a smaller amount, mostly reflecting higher consumer spending and a lower drop in U.S. exports.  Gross domestic product (GDP), the value of everything a nation produces, declined by 0.2% annual rate as opposed to the previously reported 0.7% drop from January to March the Commerce Department said.  Economic growth in the first quarter was apparently hampered by a number of temporary headwinds such as unusually harsh weather, a major dockworker’s strike and a stronger dollar that made U.S. exports costlier to sell.  The good news is that growth has picked up in the spring and early summer, though perhaps not fast as hoped. In the second quarter, the economy is on track to expand by at least 2% and the Economites forecast a 2.8% increase.

The housing sector has rebounded, consumers are spending a bit more and the value of the dollar has come off a 10-year to give U.S. exporters some relief.  Consumers spent at a moderate pace in the first quarter. The increase in household spending, the main engine of growth, was revised up to 2.1% from 1.8%. Consumers spent more at restaurants and on takeout, the government said.  Spending on transportation was also higher than previously estimated.

The economy was still running below trend in May, according to the Chicago Fed’s national activity index released Monday. The index, a weighted average of 85 different economic indicators, edged up to negative 0.17 from negative 0.19, and the three-month average edged up to negative 0.16 from negative 0.20. A zero reading shows the economy is running at its trend rate of growth, and readings in the three-month average below negative 0.70 indicate a recession has likely begun.

Americans splurged on new cars and trucks in May and spent more to fill up their gas tanks, boosting consumer spending last month at the fastest pace in six years.  Consumer spending rose 0.9% in May to mark the biggest gain since 2009, the government reported.  The amount consumers spent in April and March was also a bit stronger than initially reported. Most analysts believe Americans are in the best financial shape in years, but so far the recovery has been marked by an up-and-down pattern in consumer spending.

Inflation, or the “core” PCE index that excludes food and energy, edged up 0.1% in May.  The core rate rose at a 1.2% pace year over year, down from 1.3% in April.  The low level of inflation is a big reason why the Fed has refrained from raising interest rates. The Fed believes an inflation rate of 2% would be healthier for the economy and a persistently low rate could prompt them to wait even longer to raise rates.

On the Real Estate front:

Sales of existing homes rose 5.1% in May to an annual rate of 5.35 million, hitting the fastest pace since November 2009 and rebounding from a drop in April, the National Association of Realtors reported Monday.  First-time buyers stepped up their purchases, supported by a strengthening jobs market and greater access to mortgages, according to NAR.  A greater number of homes on the market also supported more sales, NAR said. This year is on track to be the best for home sales since 2007, NAR said. On Monday NAR revised April’s pace to 5.09 million.

Sales of new single-family homes in May reached the fastest pace in more than seven years, according to data released Tuesday that signaled strength during the hot spring housing market.  New single-family homes sold at an annual rate of 546,000 in May, the most since February 2008, with growth in two of four regions, the Commerce Department reported.

The housing market has actually been underperforming for years. In the first quarter, fixed residential investment made up about 3.1% of real GDP, below an average of more than 5% over the past five decades.  But key factors are improving. Young families and other first-time buyers are making more home purchases. The jobs environment is steadying. And with the beginnings of a pick-up for wage growth, there’s rising demand and ability among borrowers to take out a mortgage.

Rising home prices should help some struggling borrowers and firm their financial footing. The Federal Housing Finance Agency (homes backed by conventional loans FNMA & FHMAC) reported that home prices rose 0.3% in April, and were up 5.3% from a year earlier.

On the Employment front: The labor market is still showing plenty of vigor, the latest look at layoffs shows.  The number of people who applied for unemployment benefits last week rose by 3,000 to 271,000, the Labor Department said Thursday.  Initial jobless claims have been under the key 300,000 level for 16 straight weeks, the longest stretch since 2000-2001.

Useless Trivia:  And no, I did not fact-check every one of them.

