Economic Indicators

Source of Information:  Mortgage Market Information Services, Inc. Wells Fargo, and Vanguard.

The US Consumer is seen as the driving force of the Economy.  Spending continues despite high energy costs, and economic uncertainty.   Mortgage interest rates are indirectly proportional to the consumer confidence.

FYI-

• Japan and China are financiers of US debt-Treasury Bonds.
• Japan and China account for major global Economic output, which is double of UK’s.  US, the world’s largest Economy is double of Japan’s.
• Japan has successfully controlled inflation; Japan has good labor/managerial relations.
• Japan does NOT utilize money for military, unlike US and China.
• Japan practices equality for all in terms of education, etc, on par with Denmark and Sweden.  Japan unwelcomes immigration.
• China, Germany and JAPAN devote much to R&D in comparison to US.
• According to Global Competitiveness Index, Japan, Singapore, and Hong Kong rank up there with US
• September 2019, so the Federal Reserve took over as the primary buyer of Treasury issuance;  This was so the Government can fund so many unemployment programs due to Covid.  Esma thinks this  is a way of printing money which will shoot inflation.
• 2020:  Foreigners have barely been accumulating Treasuries since 2015, which commonly happens in strong-dollar environments, meaning that domestic balance sheets (pensions, insurance companies, mutual funds, hedge funds, corporations, and banks) had to fund U.S. federal deficits, and those deficits began growing quickly in recent years even during an economic expansion.
• So, the Fed’s recent period of buying massive amounts of Treasury issuance with new dollar creation to keep yields stable and liquidity high within the Treasury market, against a backdrop of insufficient real buyers, is quite different than optional QE to inject some extra liquidity and boost the wealth effect.
• Absolute world poverty has been cut in half between 2000 and 2012.
• IMF provides stability in $; WTO supports Economic development with low interest rates.

From 1942 until now, the S&P 500 has had 17 down years.

The World is Flat is not round anymore.  Events occurring abroad have an impact on your lives.  Read:    The World Is Flat 3.0: A Brief History of the Twenty-first Century.

April 2023-

• Employment is high, which leads to wage inflation, which leads to higher interest rates.

 

Nov 2022-

•   Unemployment rate is 3.7%;  There is a rising trend in jobs which negates a depression!
•   Rising interest rates are expected to slow real estate investment, which drives the Economy.

Feb 2022-

• Base interest rates are expected to go up.
• Cap rates on Industrial properties are moving up to those on Multi-family
• Rents in the Inland Empire have gone up 18% from 2021.
• KFC single tenant is selling at 3.75% cap rate.
• Lease rates for for Industrial properties have increased.  No need to obtain secure tenants in order to obtain security.
• Multitenant properties performed better in Inland Empire as compared to LA and Orange Counties, during the Covid Wave;  Same with Mom/Pop shops.

Jan 2022-

• Multifamily home sector is an inflation hedge.
• Unemployment rate of 3% is expected by year end.
• Due to inflation, wages are expected to rise 6%; Labor is calling the shots for Economy.
• Supply chain is affecting inflation
• Fannie/Freddie set the benchmarks for interest rates for the multifamily sector.

May 2021-  China’s influence on the globe.

• Many parts, manufactured in China, affect the Global supply chain.  Even ingredients used to make drugs.  Economic, military, and cultural power is used by states for survival.
• China’s exports are 50% of its GDP.
• US automotive industry is the largest and most important manufacturing sector, getting undermined by China.
• However, China depends on the US for semiconductors.
• China wants to expand business in the ME but does not want to choose between Iran and the Gulf monarchies.
• China provides loans towards African infrastructure; China itself borrows the funds at lower than global market rates.  Africans agree to employee Chinese contractors.   China holds 25% of Africa’s debt. Africans in the UN have to support Chinese interests like oppressing Uiygars in Xinjiang.
• China made loans to Angola, who had to pay back via oil; Oil prices dropped, making it difficult for Angola to pay back.
• China demands that those benefitting from China cut off ties with “chinas,” such as Taiwan.
• China has increased demand for ivory and other wildlife products.
• Chinese State-sponsored Confucian Institutes in Africa help Africans to fund their studies in China and return to Africa and work for Chinese companies; the Africans obtain training in Chinese Communism.
• China is the largest implementer Coal-energy and renewal energy; Also the largest importer of foreign oil.

