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:


(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:


(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:


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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