A dime has 118 ridges around the edge.

A cat has 32 muscles in each ear.

A crocodile cannot stick out its tongue.

A dragonfly has a life span of 24 hours.

A goldfish has a memory span of three seconds. Reminds me of voters!

 

Fun for the day: 

An engineer dies and reports to the pearly gates. St. Peter checks his dossier and says, “Ah, you’re an engineer – you’re in the wrong place.”

So the engineer reports to the gates of hell and is let in. Pretty soon, the engineer gets dissatisfied with the level of comfort in hell, and starts designing and building improvements. After a while, they’ve got air conditioning, flush toilets and escalators, and the engineer is becoming a pretty popular guy.

One day God calls Satan up on the telephone and asks with a sneer, “So, how’s it going down there in hell?”

Satan replies, “Hey, things are going great. We’ve got air conditioning, flush toilets and escalators, and there’s no telling what this engineer is going to come up with next.”

God replies, “What??? You’ve got an engineer? That’s a mistake – he should never have gotten down there; send him up here.”

Satan says, “No way! I like having an engineer on the staff, and I’m keeping him.”

God says, “Send him back up here or I’ll sue.”

Satan laughs uproariously and answers, “Yeah right. And just where are YOU going to get a lawyer?”

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 June 19th 2015

The National Debt is currently: $18,272,639,132,587.00  is Higher by another 9 BILLION.  The interest pay-out alone on the debt is 244 Billion per year!  I post this so we will be aware of what we are leaving to our children.

The Dow last traded at 18,860 higher by 180pts over where it was last Friday.  The S&P 500 is trading at 2,114.  Gold is trading at $1,201 an ounce, while oil futures at $58.96 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $2.93/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 100.03 about .75 (in price) over where we were last week.  Our current trading range has now shifted lower and is about 98.5 to about 100.5.  Each .50 change in the price of the security translates to about 0.125 in rate.  If we can hold at these levels I expect that we will trend back to higher levels.  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 pageI 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!

I just learned of a great home improvement loan from Home Depot that is not secured.  In other words, it is not a lien on your home.  Loan amounts are up to $40,000 and are based on qualifying which can be done from their website.  You have 6-months to spend the money (interest only payment period) and then the balance is amortized over 7 years at a fixed rate of 7.99%.  There are no loan fees or annual fees.  This is a great program for both Buyers who would like to do some improvements after purchasing the home, as well as Sellers who need to improve the home prior to selling.  Installation and labor can even be part of the project.  Contact me for additional information or click on the link above.

In economic news this week; It was another busy week of economic data, and the reader’s digest version is the economy is still trudging along.  The Fed Gods got together.  Business and factory conditions are lower.  Inflation is still muted.  And household rents are higher and the homeownership rate fell to the lowest proportion since the end of 1989.

Business conditions in the New York region worsened slightly, the New York Fed reported Monday. The Empire State manufacturing index for June sank to negative 2.0 from 3.1 in May. This is the second negative reading in the past three months for the index, which is a first reading of manufacturing conditions in the month. Orders fell into negative territory while shipments retreated slightly but stayed positive. The six-month outlook worsened to 25.8 in June from 29.8 in May. This is the lowest level since January 2013.

In addition to Business conditions; the U.S. factory sector, ailing from the strong dollar, global weakness and lower oil prices, has slipped into a technical recession.  The Fed reported that industrial production dropped 0.2% unexpectedly in May and hasn’t increased since November.  The six-month drop in output, adjusted for inflation, puts the sector in a technical recession.  Compared to 12 months ago, industrial production was up 1.4%, compared to 4.8% growth as recently as November.

