Subscribe To Mortgage Talk
Posts
All Comments
Thursday, February 17, 2011
1,000,000 Homes Missing
Mark Fleming, CoreLogic's chief economist, said there is a significant discrepancy — of at least 1.3 million home sales — between his firm's sales estimates and those of the Realtors group that can be attributed to their vastly different methodology.
CoreLogic estimated that home sales totaled 3.6 million last year, down 12% from 4.1 million in 2009.
The real estate agents' group said home sales fell 5% last year, to 4.9 million.
CoreLogic counts filings at county record offices nationwide and benchmarks the changes in ownership against data from the Mortgage Bankers Association, the Census Bureau and from bank filings that comply with the Home Mortgage Disclosure Act.
The Realtors' sales data comes from a sample of 40% of Multiple Listing Service data, said Walter Molony, a spokesman for the trade group.
In the last two months, the Realtor group has been consulting with outside housing economists, academics and government officials and is undertaking a "re-benchmarking using independent sources," Molony said.
The trade group expects to release revisions to its seasonally adjusted annual sales rates and to the month's supply of inventory for the past three years on Feb. 28.
"There has been a notable increase in non traditional sales outside the MLS's such as bulk transactions by investors," Molony said. "We disagree with CoreLogic's assumptions and think they were premature in putting their numbers out."
The disparity is more pronounced when looking at the monthly supply of unsold homes on the market, which often is used as a key determinant of health.
CoreLogic, of Santa Ana, Calif., estimates the 16-month supply of homes in November was the highest level since February 2009. The Realtor group estimates there was an eight-month supply of homes during the same period. A normal market has a six- to seven-month supply, Fleming said.
Lawrence Yun, the Realtor group's chief economist, said last month that home sales were on an uptrend and the market was "getting much closer to an adequate, sustainable level."
Fleming said the upcoming spring selling season will determine whether the market gets out of its doldrums.
"Our data tells us there are fewer homes being sold relative to the inventory level," Fleming said. "Moreover, there will be increased headwinds on borrowers' abilities to obtain financing, because loans will become more expensive as the market normalizes and begins to more appropriately price for risk."
Wednesday, February 16, 2011
Market Update
Previous close 101.030
Opened Down 0.09bp @ 100.938
Key Economic Data:
EUR / USD 1.3483 Down 0.0004
USD / JPY 83.9053 Up 0.1390
GBP / USD 1.6016 Down 0.0110
OIL 84.98 Up 0.66
Gold 1,375.50 Up 1.40
Key Economic News:
Core Indexes Surge; Jump in Starts All in Multifamily
Core producer price indexes surge at both finished and intermediate goods stages of processing, with no single component responsible for these significant upside surprises. Housing starts also rise more than expected, but increase is entirely in multifamily sector and appears due to efforts to start construction before changes in building codes.
KEY NUMBERS:
Producer price index +0.8% in Jan (mom, +3.6% yoy) vs. median forecast +0.8%.
Ex food and energy +0.5% in Jan (mom, +1.6% yoy) vs. median forecast +0.2%.
Housing starts +14.6% in Jan (mom, -2.6% yoy) vs. median forecast +1.9%.
Permits -10.4% in Jan (mom, -10.7% yoy) vs. median forecast -10.9%.
MAIN POINTS:
1. The core indexes of the producer price index surged in January-up 0.5% for finished goods and 1.0% for intermediate goods. In the case of the finished goods component, the increases were sprinkled widely enough that no single factor can be blamed. Scanning the report, pharmaceuticals, tires and tubes, sanitary paper products, toys and games, sporting goods, commercial furniture, and truck trailers all posted monthly increases of 1% or more. In the intermediate sector, prices of industrial chemicals accounted for roughly ¼ of the 1.0% increase, according to the Bureau of Labor Statistics. Data for prior months were revised to update seasonal factors.
2. Although this was a huge and unexpectedly diverse increase in the core finished goods index, we would be reluctant to make much of it in terms of implications for core consumer inflation, as correlation between the two have been much weaker in the past 25 years than before. Surprisingly, food and energy were fairly tame, rising 0.3% and 1.8%, respectively.
