The Weekly Rap! Government Rhetoric, the Economy and other stuff. 5/13/16

The National Debt is currently: $19,268,001,132,587.00  is Higher by another 8 BILLION in the last week.  The interest pay-out alone on the debt is 233 Billion per year!  I post this so we will be aware of what we are leaving to our children.

Brace yourselves folks, it’s Friday the Thirteenth!  Stocks slid this morning Friday, putting major indexes on track for their longest weekly losing streak since January.  Energy and financial shares in the S&P 500 led the declines. Indexes had wobbled earlier in the session after an upbeat reading on retail sales, which contrasted with gloomy earnings reports from department stores earlier this week.

The Dow is lower by 185 points at 17,535.  The S&P 500 is at 2,045.  Gold is trading at $1,274 an ounce, while oil futures at $46.14 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $2.33/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 102.78.  Our current trading range is about 102.00 to about 103.00.  Each .50 change in the price of the security translates to about 0.125 in rate.  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.  

Does anyone wonder, or care, why we as a nation are promoting a candidate, Donald Trump, that has no political experience whatsoever and another that is promoting Socialism?  Well just look at the last ten years.  We’ve had a financial meltdown where we almost saw the banking system become nationalized.  Wall Street firms fell (and yes Merrill Lynch fell).  We elected a President who won the Nobel Prize is his first few months of office and for what I’m not sure.  Our government can’t balance the budget and has had to raise the debt ceiling many times (BTW isn’t that why we call it a ceiling?).  And we haven’t grown our economy at more than 2.00% in the last eight years.

Donald Trump said in an interview that economic conditions are so perilous that the country is headed for a “very massive recession” and that “it’s a terrible time right now” to invest in the stock market, embracing a distinctly gloomy view of the economy that counters mainstream economic forecasts.  I for one have been saying this for some time now.  The writing is on the wall.  We can’t continue to have next to zero interest rates and no growth in the economy forever.  The issue is that no one wants to hear anything negative.  So we’re constantly fed positive news.  Hey, you can twist just about anything positive.

The Federal Reserve’s decision about interest rates in June will be heavily impacted by the drift of its forecasts for the economy.  The Fed Gods ought to be reluctant to raise short-term interest rates at the meeting if they are also reducing their forecasts for growth and inflation or raising their forecasts for unemployment. Why raise rates if you’re becoming more pessimistic about the economic outlook?

The Wall Street Journal’s latest survey of private economists suggests that when officials reconvene in a month the position the Fed might find itself in is one of a “conundrum”  Does anyone remember that term as used by Alan Greenspan?   Forecasters surveyed in the past week have reduced their projections for 2016 growth in GDP since March and they have trimmed other projections for growth, inflation and hiring.  Their 2016 GDP growth forecast has gone from 2.4% in March to 1.9% in the latest May survey.  The forecast for 2017 growth was snipped from 2.3% to 2.2% since March.

The WSJ survey shows expectations for inflation have come down as well since March. The projection for the year-over-year change in the Consumer Price Index in December is down to 1.7% in May from 1.8% in March and 2.1% in December. The 2017 forecast was trimmed to 2.2% from 2.3%. Forecasts for the unemployment rate in December 2016 and December 2017 were nudged up to 4.7% from 4.6% in March.  These aren’t big shifts, but they’re all going in the wrong direction. Barring a big shift in economic data between now and mid-June, the hurdle looks increasingly high for a June rate increase.

A measure of small-business sentiment, The National Federation of Independent Business’s optimism index, rose 1 point to 93.6 in April, snapping a three-month losing streak that took it to a two-year low, the group said Tuesday.  Most of the index’s sub-gauges rose or stayed neutral. Only one, the index that tracks views about the future path of the economy, slipped.  The current political climate is to blame for small business owners’ pessimism, NFIB said in a release.  “There is no leadership in Washington, no articulations of a path to a better future, and no evidence that policy-making is focused on promoting economic growth or job creation,” wrote the group’s chief economist, William Dunkelberg.  And respondents don’t think that will change after the election. The index touched a cycle high of 100 in December 2014. Its current reading is well below the 42-year average of 98.

Good news for once, our government ran a budget surplus of $106.4 billion in April, the Treasury Department said Wednesday.  After narrowing for four straight years, the deficit for the current fiscal year looks set to see an increase of red ink.  April is an important month for the deficit as it contains highly unpredictable annual tax payments and refunds.  The bigger picture though is our “politicians” are still spending more money than we are making.  See our National Debt above.  It has doubled is just the last ten years! Donald Trump has insisted that he would be able to get rid of the nation’s more than $19 trillion national debt “over a period of eight years.”  Whether or not he can accomplish this, at least he’s addressing the problem.  I’ve heard no other politician even mention taking down the debt.

Sales at retailers posted the biggest increase in April in a year, offering the hope that our economy is rebounding after a weak first quarter.  Retail sales rose 1.3% last month, spearheaded by big gains among auto dealers, gas stations and Internet retailers, the Commerce Department reported Friday.  Every segment of the retail industry saw improved results except for home centers whose sales were hindered by unusually damp and rainy weather.  Then again we’ve seen this year over year and nothing has changed to make me feel that we’re going to have a banner year.

Producer prices rose 0.2% in April after two straight declines, but inflation at the wholesale level remained largely absent in the broader economy.  The cost of services edged up 0.1% in April, the Bureau of Labor Statistics said this morning.  Goods rose 0.2%, led by surge in scrap metal prices and higher energy costs.  Food prices fell 0.3%, though.  The wholesale cost of eggs sank by one-third as farmers rebuild flocks depleted last year by the threat of disease.  Wholesale prices are unchanged in the past 12 months.  Stripping out food, energy and trade margins, so-called “core” producer prices rose 0.3% in April.  Over the past year core prices have risen just 0.9%. That’s the same as in March and February.

