>> Market Update QUOTE OF THE WEEK... "Perseverance is the hard work you do after you get tired of doing the hard work you already did." --Newt Gingrich
INFO THAT HITS US WHERE WE LIVE... Even though the housing recovery is well underway, there still is evidence that more hard work needs to be done. Last week began with March Existing Home Sales off 0.6%, dropping to an annual rate of 4.92 million units. In addition, the months' supply of existing homes edged up to 4.7 from 4.6 in February. But even though existing home sales seem to have leveled off in the last few months, they're actually UP 10.3% versus a year ago. It's also encouraging to note that the median existing home price, at $184,300, is up 11.8% over last year.
To further inspire us, March New Home Sales came in Tuesday up 1.5%, to a better than expected 417,000 annual rate. New home sales are now up 18.5% over a year ago, and Q1 of 2013 was the best quarter for new home sales since Q3 of 2008! The months' supply of new homes remained at 4.4, as the faster sales pace was offset by a rise in inventory of 3,000 units. The median price of new homes sold, at $247,000, is up 3.0% over a year ago. Finally, the FHFA index of prices for homes financed by conforming mortgages was up 0.7% in February and up 7.1% versus a year ago.
BUSINESS TIP OF THE WEEK... Don't be afraid to take small risks. Just spend the time to test things out. And trust your gut. Often our gut instincts lead the way to the success we've been looking for. >> Review of Last WeekUPBEAT AGAIN... Solid corporate earnings and positive economic reports were enough to offset some negative data and get Wall Street investors back into an upbeat mood. All three major stock market indexes ended ahead for the week. The feeling on Wall Street was that the economy may be growing slowly, but it still is growing. Coming in below expectations were Existing Home Sales and Durable Goods Orders for March, and the GDP Advanced estimate for Q1, which only managed a 2.5% annual growth rate.
On the good side, initial jobless claims were down by 16,000 to 339,000, and continuing claims dropped 93,000 to 3.00 million, causing some analysts to anticipate stronger job growth for April's numbers arriving this Friday. Other good notes were struck by the March gain in new home sales and Michigan Consumer Sentiment for April coming in higher than expected. The biggest positive news? Over 80% of the Q1 corporate earnings reported so far have met or beaten estimates.
The week ended with the Dow up 1.1%, to 14713; the S&P 500 up 1.7%, to 1582; and the Nasdaq up 2.3%, to 3279.
Even though stocks moved higher, bonds also gained, thanks to the mixed economic data. The FNMA 3.5% bond we watch ended the week up .07, at $106.16. For the fourth straight week, national average mortgage rates slid, approaching near historical lows. The seasonally adjusted Purchase Index of mortgage loan application volume was up 0.3% from the week before to its highest level since May 2010, according to the Mortgage Bankers Association.
DID YOU KNOW?... This week's monthly Employment Report indicates both the strength of the economy, since companies hire when things are going well, and prospects for growth, since higher employment means more money available to be spent on goods and services. >> This Week's Forecast INFLATION, PENDING HOME SALES, MANUFACTURING OK, THE FED MEETS, MORE JOBS... Before it meets Wednesday, the Fed will see its favorite inflation measure, Core PCE Prices, which are expected to remain within central bank guidelines. March Pending Home Sales are predicted to show existing home sales continuing to recover a few months out. No one expects a rate hike at Wednesday's FOMC Meeting, but the policy statement will be read carefully.
The week's two manufacturing readings, the Chicago PMI for the Midwest and the national ISM Index, are forecast above 50, indicating mild growth in that sector. But the big focus will be the monthly Employment Report come Friday. A gain of 150,000 Nonfarm Payrolls is expected for March, but the Unemployment Rate should remain at 7.6% >> 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.
Economic Calendar for the Week of Apr 29 – May 3 | Date | Time (ET) | Release | For | Consensus | Prior | Impact | M
Apr 29 | 08:30 | Personal Income | Mar | 0.3% | 1.1% | Moderate | | M
Apr 29 | 08:30 | Personal Spending | Mar | 0.1% | 0.7% | HIGH | M
Apr 29 | 08:30 | PCE Prices – Core | Mar | 0.1% | 0.1% | HIGH | | M
Apr 29 | 10:00 | Pending Home Sales | Mar | 0.1% | –0.4% | Moderate | Tu
Apr 30 | 08:30 | Employment Cost Index | Q1 | 0.5% | 0.5% | HIGH | Tu
Apr 30 | 09:45 | Chicago PMI | Apr | 52.0 | 52.4 | HIGH | Tu
Apr 30 | 10:00 | Consumer Confidence | Apr | 61.0 | 59.7 | Moderate | W
May 1 | 10:00 | ISM Index | Apr | 51.0 | 51.3 | HIGH | W
May 1 | 10:30 | Crude Inventories | 4/27 | NA | –0.947M | Moderate | W
May 1 | 14:15 | FOMC Rate Decision | 5/1 | 0%–0.25% | 0%–0.25% | HIGH | Th
May 2 | 08:30 | Initial Unemployment Claims | 4/27 | 346K | 339K | Moderate | Th
May 2 | 08:30 | Continuing Unemployment Claims | 4/20 | 3.050M | 3.000M | Moderate | Th
May 2 | 08:30 | Productivity – Prelim. | Q1 | 1.2% | –1.9% | Moderate | Th
May 2 | 08:30 | Trade Balance | Mar | –$43.5B | –$43.0B | Moderate | F
May 3 | 08:30 | Average Workweek | Apr | 34.6 | 34.6 | HIGH | F
May 3 | 08:30 | Hourly Earnings | Apr | 0.2% | 0.0% | HIGH | F
May 3 | 08:30 | Nonfarm Payrolls | Apr | 150K | 88K | HIGH | F
May 3 | 08:30 | Unemployment Rate | Apr | 7.6% | 7.6% | HIGH | F
May 3 | 10:00 | ISM Services | Apr | 54.0 | 54.4 | Moderate |
>> Federal Reserve Watch Forecasting Federal Reserve policy changes in coming months... No one expects the Fed to touch the Funds Rate at this week's FOMC meeting, with unemployment above the target and inflation under control. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same. Current Fed Funds Rate: 0%–0.25% After FOMC meeting on: | Consensus | May 1 | 0%–0.25% | Jun 19 | 0%–0.25% | Jul 31 | 0%–0.25% |
Probability of change from current policy:
After FOMC meeting on: | Consensus | May 1 | <1% | Jun 19 | <1% | Jul 31 | <1% |
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