Last week I wrote that the Fed policy makers had come out publicly in stating that there was not a consensus on what actions they should take to stimulate the economy. This past week's economic data as well as next week's should provide Fed policy makers with more than enough information to make a definitive decision on what to do.
The economic reports this past week continue to demonstrate that the economy is going nowhere. You will notice that I didn't even say "going nowhere fast", I just said "going nowhere". With every bit of positive news that an investor or consumer can grab on to, there is another piece of negative news sitting right behind it to quell any momentum that could be gained. The stock market this week is a perfect illustration.
This week in the stock market we saw some significant drops and rallies based upon daily economic reports. By the time the smoke cleared, we are almost exactly back to where we started the week. On Monday the DOW started the week at 11,137. After hitting highs of 11,205 and lows of 10,925, the market ended trading on Thursday at 11,135, exactly 2 points lower than where the week started. Friday no economic reports are due out so trading should be quiet.
The National Association of Home Builders monthly survey on the future of housing showed an unexpected increase. The survey which measures the feelings about the economy and housing as a whole showed a gain for the first time since the spring, which was the end of the 2nd round of housing stimulus.
Housing Starts also showed a surprise increase for the month of September with single family construction leading the way. Housing Starts increased .3% which piggy backs on the prior months 10% increase. Additionally, Housing Starts are up 4.1% from a year ago. On the opposite side of the coin, the future for new construction remains in question as new building permit filings declined 5.6%.
Mortgage rates remain at historic lows however once again we see that even the slightest increase in rates can have a dramatic impact on both purchase and refinance applications. Mortgage rates last week increased just over 1/8% and the market saw a drop in purchase applications of 6.7% and refinance apps declined 11.2%. It is my opinion, for what it is worth, that if next week we experience additional declines in the housing sector, the government will be compelled to act on executing another round of stimulus sooner than later.
First time initial jobless claims declined 23,000 last week. The markets showed virtually no reaction to this report as it seems that unless there is significant movement in the numbers, the market just looks at this as weekly variations with no real direction for un-employment.
As announced earlier this week, Bank of American and some of the other major lenders are resuming their foreclosure proceedings in many states. There are still many hurdles that the banks will need to clear in the courts regarding foreclosures so the story is not coming to a close. Although the banks insist that they have not made errors in who they have removed from homes, judges and regulators are quite skeptical about what the banks are stating. Let's face it, the banks have a history of not telling the truth.
Relevant economic news on tap for next week:
• Monday October 25th - Existing Home Sales
• Tuesday October 26th - S&P Case-Shiller Home Value Index & Consumer Confidence
• Wednesday October 27th - MBA Mortgage Applications, Durable Goods Orders & New Home Sales
• Thursday October 28th - First Time Weekly Jobless Claims
• Friday October 29th - GDP & Consumer Sentiment
Subscribe to:
Post Comments (Atom)
0 comments:
Post a Comment