Consumer sentiment surged in early May as Americans’ views of the future brightened.  The University of Michigan’s index surged 7.6% to 95.8.  Most of the gain was due to the expectations index, which soared 12.8% to 87.5, it’s highest in nearly a year. The current conditions component also rose, by 1.8%, to 108.6.  The largest gains were centered in lower-income and younger households, who may be more sensitive to income gains and the jobs outlook, the Michigan researchers noted in a release.

On the Employment front:  The number of available jobs rose to an eight-month high in March, in what could be a sign that companies are struggling to find talent to fill the positions they need — but that financial-market turbulence hasn’t deterred firms from expanding.  The Labor Department said there were 5.76 million job openings in March, up from 5.61 million in February.

The sector with the largest number of open jobs is the professional and business service sector, with 1.23 million open slots, a 124,000 gain from March. The number of job openings in the construction sector edged up to 210,000, the highest level in nearly nine years, before the Great Recession that wrecked the housing sector.  The low-paying retail sector had 35,000 fewer open jobs in March, though another low-paying field, leisure and hospitality, had 29,000 more jobs to fill.

The number of Americans who applied for unemployment benefits in early May rose for the third straight week and hit a 14-month high, reflecting an unusual surge in New York state and perhaps adding to evidence that the U.S. labor market may have softened.  Initial claims climbed by 20,000 to 294,000 from May 1 to May 7, the Labor Department reported Thursday. The last time initial claims were that high: Feb. 28, 2015.

Wall Street is sure to pay close attention to jobless claims over the next few weeks to see if the softening trend continues. Even after 46,000 increase in the last three weeks, however, initial claims are still very low. They’ve held below the key 300,000 level for 62 weeks, the longest streak since 1973.

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!

I have a personal App for your phone that replaces my business card.  You can contact me (various formats), run the mortgage calculator, get RE/Mortgage news, and have access to my social media sites including this weekly commentary.  You can even share my app with others.  Please check it out and let me know what you think.  Click on the following link from your phone and hit “add to home screen, then click “add” and you’re done.

Bill’s phone App:  https://bbartok.mortgagemapp.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! Government Rhetoric, the Economy and other stuff. 4/15/16

The National Debt is currently: $19,245,639,132,587.00 is Higher by another 8 BILLION in the last week.  The interest pay-out alone on the debt is 233 Billion per year!  I post this so we will be aware of what we are leaving to our children.

Stocks retreated today, following an early-week rally fueled by a sharp rise in shares of financial companies.  Major indexes in the U.S. are on track to close the week up more than 1.5%. Shares of the biggest U.S. banks are on track to end the week nearly 7% higher, buoying the broader market over the week.

The Dow is currently lower by 37 points at 17,888.  The S&P 500 is at 2,079.  Gold is trading at $1,233 an ounce, while oil futures at $40.40 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $2.41/Gal. Summer gas (higher priced) is in production.

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 102.97 which is the highest it’s been since Feb 11th 2016.  Prior to that you would have to go bake to Jan 2015.  Our current trading range is about 101.50 to about 102.8.  Each .50 change in the price of the security translates to about 0.125 in rate.  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.  

On the political scene: The goal of most primary elections/caucuses is for voters to choose a favorite presidential candidate.  Then based on the results, a representative (Delegates) then carry that vote to the national convention where they cast their vote for the nominee.  If no candidate is chosen after the first vote those delegates who were bound by the vote of the people, are free to vote for whomever they personally prefer. 

But apparently not in Colorado.  The state GOP decided to cancel its normal caucus procedure, in part, because it said they were worried that too many people would turn out. Anyway, so instead of all registered Republicans choosing from the presidential candidates, just the “party insiders” voted on delegates to represent them at the national convention this summer. That’s where things got messy (North Dakota, Wyoming and three U.S. territories did the same thing, but Colorado’s un-caucus got the most press). Because pledged delegates are free after the first ballot to vote for whomever they’d like at the convention. The Republican Party got just what it wanted – a bunch of free agents.

Whether you like Donald Trump or not, you should read the following post in the Wall Street Journal today titled “Let Me Ask America a Question: How has the ‘system’ been working out for you and your family?  No wonder voters demand change.

Last week I mentioned that the U.S. “expansion” is already older than the average post World War II expansion and that the Fed Gods were debating on whether or not our economy is headed for a recession.  Our business/economic cycle is a four stage process; Expansion/Growth-Prosperity-Recession-Recovery.  The length of time we spend in each cycle varies.  If we are in the “expansion” phase of the current cycle, just where is the prosperity?  And if the economy is truly expanding (not just treading water) then why hasn’t the fed lifted interest rates as they normally do in a growth phase.

The Fed eases money supply (lower rates) in times of recession and tightens monetary policy in times of prosperity.  The magnitude of our last recession was so major and the Fed in attempt to not let recession go into depression, had to enact much different easing measures such as purchasing bonds/mortgages from the market and lowering interest rates to levels not previously seen.  The problem is that growth has not returned to levels needed to reverse policy and this their stimulus policy may have actually hurt the recovery.  By keeping rates at which companies borrow money at basically zero, they have supported the stock market and now if they raise rates they risk a stock market correction which would derail any sort of recovery.

In economic news this week; Consumer confidence fell, our government is still spending money it doesn’t have, Retail sales fell again, and inflation is basically flat. 

A measure of small-business sentiment in March slipped to a two-year low, a trade group said Tuesday.  The National Federation of Independent Business said its small-business optimism index fell 0.3 points to 92.6. Four of the ten components fell.  The major reasons 51% of owners think that the current period is a bad time to expand was a weak economy, the political climate was the second most frequently cited.

