QUOTE OF THE WEEK… “One never notices what has been done; one can only see what remains to be done.” –Marie Curie, Polish and naturalized-French physicist and chemist
INFO THAT HITS US WHERE WE LIVE… The woman who discovered radioactivity and twice won a Nobel prize, prompts us to notice what’s been done so far in the new home market. Sales volume came in at an annual rate of 464,000 in November. This was only a 2.1% slip from October’s five-year high, so most of those gains were retained in November, and this beat consensus expectations. Many observers see continued momentum in new home sales, as the median price rose again in November and is now up 10.6% from a year ago. Inventory is down to a 4.3 months’ supply.
Of course, a lot remains to be done. The annual sales rate is still below the 700,000 pace economists say indicates a more healthy new home market. Yet builders feel positive. The chairman of the National Association of Home Builders commented, “NAHB’s member surveys…show increasing confidence.” Good news for the overall housing market came from the incoming Federal Housing Finance Agency Director. He said that he will postpone the fee hikes Fannie Mae and Freddie Mac hadplanned for mortgages they back. Those fees would have increased the costs of conventional loans.
BUSINESS TIP OF THE WEEK… If you want innovation, don’t try to come up with an idea out of thin air. Instead, just find a problem to solve. Every product and service you now use was originally created to solve a problem.
>> Review of Last Week
FABULOUS FLOOR SHOW… The trading floor of the New York Stock Exchange has put on quite a show in 2013, as the Dow Jones Industrial Average is up over 25% and the S&P 500 up over 29%, year-to-date. The Nasdaq, which lists a different, tech-heavy group of stocks and has no physical trading floor, is up over 37% year-to-date. Since stock market performance is considered a leading indicator of the overall economy, we could be in for a stronger pace of recovery in 2014. Let’s hope so.
For the week, the three major stock indexes posted gains once again, even though the economic data was mixed, as usual. Both November Personal Income and December Michigan Consumer Sentiment missed estimates. But Core PCE Prices showed inflation crept up just 0.1% in November and is up only 1.1% the past year.Durable Goods Orders and New Home Sales both beat expectations for November. Best of all, Thursday saw a sharp dip in Weekly Initial Unemployment Claims.
The week ended with the Dow up 1.6%, to 16478; the S&P 500 up 1.3%, to 1841; and the Nasdaq up 1.3%, to 4157.
Investors’ appetite for risk into year-end sent them over to stocks, pushing bond prices down. The FNMA 3.5% bond we watch ended the week down .18, to $99.09. As we head into the final trading days of the year, Freddie Mac’s Primary Mortgage Market Survey for the week ending December 26 showed national average fixed mortgage rates little changed. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up to the minute information.
DID YOU KNOW?… A Santa Claus rally is a rise in stock prices the week after Christmas, in anticipation of the January effect, which is another rise in stock prices that can happen as investors get back into the market in the New Year.
>> This Week’s Forecast
PENDING HOME SALES UP, MANUFACTURING OFF, CONSUMERS CONFIDENT…Though holiday shortened, this week will offer up some useful data. November Pending Home Sales are expected to rebound from their October dip. Manufacturing activity in December is forecast to show a slightly slower rate of expansion, both in the Midwest (Chicago PMI), and across the country (ISM Index). But Consumer Confidenceis predicted up in December.
New Year’s Day, Wednesday, the financial markets will be closed. We wish you a successful and healthy 2014!
>> The Week’s Economic Indicator Calendar
Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.