Pending Home Sales

Pending Home Sales for October rose 0.2%, which is a positive number to be sure, but under the 0.7% increase expected.  A pending sale of course is home under contract but not yet closed.

The Jobs Report is coming up on Friday where it is anticipated that non-agricultural employers will have added 196,000 new jobs to our labor force last month.  Being employed is great since the National Retail Federation reports that 150,000,000 people did some holiday shopping last weekend.  I bought a Christmas tree so I suppose that I am part of that number.

The Simplicity of Pie

Heading into the biggest shopping week of the year, Consumer Confidence slips 8.8% from last month.  I am confidently doing my part today by providing almost 100 pies to my clients who have phoned in their orders. It’s one of my favorite things of the year, to show gratitude for people who let me help them finance their home.  This is a simpler way to put smiles on their faces (and mine) without all of the requisite signatures and documentation when borrowing money.

I am off for the rest of the week; have a happy Thanksgiving!


Existing Home Sales for the month of October were down 3.4%, dropping the annualized rate from 5.5 million to 5.36 million.  Despite that little blip, the housing market is still stronger that had been anticipated–as you can see from the graph.

I am geared up for the Thanksgiving holiday this week; my parents fly into town this afternoon and I am passing out pies tomorrow afternoon.  Just about every call I get today is to order a free pie.  If you haven’t done that yet, it’s not too late :).

Fed Fund Futures now show a 74% probability that the FOMC will raise interest rates next month.

Giving Thanks

I want to express my gratitude for you, my client.  You are the reason that my business can continue to help more and more people every year.  From the bottom of my heart, THANK YOU!  As an expression of my gratitude, I want to provide your family with a Thanksgiving pie this year.  All you have to do is tell me which kind you want:

Pumpkin, Apple, or Pecan

The order will be placed with the bakery on November 23rd at 5:00, so call or text me sometime before that at 801-830-0083—-or just reply to this email—-and let me know which pie you want.  Pies will be available for pick up in my office the afternoon of Tuesday, November 24th.

Charting the Future

Sometimes charts are boring, and sometimes they are telling–which makes them interesting.  This chart maps the trend in Retail Sales over the last 22 years, overlaid with periods when our U.S. economy experienced periods of recession.  What strikes me in this picture is that over the last two decades, the two previous recessionary eras coincided with a stagnation in consumer spending–when Retail Sales failed to grow at a two percent annual rate.  This year, we have dipped down below that number, and we continue to hang down under that 2% mark.  Retail Sales are important because that’s where the rubber meets the road, so to speak.  It’s not a survey that can be impacted by a caller’s bad mood like some other prognosticators.  This is showing that we aren’t spending money, and a lack of spending leads to a lack of productivity.  The “velocity of money” comes to a halt.  So go buy some stuff and then give yourself a high-five for being patriotic.  Better yet, go buy a house and get a big loan and then I’ll go buy some stuff. 🙂

New Construction

Housing Starts fell 11% from last month, which is a seven month low and an immediate downer if you just read the headline.  On the other hand, Starts have been above the one million mark now for seven straight months–the longest stretch since 2007.  Building Permits, an indication of next month’s Housing Starts rose 4.1% last month.

Other interesting tidbits on info: Goldman Sachs is forecasting a 43% spike in The chance of a Fed rate hike on December 16th is at 66% today.

Free Rent?

Many Americans are concerned with the rising cost of housing, but it turns out that  there is still such a thing as free rent.

The core Consumer Price Index rose 1.9% last month alone.  The biggest culprits for the spike in cost of living are rising rents and massive medical expenses. Though inflationary (and a nod to the Fed to hike in December), it should be noted that this is the first time in three months that the CPI has been in positive territory, so panic is not necessary.  Offsetting the rise in cost of living–and perhaps even driving it–Hourly Earnings are up 0.2% from last month and 2.4% from this time last year.

Putting Our Money Were our Mouth is

Each month a survey of 500 homes across the country is conducted by some low paid telephone solicitors with thick skin.  That extracted data is then reviewed by some of the brightest minds in Michigan and a numerical value is placed on the collective feedback of of Mr. and Mrs. America regarding how they are planning to spend any money that they may or may not have.  That number is published monthly as our Consumer Sentiment.  This month, Consumer Sentiment is up more than an aggregate body of wagering economists anticipated (for those of you keeping track at home, November’s number is 93.1).  In short, they concluded that we feel good about buying stuff.

That’s great news for monetary growth because two-thirds of our U.S. economy is accounted for by all of that stuff that we consumers purchase.  The disconnect this month is that consumer spending (AKA: Retail Sales) didn’t reflect the optimistic outlook that the brains in Michigan calculated.  That Retail Sales report is published by the Commerce Department (as in The United States Department of Commerce, not the commerce department of the local Cal-Ranch store).  Consumer spending is less than half of what it should be during a normal economy, chugging along at a 2-3% annual growth rate.  Where the majority of economic activity in our country happens when you and I whip out the debit card, our (collective) failing to spend money is adversely impacting the economy as a whole.

That is a long explanation for me to tell you that as I see it, we are not putting our money where our mouth is.

The Sumo in the Room

As I forecasted yesterday, pricing on mortgages has hit a layer of support this morning and is currently trading up 13bps.  Typically when we see a swift 200 point selloff like we had the last two weeks, we’ll get a rebound (yeah you remember it right: a “dead cat bounce”) where bonds recover about half of their immediate losses before continuing onward in the longer term trend.  I’d like to think that we can get that bounce over the next week and see rates improve 1/8% from where they are at today, but I can make no promises.  The technical picture (illustrated in the photo above by the little guy) is at the mercy of the bigger picture–the ongoing economic recovery and the likelihood that the Fed raises rates next month (which as you can see in the analogy in the photo above is wearing a pretty serious face right now).

The Weekly Jobless Claims published today showed 267,000 newly out-of-work individuals filed for their first unemployment check this week.  This is the same number we saw last week.

Veteran’s Day

In honor of Veteran’s Day (originally called Armistice Day–the day that World War I ended), the bond markets are closed today. Here are a couple of interesting statistics regarding the finances of our soldiers, and reasons why you might consider signing up to be one of them. The median income for male veterans is 15% higher than non-veterans, while female veterans earn on average a whopping 45% more per year than their non-veteran counterparts.  The VA reports that over 79% of veterans own their own home, compared with only 63% of the rest of Americans.  One of the reasons is that the VA mortgage is the best loan available.  Interest rates are the lowest, there is no monthly mortgage insurance, no income cap, and best of all, no down payment required.  Thank you, those of you who serve or have served my country.  Thank you.