May 2021-  Persian Gulf Security

• From 2019 to 2020 Oil prices have CRASHED.
• 2003 US invasion of Iraq conceived ISIS.
• Since 2018, US has been an exporter of oil, thanks to Shale.
• Iran/India have improved relations.
• Russia/Iran support Bashar in Syria.
• Obama’s Joint Comprehensive Plan of Action or JCPOA’s goal is to meant to ease the Economic Sanctions on Iran to incentivize them to not pursue nuclear ambitions.
• Arab Uprisings have failed in bringing about democracies.   Dictators/Monarchs provide housing, education and jobs to their citizenry.
• Trump Administration tried to annex Palestine into Israel.

May 2021-  Aftermath of Brexit

• EU provided a single market without barriers for UK.
• UK farmers export 2/3 to EU;  About 3/4 of UK’s food comes from EU as well.
• Libor is not going to be taken as seriou
• sly now;   US wants to engage with a stronger EU in business deals.
• EU’s Economic weight will go DOWN by 2/3.

May 2021-  Navigating the Artic.

• 2016, the first time a cruise ship traveled in the Arctic archipelagos
• Melting ice gives us access to natural resources such as oil, natural gas
• China is making  in loans to Artic countries for infrastructure; if not paid back, China gains foothold.

– Effects of Pandemic in CA

• Prop 15, Split Roll tax is proposed on commercial and industrial properties, which affects small businesses, which are backbone of our economy.
• BOPIS- Buy online and pick up in stores is doing well for Retailers and Restaurants.
• Properties sold: Cap rates on drugstores- Mid 5’s.Dialysis Centers and Urgent Cares- 6-7%; 1031 and Triple Net have been moving properties forward.
• Consumer Spending on Health care has gown 20%; Retail-apparel- 7%
• If things don’t improve, situation could compare with that of the  Great recession- 2007-9.

September 2020

•       Aug Retail sales increased 1.9 percent month-over-month in September, the U.S. Commerce Department reports.

August 18, 2020

•  Low interest rates have led people to invest in stocks rather than bonds; this shows consumer confidence in the market is stable.
• For benchmark purposes, the largest annual decline in economic growth (GDP) during the great recession was -2.4% in 2009. The largest annual decline in the past 60 years, was 6.19% in 1974.
• The economy is expected to grow in the second half of the year, however it has a lot to make up in order for the annual rate of decline not to be the greatest within the past two generations.
• Flood of foreclosures is expected.  People do have more equity in their homes though, unlike 2008.
• U.S. unemployment reached 14.7 percent in April, well above the 10.9 percent peak of the GFC.  Real GDP fell by 5 percent in the first quarter of the year and by 32.9 percent in the second quarter of the year, the worst decline on record.

July 20, 2020

• Grocery-Anchored shopping centers are stable at this time. 80% of the usual stability; Restaurant-anchored ones are less stable.
• Supply chain, like Beef for example is causing difficulty for Restaurateurs and distributors.
• Day-Care centers are suffering business as well.
• Typical Business: Rent 10%; COGS 30%; Staff 30%; Profit 10%.   Many are having to pay from their pockets.
• Home Depot and Costco are doing well.  Large Retailers have a Moody’s rating of C
• Half of Retailers have filed for bankruptcy; Hundreds of big boxes, like Office depots are are expected to close.
• Demand for Industrial and multi-family is higher than for retail.
• Most retail facilities are becoming party distribution centers.
• Shopping center owners are working with banks to reorganize their loans since tenants cannot pay;  Landlords are creatively managing TI demands.
• 2008-10 was Major Financial Crisis.  At that time online sales were minimal;  In 2020, 15% of the sales are online; 25% Online expected in the future.

April 20, 2020

• Large Caps plummeted 20% in the first quarter.
• Mid caps plummeted 30%

February 11, 2020

• Unemployment rate is low 3.6%.  Chances of inflation remain low.
• Interest rates are falling and Real Estate market should be up.
• Travel industry took a hit due to corona virus.

January 20, 2020

• Economic Growth (GDP) was 3% into 2019.   It is expected to be 2.25% for 2020.
• Federal deficit has about doubled in the last four years.
• From 2012 to 2018, job growth rate was consistent.  2019 was the slowest growth since 2011.
• 2019 say 3.9% as the average 30-year interest rate, thus rising the number of home sales.   This plunge in interest rates resulted from investors having confidence in the US Treasury and thus investing in it.  2018 had 4.45%

January 30, 2017

• We expect GDP growth to accelerate to 2.3% versus the 1.6% of 2016.
• UK is doing fine, despite the Brexit.
• Trumps’ efforts at renegotiating the NAFTA, places the Mexican economy in uncertainty.  Currently rate of inflation is running around 3.4% , which is expected to rise there and thus stave off investment and curtail the GDP growth, thus heading toward a recession.