Consumer sentiment eased to 89.7 in the University of Michigan’s preliminary reading for April. That was down 1.3 points from a March reading of 91.0.  Consumers’ views of the current situation fared better than their expectations: the current conditions index shed just 0.2 point to 105.4, while the expectations gauge was down 1.9 point to 79.6.  It was the fourth-straight monthly decline, but Michigan’s survey director said in a release that he expects the gloom to ease as the economy brightens after a rocky first quarter.  Now that’s speculation.

Our government ran a budget deficit (they spent more money than they made) of $108 billion in March, the Treasury Department said Tuesday, about double what it did in the same month in 2015.  Spending for the month was $336 billion, or 17% more than the same month a year ago.  In March, federal government spending rose for military programs, Medicare and other categories compared to last year.  Despite the increase in March, the budget deficit is up just 5% for the fiscal year to date, to $461 billion.  The government’s fiscal year runs from October through September. 

Sales at U.S. retailers fell in March for the second time in three months to end the first quarter on a weak note, a sign consumers are reluctant to boost spending despite improved household finances and a sturdier labor market.  Retail sales dropped 0.3% last month, the Commerce Department said Wednesday. The soft pace of retail sales from January through March is likely to contribute to another weak quarter of U.S. growth when the government reports gross domestic product later this month.

U.S. wholesale prices fell 0.1% in March despite a rise in the cost of gasoline, reflecting the low level of inflation in the guts of the economy.  Instead producer prices were held in check by a deep decline in trade margins for retailers and wholesalers.  The price of a barrel of oil has hit $40 again after briefly dipping below $30 earlier in the year.  Over the past year overall producer prices have fallen 0.1% in unadjusted terms.  Stripping out the volatile categories of food, energy and trade, core prices were flat in March. Core prices have risen 0.9% in the past 12 months, unchanged from the rate in February.

The consumer price index, CPI, rose by seasonally adjusted 0.1% last month after falling 0.2% in February, the Bureau of Labor Statistics said Thursday.  The higher cost of filling up at the gas pump offset lower prices for groceries and new clothes to push inflation a touch higher in March.  Energy prices climbed 0.9% to mark the first increase in four months. Gas prices rose last month, as did the cost of electricity.  The price of food, on the other hand, fell 0.2%.  The cost of groceries posted the biggest one-month decline since 2009, partly reflecting lower prices charged by farmers for staple crops such as corn and wheat. 

Over the past 12 months the CPI has risen at a 0.9% rate, down a tad from February.  The Fed would like to see inflation rise a bit before it raises interest rates again, but the latest CPI suggests price pressures remain muted. Stripping out food and energy, so-called core prices also rose 0.1% last month.  Core consumer prices have risen at a 2.2% annual clip, down from 2.3% in the prior month.

The Federal Reserve’s business contacts reported some upbeat news on two troublesome issues that have held down the economy: low wages and the troubled oil and gas sector.  The Fed’s Beige Book, released Wednesday, again used the phrase “modest to moderate” to describe growth in the U.S. economy, and the Fed’s contacts said they thought growth “would remain in that range going forward.”  But there were pockets of optimism in the report, which is a collection of anecdotes about the economy.  At its last meeting in March, the Fed scaled back its projection for rate hikes this year to two from four, citing overseas risks to the domestic economy. Fed Chairwoman Janet Yellen elaborated on these risks in an interview released by Time Magazine Tuesday, saying there were many things about the global economy were uncertain.

On the Employment front:  The number of Americans who applied for unemployment benefits last week fell by 13,000 to 253,000, matching the lowest mark since the end of the Great Recession and sinking to a level last seen in 1973. The U.S. has generated millions of jobs over the past five years, putting many Americans back to work and keeping the economy on a slow but stable growth path in the wake of the devastating 2007-2009 downturn.  Many companies these days are not only reluctant to part with current employees, they complain it’s harder to find enough qualified people to fill open positions.  The low level of claims is also a sign the economy was still adding jobs in April at a healthy clip. Low claims usually correlate with strong employment reports.

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 have a personal App for your phone that replaces my business card.  You can contact me (various formats), run the mortgage calculator, get RE/Mortgage news, and have access to my social media sites including this weekly commentary.  You can even share my app with others.  Please check it out and let me know what you think.  Click on the following link from your phone and hit “add to home screen, then click “add” and you’re done.

Bill’s phone App:  https://bbartok.mortgagemapp.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! Government Rhetoric, the Economy and other stuff. 3/25/16

The National Debt is currently: $19,158,639,132,587.00  is Higher by another 41 BILLION in the last week.  The interest pay-out alone on the debt is 233 Billion per year!  I post this so we will be aware of what we are leaving to our children.

Stocks ended five consecutive weeks of gains Thursday, as a rally that carried shares to their highest levels of the year petered out during a holiday-shortened week.  The Dow closed higher by 13 points at 17,568 Thursday and was closed yesterday for Good Friday.  The S&P 500 closed at 2,044.  Gold is trading at $1,218 an ounce, while oil futures at $39.59 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $2.37/Gal. Summer gas (higher priced) is in production.

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 101.88.  Our current trading range is about 101.25 to about 102.8.  Each .50 change in the price of the security translates to about 0.125 in rate.  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.  

You’ve no doubt heard that Republicans could have what’s called a “contested” Convention.  So exactly what is a Contested Convention?  Sometimes a contested convention is called a “brokered convention,” under the presumption that powerbrokers will negotiate backroom deals in order to determine the ultimate nominee. The terms are essentially interchangeable, but “contested convention” is more precise because the situation may resolve itself more organically.