The Fed Gods got together this week and as anticipated, held their benchmark interest rate near zero, but according to analysts (the statement did not say this exactly), the Fed Gads believe improving economic growth is likely to warrant one or two interest rate increases before the end of the year. In their statement at the end of two days of talks, Fed officials were cautiously optimist about the economy.  Fed Chairwoman Janet Yellen said economy has managed to escape the “soft patch” of the first quarter.  The labor market is improving and some of the downward pressure on inflation from energy prices is abating, Yellen said, but added that more progress is needed before the central bank would be ready to pull the trigger and raise rates.

A spike in gasoline costs boosted consumer prices in May by the most in more than two years, though overall inflationary pressures in the economy have remained muted. The consumer price index rose 0.4% last month, almost entirely because of a surge in gas prices ahead of the summer driving season.  Gas prices shot up 10.4% to mark the largest gain in six years.  Gas prices have leveled off in June, however, and the cost of a gallon of gas is much lower compared to last summer.  The overall cost of food, meanwhile, was unchanged for the second month in a row

Stripping out the volatile food and energy categories, so-called “core” consumer prices rose a much milder 0.1% in May.  The cost of housing, airline tickets and medical care all rose while clothing prices declined.  Despite the increase in prices in May, consumer inflation is basically zero over the past 12 months. The muted level of inflation mostly reflects sharply lower gasoline prices compared to a year ago.  The core rate has risen 1.7% in the same span, down slightly from the prior month. But that’s still a low level historically and less what the Fed would like to see. The central bank has held off from raising interest rates even as the economy has improved partly because of unusually low inflation.

The U.S. leading economic index rose 0.7% in May for the second month in a row, the Conference Board said Thursday. “The U.S. LEI increased sharply again in May, confirming the outlook for more economic expansion in the second half of the year after what looks to be a much weaker first half,” said Ataman Ozyildirim, director of business cycles and growth research, in a statement.

On the Real Estate front: Home builders see a bright future for the market, with sales ramping up, according to the National Association of Home Builders/Wells Fargo reported Monday, even as plans for a merger show that major construction companies are trying to cut costs.  The home builders’ index rose five points to 59 in June, hitting a nine-month high.  Readings above 50 signal that home-construction companies, generally, are optimistic about sales trends, and June marks the 12th consecutive month of above-50 readings.  Gauges of builders’ views on present and upcoming home sales each hit their highest level since late 2005, shortly before the housing bubble burst. Confidence among home builders is higher than levels typically seen at recent building rates. Builders that survived the meltdown may feel particularly confident in their ability to navigate the market.

Landlords kept financial pressure on tenants last month, as annual rent growth far outpaced households’ other costs, according to data released this morning.  The cost to rent a primary residence rose 3.5% over the year through April, while the overall consumer inflation CPI dropped 0.2%, dragged down by plunging energy costs, the U.S. Labor Department reported.  The homeownership rate, which shows the share of occupied homes in which an owner lives, fell to 63.8% in the first quarter, the lowest proportion since the end of 1989, the U.S. Census Bureau said.  Families with income both above and below the median have seen drops in homeownership rates over the past year.  With homeownership at the lowest rate in 25 years, and the rental-vacancy rate close to the slimmest proportion in more than two decades, 2015 is seeing a continuation of a landlord’s market, and letting landlords to charge more.

Just how hot is rent inflation? Annual growth in tenants’ payments has been between 3.4% and 3.5% for the past six months, higher than an average of about 3% for the past two decades. Builders have ramped up apartment construction, a trend that should ease price pressure, but it will take time for that new supply to become available.  As long as demand remains high for apartments, landlords will be able to continue to raise families’ housing costs.  High rent prices may be affecting other areas of the economy as well, keeping households from spending their savings from falling gas prices. Market analysts had expected a stronger labor market and cheaper gas to lead to more shopping, but that effect hasn’t exactly panned out. While energy prices have crept up in recent months, consumer costs for gasoline in April were down more than 30% from a year earlier.

