For the week of Jul 25, 2011 — Vol. 9, Issue 30

In This Issue…
Last Week in Review: You could feel the heat last week, both around the country and in Washington DC, as the debt ceiling debate raged on.

Forecast for the Week: Earnings season continues, plus reports on housing, the economy, and how the consumer is feeling.

View: Flying the skies just got friendlier, thanks to these new rules.

Last Week in Review
“The heat is on.” The title of that Glenn Frey song not only applied to the sweltering temperatures around much of the nation last week, it also applied to the debt ceiling debate, as the heat was on our leaders in Washington to finalize a solution to our debt situation. Why is this important? Read on for details.

It only takes a look at what is happening in Europe these days to understand why it’s crucial that the United States finds a solution to the debt ceiling issue. Not only have eight European banks recently failed a stress test, but last week there was news that Greek, Italian, Portuguese, and French “credit default swaps” (which are insurance policies against default) were trading at record levels. While the European Union is continuing to work to contain Europe’s debt problems and prevent a default in Greece (and elsewhere), these events bode a very important lesson for the US.

Why? Because solving our debt ceiling debate and finding a long-term plan for lowering our deficit and being fiscally sound will raise confidence in our debt and help the US keep its AAA credit rating from the various credit rating firms like Moody’s and Standard and Poor’s. This will help investors continue to see the US as the ultra safe haven for their money, which is a key aspect of our continued economic recovery.

Speaking of our economic recovery, there was some good news last week for the housing sector, as June Housing Starts and Building Permits were both reported better than expected. While this is only one number and one number doesn’t make a trend, this is a good figure, and I will be watching closely for follow through in future readings.

If you’ve been thinking about buying or refinancing a home, give me a call or send me an email to learn how you can take advantage of home loan rates that remain near some of the best levels we’ve seen this year. Or forward this newsletter on to someone you know who may benefit.

Forecast for the Week

Earnings season continues, with reports from 3M, Ford, and Exxon, among others. Plus, a busy week is ahead when it comes to economic reports. Look for:

  • On Tuesday we’ll get an idea about how people are feeling about the economy with the Consumer Confidence Report.
  • Tuesday also brings a report on New Home Sales, which will be followed by the Pending Home Sales Report on Thursday.
  • Thursday also brings another weekly Initial and Continuing Jobless Claims Report. Last week’s Initial Jobless claims came in at 418,000, above the 400,000 mark for the 15th consecutive week. This leading indicator on job market health tells us that the labor market pains have not subsided.
  • Rounding out the week is a double read on the state of the economy with Wednesday’s Durable Goods Orders, which gives us an update on consumer and business buying behavior on big-ticket items, and Friday’s Gross Domestic Product Report, which is the broadest measure of economic activity.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.

As you can see in the chart below, uncertainty in Washington and overseas caused volatility and anxiety in the markets last week, which put pressure on the Bond market and home loan rates. But remember, rates are still very attractive right now. Let me know if I can answer any questions for you.

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Chart: Fannie Mae 4.0% Mortgage Bond (Friday Jul 22, 2011)
Japanese Candlestick Chart
The Mortgage Market Guide View…
New Passenger-Friendly Rules for Air Travel

New rules will also raise compensation if you’re bumped.

By Susannah Snider, Kiplinger.com

When Jacqueline Tanzella flew from San Francisco to Florida recently for a family vacation, she paid $25 for Delta Airlines to check her bag. She landed around midnight; her suitcase didn’t. Tanzella made it through the night by borrowing pajamas from an aunt and a new Superman toothbrush from her nephew. But she wasn’t happy. “I didn’t pay a $25 fee only to be inconvenienced by not having my bag until the next morning,” she says. “Most retailers would reimburse me or give me a credit in a situation like this.”

Baggage fees are getting scrutiny in expanded airline passenger protections announced by the Department of Transportation. One rule requires airlines to reimburse bag-check fees if your luggage is lost. That won’t help fliers like Tanzella, whose bags are merely delayed, and some experts are grumbling that the protections lack bite. “It is only incremental improvement,” says Rick Seaney, of FareCompare.com. The new protections will also increase the amount that airlines must pay passengers who are involuntarily bumped (from a maximum of $800 now to a maximum of $1,300), limit the time international flights may sit on the tarmac, and require taxes and fees to be more clearly displayed in advertised fares.

Expect some negative side effects. For instance, less overbooking by airlines to avoid higher “bump” fees could put upward pressure on fares, says CrankyFlier.com’s Brett Snyder. The new rules go into effect in August.

Reprinted with permission. All Contents ©2011 The Kiplinger Washington Editors. www.kiplinger.com.

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Economic Calendar for the Week of July 25-29, 2011

Remember, as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise.

Economic Calendar for the Week of July 25 – July 29

Date ET Economic Report For Estimate Actual Prior Impact
Tue. July 26 10:00 Consumer Confidence Jul 56.0 58.5 Moderate
Tue. July 26 10:00 New Home Sales Jun 320K 319K Moderate
Wed. July 27 08:30 Durable Goods Orders Jun 0.4% 2.1% Moderate
Wed. July 27 02:00 Beige Book Moderate
Thu. July 28 10:00 Pending Home Sales May -3.0% 8.2 Moderate
Thu. July 28 08:30 Jobless Claims (Initial) 7/23 415K 418K Moderate
Fri. July 29 08:30 Gross Domestic Product (GDP) Q2 1.6% 1.9% Moderate
Fri. July 29 08:30 GDP Chain Deflator Q2 2.0% 2.0% Moderate
Fri. July 29 08:30 Employment Cost Index (ECI) Q2 0.5% 0.6% HIGH
Fri. July 29 01:00 Chicago PMI Jul 58.0 61.1 HIGH
Fri. July 29 10:00 Consumer Sentiment Index (UoM) Jul 63.8 63.8 Moderate
The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is without errors.

Kurt Galitski

Meet Kurt Galitski - The Kurt Real Estate Group, your new best friend. Distinctive Strategies that Deliver Record-Setting Results. When you combine Kurt’s passion and knowledge of the real estate market, you really gain an appreciation for what makes Kurt different. But what truly sets him apart from the crowd are his 5 distinctive strategies and his property management… For Kurt, getting into real estate was not an accident, it was a deliberate and calculated decision to deliver a better experience to home buyers, sellers, and landlords that they have ever received before. Today, you could ask any one of hundreds of clients, read his Yelp reviews, or look at his track record of being featured in Orange Coast Magazine in excess of eight consecu­tive years and you too will say mission accomplished. www.KurtRealEstate.com www.KurtPropertyManagement.com 877-957-6677

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