Summary of 2016

• In Dec 2015, the Fed raised interest rates for the first time since 2006, in the hopes that the Economy would show continual improvement.  This resulted  in weak home sales.
• In May 2016 job growth was weak in the farm area.  Non-farm had good increases.  In July 2016, US Dept of Labor reported a 4.9% unemployment rate.
• The Global Economy has worsened as a result of Brexit.
• Demand was high for bonds and preferred stocks and income-producing investments.
• European, Japanese, and Chinese central banks maintained flexibility in their policies due to Economic conditions.

September 2016

•  In UK, retail sales and unemployment have steady despite the exit.  Inflation is running below 2%.
• In US, average DOM for home sales is 36 days.  Medina household income is 56K, with good job growth.  (I wonder if this is a sign of inflation and perhaps a sign of interest rates to rise.)
• Most of the worldwide stock markets seem to be doing well.
• 10-yr US Treasury is around 1.45%
• Many foreign currencies strengthened against the dollar.
• Barclays Global Aggregate Index returned about 12.31%

 Summary for 2015

• First quarter was weak.   GDP rose in the second quarter from Government spending, personal consumption, rising exports and declining imports.
• Third and fourth quarters, again weak.
• Labor market improved significantly.  Unemployment rate, 4.9% only.
• Russell 1000 declined 2%.  Russell 2000 declined 10%.  Global indices declined 12%.  Bond Indices  declined about 2%
• Iran is expected to increase oil production once the sanctions are lifted.
• Energy sector fell BIG TIME, due to oversupply, hurting producers but favoring customers.
• Vanguard REIT returned -8%.
• 10-year Treasury note yielded about 2%.  It went up from 1.75%.  When yield goes up bond prices go down.

  Week of  9/23/2015

•  IN CA,  Nine of the 11 super-sectors added jobs over the year to August: construction; trade, transportation and utilities; information; financial activities; professional and business services; educational and health services; leisure and hospitality

  Week of  9/18/2015

•  In August retail sales rose while industrial production weakened from low motor productions.
•  The lower gas prices should uplift consumer sentiment.
•  The Fed has lowered its expectations for the Federal Funds Rate and thus for core inflation.  For investors, this immediately raises a problem since this introduces a lower path of nominal GDP growth going forward which would be associated with a slower pace of profit growth over time.
•   Business’ spending on equipment remains modes.
•   The Fed has lower expectations for both the unemployment rate and the inflation rate and thus for the economic growth as well.
•  The low mortgage rates are expected to drive up home sales.
• The Fed policy makers expectation is that it will be raising rates over the next couple of years.
• Keep in mind that Housing is not the main driver of the economy but instead plays more of a “supporting role.”
•  Orders for durable good, exlcluding aircraft and defense, rose.
•  In UK, inflation is below its 2% target.  BoE will probably raise rates in 2016, depending upon how the CPI behaves.
• U.K. economy is not particularly exposed to the developing economies of the world.   What about the US, Australia and other economies?
•   In Japan, BoJ continues its asset purchases and may increase that pace in light of the struggling economy and continual deflation.
•  Manufacturing activity in China has taken a major dive.
•  Manufacturing sector in Mexico showed weak performance.
•  Manufacturing in Germany and Eurozone has shown increases,

Week of  7/15/2015

• GDP Year/Year change for 2016 is forecasted at 2%.
• In Australia, inflation is running 2%.
• US Stock market returned about 6% for the past 6 months.
• The STRONG US -Dollar has had a negative effect on Multinationals.
•  Fed will most likey raise short-term rates before year end.

Week of  6/20/2015

• CA Unemployment rate has improved since last year in ALL sectors except finance and insurance.  Industrial vacancy is down as well.  These indicate a better situation than a year ago.  It is getting closer to the LONG-run unemployment rate.
• Consumer spending is expected to increase as well.  Health care spending accounts for 20% of the total.
• However, Canadian retail sales are down.
• Business spending has expanded with a decline in Energy and gas prices.  Energy States showed a strong GDP growth!!  (I don’t get it..)
• Fed is NOT helping with the long-term interest rates but definitely keeping short-term rates low to stimulate economy.
• Industrial Real Estate Vacancies are down because Manufacturing, Distributions, and warehousing demand is UP.

