Monday, 05 December 2011 12:38
QUOTE OF THE WEEK..."Motivation is the art of getting people to do what you want them to do because they want to do it."--Dwight D. Eisenhower
INFO THAT HITS US WHERE WE LIVE...Enough people were motivated to buy new homes in October to push monthly sales up 1.3% to a 307,000 annual rate. Even better, the motivation was strong enough to send the median price to $212,300, UP 4% over a year ago. Going forward, what should motivate everyone is that the supply of new homes fell to 6.3 months. Nonetheless, new home sales need to get to an annual rate around 950,000 and some observers say that will take another few years.
Housing market pessimists had to be really disappointed by October's Pending Home Sales. This measure of signed contracts for existing home sales that have not yet closed was UP 10.4% for the month and is 9.2% higher than it was a year ago. This bodes well for existing home sales a few months out. Additional home price data went in opposite directions. The Case-Shiller home price index in the 20 largest metros was down 0.6% in September, but the FHFA index registered a 0.9% price increase for homes financed with conforming mortgages.
BUSINESS TIP OF THE WEEK...A great thought this time of year: give generously without expecting anything in return--it will pay off in the long run.
>> Review of Last Week
YO-YO MARKETS...That's how one chief investment officer described what's been happening on Wall Street. The worst ever Thanksgiving week for stocks was followed by the S&P 500's biggest weekly gain since March 2009, the Dow's largest weekly gain since July 2009 and a seriously strong upturn for the Nasdaq. The bulls got back in control starting with some reassuring news for Europe. The Fed and five other central banks agreed to lower the cost of borrowing dollars for foreign banks. This doesn't solve fiscal problems for the Europeans, but it does keep the money flowing to buy them more time.
Decent economic data kept the bulls on their charge. In addition to the housing news, sales for the first full weekend of holiday shopping were UP 16.4% over last year according to the National Retail Federation. ComScore reported Black Friday online sales were up 26% from last year. Then Friday's November Employment Report showed 120,000 new jobs, plus revisions to October and November added another 72,000 payrolls. The unemployment rate dropped to 8.6%, but this was due to a decrease in the labor force of 315,000. There was also concern over the 0.1% drop in average hourly earnings.
For the week, the Dow ended UP 7%, at 12019; the S&P 500 went UP 7.4%, to 1244; and the Nasdaq was UP 7.6%, to 2627.
Stocks were surging, so bonds should have tanked if things had gone by the book. But these days, not many things financial follow a predictable course. Bond performance was actually mixed, which turned out well for the FNMA 3.5% bond we watch. It ended the week up .86, to $102.06. According to Freddie Mac's weekly survey, national average mortgage rates remained at or near record lows for the fifth week in a row.
DID YOU KNOW?... The Trade Balance reported this week is the country's exports, minus imports. It is the largest component of our balance of payments.