"WHAT GOES UP... MUST COME DOWN?"

Gas prices have dropped at the pump lately, but the markets are more focused on movement in the rest of the economy. Here’s a look at where some important economic indicators are headed... and what they mean to you!
 
Fill ’er up... oil’s down! Late last week, crude oil fell under $90 per barrel after the International Energy Agency (IEA) said it would release 60 Million barrels of oil in the coming months to offset the loss of production in Libya.

Lower expectations for economic recovery. The big news last week was the Fed FOMC meeting and the release of the Fed’s Policy Statement. While there weren’t many surprises to come out of the meeting, the Fed did revise its forecast for the 2011 Gross Domestic Product (GDP) lower and acknowledged that the economic recovery is a little slower.

Frustratingly high. On Unemployment, the Fed stated that the pace of job growth is "frustratingly slow" and that it believes the Unemployment Rate will average 8.6% to 8.9% in the 4th quarter of 2011...which is actually higher than earlier forecasts of 8.4% to 8.7%.

Inflation on the rise? The Fed also raised expectations for Core Inflation, which strips out volatile food and energy costs. This is important because if inflation picks up, Bond prices will move lower - since yields have to move higher to attract buyers to compensate them for the pickup in inflation. And that means home loan rates may move higher as well.

Where are Stocks headed? The Fed said the second round of Quantitative Easing (known as QE2) will end as scheduled at the end of June - but there was no mention of a third stimulus package (which would be known as QE3). Their silence on this point was fairly deafening. Many experts have wondered about the possibility of a third round of QE, but it doesn’t look to be in the cards at this point. It’s important to note that the Stock market did not like that there was no mention of QE3, especially since Stocks have only risen the past couple of years when the Fed has been buying - like during both QE1 and QE2. It will be very interesting to see how Stocks behave once the QE2 support is removed.

Misery loves company? Here’s an interesting fact for you. Believe it or not, there’s actually a "Misery Index." This Index takes into account both inflation and the Unemployment Rate. Currently, it’s just slightly below the level seen in December 2009, which is when the economy was still in the midst of the credit crisis. To put this in perspective, we haven't seen the Misery Index this high since 1983. And what is a bit concerning is that the Index has climbed higher each month so far during 2011. With inflation rising higher still and unemployment not ticking down, the upward trend may well continue in the near future.

Better than expected... but what’s the catch? Durable Goods were reported better than expected last week. It wasn’t a blockbuster reading, but it was good news in light of concerns that the economic recovery is slowing. That said, there’s a catch to consider if you or someone you know is looking to refinance or purchase a home. The recent slowdown in the economic recovery has actually helped improve Bonds and home loan rates. But if the slowdown proves to be just a minor bump in the road to recovery and if future reports show modest improvements, home loan rates could move higher rather quickly.

The good news is that home loan rates are still at historical lows, making this a terrific time if you or someone you know might be thinking about purchasing a home. It only takes a few minutes to see if you can benefit from the situation. Call or email to get started.

• A double does of housing news with Tuesday’s Existing Home Sales Report and Thursday’s New Home Sales Report.
• The regularly scheduled Federal Open Market Committee meeting on Tuesday and Wednesday. Given last week’s hotter than expected inflation news, will the Fed still say inflation is transitory?
• Thursday also brings another weekly Initial and Continuing Jobless Claims Report. Last week’s Initial Jobless claims fell 16,000 to 414,000 and while the decline is good news, this is the tenth straight week that Jobless Claims have remained back above the 400,000 level.
• Rounding out the week on Friday are two important reports on the state of the economy: Durable Goods Orders, which gives us an update on consumer and business buying behavior on big-ticket items, and Gross Domestic Product, 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.

Bonds and home loan rates traded sideways last week, with inflation news keeping market improvements from the instability in Greece in check. I’ll be watching closely to see how world events and economic reports impact the markets this week.

Volatility was extremely high... but the bottom line is a tremendous opportunity

"SLOW DOWN... YOU MOVE TOO FAST." Maybe the economic recovery is taking acue from these 1960's lyrics by Simon and Garfunkel, as the economic recovery seems to be in a sluggish state at the moment. And while it doesn't leave too many Americans "feelin' groovy," there are some amazing opportunities at hand in housing. Here's what you need to know about the economy and housing industry - along with one sure thing about the current situation.

Volatility was extremely high last week - not just in the financial markets, but also in the economic reports and economic outlook. The big news of the week was the official Jobs Report, which came in well below expectations. In fact, in the private sector alone, the report indicated that only 83,000 jobs were created in May - and that number was almost 100,000 less than expected!

Although the Hourly Earnings component of the report came in a little better than expected, the overall report was just plain bad. Even for a market hungry for good news, there was no way to spin this report. Now the markets will have to wait and see if this was a one-off bad report and just a bump in the road to recovery... or if things have indeed slowed down once again.

Manufacturing slowing?

New data on the manufacturing sector of the economy also indicated a possible slowdown, as the Chicago PMI and the ISM Index - which both measure manufacturing - came in below expectations.

Rumors of a bailout lower the US Dollar.

In news across the pond, reports came out last week that Germany is putting together a plan to bailout Greece. The plan would "kick the can down the road" a little longer for Greece, allowing them more time to figure out a strategy to get their debt in order. As a result of these bailout hopes, the Euro was strengthened and the US Dollar dipped lower. Remember, a softer US Dollar helps US Stocks, as US companies benefit from stronger exports with a weakening Dollar. But a lower Dollar isn't so good for Bonds, so this news stalled the rise of Bonds early last week.

Home prices still very affordable.

Moving from Europe back home to the US, we also received new data last week on home prices across the country. According to the 20-city Case-Shiller Home Price Index, prices were down 0.8% in March. Overall, foreclosures and bank-owned sales continue to weigh on housing - and are expected to do so for a couple more quarters. That said, the housing market is very localized, so only a local real estate professional can help you understand where home prices are at in your community - let me know if you need a referral to someone great in your area.

One thing's for sure...

If you or someone you know is considering purchasing a home or refinancing, this is an ideal time to see how you can benefit from the current market conditions. Home prices are extremely affordable right now and home loan rates are near historic lows.

It only takes a few minutes to look at some options that fit your unique goals and situation. Call or email today to see how you can benefit from the current situation!

Mobile Technology in Real Estate

THe National Association of Realtors (NAR) reported that 56% of Realtors used a Smarphone daily in 2010 compared to only 42% in 2009. Another statistic is that by the end of 2011 it is expected that half of the US population will use a Smartphone. These statistics are straggering and warrant out attention since we can expect a good percentage of consumers to be using a mobile device to stay connected for real estate related information throughout the buying and selling process.

MLSLI is now available on handheld devices at MLSLI.mobi and it puts the mobile technology at the service of Realtors and customers.

Consumers simply type in http://mlsli.mobi and access the easy to read, formated information that can be clearly viewed on a mobile device. MLSLI.mobi provides consumers with a mobile connection to listings, open houses and more.

This definitely will enable all of us to take full advantage of the capabilities of our mobile devices and work more efficiently and effectively while we are on the go.