On the Employment front: The number of jobless workers seeking unemployment benefits fell again in mid-June and stood near a 15-year bottom, reflecting the steady pace of hiring across the nation and the unusually low level of layoffs.  Initial jobless claims last week fell by 12,000 to 267,000, the Labor Department said Thursday.  New claims are 15% lower compared to one year ago and they just slightly above a post-recession low of 262,000.  The economy added a preliminary 280,000 jobs in May and hiring picked up in the spring, suggesting the labor market has recovered after a winter soft patch. The U.S. is creating more than 200,000 jobs a month, more than enough to gradually reduce the nation’s official 5.5% unemployment rate over time.

 

Fun for the day: 

Under the age of 40? You won’t understand. Part 2 of 2

Ø  I thought that I was supposed to accomplish something before I was allowed to be proud of myself.

Ø  I just can’t recall how bored we were without computers, Play Station, Nintendo, X-box or 270 digital, and TV cable stations. We weren’t!!

Ø  Oh yeah … And where was the antibiotics and sterilization kit when I got that bee sting? I could have been killed!

Ø  We played “King of the Hill” on piles of gravel left on vacant building sites and when we got hurt, mom pulled out the $1 bottle of iodine and then we got our backside spanked. Now it’s a trip to the emergency room, followed by a 10 day dose of antibiotics and then mom calls the lawyer to sue the contractor for leaving a horribly vicious pile of gravel where it was such a threat.

Ø  To top it off, not a single person I knew had ever been told that they were from a dysfunctional family.

Ø  How could we possibly have known that?

Ø  We never needed to get into group therapy and/or anger management classes.

Ø  We were obviously so duped by so many societal ills, that we didn’t even notice that the entire country wasn’t taking Prozac!

Ø  How did we ever survive?

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.jpg

The Weekly Rap! Friday June 12th 2015

If you like this commentary please visit and “Like” my Facebook pageI 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!

The National Debt is currently: $18,263,639,132,587.00  is Higher by another 9 BILLION.  The interest pay-out alone on the debt is 244 Billion per year!  I post this so we will be aware of what we are leaving to our children.

The Dow last traded at 17,880 right where it was last Friday.  The S&P 500 is trading at 2,092.  Gold is trading at $1,179 an ounce, while oil futures at $60.00 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $3.03/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 99.28 right where we were last week.  Our current trading range has now shifted lower and is about 98.5 to about 100.5.  Each .50 change in the price of the security translates to about 0.125 in rate.  If we can hold at these levels I expect that we will trend back to higher levels.  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.     

In economic news this week; It was another busy week of economic data, and the reader’s digest version is the economy may by showing signs of life.  Yesterday we learned that Retail Sales for May were +1.2%, Import Prices were +1.3%, Initial Jobless Claims were below 300k for the 14th straight month. NAR was also out saying 2015 could be the best year in housing since 2006.  So why wouldn’t rates go up?  Well, the IMF is butting heads with Athens: stalled negotiations between Greece and its creditors caused a flight to quality in our country.

So does anyone remember the Sacramento radio station KZAP from back in the day?  Well the station (and the Cheshire Cat) are making a comeback.  I can’t believe it! Finally a station will plays Rock music from all decades! We have every other station “Genre” out there but the only Rock station is Classic Rock. KZAP was my favorite “go to” station growing up and I am glad they’re coming back. KZAP will appear at 93.3 on the FM dial as well as streaming live at k-zap.org. They will have donations, grants and underwriting instead of ads, with only three minutes of every hour earmarked for sponsor breaks. Finally a station where you can actually tune it in for extended periods without saying, ‘I just heard that an hour ago! Go KZAP!

KZAP Cheshire Cat Reduced to 5x3

Small-business sentiment improved in May. The National Federation of Independent Business small-business optimism index rose 1.4 points to 98.3, the highest level since December, as six of ten components improved. That puts the index in line with its historical average of 98, the NFIB said.