Week of  5/1/2015

• The median home price in May 2014 was 7.5% below the median home price at the peak of the housing boom in June 2006.   I do NOT know about 2015.
• First quarter GDP results for the US were bleak,  thus rippling accros the globe.  Weaknesses in Manufacturing and disruptions with the Oil market contributed.
• Consumer confidence and spending  fell in April.  Consumer Sector accounts for 2/3 of the US economy, thus making it the largest of the four sectors.
• Chinese Manufacturing remains stable.
• Canada is a major oil producer and lowered its interest rates.

Week of  3/8/2015

• Decrease in Energy is expected to increase GDP, which was predicted down below to decrease in 2015 due to cuts in Government spending.
• It is unlikely that there will be interest rate hikes without growth in Wages.
• Some sources say that the unemployment rate is now 5.5%, which makes Esma think that the interest rates WILL rise.
• Leisure and Hospitality industries are growing.
• Brazilian economy forecasts rate poorly for 2015-16
• Chinese economy growth has slowed over the past few years.
• Federal funds rate will probably increase by June of 2015.
• Five of the major Federal Trust Funds, supporting SS and Highways etc. have been paying out much more than their revenues, thus facing depletion in about 2025.

Week of  1/8/2015

• Decline in Gas prices and automobile sales accounted for decline in Retail sector last month.  SA refused to cut oil productions to meet the drop of oil prices.  OPEC, especially SA affect the oil prices by modifying their production.
• Increase in home sales from Nov to Dec resulted from owners buying in So Cal vs investors.
• Revenues in Film Production and Tourism industry have increased over the past year.
• Occupancy for Industrial Leases has increased.
• US 10-year treasury return 1.75% while Municipal bonds return 8.86%
• REITs performed extremely well due to falling interest rates.  They are riskier than fixed income securities.   Retail REITs performed well, followed by office and health care, then industrial had modest returns.
• Energy Sector performed TERRIBLY.   Global energy demand is predicted lower.   West Texas crude oil dropped 50%!!!  Natural gas also dropped significantly.   Such drop was experienced in 1991, 2001, 2008, and now 2015.
• US Stocks returned 13% while International stocks returned 1%.

Week of  11/8/2014

• US Economy has expanded in the 3rd Quarter due to increased exports and defense spending.
• Imports have declined.
• 2014 Annual GDP growth expected is 2.2%
• Federal Reserve ended it Bond-buying program. Global banks engaged in aggressive stimulus actions, which benefited the bond prices and stability.  US Bonds returned 6.6%.
• Interest rates are very low. This is the direct result of a Federal Reserve-funded fiscal stimulus plan, better known as the “third round of quantitative easing” or “QE3,” aimed at hastening the recovery of the housing and the economy as a whole. Through the program the Fed purchased $85 billion worth of Treasury bonds and mortgage-backed securities per month, which has driven down interest rates, making mortgages more affordable.

Week of  11/27/2014

• Business spending is up as well as manufacturing.
• The Energy sector in Mexico is the key towards make it a developed country.
• Mining sector rose to 18%.
• Petroleum production is doing well in Mexico.
• The risk of RUN-AWAY inflation is low since unemployment is still high and excess capacity remains in the industries.

Week of  10/17/2014

•  Global growth has been affected by  US  reducing its asset purchase program, default of Argentinian bonds, and instability in the Ukraine and the Middle East.
• Deflation and weak economic growth have caused bond yields to increase. Greece, Spain, Italy are all in deflation state.
• 10-yr Treasury’s Yield has been higher than DJ.
• Much Volatilty this week in sales perhaps due to Ebola scare.
• Gasoline prices have fallen, which is good for consumers but bad for Producers and thus for  30% of US GDP growth.

Week of  9/14/2014

• Economic growth of up to 3% is expected through 2015.
• We are experiencing much volatility in asset prices, similar to 2008-9.
• Inflation rate is expected to remain in the 2% range.
• Dollar value has shown appreciation.
• The benchmark US Treasury 10-year yield runs about 2.75%

Week of  7/31/2014

•    10-year US Treasury Yield ended at 2.56%.   (Bond prices and yields move in opposite directions.)
•     International Bond markets (Barclays Global Aggregate Index) returned 3.35%
•     International Stocks returned 10%, led by Emerging markets in the Pacific.   European stocks did alright.
•     Shale deposits in North Dakota led the Energy Sector, with returns in the high double digits.

