Thoughts to Ponder and The Market Update March 13

Thoughts to Ponder . . .

• Smiles are contagious… be a carrier.
• When people tell me “You’re going to regret that in the morning,” I sleep in until noon because I’m a problem solver.
• I might wake up early and do some exercise, or I might win the lotto, the odds are the same.
• What animal can jump higher than a house? Any animal that can jump at all, because houses can’t jump.
• Friends are chocolate chips in the cookie of life!

 

And Now on to The Market Update . . .

The markets have been somewhat in a holding pattern as investors await next weeks Fed decision on interest rates.

• Although, more than 70% of analysts interviewed believe that the Fed will raise rates, investors appear to be waiting for the announcement before making any major changes in their finance strategies.

 

Adding to the likelihood that the Fed will raise rates next week are this week’s ADP Employment Report and the National Labor Department Report.

• On Wednesday ADP released that their data which showed a giant increase in private payrolls by 298,000 for the month of February.
• This was more than 100,000 higher than the high end of analyst’s expectations.

 

The markets did not react with much more than a yawn as investors do not put much faith in the accuracy of the ADP report compared to the Labor Department data.

• However, it is important to note that in January ADP was relatively accurate with their estimates.
• Overall in the last year, ADP reporting has been much closer to the Labor Department numbers than they have been in years past.

 

Friday the Labor Department reported a gain of 235,000 jobs.

• Although the number is lower than ADP’s number, the results are still very strong.
• This growth in the labor force piggybacks on January’s gain of 238,000.
• This report all but cements the likelihood the Fed raising rates at the Fed meeting next week.

 

The Mortgage Bankers Association of American reported that last week purchase applications rose by 2.0 percent while refinances increased 5.0 percent.

• Mortgage rates had ticked down in the last week and that is likely the stimulus for the increase in refinances.
• Purchase applications, although continuing to rise, are being tempered by the fact that there is a significant lack of housing inventory across the country.

 

Oregon and Washington have been the main areas of the country lacking inventory for pretty much all of last year.

• This year, the housing shortage has expanded and has been felt in many more areas across the United States.
• The Northeast and South are now facing significant shortage in available housing inventory for sale.
• The Midwest has also experienced a decline in housing inventory but not to the degree of the other regions.

 

First time jobless claims continue to remain extremely low.

• Down to 243,000, along with this week’s very strong employment reports, the decline in claims is likely to continue.

 

This week’s potential market moving reports are:

• Monday March 13^th – Labor Market Index
• Tuesday March 14^th – FOMC Meeting Begins
• Wednesday March 15^th – MBA Applications, FOMC Announcement, FOMC Forecasts, Retail Sales, Consumer Price Index, and the Housing Market Index
• Thursday March 16^th – First Time Jobless Claims, JOLTS Report, and Housing Starts
• Friday March 17^th – Industrial Production and Consumer Sentiment