3. Housing starts rose 14.6% in January to 596k, as a 77.7% surge in multi-family starts outweighed a 1% drop in single-family starts. Moreover, there were small downward revisions to December. Permits for new construction, however, fell 10.4%. In particular, permits for multi-family houses-which tend to have most predictive power for future housing activity-slumped by 23.8%. As noted last month, permits rose sharply at year-end 2010 to beat changes in building codes that went into effect in several states; this had a pronounced effect on the multifamily figures that will be fleeting.
9:15: Industrial production and capacity utilization for Jan...a decent gain? Although payroll gains in January were disappointing overall, the manufacturing sector managed to add 49,000 jobs. This plus an uptick in the workweek in that sector suggests another decent increase in industrial output, despite the poor weather.
On production, median forecast (of 80): +0.5%, ranging from -0.5% to +0.9%; last +0.8%.
On capacity utilization, median forecast (of 66): 76.3%, ranging from 75.4% to 78.00%; last 76.0%.
14:00: Minutes to the Jan 25-26 FOMC meeting...not as boring as the statement. Although the meeting itself did not produce any material surprises, the markets will nonetheless read these minutes carefully. The committee probably marked up its forecast for near-term growth. We'll also be interested in whether more members feel that the longer-run sustainable level of unemployment has moved up and in any color on the range of views about future policy.
Advice:
I would float and lock at the end of today, if the market permits.
Tuesday, February 15, 2011
Market Update
Previous close 100.780
Opened Down 0.06bp @ 100.719
Key Economic Data:
EUR / USD 1.3522 Up 0.0033
USD / JPY 83.7950 Up 0.4703
GBP / USD 1.6157 Up 0.0119
OIL 85.30 Up 0.49
Gold 1,372.10 Up 7.00
Key Economic News:
Soft Sales, Due to Weather; Empire Index and Import Prices Both Firm
A weaker than expected retail sales report, mainly due to downward revisions to Nov and Dec. Weather clearly a factor in recent months as non-store retailers outperform relative to recent differentials. Empire index shows further gains in manufacturing in New York State while import prices surge in reaction to commodity price pressures.
KEY NUMBERS:
Retail sales +0.3% in Jan (mom, +7.1% yoy) vs. median forecast +0.5%.
Ex autos +0.3% in Jan (mom, +5.4% yoy) vs. median forecast +0.5%.
Import prices +1.5% in Jan (mom, % yoy) vs. median forecast +0.8%.
Empire index 15.43 in Feb vs. median forecast +15.
MAIN POINTS:
1. Retail sales rose less than expected in January, although the core component-sales ex autos, building materials, and gasoline-was in line with the consensus view (+0.4%) and just a touch less than we had thought (about ½%). However, data for November and December were revised down 0.2% and an additional 0.3%, respectively. We expect a small downward adjustment to the consumption component of the fourth-quarter real GDP growth rate (currently 4.4% at an annual rate for consumption) and see the tracking into the first quarter for purchases of goods at just over half the fourth quarter (nominal) 6.6% annual rate.
2. The report provides clear evidence of weather effects over the past three months in retail spending, as non-store retailers posted gains of 1.5%, 2.6%, and 1.2% for November, December and January, respectively. While this category is trending higher than the total as more Americans shop from the comfort of home, this three-month increase of 5.4% (not annualized) versus a paltry 0.9% for core sales is a much bigger difference than the difference in year-to-year trends (13.4% vs. 4.3%).
3. The Empire index rises from 11.92 in January to 15.43 in February. New orders remain broadly unchanged (down round half a point to 11.8) but shipments decline (by around 14 points to 11.31). The index for employees falls (by almost 5 points to 3.61) but the index for inventories rises (by almost 5 points to 9.64). The index for prices paid rises 10 points to 45.78.
4. Import prices rose 1.5% month-on-month in January (5.3% yoy), with increases across a variety of commodity-related categories: prices for "industrial supplies" rose 3.3% on the month, while foods and beverages were up 2.6%, and petroleum 3.4%. Categories dominated by manufactured goods, including capital goods and consumer goods, showed much lower inflation (+0.1% and +0.3% respectively).