Our Federal government ran a budget deficit of $82 billion in May, the Treasury Department reported. The May deficit is $48 billion lower than the same month a year ago. The government spent $295 billion in May, which was $35 billion, or 11%, less than a year ago. Total receipts in May were $212 billion, an increase of $12 billion, or 6%, over last year. For the fiscal year to date, the budget deficit is $365 billion, a decrease of 16% from the first eight months of fiscal 2014. Again, when are they going to balance their checkbook?

Sales retailers climbed 1.2% in May and rose for the third month in a row, offering more evidence of springtime rebound in consumer spending after a winter lull.  Auto dealers and gas stations posted the strongest sales, but most major retail segments did see healthy gains.  Excluding autos, sales rose 1%. Sales minus autos and gasoline climbed 0.7%, the Commerce Department reported. What’s more, sales in April and March were stronger than initially reported.  Retail sales rose 0.2% in April instead of being unchanged. Sales in March were revised up to 1.5% from 1.1%.

Wholesale or “Producer” prices rose 0.5% in May, driven by a rise in the wholesale cost of gasoline and other fuels.   The increase in the producer price index, the largest since September 2012, was the second in three months following four straight declines.  The price of goods rose 1.3%, while services were unchanged, the Labor Department reported. Yet even with the advance in May, producer prices over the past 12 months are 1.1% lower.  Excluding the volatile categories of food, energy and trade, core prices fell 0.1%. The core rate has risen 0.6% in the last 12 months.

Consumer sentiment rose to a preliminary June reading of 94.6, rebounding from a drop for May’s final result, when the gauge hit a six-month low of 90.7, according to reports on the University of Michigan gauge released Friday.  The Economites follow readings on confidence to look for clues about consumer spending, the backbone of the economy.  For context, the consumer-sentiment gauge averaged 86.9 over the year leading up to the recession.

On the Employment front:    Job openings at workplaces rose to a record high of 5.38 million in April from 5.11 million in March, the Department of Labor reported. Compared with same period in the prior year, April’s job openings rose 22%, as private-sector openings increased 21% to 4.89 million, and government positions rose to 489,000 from 367,000.  With 8.55 million unemployed people in April, there were about 1.6 potential job seekers per opening, below March’s ratio of 1.7.  In April 2014, there were about 2.2 potential seekers per opening. When the recession began in December 2007, there were about 1.8 potential job seekers per opening. The number of separations, such as quits and layoffs, dropped to 4.88 million in April from 5.07 million in March.  Meanwhile, the total number of hires declined to 5.01 million from 5.09 million. The level of hires was about 5.04 million when the recession began.  In other words we’re pretty close to pre-recession numbers.  It just took almost eight years.

The number of people who applied for unemployment benefits rose slightly in the first week of June but remained near a 15-year low amid a sharp upsurge in hiring over the past few years.  Initial jobless claims edged up by 2,000 to 279,000 last week. Initial claims have been under the key 300,000 mark for 14 weeks in a row, a feat last accomplished 15 years ago.

Fun for the day: 

Under the age of 40? You won’t understand. Part 1 of 2

Ø  My mom used to cut chicken, chop eggs and spread butter on bread on the same cutting board with the same knife and no bleach, but we didn’t seem to get food poisoning.

Ø  Our school sandwiches were wrapped in wax paper in a brown paper bag, not in ice pack coolers, but I can’t remember getting e Coli.

Ø  Almost all of us would have rather gone swimming in the lake or at the beach instead of a pristine pool (talk about boring); no beach closures then.

Ø  We all took PE – and risked permanent injury with a pair of Dunlop sandshoes or Converse high tops instead of having cross-training athletic shoes with air cushion soles and built in light reflectors that cost as much as a small car. I can’t recall any injuries but they must have happened because they tell us how much safer we are now.

Ø  We got the cane for doing something wrong at school, they used to call it discipline yet we all grew up to accept the rules and to honor & respect those older than us.

Ø  We had 30+ kids in our class and we all learned to read and write, do math, and spell almost all the words needed to write a grammatically correct letter – imagine that!