Week of  6/7/2014

• Job market is improving in higher paying sectors like construction, energy,  professional services.   Also improving in lower-paying sectors like retail and home health care.
• US Economy is improving at  better pace than Europe.
• China has stabilized although demand from Europe is still down.
• Japan has shown improvement.
• Brazil and Mexico showed weak growth.

Week of  5/4/2014

• Inventory of homes is low.  Distressed Sales are down. Housing market is still not picking up.  Rates are climbing.
• Manufacturing sector is looking better.  Orders rose for durable goods thus inducing capital spending.
• Unemployment rate hovers around 6.7%

Week of  4/18/2014

• China’s GDP grew over 7% from previous year.  China holds 60% of the trade activity for import & export goods in LA.
• March showed INCREASE in auto sales, restaurants
• Import prices, CPI, and producer prices are ALL going up, thus indicative of Inflation.
• There has been a rise in Industrial and Manufacturing output.

Week of  2/15/2014

• Individuals working at art galleries earned below the statewide average at $49,828, but this was still higher compared with the rest of the retail industry whose workers brought home an average annual salary of $32,533 in 2012.
• Creative services like the design, performing and visual arts, and wholesale/retail sectors will have to make up jobs lost in manufacturing, most of which will not be returning.

Year End  1/31/2014

• Investors showed interest in Shale Oil in ND, PA..
• US stocks produced gains of 23%!!!!
• International stocks, about 6%.
• The BENCHMARK, 10-year treasury note yielded 2.7%
• The FED has decreased bond-buying from the US Government, which will drive down the prices of US bonds, which in turn will increase interest rates.
• Rising interest rates diminish the return of REITs.
• Dividends from bonds and other investments are less riskier that REITs.
• Bond prices and yields move in opposite directions.
• Barclay’s Global Bond Index returned -1.24%
• Contributors to the Growth is US GDP:  Private Investment in Inventories, Increased spending by Federal and local governments,  deceleration in imports.
• IMF projects an increase in  Indian  and Chinese GDP.

Week of  10/31/2013

• US and global equity markets showed good returns.
• Eurozone exited recession.
• Japanese equity rose in the hope of future reduced-deflation.
• Electric car manufacturers showed good returns.
• Value of Gold depreciated.
• Technology sector appreciated.
• Utility and Energy sector was down.

Week of  8/19/2013

• Eurozone exits recession.
• Japan’s growth has been modest even though chances of slipping back into recession are low.
• Brazilian unemployment rate is about 6%.

Week of  7/30/2013

Fed’s asset purchase program created jobs in the economy.

• 33% of All home buyers in Southern California are Cash buyers. (Perhaps they are using equity on their main homes.  Perhaps they are investors?)
• ISM Manufacturing Index rose.
• Net exports have detracted due to slow economies elsewhere.
• Money available for auto loans is stable, whereas revolving credit is more volatile.
• Bank of Japan is buying Real Estate assets and bonds in order to keep inflation around 2%.

Week of  7/23/2013

• GDP is forecasted to grow at less than 2% throughout 2014.
• Higher taxes on high owners will reduce the GDP growth by 1%.
• Growth in construction of new residential, SFR and multi-family structures is expected to grow about 18%
• Federal expenditures are expected to fall to low level for first time since 2008.
• Net exports are expected to grow at 5% in 2014.
• Unemployment rate for 2014 is expected to hover around  7.2%.
• Increases in prices of commodities resulting in inflation depends on the global market.  Inflation is expected at 1.7% in 2014.
• Federal deficit is expected to decrease, however, debt ceiling is expected to increases in October 2013.

Week of  7/12/2013

• Unemployment rate has improved now to 6.5%, but it has to getter better to 6%, than the FED will raise interest rates.
• US Producer prices rose because Energy prices rose.  In the Eurozone, energy prices declined, then cost of other goods declined, thus leading to a low PPI.
• The weaker global economy resulting in less demand for US goods will drive down production in the US.
• Industrial production fell in Germany, Eurozone’s largest economy.
• Inflation rose in Brazil to 6.5%, thus resulting in the Central Bank raising interest  rates to 8.5%.
• Long-term interest rates in the US are rising because of the improving Economic conditions.
• Food and Energy prices are more volatile, in contrast to the core CPI.