10:00: Housing market index for Feb….still at a very low level? This index continues to hang in the mid teens, where it has been for most of the past three years. Nobody expects much of a change this month.
Median forecast (of 47): 16, ranging from 15 to 18; last 16.
10:00: Business inventories for Dec…did retail remain flat? The median forecast of a 0.7% increase implies no change in retail inventories given what has already been reported for manufacturing (+1.1%) and wholesale (+1.0%).
Median forecast (of 51): +0.7%, ranging from +0.2% to +1.0%; last +0.2%.
13:00: Treasury Secretary Timothy Geithner testifies on the administration's FY 2012 budget…before the House Ways and Means Committee.
14:00: OMB Director Jacob Lew testifies on the administration's FY 2012 budget…before the Senate Budget Committee.
17:00: ABC consumer comfort index…can't seem to hold those gains. This index fell back to -46 in the first week of February from a comparatively high -41 in the last week of January. Its nearly 3-year range is -54 to -40.
Friday, February 11, 2011
Thursday, February 10, 2011
Don't give me 100%
A coach wants you to give your best effort. So what does he do? He says he wants you to give him "110 percent."
Not much has changed in my mind since I heard a coach use this line the very first time. In fact, I'm still trying to wrap my noggin around exactly what 110 percent would look like - or feel like.
After all, if everyone uses about 10 percent of his potential mind power, then why would I need 100 percent - much less 110 percent - in order to win? Seems to me if I was able to give 11% of my mind's power instead of 10%, I might move to the head of the pack.
Moreover, a one percent bump in performance is much easier to see and feel than 110. Former NBA coach Pat Riley figured this out long ago, when he coached the Los Angeles Lakers. After the team had already snagged a title, he re-motivated them by getting every single player to commit to a 1% improvement in rebounding, shooting, assists, free throws and so on.
This 1% commitment led to some staggering results. Some players, just by being able to see themselves giving 1% more, ended up doing 20% or more better than the year previous.
In Taoist internal martial arts, the focus is NEVER on giving 100% of your very best. Why? Because when you try to give 100%, you add unnecessary tension to the equation - and this tension never results in increased performance.
The other night I was warming my son, Frank, up in the bullpen prior to a Little League scrimmage. Unlike other days, he was way off in this throws. The balls were flying a couple feet over my head. Or wide right - or wide left.
I walked up to him and increased the depth of his inhale and exhale. Why? Because he was hardly breathing at all. And if someone isn't breathing with each pitch, guess what's he holding onto?
TENSION.
Just by getting him to relax via a good inhale and exhale, his aim improved 100 percent.
But then I added some other internal martial arts knowledge to his pitching. I gave him a specific percentage of his maximum I wanted him to be using when he throws. I based this number upon what I know will give him maximum velocity and control.
I can assure you the percentage I gave him was NOT 100 percent - much less the highly-touted "110 percent."
Guess what happened?
He started throwing perfect strikes to me. And they were stinging my hand. Let me tell you, when a 10-year old throws hard enough to sting your hand, he's got some ooomph.
When Frank took the mound a few minutes later, he looked great. One bullet after another. Three up three down.
Every pitcher has good days and bad days. It's rare that one who is doing poorly can be turned around on the same day. Yet, that's what happened with my son the other night.
It's a natural and typical occurrence with the kids I work with.
Last night I worked with a few of the other pitchers - all of whom are beginners. None of these kids could throw a perfect strike.
But after a few minutes of changing the mental pictures of what they're doing - they were tossing strikes.
Each kid went home believing in himself a little more than when he started out. And this belief will result in improved performance, not just in practice - but in the games as well.
Ridding your body of tension is key to superior performance. It's key to getting the most out of life.
It's key to turning wild pitches into perfect strikes.
Believe me, success isn't about giving 100 percent or 110 percent. It's about learning to get more out of yourself while feeling like you're doing less.
It's being in a relaxed-ready state that allows for maximum output.
Tension interferes with output. It creates physical, mental and spiritual resistance.
You're much better off with ZERO RESISTANCE .
Zero Interference from your mind-body.
By Matt Furey