Ø  We all said prayers in school and sang the national anthem, and staying in detention after school caught all sorts of negative attention.

Ø  We also learnt our times table by reciting them every day.  

Stay tuned next week for part 2 of 2…..

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.jpg

The Weekly Rap! Friday June 5th 2015

If you like this commentary please visit and “Like” my Facebook pageI 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  “underwriter approved”.  Please contact me and get your offer accepted!

The National Debt is currently: $18,254,639,132,587.00  is Higher by another 8 BILLION.  The interest pay-out alone on the debt is 244 Billion per year!  I post this so we will be aware of what we are leaving to our children.

The Dow last traded at 17,865 lower by 150 pts from where it was last Friday.  The S&P 500 is trading at 2,094.  Gold is trading at $1,167 an ounce, while oil futures at $57.92 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $3.13/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 99.19 worst by 2.15% in price over where we were last week (101.34).  Our current trading range has now shifted lower and is about 99.00 to about 100.5.  Each .50 change in the price of the security translates to about 0.125 in rate.  If we can hold at these levels I expect that we will trend back to higher levels.  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.     

In economic news this week; National Donut Day? Really?  It was a heavy week of economic date with the Employment Report published, and the reader’s digest version is the economy may by showing signs of life, at least where jobs are concerned.  Simply put though, one month’s worth of data isn’t reliable enough to prove anything one way or the other. The monthly data can be extremely noisy.

It’s a big weekend in horse racing as American Pharaoh is set to make a historic run for the first Triple Crown since 1978 in Saturday’s Belmont Stakes.  American Pharaoh is the 14th horse since 1979 to win the first two legs of the Triple Crown.  But his heralded arrival in New York on Tuesday had the look of celebrity lateness: Most of the field has been at Belmont Park for days, if not weeks, settling in.  This was the big “issue” last year as California Chrome was battling for the Triple Crown Title.  The issue was that he was competing against horses that were well rested. 

Americans cut back on spending in April and saved more, showing that consumers remained cautious as the second quarter got underway.  Consumer spending was flat last month, the weakest performance since January, even though incomes rose 0.4%, the Commerce Department reported. The pace of spending over the last 12 months also fell to the lowest level in several years, though much of the decline is attributed to sharply lower gasoline prices.  Gas prices have risen recently but are still well below 2014 levels.

Consumers cut back on long-lasted goods such as new cars, however spent more on services such as dry cleaning and eating out.  Consumer spending accounts for more as much as 70% of what goes on in the economy. The six-year-old recovery has been characterized by slower-than-usual spending, a residue of the Great Recession and the devastation it caused to the labor market.  Economists have predicted the upsurge in hiring over the past few years, along with lower gasoline prices, will boost spending. But so far that hasn’t happened. Americans are using credit cards less, taking on less debt and saving more.

Construction spending grew 2.2% in April, although small, reached the fastest pace in more than six years, and the highest annual pace since November 2008, thanks to more private and public spending, due to building of apartments, commercial buildings and roads, the Commerce Department reported.  More construction is good news for at least two reasons. Faster building rates show that developers see demand for more homes, stores and such. More construction also means more jobs, growth that lends support to the broader economy.

Wages are rising, albeit slightly, in most of the country, according to the latest survey of economic conditions, known as the Beige Book, released by the Fed on Wednesday.  While the overall economy seemed slow to rebound from the weak first quarter, skilled and non-skilled workers were starting to see larger paychecks, the survey found.  The Beige Book is a collection of anecdotes collected by the dozen Fed regional banks. The report is designed to give a sense of current economic conditions to the Fed Gods, now debating whether the economy is strong enough to withstand higher interest rates.  Rising wages would be an important sign of a healthy economy. Since the end of the Great Recession, hourly wages have been rising around a 2% rate.

