Market update for the week of December 26, 2011
Tuesday, December 27, 2011
WEEK..."...never retreat, never retract...never admit a
mistake."--Napoleon Bonaparte
INFO THAT HITS US WHERE WE
LIVE...Wisely, the National Association of Realtors (NAR) did not follow the diminutive Emperor's advice
last week, admitting they uncovered some mistakes in the statistical model used
to estimate national Existing Home Sales the past few years. They therefore had
to revise those sales down 14%, to a 4.42 million annual rate in November. Nevertheless, Existing Home sales were UP 4%
for the month and UP 12% versus a year ago. And the inventory is down 18% versus
last year, now at a 7 months' supply!
In line with that, Housing Starts were UP 9.3% for November and UP 24.3%
versus a year ago, while Building Permits were UP 5.7% for the month. November
New Home Sales came in Friday UP 1.6%, with the supply dropping to 6
months, its lowest level since early 2006! The numbers of unsold new homes under
construction and unsold completed new homes are also at or near record lows.
The FHFA price index for homes financed by
conforming mortgages was down just 0.2% in October and is down only 2.8% versus
a year ago.
BUSINESS TIP OF THE WEEK...Start on a
goal right away. Get the momentum going by taking action
immediately--flesh out
the schedule, reserve important dates, get delivery commitments from others.
>> Review of Last
Week
SANTA CAME EARLY...It was a little early for a "Santa Claus rally" (see
below), but it sure seemed like the big man in red was giving Wall Street
investors a nice holiday gift--to wit, a better than 3.5% weekly gain in
stock prices, recouping the prior week's slide. Recent European worries
were assuaged by improving German sentiment data, an encouraging Spanish bond
auction and the European Central Bank's Long-term Refinancing Operation (LTRO),
which promised greater stability in the region, at least for awhile.
We also had better economic news on our side of the
pond. Initial jobless claims dropped to
364,000, the
lowest level since April 2008, and continuing claims dropped to 3.55 million,
the lowest since September 2008. Durable Goods orders were up 3.8% in November,
beating expectations. On the inflation front,
Core PCE Prices were up just 0.1% in November and well within the Fed's target
range, at 1.7% for the year. But Q3 GDP was revised down to a sobering 1.8%.
For the week,
the Dow ended UP 3.6%, at 12294; the
S&P 500 shot UP 3.7%, to 1265; and
the Nasdaq went UP 2.5%, to 2619.
As stocks soared, it was a tough week
in the bond market. The FNMA 3.5% bond we watch ended the week down .90, to
$101.32.
But national average fixed mortgage
rates remained at or near their all-time record lows
according to Freddie Mac's weekly survey.
DID YOU KNOW?...A "Santa Claus rally" is a rise in stock prices that sometimes occurs the
week after Christmas. It often anticipates the "January Effect"--a rise in stock
prices the first month of the year.
>> This Week’s
Forecast
YEAR ENDING ON HOME SALES PENDING...Thursday's Pending Home Sales for
November, indicating how actual sales might go the next few months,
should be up slightly. December Consumer
Confidence is also forecast up a bit, perhaps due to the slowly improving
jobs picture, with weekly Initial Unemployment Claims
predicted to remain below 400,000. The Chicago PMI, a bellwether for manufacturing overall, is
expected to stay in expansion mode.
Next Monday, January 2, 2012, the stock market will be closed in
observance of New Year's Day. May the coming
year bring all the best to you and yours!