In most election years, one presidential candidate wins enough delegates during the primary-caucuses process in order for the presumptive nominee to earn a majority of the delegates before the convention begins.  In a contested convention, however, no presumptive nominee exists because no candidate garners a majority of the delegates on the first ballot. So even though a convention is often just a perfunctory meeting for top party officials used to rally around the flag into the general election, a contested convention means the meetings actually make a pivotal difference for who the nominee will be.

What I really want to know is exactly “who” is making the rules?   GOP “rules” say that a candidate needs to win a majority in at least eight states in order to be nominated on the floor of the convention.  It was originally aimed at stifling Ron Paul supporters at the 2012 convention.  But party “officials” say this threshold could be lowered in the days before the convention to either allow (or block) certain candidates from getting nominated on the convention floor.  In other words Donald Trump could have the approval of the voters but not the party “officials” who could block him from getting nominated, which is why I think the Party let him run in the first place.  You can just see it…  “We’ll let him run to make sure he doesn’t run Independent.  He won’t win anyway and if he does we’ll control the nomination at the Convention.”  I can see that happening.  Voters may be in for a rude awakening when they learn that the votes cast by delegates on the floor of the convention — rather than those cast in primaries and caucuses — actually determine the Republican nominee.

In economic news this week; Orders for Durable goods fell, revised fourth Quarter GDP showed corporate profits fell, as did existing home sales.  This coming week will end with a gusher of fresh data on the health of our economy: High-profile reports on the labor market and the manufacturing sector are set to come out Friday morning. Other releases throughout the week will offer insight into consumer confidence and spending, inflation and the path forward for the Federal Reserve.

Orders for long-lasting or durable goods fell 2.8% in February (the third drop in four months) as every major industrial sector except for autos showed declines.  The details of the report show widespread weakness that underscores why the economy has slowed since last fall.  A strong dollar, weak global economy and nosedive in the U.S. energy sector have dented demand for American manufactured goods.  And there’s little reason to expect a big rebound anytime soon.

The fourth quarter’s slowdown was less severe than previously estimated but corporate profits fell, showing the economy entered 2016 on uneven footing.  Gross domestic product, the broadest measure of goods and services produced across the economy, advanced at a 1.4% annual rate in the fourth quarter, the Commerce Department said Friday. That was an upward revision from last month’s estimate of 1% growth.

Corporate profits sank 3.2% in 2015 to mark the first decline since the Great Recession, adding another weight on a slow-growing economy.  American companies have been squeezed by falling exports, cheaper imports and continued caution on the part of savings-minded consumers.  Firms have also incurred higher labor costs.  Weak earnings call into question whether companies can continue to add new workers, increase investment and sustain an economic recovery that’s almost seven years old.

On the Real Estate front: Millennials and others looking to buy a first — or “starter” — home are struggling to find ones they can afford, a new research report says.  There are fewer affordable starter homes in 95 of the 100 largest U.S. markets now compared with 2012, according to the San Francisco-based real estate research company Trulia.com. Trulia defines a starter as a home that is in the lower third of a market’s valuation and affordable to those making the median income in that market.

There’s a paradox in Monday’s existing-home-sales data.  Sales slid 7.1% to the lowest pace since November, the National Association of Realtors reported.  NAR has warned for many months that low levels of supply, which are pushing prices ever higher, will eventually cripple the market.  February’s decline may be a sign that the Realtors’ fears are coming true, although it may still turn out to be a temporary blip caused by weather, new closing regulations, and the difficulties of adjusting data to account for all those anomalies. 

Still, as NAR Chief Economist Lawrence Yun said in a statement, “the main issue continues to be a supply and affordability problem. Finding the right property at an affordable price is burdening many potential buyers.”  That may sound obvious: if you can’t afford the few limited options available on the market, you’d probably give up too. It also tracks with a survey NAR published last week, which found that the share of current renters who say now is a good time to buy fell in the most recent quarter.

Sales of new homes bounced back in February, another sign of continued, if subdued, momentum in the housing market.  New home sales ran at an annual pace of 512,000, the Commerce Department said Wednesday.  That was the highest since December.  February’s rate was 2% higher than January’s, but 6.1% lower than year-ago levels.  The median national sales price in February was $301,400, up 6.2% compared to January. There was 5.6 months’ worth of supply available at the current sales pace at the end of the month.

By 2016, about 238,000 homes or 28% of the total available inventory of 860,000 in those markets surveyed were considered starter homes, down from 425,000 homes or 30% of all homes in 2012, out of a total of 1.4 million that year the report found.  In 2016, the median starter home list price was $154,156, and a buyer would need to dedicate 37% of his income just to afford it, compared with 32% in 2012, Trulia said.

On the Employment front:  The number of Americans who applied for unemployment benefits in the mid-March was little changed at 265,000, reflecting the low level of layoffs taking place across the economy.  Initial claims have now been below 300,000 for 55 weeks, a feat last accomplished in 1973, when the size of the labor force was much smaller.  The average of new claims over the past four weeks edged up by 250 to 259,750, the Labor Department said Thursday. The monthly average is seen as a more accurate predictor of labor-market trends.

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 have a personal App for your phone that replaces my business card.  You can contact me (various formats), run the mortgage calculator, get RE/Mortgage news, and have access to my social media sites including this weekly commentary.  You can even share my app with others.  Please check it out and let me know what you think.  Click on the following link from your phone and hit “add to home screen, then click “add” and you’re done.

Bill’s phone App:  https://bbartok.mortgagemapp.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! Government Rhetoric, the Economy and other stuff. 3/18/16

The National Debt is currently: $19,117,639,132,587.00  is Higher by another 8 BILLION in the last week.  The interest pay-out alone on the debt is 233 Billion per year!  I post this so we will be aware of what we are leaving to our children.

