QUOTE OF THE WEEK..."It all will come your way, once you understand that you have to make it come your way, by your own exertions."--Ben Stein
INFO THAT HITS US WHERE WE LIVE...Last week, more signs appeared that things are coming our way in housing. Wednesday the Census Bureau reported that the nation's home ownership rate moved up in the third quarter to 66.1%, slightly ahead of the prior quarter. Some commentators feel the three-year decline in home ownership might be starting to bottom out. Home ownership may have been encouraged by rising rents, with the vacancy rate now up to 9.8%.
The National Association of Realtors (NAR) chimed in with a forecast that existing home sales should be up 1% this year, then up another 4.3% next year. Although the median price will fall slightly this year, it's predicted to rise 2.6% in 2012. New home sales, after dropping 4.7% this year, are projected to rise 21.3% in 2012. And this year's 1.8% price hike will be followed by a 3.8% gain next year. Let's hope they're right.
BUSINESS TIP OF THE WEEK...Passion counts for a lot. The relentless intensity and commitment you need to succeed come from enjoying what you do and believing it's worthwhile.
>> Review of Last Week
CLASSIC GREEK DRAMA...The European Union's efforts to avert a Greek tragedy featured a soap opera produced by the Greek government. One day they announced the EU bailout proposal would be put to a vote by Greek citizens, the next day opposing parties agreed to accept it. This melodrama pushed stock prices down, up, down, and after posting gains four weeks in a row, the S&P 500 scored a 2.5% weekly loss. The Fed also contributed, issuing a policy statement citing "a moderate pace of economic growth over coming quarters" and predicting "the unemployment rate will decline only gradually."
Friday's October Jobs Report revealed employment levels consistent with weak-to-moderate economic growth. Just 80,000 new jobs were added in October, but prior months were revised upward and the unemployment rate edged down from 9.1% to 9.0%. ISM Manufacturing and Services indexes showed business still growing, although very slowly. Consumers are doing their part, with weekly chain store sales UP 3% for the year by one survey and UP 5.2% by another.
For the week, the Dow ended down 2.0%, to 11983; the S&P 500 was down 2.5%, to 1253; and the Nasdaq slipped 1.9%, to 2686.
Investors worried about the European debt situation flocked to the bond market in droves. Yields and mortgage rates edged down, as bond prices escalated. The FNMA 3.5% bond we watch ended the week up 1.79, at $102.05. National average mortgage rates dropped again, according to Freddie Mac's weekly survey, and remain at very low levels.
DID YOU KNOW?...This week's University of Michigan Consumer Sentiment index is a survey of people's feelings about their financial situation and the economy. The index was normalized to 100 in 1964.
>> This Week’s Forecast
VERY QUIET ON THE ECONOMIC NEWS FRONT... Following last week's Fed meeting and employment report, this week's sparse economic news provides a nice breather. Initial Unemployment Claims should stay near the 400,000 level. The September Trade Balance is forecast to hold steady, with imports about $45 billion ahead of exports. Michigan Consumer Sentiment is expected to improve.
>> 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 Nov 7 – Nov 11
>> Federal Reserve Watch
Forecasting Federal Reserve policy changes in coming months...Economists do not see a change in the Funds rate through mid-2013. A dramatic rise in inflation could alter that of course. 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%
Probability of change from current policy:
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