|For the week of September 18, 2017 — Vol. 15, Issue 37
>> Market Update
QUOTATION OF THE WEEK…“It’s not the will to win that matters. Everyone has that. It’s the will to prepare to win that matters.”–Bear Bryant, American college football player and coach
INFO THAT HITS US WHERE WE LIVE… After its massive data breach, credit bureau Equifax faces investigations by the House, Senate, Consumer Financial Protection Bureau, Federal Trade Commission (FTC), New York Attorney General, and state of Massachusetts. Because of glitches on the Equifax consumer information site, the NYAG advised people to “call Equifax to see if their data was compromised.” The FTC suggests getting free credit reports at annualcreditreport.com, and if you suspect identity theft, visit IdentityTheft.gov. They also warn of scammers calling, pretending to be Equifax: “Don’t tell them anything. Equifax will not call you out of the blue.” See more on the FTC website.
Hurricanes Harvey and Irma hit just before the National Flood Insurance Program (NFIP) was set to expire. But President Trump has signed an extension that gives Congress until December 8 to come up with a long-term NFIP solution, and the bill also provides substantial relief to Hurricane Harvey victims (most had no flood insurance). Mortgage data provider Black Knight reports purchase lending hit a 10-year high in Q2, 16% ahead of last year. A property database reports, as of July 31 there are 14 million equity rich properties, where the total mortgage amount is 50% or less than the estimated market value. That’s a 1.6 million gain over last year.
BUSINESS TIP OF THE WEEK… Success is built on teamwork. Even if you’re solo, every client relationship creates a team, as does every professional relationship you establish to meet a client’s needs. Teamwork works!
>> Review of Last Week
SHAKING IT OFF… We’ve recently had two hurricanes, another North Korean missile fired over Japan and some disappointing economic data, but investors shook it all off and sent the Dow and S&P 500 to new all-time highs last week. It was the Dow’s biggest weekly gain since December and the S&P 500’s largest since January. The worst news for us was the hotter-than-expected inflation read, with the Consumer Price Index (CPI) up 0.4% in August and up 1.9% year-over-year. This dialed up expectations the Fed at this week’s meeting will start reducing the assets it bought to shore up the financial crisis, and then do a rate hike in December.
Retail Sales disappointed, down 0.2% in August, but one equity manager observed, “given the storms, it’s hard to read too much into it.” Hurricanes Harvey and Irma are tragedies with an impact that will be felt a long time, and our thoughts remain with all those affected. In addition, economists say the storms may disrupt GDP near term, but the rebuilding process and the healthy underpinnings of the overall economy point to continued improving growth. It may be a few months for demand to get back to normal, but people are upbeat. The latest University of Michigan Consumer Sentiment Index reports that consumers’ assessment of their financial situation is the best it’s been in more than a decade.
The week ended with the Dow UP 2.2%, to 22268; the S&P 500 UP 1.6%, to 2500; and the Nasdaq UP 1.4%, to 6448.
The bond market saw a safe haven sell off, despite the less-than-excellent economic data. The 30YR FNMA 4.0% bond we watch finished the week down .39, to $105.36. National average 30-year fixed mortgage rates held at their 2017 low in Freddie Mac’s Primary Mortgage Market Survey for the week ending September 14. But their chief economist cautioned, “mortgage rates could see an increase in next week’s survey.” Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.
DID YOU KNOW?… A personal finance website reports home flipping in 2016 hit its highest point since 2007, with investors turning the largest average gross profit since 2000—nearly $63,000 per flip.
>> This Week’s Forecast
EXISTING HOME SALES OFF, BUT HOME BUILDING UP, PHILLY FACTORIES HANG IN… Hampered by tight inventory in many markets, Existing Home Sales are forecast to slip a bit in August. But Housing Starts should be up for the month, though Building Permits for future work are expected to slide. The Philadelphia Fed Index is predicted to show manufacturing expanding in that important region, but at a slightly less robust rate.
>> 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 Sep 18 – Sep 22
>> Federal Reserve Watch
Forecasting Federal Reserve policy changes in coming months…The futures market sees no rate hike at this week’s FOMC meeting. But hold on, they’re now forecasting a better-than-even chance the Fed will push up the rates by a quarter of a percent in December. Last week they thought late spring. Go figure. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.
Current Fed Funds Rate: 1.0%-1.25%
Probability of change from current policy:
Senior Loan Officer
Direct Phone 214-346-5279
Cell Phone 214-794-4014
13140 Coit Rd # 502
Dallas TX 75240
NMLS # 266128
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