Week of  6/10/2013

• There has been job growth in low-wage professions like hospitality, leisure, and home health care.
• Disposable income is still low.
• Manufacturing was fine during 2011-2 but now it is now down.  Durable goods are Okay.
• Distribution and warehousing is down as well.
• Although inflation is down in the US, the low interest rates still do not produce good-enough yields for fixed income securities.
• Household wealth is up but demand for loans in down, except student loans.
• In Commercial real estate, order of vacancies from low to high:  residential income, industrial, retail, and office space.
•  There has been increased business spending on computers and peripherals, industrial equipment, transportation equipment, and structures in health care, manufacturing, utilities, and mining.
•  Economy will probably expand at a slow pace in part due to slower growth in China and an outright recession in many European economies.
• Unemployment  is up in Autralia.
• Industrial production has been better in UK, Brazil, and Germany.
• Inflation is expected to rise in Japan.

Week of  5/10/2013

•          Australia Reserve Bank cut its cash rate to 2.75%, which is lower than the rate of from the 2009 global recession.
•        Japan is showing some growth.

Week of  4/10/2013

•   US dollar strengthened perhaps due to declining oil prices. (Most commodities are priced in US dollars.
•   Korean bank should have lowered rates because of the Weak currency and even weaker Japanese yen, but they are trying to control inflation.  Demand for Korean-made products go down in Japan.  However, Korea is expecting high in its exports.  Japan has a continuous problem of deflation.
• Inflation pressure is down for now, probably until 2017.  Maybe that will help keep up the consumer spending.  Inflation stands at 2%.
• Business owners are concerned with Regulation, Taxes, (especially payroll), and poor sales.
• During the past month, retail sales fell for merchandising and gas pumps.   Prices rose for gas.
• GDP growth should be about 3% now in the post recession years, however has been running around 2% during the past years.

 Week of 3/29/2013

•     Housing, Labor markets, and manufacturing shows improvement.
•     Financial crisis in Cyprus has caused Greek Government bonds’yields to increase.  Therefore, deepening the debt of Greece.
•     Housing permits and retail is down in Spain.
•     Bank of England has been increasing its Asset Puchase program since 2012.

Week of 3/21/2013

•         Housing Starts have gone up.  Materials have gone up, especially lumber.
•         Investors are buying up houses.  Inventory is short.
•         Manufacturing sector is showing improvement.
•         Umemployment has improved.  Retail sales are expected to rise and inflation is expected to rise.
•        UK economy has contracted during the past 4 quarters.  They are trying to keep their bonds’ ratings up.
•      Economic growth is expected to strengthen over 2013.

Week of 3/15/2013

•  Retail Sales were above expectations, except in the Control group, which consists of food, gasoline, and building materials.
• Unemployed has improved.   Interest rates are expected to rise.
• 10-year US Treasury rates will probably end in 2.3% at year end.
• Energy prices increased the CPI.
• The increased SStax and higher gas prices affect the low to middle income families the most.
• Manufacturing and Utilities showed gains.
• European Economies are still dragging, thus resulting in the dragging of the Chinese Economy, which helps all global markets.
• Germany, Eurozone’s largest economy is expected to increase in industrial production.
• Brazil’s industrial production has been much better compared with December.
• Mexico’s industrial production improved somewhat, but is still weak, thus Central bank has lowered their interest rates.

  Week of 3/1/2013

•              Improved prices and sales in housing, autos, and exports.
•             Budget cuts will affect the government spending and GDP, severely in 2015.
•           Delinquency rates on housing and commercial loans were 2% prior to the recession.  Now they are 10% and 4% respectively.
•            England’s inflation rate is above 2%.
•            Canada’s inflation rate is about 1%.
•           Japan has been experiencing deflation for years.

Week of  2/8/2013

•              Rising health care costs have negative effect on employers, who are in turn passing them off to the employees.
•               There has been a rise in retail sales, particularly in auto sales.
•               Utilities slowed because of the warmer-than-average winter.
•               Petroleum prices are down compared to a year ago.  Petroleum comprises of more than 20% of our imports.
•               UK’s inflation will probably stay above 2% over the next two years.
•               Japan’s target rate of inflation is 2%.
•              Economy is improving.  Unemployment is improving.  GDP is expected to increase this summer.   Job growth is expected in the service sector.