Last Wednesday, on March 9, 2016, the bull market officially celebrated its seventh birthday. During that seven-year period, the S&P 500 nearly tripled, gaining 194% in price and producing a total return of 241%. Despite all of the time that has passed, memories of the stock market collapse in 2008 and 2009 remain vivid for all of us.  Set up by the severe 2008 – 09 decline, this bull market has been one of the strongest in history.  My question is; Why?  I would say the biggest driver of gains in the current Bull market has been Federal Reserve (Fed) policy.  Monetary policy stimulus, including quantitative easing (QE) and the so-called ZIRP (zero interest rate policy), has played a Huge role in powering this bull.

Think about it; if the Fed isn’t raising rates because the economy isn’t strong enough, shouldn’t the stock market fall?  Stocks have historically done quite well after the Fed starts rising interest rates.  Why would companies like lower rates better than a booming economy?  Because their borrowing cost is next to nothing and when you have lower expenses, your earnings look better. 

Folks, Wall Street firms will never tell you they think the market is poised for a fall.  They want you invested in stocks and other assets.  It’s how they make $$$.  Even in a bear market (2008-20010) they will tell you “everything’s going to be alright”.  While a Financial Advisor at Merrill Lynch (14yrs) I was reprimanded for telling clients to go to cash.  They said it was “timing the Market” and not allowed.  This is one of the many reasons I left that business.

As I stated last week, we’ve been stuck in the current “growth” pattern for the last 7 years.  An average real gross domestic product, GDP, (the output of goods and services produced by labor and property located in the United States) growth rate of about 1.88% (2009 thru 2015) is not growth, but treading water.  The highest we’ve gotten is 3.00% back in 2010.  Prior to this recent time period we averaged about 3.5% growth. 

The Dow is higher by 91 points today/Friday and the highest of the year. The Dow is at 17,573.  The S&P 500 is trading at 2,045.  Gold is trading at $1,254 an ounce, while oil futures at $39.52 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $2.29/Gal. Summer gas (higher priced) is in production.

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 102.06.  We tested the support (lower) end of the trading range last week.   Our current trading range is about 101.25 to about 102.8.  Each .50 change in the price of the security translates to about 0.125 in rate.  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; Stocks rose again today, putting major indexes on pace for their fifth straight week of gains.  The week’s advance accelerated after the Fed on Wednesday signaled a more gradual path of interest-rate increases. The Dow, which has risen each day this week, is up 2.1% so far this week. The S&P 500 has added 1.2%.

The Federal Reserve held their scheduled meeting this week and held interest rates steady along with signaling it will lift them more slowly than previously indicated because of a weak global environment and volatile stock market.  The Fed said in a statement that they decided to leave the central bank’s benchmark interest rate in a range of 0.25%-0.5%. The decision was widely expected.

The big change was in the Fed’s so-called “dot plot,” where officials penciled in only two quarter-point hikes this year, down from four in December.  “We continue to see risks,” Fed Chairwoman Janet Yellen said in a press conference after top officials met.  But she also pointed out that “the U.S. economy has been very resilient in recent months.”

Just a few months ago, the Fed appeared ready to embark on a series of interest-rate increases after determining the economy was strong enough to handle it. Yet big losses in the stock market early in the year, slowing U.S. growth and fresh worries the global economy spurred the Fed to back off.  See last week commentary regarding the Fed backing itself into a corner where rates are concerned.  Financial markets now don’t expect a rate hike before June and rallied on the news.

More recently our economy seems to have stabilized, easing some of the Fed’s concerns. The Fed pointed to improved consumer spending, a stronger housing market and “strong job gains.”  Yet the Fed acknowledged that exports and business investment remain soft.  Inflation is expected to remain on the low side this year, even though there are some signs that price pressures are building.  The Fed predicted its preferred PCE inflation gauge will end 2016 at 1.2%, down from a prior forecast of 1.6%.  The bank wants to see inflation rise to the 2% level it considers a sign of a healthier economy.

Other Central Banks adjusted their rates this week:  Norway’s central bank cut its main interest rate as it sought to boost a slowing economy and keep prices rising close to its 2.5% target.  Indonesia’s central bank cut interest rates for the third time this year to offer more support for the domestic economy. The South African Reserve Bank raised its key interest rate to 7.0%, from 6.75% previously, citing the threat that a weakening currency poses to inflation.

U.S. wholesale prices fell 0.2% in February to mark the fifth decline in seven months, largely because of lower gasoline and food prices.  The price of goods dropped 0.6% last month. Wholesale gas prices sank 15% and food declined 0.3%. The cost of services was flat.  Over the past year overall producer prices are flat in unadjusted terms.  Excluding the volatile categories of food, energy and trade, core prices edged up 0.1% in February.  Core wholesale prices have risen 0.9% in the same span, the biggest 12-month increase since last summer. While some pressure appears to be building, inflation is still very low.

Consumer prices also fell in February as well owing to another drop in gasoline, but the rising cost of shelter and medical care is creating upward pressure on underlying inflation.  The consumer price index declined 0.2% last month, the Commerce Department said Wednesday.  Energy prices dropped 6% last month, mostly because of cheaper gasoline. The price of food, however, moved up 0.2% as the cost of groceries rose for the first time since last fall.  Over the past 12 months the CPI has risen at a mild 1% rate. That’s down from 1.4% in January.  Yet stripping out food and energy, so-called core prices rose 0.3% in February.  Core consumer prices have climbed at a 2.3% annual rate, the fastest pace since May 2012.

Sales at U.S. retailers dipped in February after an even bigger drop in January, a sign that consumers haven’t ramped up spending despite steady job creation.  Retail sales fell 0.1% last month, the Commerce Department said Tuesday.  And sales for January were revised lower to show a 0.4% decline instead of a 0.2% gain.  Retail sales account for about 25% of consumer spending, the main engine of economic growth.  The lackluster pace of sales in the first two months could mean another tepid increase in gross domestic product, GDP, in the first quarter.  The economy expanded at a weak 1% annual clip in the fourth quarter and was projected to accelerate to a 2.3% rate in early 2016.