The strong May employment report this morning likely keeps the Fed on track to start raising short-term interest rates later this year, but officials are unlikely to move at a policy meeting later this month because they want to see more evidence of a solid economic expansion.  The Fed Gods before the report signaled they had moved into a wait-and-see mode ahead of their June 16-17 meeting, their confidence shaken by an economic contraction in the first quarter and preliminary signs of a slow rebound in the second.  They now want to see more data proving the winter economic contraction was transitory and not a signal of a more serious loss of momentum. Many investors are expecting a September rate increase, though Fed officials stress they are not bound to any particular date.  Many of the Fed Gods began the year believing that by June they might start lifting their benchmark short-term interest rate from near zero, in what would be their first rate increase in nearly a decade. Instead, they were thrown by new signs of economic pullback.

On the Employment front:   The U.S. pumped out a robust 280,000 jobs in May, indicating that companies are still on the prowl for new workers despite what appears to have been a temporary slowdown in economic growth earlier this year.  The increase in hiring, the biggest since December, was widespread and would suggest that the economy has regained some momentum. High-tech firms, health-care providers, hotels, home builders and retailers all added workers.  Only the energy industry, coping with lower oil prices, saw a sizable decline in jobs, the Labor Department reported this morning.

The unemployment rate, meanwhile, rose a tad to 5.5% from 5.4%, but the increase stemmed from a large inflow of people into the labor force.  More job seekers take up the hunt when they think work is easier to find and job openings recently hit an all-time high.

In another good omen, the surge in hiring in May also boosted wages. Average pay rose 8 cents to $24.96 an hour, pushing the increase over the past 12 months up to 2.3%.  That’s the highest rate since mid-2013, suggesting the boom in hiring over the past few years is finally forcing companies to pay more to attract workers.

So far this year, the economy has added an average of 217,000 jobs a month, easily enough to employ new entrants in the labor force and gradually push the unemployment rate down over time.  Still, job creation has tapered off from a good pace in the second half of 2014, when the economy added an average of 281,000 jobs a month. At the current pace of hiring it will take longer to employ a good chunk of the 17 million Americans who want a full-time job but still can’t find one, an unusually high number after six years of economic expansion.

It looks like the millennials are going to work as young people were the stars of the strong May employment report.  People under the age of 25 accounted for 96% of the 397,000 increase in the labor force in May, which includes those looking for work as well as those working. They accounted for 76% of the 272,000 increase in employment, according to the survey of 60,000 U.S. households reported by the Bureau of Labor Statistics.

Fun for the day: 

We are about to enter the BBQ season. Therefore it is important to refresh your memory on the etiquette of this sublime outdoor cooking activity. When a man “volunteers” to do the BBQ the following chain of events are put into motion:

(1) The woman buys the food.

(2) The woman makes the salad, prepares the vegetables, and makes dessert.

(3) The woman prepares the meat for cooking, places it on a tray along with the necessary cooking utensils and sauces, and takes it to the man who is lounging beside the grill – beer in hand.

(4) The woman remains outside the compulsory nine feet exclusion zone where the exuberance of testosterone and other manly bonding activities can take place without the interference of the woman.

Here comes the important part:

(5) THE MAN PLACES THE MEAT ON THE GRILL.

(6) The woman then goes inside to organize the plates, cutlery and condiments.

(7) The woman comes out to tell the man that the meat is looking great. He thanks her and asks if she will bring another beer while he flips the meat.

Important again:

(8) THE MAN TAKES THE MEAT OFF THE GRILL AND HANDS IT TO THE WOMAN.

(9) The woman prepares the plates, salad, bread, utensils, napkins, sauces, and brings them to the table.

(10) After eating, the woman clears the table and does the dishes.

And most important of all:

(11) Everyone PRAISES the man and thanks HIM for his cooking efforts.

(12) The man asks the woman how she enjoyed “her night off”, and, upon seeing her annoyed reaction, concludes that there’s just no pleasing some women.

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.jpg