QUOTE OF THE WEEK… “Never, never, never give up.” –Winston Churchill
INFO THAT HITS US WHERE WE LIVE… Not giving up on the U.S. housing market is clearly the right strategy. Additional proof of this came with latest New Home Sales report. Up a strong 9.6% in January, new single-family home sales reached a 468,000 unit annual rate. This was the strongest yearly rate since July 2008. So much for the notion that slightly higher mortgage rates are holding back home sales.This January boom in new home sales also supports the theory, reported here, that recent weaker existing home sales numbers were partially caused by a lack of inventory that drove buyers into new homes.
Pending Home Sales, a measure of contracts signed on existing homes, was up just 0.1% in January, foretelling modest sales growth a couple of months out. The January reading, however, was the first increase since last May. In other housing news, the Case-Shiller index of home prices in the 20 largest metros went up 0.8% in December and was up 13.4% for all of last year. The FHFA index of prices for homes financed with conforming mortgages was up also 0.8% in December, and is 7.7% ahead for 2013. Both annual home price gains were the largest seen since 2005.
BUSINESS TIP OF THE WEEK… A great communications exercise is to boil down your message to less than 30 words and just three key points. Being succinct is important, whether you’re chatting up a prospect or a member of the media.
>> Review of Last Week
A VERY PLEASANT FEBRUARY… For much of the country, February’s weather may have been horrible, but the climate on Wall Street was pleasant indeed, as stocks treated investors to strong monthly gains. The Dow’s 4% February rise was its largest monthly percentage gain since January 2013 and the Nasdaq’s 5% hike was its biggest since September. The S&P 500, with a 4.3% February gain, is finally positive for the year. This was all encouraging to see, given negative influences like Russia’s worrisome involvement with Ukraine and some disappointing economic reports.
That downer data was, as usual, mixed in with some good stuff. The Conference Board’s Consumer Confidence read missed expectations, but the University of Michigan’s Consumer Sentiment beat forecasts. Pending Home Sales came in lower than predicted for January, but New Home Sales surprised to the upside. GDP – Second Estimate had overall economic growth sliding to 2.4% in Q4, but January Durable Goods Orders were down less than expected. Finally, the Chicago PMI showed manufacturing continuing to expand in February in the Midwest, where the weather apparently has less economic impact.
The week ended with the Dow up 1.4%, to 16322; the S&P 500 up 1.3%, to 1859; and the Nasdaq up 1.0%, to 4308.
While stocks moved up, bonds didn’t do too badly either, as the mixed economic data kept some investors focused on safety. The FNMA 3.5% bond we watch finished the week up .88, to $101.12. For the week ending February 27, Freddie Mac’s Primary Mortgage Market Survey reported national average fixed mortgage rates edged up, while adjustable mortgage rates dipped slightly. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up to the minute information.
DID YOU KNOW?… The National Debt is the sum of all prior annual federal deficits. Since these are financed by government borrowing, the national debt represents all outstanding government debt.
>> This Week’s Forecast
CONSUMER SPENDING AND PRICES HANG IN, EMPLOYMENT HOLDS ON… The week begins with Personal Spending and Core PCE Prices data expected to show that consumers hung in there, contributing a smidge more to the economy in January, while inflation remained under control. The week ends with the January Employment Report, predicted to reveal job growth holding on to modest levels.
The ISM Index of manufacturing and ISM Services index are both forecast above 50, indicating continued, if slow, growth in February. The Fed’s Beige Book may give useful insights into the economic situation in the 12 Federal Reserve Districts across the country.
>> 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.