Brought to you by Tim Lammon

FOR THE WEEK OF JANUARY 23, 2023

QUOTE OF THE WEEK
“Remember, today is the tomorrow you worried about yesterday.”—Dale Carnegie, American writer, lecturer, and developer of self-improvement courses

NATIONAL MARKET UPDATE

Existing Home Sales slipped in December, blamed on falling affordability. But the National Association of Realtors noted, “expect sales to pick up again soon since mortgage rates have markedly declined after peaking late last year.”
Housing Starts dipped a tick overall too, yet it was all due to multi-families—single-family starts rose for the first time in four months, scoring the biggest monthly percentage gain in more than a year.
Permits fell a bit, but builders have their hands full, with homes under construction at the highest level going back to 1970. And with the recent drop in mortgage rates, homebuilder sentiment rose for the first time in 13 months.

REVIEW OF LAST WEEK

CASHING IN THE GAINS… After the strong start to the year, some traders decided to take money off the table, sending the Dow and S&P 500 down, though the tech-heavy Nasdaq stayed positive.
There were also a few concerns about economic growth and rate hikes. These were spiked by weak December retail sales and manufacturing data, plus the Fed’s Beige Book forecasting little growth going forward.
But welcome news came as December’s Producer Price Index (PPI) reported a slowdown in wholesale price inflation. We also saw initial weekly jobless claims drop to their lowest level since late September.
The week ended with the Dow down 2.7%, to 33,375; the S&P 500 down 0.7%, to 3,973; and the Nasdaq UP 0.6%, to 11,140.
Bond prices overall barely moved up for the week, though the UMBS 5.5% slipped .04, to $101.11. The national average 30-year fixed mortgage rate headed down again in Freddie Mac’s Primary Mortgage Market Survey. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.
DID YOU KNOW… Freddie Mac’s Chief Economist noted, “Rates are at their lowest level since September of last year, boosting both homebuyer demand and homebuilder sentiment,” adding “declining rates are providing a much-needed boost to the housing market.”

THIS WEEK’S FORECAST

NEW AND PENDING HOME SALES, GDP, INFLATION… Both New Home Sales and the Pending Home Sales index of signed contracts on existing homes should dip in December, though not by much. The GDP-Advanced read for Q4 is forecast to show a slightly lower growth rate for the U.S. economy. Friday, all eyes will be on PCE Prices, the Fed’s favorite measure of inflation. The prediction is for the inflation rate to slow.

FEDERAL RESERVE WATCH

Forecasting Federal Reserve policy changes in coming months. The feeling on Wall Street still is that the Fed will ease up on raising rates. Forecasts call for quarter percent hikes the next two meetings, then no hike in May. Note: In the lower chart a 99.8% probability of change is a 99.8% probability the rate will rise. Current rate is 4.25%-4.50%.
AFTER FOMC MEETING ON: CONSENSUS
Feb 1 4.50%-4.75%
Mar 22 4.75%-5.00%
May 3 4.75%-5.00%

Probability of change from current policy:
AFTER FOMC MEETING ON: CONSENSUS
Feb 1 99.8%
Mar 22 82.5%
May 3 89.5%

BUSINESS TIP OF THE WEEK
What differentiates successful people is that they always follow up. Research has shown it takes five to seven touchpoints with a prospect to close a deal. Clearly, persistence pays off.

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