A measure used to help determine GDP, known as core retail sales, was unchanged in February. Core sales strip out gas, autos, building materials and grocery stores. Core sales have risen a scant 1.1% in the past three months.  The retail sales figures, however, do not take inflation into account. Cheap gas, falling import prices and a recent decline in the cost of food have helped Americans to stretch their paychecks.  Real consumer spending is therefore stronger than retail sales suggest.

A measure of U.S. leading economic indicators rose in February for the first time in three months and suggests steady if mild growth in the months ahead.  The leading economic index rose 0.1% to 123.2 last month, according to the nonprofit Conference Board.  “Although the LEI’s six-month growth rate has moderated considerably in recent months, the outlook remains positive with little chance of a downturn in the near-term,” said Ataman Ozyildirim, an economist at the board that produces the report.  A separate index of current conditions rose 0.1% in February. The LEI is a weighted gauge of 10 indicators designed to signal business-cycle peaks and valleys.

U.S. consumer sentiment slipped to 90.0 in March from 91.7 in February, the lowest reading in five months, because of concerns about how fast the economy will grow in the months ahead as well as the expectation that gasoline prices will rise.  “While consumers do not anticipate a recession, they no longer expect the economy to outperform the 2.4% rate of economic growth recorded in the past two years,” said Richard Curtin, chief economist of the survey.  The last time the index was as low as it is now was in October. The sentiment index reached a post-recession peak of 98.1 in January 2015 but has averaged 92 since then.  The all-time high for the sentiment index is 112, set in January 2000. The index hasn’t topped 100 since 2004.

On the Real Estate front: Confidence among home builders held steady in March, an industry group reported Tuesday, even as another issued a call for more housing construction.  Construction on new houses rose in February to a five-month high, led by the biggest increase in single-family units in nine years.  Sales of existing homes hit the second-highest rate of the expansion in January, the National Association of Realtors said last month.  Houses sold at such a strong pace that inventory fell to one of the lowest levels in decades, pushing prices ever higher.

On Tuesday, NAR released a survey showing demand for homeownership was still strong. The vast majority, 82%, of current homeowners surveyed said now is a good time to buy. The survey also demonstrated what NAR calls “an overwhelming consumer preference for single-family homes in suburban areas.”  In a release, NAR Chief Economist Lawrence Yun said that “supply and demand imbalances and unhealthy levels of price growth in several metro areas have made buying an affordable home an onerous task for far too many first-time buyers and middle-class families.”

On the Employment front:  The number of Americans who applied for unemployment benefits last week rose by 7,000 to 265,000, but the rate of layoffs taking place in the economy are still exceedingly low.

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 have a personal App for your phone that replaces my business card.  You can contact me (various formats), run the mortgage calculator, get RE/Mortgage news, and have access to my social media sites including this weekly commentary.  You can even share my app with others.  Please check it out and let me know what you think.  Click on the following link from your phone and hit “add to home screen, then click “add” and you’re done.

Bill’s phone App:  https://bbartok.mortgagemapp.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! Government Rhetoric, the Economy and other stuff. 3/11/16

The National Debt is currently: $19,109,639,132,587.00 is Higher by another 80 BILLION in the last week. The interest pay-out alone on the debt is 233 Billion per year! I post this so we will be aware of what we are leaving to our children.

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

Try making an accurate economic forecast for 2017 when the next U.S. president could be anyone from Bernie Sanders to Donald Trump. Just as the 2016 race has stymied political prognosticators, it is also confounding the economites (my term for economists, think of a creature that ruffles its fur/feathers when its right and hides when wrong).

This is the primary reason most folks are fed up with our government and are voting for an outsider like Trump, as bold as he might be. President Barack Obama said last Friday that the February jobs report showed that the U.S. economy was “the envy of the world” and that “Republican presidential candidates should stop talking down the economy.” If we are the envy of the world then that doesn’t say much for the rest of the world.

Obama said in remarks to reporters ahead of a meeting of his economic team. “The facts don’t lie….America is pretty darn great right now.” Trump’s motto is “Make America Great Again.” While the Labor Department on Friday reported a strong (in relation to the last 8 years) 242,000 jobs created in February this is in no way indicative of a growing economy to be bragging about. If he’s referring to a 2.00% growth rate then this is a good number. But there are a certain number of new jobs needed to absorb population growth. More on this next week.

The president also said that he didn’t expect the unnamed candidates would change their “doomsday rhetoric” and said “his plans” to grow the economy have worked. Really??? The national Debt has doubled, and by 10 Trillion dollars. His comments mask some stubborn problems. One of the most acute is weak wage growth despite a sinking unemployment rate. Hourly pay has been rising just 2.1% a year since the recovery took root in 2010. By contrast, wages grew 3.2% annually during the 2001-2007 expansion and 3.2% in the 1991-2000 boom.

More than three-fourths of forecasters in a new Wall Street Journal survey say the presidential election has introduced more uncertainty than is typical from a change at the White House. While it doesn’t take a poll to tell me that, the stock markets have rebounded over the past month as economic reports bolstered the case that continued—though moderate—economic growth seems likely. The average survey respondent estimates the economy will grow about 2.4% this year and next and that the unemployment rate will fall to 4.6% in 2017.

We’ve been stuck in the current “growth” pattern for the last 7 years, or since Prez Obama took office. I would say that at an average real gross domestic product, GDP, (the output of goods and services produced by labor and property located in the United States) growth rate of about 1.88% (2009 thru 2015) is not growth, but treading water. The highest we’ve gotten is 3.00% back in 2010. Prior to this recent time period we averaged about 3.5% growth.

