Thoughts to Ponder and The Market Update October 14

 

Thoughts to Ponder . . .

• I’m not suffering from insanity, I’m enjoying every minute of it.
• Why do they call it beauty sleep when you wake up looking terrible?
• Exercise? I thought you said extra fries!

 

And now on to The Market Update . . .

The stock market through the first 4 days of the trading week is down 258 points.

• The reason…simply the fact that as of right now more and more investors believe interest rates will be raised at the next FOMC meeting.
• Corporations love the low rates that the government lends out money as this reduces corporate interest costs and increases company profits.
• The thought that the government financial gravy train may come to an end has investors a little nervous.

 

For the longest time, there has been talk that sooner or later the Fed will raise rates.

• However, no matter how much people here about it, when it seems like it will actually happen, investors behave as if the financial world is coming to an end and we see the stock market decline.

 

Contributing to the angst of Wall Street investors was seeing in the release of the FOMC minutes on Wednesday, that some of the board members appear to be running out of patience regarding raising rates.

• Each month we hear that more and more of the FOMC participants are leaning towards raising rates sooner than later, and they are becoming more vocal about it.
• Some members feel strongly that continuing to delay a rate increase may ultimately force the Fed to raise rates more rapidly in the future.
• With inflation remaining virtually non-existent, this fact continues to keep the majority of the board members against raising rates now.
• In the end, the vote to keep rates unchanged was 7 to 3 among members.

 

Applications for mortgage loans slowed for the week of October 7 according to the Mortgage Bankers Association of America.

• Purchase loan applications declined 3.0 percent while refinancing dropped by 8.0 percent.
• This is the lowest level since June of this year.
• The strength in the MBA report is that applications are 27 percent higher than the same time last year.

 

Mortgage rates have nudged upward over the last week.

• As we have seen before, the slightest movement, higher or lower, can have a dramatic impact on refinance activity.
• As far as purchase activity, it remains stable.
• One of the issues which seems to be playing a role in purchase activity is the uncertainty related to the upcoming election.
• Consumer sentiment has been declining as we get closer to the election.
• Negativity spewing from the candidates is increasing rapidly, and unless you live in a vacuum, it is virtually impossible to ignore hearing it.

 

First time jobless claims continue to remain at historic lows with claims reported at 246K for the week ending October 8^th.

• There are plenty of jobs available today and the reality is that employers are more the ones struggling to hire good employees.
• It used to be that employers had their pick of who they can hire.
• Today candidates seem to have the upper hand in making a choice as to where they want to work.

 

This week’s potential market moving reports are:

• Monday October 17^th – Industrial Production
• Tuesday October 18^th – Consumer Price Index and Housing Market Index
• Wednesday October 19^th – MBA Mortgage Applications & Housing Starts
• Thursday October 20^th – First Time Jobless Claims & Existing home Sales