Week of  2/1/2013

•          Dell announced that it is going private.  This resulted in the rise of  stock market.
•          The Yen is weakening against the dollar.
•          Treasury intends to conduct auctions for all of its preferred stock and subordinated debt positions (the CPP Securities)  

 Week of  1/7/2013

• The increase in payroll taxes and increase in income taxes for the wealthy will probably drag the economy.
• Economy will probably grow at a 2.5% rate.
  Inflation will probably play at 2.5% this year.
• Stocks will probably outperform bonds in 2013.
• Improvement in the International stock market will probably continue.
• 10-year Treasury yield may go up to 2.5% by the end of 2013.
• Factory orders for the manufacture of Defense products surged last month!

Week of  12/7/2012

•   Enegy prices at the pump showed a decline.
•    Slow growth in Asia, i.e China has declined growth in Australia, who exports Copper and other materials to Asia.

Week of  10/19/2012

• Economic Activity is China is SLOW in single digit growth as opposed to double digit growth in the last decade.
•      Retail Activity in Mexico has relied heavily on Petroleum and exports to the US.  Slow activity may force interest rates down in Mexico.
•      Germany exports a big portion to the Eurozone, which has been slow.
•        US has shown increases in PPI and CPI mostly due to increasing Energy costs.
•        Industrial production showed declined in outputs, but showed increases in Utilities and Mining (the Non-Manufactered portions.)
•        Residentiail construction, business investment, net exports, and personal consumption helped GDP, whereas inventories and Government consumption detracted from it.
•       The Fed and others are buying riskier products, higher  than the Treasury yields.
•       The Great Recession of 2008-2009 hit the Pre-retirees harder than others because of decline in their incomes, investments and home values.

Week of  9/13/2012

• Rising fuel costs and Economic slowdown abroad affect our local conditions.
• There may be higher inflation due to higher prices of commodities.
• There has been big growth in cyclically-sensitive goods sector.
• The Fed has purchased MBS and that may lead to increases in interest rates in second quarter of 2013.
• Corporate Indexes’ risk adjusted returns are high compared to Treasury Returns.

Week of  8/3/2012

•  Unemployment rate is running around 8.3%.
• Eurozone’s condition has adverse affects throughout the world.
• Italian and Spanish government bonds yield around 6%.  German bonds around 1.4%.
• China, the second largest economy has shown decline in growth.
• USA’s drought will help Argentina’s Economy.  US, Brazil and Argentina produce 80% of the Soybeans.

Week of  7/31/2012  (This is a six month report form 1/2012 – 7/2012)

• US stocks of large companies returned about 5%, for the past 6 months, much better than international and emerging markets.  Dollar is strong against the Euro.
• US bond market posted a return of 3%, for the same time period.   Bond  prices moved higher and yields lower.  (Prices and Yields move in opposite directions.
• Yield on the US 10-year Treasury showed a record low of 1.5%
• The long-term and short-term yields for US Treasury Bonds fluctuated during the six month period.
• Since 2008, Fed has kept short-term interest rates low.
• Manufacturing sector has continued in showing declines.
• REITs have done well particulary in the retail subsector.  Demand for leased space in higher-end shopping center pushed rents up.
• REITs in hotels, self-storage facilities, health-care facilities, and apartment buildings have showed modest returns.
• REITs in office and industrial subsectors showed LOW returns.

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•   March to July showed sharp decline in crude oil prices.
•   Natural gas prices have been historically low.  Advances in drilling  have  increased supply.
•  Integrated oil and gas companies, especially of South America suffered high losses.
•  Oil and gas exploration and production suffered losses as well.
•   Globally, the lessening demand for oil has made the Energy sector suffer.

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       Week of  7/23/2012

•  Bank of Canada is considering raising rates to prevent inflation.
• Mexico has reported good amount of autombile exports.
•  UK has had a drop in oil prices, which should help consumer demand for other items.

Week of  6/29/2012

•     Consumer spending, including durables rose as gas prices decreased.
•     Auto sales were up in Japan and down in the U.S.
•     Europe had bleak retail sales.  Household goods were down more than personal goods because of lows in housing market
•      Inflation in Eurozone has stayed steady while inflation in Italy rose.
•      Leaders in Eurozone agreed to inject money into the banks to enable them to lend to small businesses.