During this time period the Fed has kept short term rates at “0” and the Stock market (Dow Index) has gone from just over 6,000 to over 18,000. I’ve said this before, but the Fed has backed itself into a corner. If/when they raise rates they will have to do it when the economy is doing better or they risk a potential stock market correction. And I don’t see the economy improving any better than the stagnant 2.00% we’ve been stuck at since 2010, And when they do raise rates (to beyond 3.5%) corporate earnings will suffer due to interest rate expense. I thought we would’ve seen changes after the last election but we’ve gotten more of the same. A lot depends on the upcoming election. The Fed predicts the economy will trudge along at a 1.8% to 2.2% growth rate until at least 2018.

Most economites surveyed by The Wall Street Journal expect the Fed to leave short-term interest rates unchanged at its next two policy meetings, and next raise them in June. About 76% of business and academic economites polled in recent days said the Fed would next raise its benchmark fed-funds rate at its June 14-15 policy meeting, up from 60% in the February survey. Just 3% of forecasters predicted Fed Gods would lift rates at the March 15-16 meeting, down from 9% in the last survey. Asked to gauge the probability of a March rate increase, on average they said 12%.

In economic news this week; the fact that there has been no real “bad” economic data, and improvements in consumer spending and employment, is helping ease investors’ concerns about weak corporate earnings and worries that the country could be headed toward a recession.

Small-business owners turned slightly less confident about their economic prospects last month, with lackluster sales crimping margins and ongoing uncertainty over the economic outlook and political landscape pinching spending plans. The National Federation of Independent Business’s small-business optimism index, based on a survey sent to about 5,000 owners, slipped 1 point to 92.9, the lowest level in about two years. In 2015, the gauge averaged 96.1.

While overall consumer credit increased 3.6% in January, credit growth actually slowed as consumers cut back on credit card use, the Federal Reserve reported Monday. This is the smallest percentage increase since March 2013. It’s also a sharp deceleration from December’s 7.3%. The slowdown brought consumer credit below expectations. Total consumer borrowing, which does not include mortgage debt, now totals $3.5 trillion. Credit card borrowing declined 1.4% in January following gains averaging 7.5% over the past two months. This is the first decline since last February. The Economites often view credit card use as a proxy for consumer confidence. Non-revolving credit, which includes auto loans and student loans, grew 5.4% in January after a 7.4% gain in December.

The federal government ran a budget deficit of $193 billion in February, the Treasury Department reported Thursday, just slightly higher than the $192 billion recorded in the same month a year ago. The last time the government brought in more $$$ than is spent was in 2000. Total spending for the month was $362 billion, Treasury said, or 9% more than a year ago. Spending rose for interest payments on the public debt, Medicare and Medicaid benefits and veterans’ programs, among other budget areas. Receipts totaled $169 billion, up 21% from last February. Individual income and payroll taxes rose by 12%.

On the Real Estate front: On the national level; the National Association of Realtors gauge of pending home sales dipped 2.5% in January. Also NAR’s monthly gauge fell to 106.0 from an upwardly-revised 108.7 in December. It was the 17th straight month in which the index has been higher compared to a year ago, but that gain was only 1.4% in January. On the local level; pending sales in El Dorado County were higher by 58% from Jan to Feb and new listings were higher by 33% in the same period. The index tracks real estate transactions in which a sales contract has been signed, but the deal has not yet closed.

The decline probably reflects some impact from the massive blizzard in January, NAR said, but also the strong acceleration in home prices, along with lean inventory. “Some buyers could be waiting for a hike in listings come springtime,” NAR Chief Economist Lawrence Yun said in a statement. Sales of existing homes surged last month but prices also jumped, by 8.2%. NAR forecasts such sales will rise 2.5% over the 2015 tally in 2016, to 5.38 million. The group contends new home construction is needed to bring balance into the market.

On the Employment front:  The number of Americans who applied for unemployment benefits fell by 18,000 in the first week of March, setting a five-month low of 259,000 and reflecting a low rate of layoffs in a steadily growing economy. Initial claims fell below the 300,000 threshold that signals a healthy labor market more than a year ago. They have remained under that mark since. New claims touched a 42-year low of 256,000 in October.

Stocks rallied today as investors reassessed the impact of the European Central Bank’s latest stimulus measures and the health of the U.S. economy. The Dow is higher by 217 points today/Friday and the highest of the year. The Dow is at 17,212. The S&P 500 is trading at 2,022. Gold is trading at $1,251 an ounce, while oil futures at $38.55 a barrel. Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $2.13/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 101.44. We are currently testing the support of the trading range. Our current trading range is about 101.50 to about 103.00. Each .50 change in the price of the security translates to about 0.125 in rate. 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.

I have a personal App for your phone that replaces my business card. You can contact me (various formats), run the mortgage calculator, get RE/Mortgage news, and have access to my social media sites including this weekly commentary. You can even share my app with others. Please check it out and let me know what you think. Click on the following link from your phone and hit “add to home screen, then click “add” and you’re done.

Bill’s phone App: https://bbartok.mortgagemapp.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 March 27th 2015

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!

The National Debt is currently: $18,157,222,132,587.00  is Higher by another 5 BILLION.  The interest pay-out alone on the debt is 240 Billion per year!  I post this so we will be aware of what we are leaving to our children.

Stocks edged higher this morning, putting major benchmarks on track to snap a streak of four days of losses.  The Dow last traded at 17,690 about 500 pts lower than where it was last Friday.  The S&P 500 is trading at 2,058.  Gold is trading at $1,200 an ounce, while oil futures at $49.87 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $2.87/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 .125% over where we were last week.  Our current trading is about 101.00 to about 102.25.  We broke above the range last Friday and traded to 102.52 but have retraced to 101.84 currently.  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.     

