The proposed overhaul on income taxes is said to simplify what everyone pays.  Corporations will pay 15% instead of 35%.  Individuals will pay 0%, 10%, 25%, or 35%. The estate tax and the alternative minimum tax are also said to be eliminated.  Stocks have been down and bonds have been up since the plan was published.  Though the specifics weren’t yet worked out, I am certain that the IRS will continue to collect just as much out of you and me.

Pending Home Sales report a 0.8% drop from last month, where a 5.6% increase was logged.  Durable Goods also dropped from a 1.2% advance to 0.7%.

Freddie Mac reports that the average 30 year loan is going for 1.03% right now.  As usual, I am cheaper than that. 

Janet in Jackson

Durable Goods orders are up 4.4%, quite a bit above expectations. Jobless Claims are down by a thousand, which also beats expectations.  Those are two encouraging pieces of information, but what people really want to hear is the thoughts of one woman, who will be speaking at a symposium in the Cowboy State tomorrow about the future of interest rates.  Fed Fund Futures are prognosticating a 21% chance of a rate hike in September and a 41% probability in November.

Buying Durable Goods

I am a fan of durable goods.  Meaning, I enjoy spending my money on things that will last at least a year.  Particularly, I enjoy shopping for watches and pens (the kind that last indefinitely).  This watch pictured here was made in 1987 and made it into the hands of Eric Clapton two years later for a price of $513,688.  Mr. Clapton wore it on occasion and sold it in 2012 for $3,650,000.  It had appreciated a modest 8.65% during those 23 years and allowed Eric Clapton to retire comfortably. Well, that and selling almost 150 million albums over the last 50 years of course.  This watch would be considered a durable good.

Durable Goods Orders are tracked like every other economic statistic, and this month they declined 4.0% from the previous month, which was also down 2.8% from the month before.  So though our society is still spending plenty of money, it’s for disposable stuff that won’t last.  That is a sad commentary.

Speaking of commentary, the 8x per year Fed meeting concludes today, after which Chair Yellen will read a prepared statement over-viewing the current status and future direction of the economy.  It is anticipated that during that statement, she will state that the Fed is leaving its Cost of Funds rate at 0.375%. 

Durable Goods?

While this photo represents 66% of every lunch prepared for my younger two boys (dino nuggets being the third component), it also showcases the two staple products behind the newly formed Kraft Heinz Company.  The mega merger, financed in part by Warren Buffet’s Berkshire Hathaway will be the fifth largest food and beverage company in the world (Nestle being numero uno).

This has about as mucho to do with mortgages as does the Durable Goods report out today, showing that Americans purchased 1.4% less long-lasting stuff than we did the month before.  Incidentally, Mac-n-Cheese could count in those statistics as the shelf life does in fact exceed one year.

Consumer Confidence Up, Durable Goods Down

Consumer Confidence was released this morning, rising up to 94.5 from last month’s 86–that’s a big jump.  And it looks like that girl will confidently be at the store again next month as well since she isn’t buying anything that’ll last very long.  Durable Goods Orders are down again this month by 1.3%.

You want to buy something of value?  Buy a home!  The Case Shiller Price Index shows that home values are up another 5.6% from this time last year.

How Durable are the Goods?

We will need to wait until October to see how selling $3B in iPhone 6 on just the first day of availability sways the numbers; today though, August’s Durable Goods Orders (purchases of wares that are expected to last at least a year) took a record plunge of 18.2%.  Getting “sold on the sizzle” of decreased sales, traders have pulled their positions causing the DOW to plummet over 200 points so far this morning.  I anticipate that in a few hours investors will remember that July’s Durable Goods Orders were UP a record 22.5% as a result of ginormously expensive aircraft contracts, making today’s decline in reality an increase of 4% from June.  So don’t go cashing in your 401(k) just yet.

Up against a ceiling of resistance, Mortgage Bonds are flat, so all of the funds from the sale of equities are going into cash accounts.  Translation: it’s a good day to lock in the interest rate on your loan if you haven’t already done so.

Durable Goods Orders Rise on the Wings of Boeing

The headline Durable Goods orders shows a rise of a whopping 22.6%.  Dissecting the report however shows a massive order from Boeing Aircraft, and after you strip out the transportation sector (due to the volatile ordering process and enormous price tag), the net–or core–Durable Goods orders actually declined 0.8%.
Oftentimes Stocks buy or sell on the headlines and then reverse direction after the information is digested.  The S&P 500 Index just breached the 2000 threshold after today’s opening bell.  The index is up almost 20% from a year ago.  The bond chart has seen very little movement since the end of May.
Thirty year FHA loans are at 3.5% and Conventional loans are at 4.125%. Fifteen year rates are way lower at 3.0% (APR will be higher, depending on the loan and down payment amounts, and amortization term–as closing costs and the presence of mortgage insurance affect each loan differently.)