In economic news this week; the reader’s digest version is the economy is still trudging along.  The first quarter is showing signs of slowing as The U.S. Dollar continues to gain strength and oil remains at 25 year lows.  Earlier in the week the ECB’s (European Central Bank) commitment to flood the Eurozone with more than €1 trillion ($1.16 trillion) in newly created money, sparking a rally in stock and bond markets and sending the euro plunging.

Profits at U.S. corporations in late 2014 posted their largest drop in four years, a reflection of an economy weighed down by a strong dollar and weak global demand.  The Commerce Department’s third estimate of fourth-quarter gross domestic product (GDP) also showed that the economy slowed in the final months of 2014, putting the growth trajectory on a lower path ahead of an apparent slowdown early this year.

GDP, the broadest measure of goods and services produced across the economy, expanded at an annual rate of 2.2% in the fourth quarter.  That was unchanged from its previous estimate last month.  Corporate profits fell at a 3% pace from the third quarter. That was the largest quarterly drop in profits since the first quarter of 2011.  On a year-over-year basis, the report pegged corporate profit growth at 2.9%, slowing from 5.1% annual growth in the third quarter.  As a share of the total economy, corporate profits were just a hair below the record high of 10.5% set in 2013. The expectation is for the current quarter to remain sluggish. First-quarter GDP estimates have been trimmed earlier this week following a disappointing report on business spending and investment.

The great deflation of 2014 caused by the plunge in oil may have run its course: Consumer prices rose 0.2% in February, the first rise in four months.  Gasoline prices have rebounded in early 2015, with the cost of oil stabilizing at around $50 a barrel after selling for more than $100 last summer.  Higher costs for food, housing and new cars also contributed to the increase in consumer prices in February.  Still, there’s been zero overall inflation in the last 12 months, the offshoot of the biggest drop in gasoline prices since the Great Recession.  The annualized rate of consumer inflation had even turned negative in January for the first time since 2009. 

If food and energy are excluded, so-called “core” consumer inflation has risen at a 1.7% rate over the past 12 months.  Although the Fed uses a different index as its preferred price gauge, they view a 2% inflation as healthier for the economy. The Fed is more likely to raise interest rates if inflation starts to move steadily higher.

While Businesses are hiring at the fastest pace in 15 years, they sure aren’t investing like good times are here to stay.  Orders for long-lasting or durable goods such as cars, appliances and computers fell 1.4% in February to mark the third decline in four months. The increase in orders for January was lowered, making the decline last month look even worse. Businesses started cutting investment at the end of the summer and that contributed in part to slower growth during the last months of 2015 after a very strong third quarter.  

Companies are actually investing less now compared to a year earlier in unadjusted terms. A soft global economy and soaring dollar that’s made it harder to sell U.S. exports are among the headwinds that are constraining American businesses. The steep plunge in oil price has also curtailed investment in what was a booming domestic energy sector.

On the Real Estate front: The price of buying and renting a home are rising, squeezing consumers and dampening the housing market.  The median sales price of used homes hit $202,600 in February, up 7.5% from the year-earlier period. This is the largest increase in a year and is “unhealthy” said Lawrence Yun, chief economist of the National Association of Realtors.  While higher prices are good for homeowners, “for people who want to buy a home it is becoming more difficult,” Yun said.  Wages are only rising 2%, he noted.  Potential first time buyers on the sidelines, and renters are also being squeezed as rents are rising at a 3.5% rate, Yun noted.  Given the rise in rents, these buyers are unable to save for down payments, Yun noted.  The share of first-time home buyers rose marginally to 29% from 28% in February, well below the 40% level that the Economites say is normal.  

After falling to a nine-month low in January, overall sales of existing homes rebounded partially, rising 1.2% in February.  Existing home sales remain soft, having been stuck around the 5 million unit rate for two-and-a-half years. One reason prices are rising is that inventory remains low, Yun said.  February’s inventory was 1.89 million existing homes for sale, a 4.6-month supply at the current sales pace. This was down 0.5% from the year-earlier period.  The investor share fell to 14% from 17% also due to the higher prices, Yun said.  The all-cash share of purchases slipped to 26% from 27%.

Sales of new homes in the U.S. surged in February, and home buying in the first two months of 2015 rose to the highest level in seven years despite heavy snow and bouts of extreme cold in some parts of the nation.  The pace of new home sales climbed 7.8% last month to an annual rate of 539,000 from an upwardly revised 500,000 in January, the government reported. That’s how many new homes would be sold if the rate of sales for the whole year were the same as it was in February.  Sales were unusually strong in the Northeast, where demand had fallen off sharply in January. Sales also climbed 10% in the South, the region in which more than half of all new single-family homes are built.

On the Employment front:  The U.S. economy may have slowed sharply in the first quarter, but companies aren’t showing much concern: Layoffs remain near a 15-year low.  The number of people who filed new applications for benefits at their state unemployment offices, known as initial claims, fell by 9,000 to 282,000 last week.  New claims have tracked below 300,000 for three straight weeks after a weather-induced spike in February that pushed them to the highest level since last spring. And they are running about 9% lower now compared to one year ago.

Fun for the day: 

Part 1 of 5 of “Where to move”…for all of those who are contemplating retirement locations.

You can retire to Phoenix, Arizona where…  

1. You are willing to park 3 blocks away from your house because you found shade. 

2. You’ve experienced condensation on your rump from the hot water in the toilet bowl. 

3. You can drive for 4 hours in one direction and never leave town. 

4. You have over 100 recipes for Mexican food. 

5. You know that “dry heat” is comparable to what hits you in the face when you open your oven door. 

6. The 4 seasons are: tolerable, hot, really hot, and ARE YOU KIDDING ME?? 

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 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

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