Week of  5/4/2012

•    Countries that export commodities should do fine in the global economy.
•    Emerging markets are expected to outperform the developed world.
•    China has controled inflation to 3.6%, which is much better than in 2010.
•    Canadian unemployment  fell to a low of 7.2%.
•     Probably, the Eurzone banks will get another bailout.
•    Australia cut interest rates because of Eurzone’s and China’s  economic weeknesses.
• British Government is expected to increase Assets’ Purchase program to help keep Britain out of Recession.
•   US small businesses are reducing their debt.

Week of 3/30/2012

•      Manufacturing decreased with demand for durable goods and electical equipment.
•     Inflation is expected to up to 6.3% and employment is expected to rise.
•     Consmer spending may be lower due to low growth is savings-rates.
•     Japanese GDP has gone down due to natural disasters.
•     Eurozone shows deteriorating unememployment.  Greek downfall hurts.
•     Greek Bonds Yield 35%.  BAD.
•     Brazil’s industrial production is hurt by the Eurozone recession.
•     Bernanke will probably purchase more MBS.
•     Banks have low loan/deposit ratio, suggesting a good ability to withstand recession.
•    Fastest growing states are those into Energy Exploration and Agriculture:  ND, IA, TX, OK.   Mining and Agriculture:  NB, WY, CO, UT.
•  CA growth comes from Hi-Tech and Entertainment Industries.

Week of 3/18/2012

•  Consumer Confidence is on the rise.
•  S&P Stock prices are on the rise, despite the high gas prices.
•  Income growth has not been able to upkeep with inflation.  Consumers have taken on more debt.
•  US Gov increased borrowing debt through US Treasury securites.
•  Corporate bond debt has also increased.  Mortgage debt has decreased.
•  New home Starts have to compete with the foreclosed ones.

Week of 1/15/2012

• Economists expected refinancing to plummet.
• Manf/Industrial production:   negative in 2008-10;  positive in 2010-11 from cars and machinery.
• Food/Energy prices down, but core inflation- 3%
• Ten-year T-note (Treasury bond)  finished low.
• Saving instruments like 3-month Treasury bill retuned about 0%. (Fed wanted the shortest-term interest rates.)
• Barclays USCapital Aggregate Bond Index returned 8.7%.  Very High!!  This measures the  broad taxable bond market both Gov&Corp.

Week of 1/1/2012

• Decline in Petroleum imports led to decline in exports of Industrial materials, thus decline in GDP.
•  Watch how lower unemployment rates, (9% during 2011)  affect inflation this year.
• IMF (International Monetary Fund) anticipates 2012 economic growth of: -.5%-Eurozone, -1.7%-Japan,  5.4%-India&China.
• Federal Funds rates is expected to stay low through 2014.

Week of 11/22/2011

• Bush’s tax cuts are about to expire in 2013 on Capital gains, dividends, and the highest tax bracket going from 35% to 39%, thus people will have less money to spend.
• US was unable to decide how to reduce its Long-term Deficit.  This causes much uncertainty.
• Equities should not suffer because of the Impasse.  Equities are a function of Economic Growth.   Therefore, the impasse should not affect the GDP.
• Debt/GDP ratio should be 75% ideally.
• Wells Fargo forecasats the GDP to run between 2-3.5% for the next ten years.

Week of 9/26/2011

•       Large number of home sales are cash deals from investors and foreign
  buyers.
•      Arizona and Nevada lead the foreclosure rates.
•       Fed decided to reinvest in agency bonds and MBS, this should help
  stabilize interest rates.    Fed intends to purchase long-term securites and sell an equal amount of shorter-term ones.
•       There is a rise in home-modeling activity.

 Week of 9/12/2011

• •      Low demand in Retail sales may lower mortgage rates.
  •      Higher number of Unemployment claims may lower mortgage rates.

Week of 9/08/2011

For the few next months, MODERATE growth is expected in:

•                Consumer spending, equipment, and software
•                Remodeling in Commercial and Residential contruction.

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•          Inflation is about 2%.   CPI is climbing.
•          US firms show growth in manufacturing  and consumer products.
•          Short-term interest rates are controlled by Fed Funds Rate.
•          Many Asian economies are sensitive to global trade.

Week of 8/21/2011

•  US Treasury Notes will be auctioned.  Strong demand could lower mortgage interest rates.   Low demand would incease the rates.   Many mutual funds own shares in these Notes, as well as shares in secondary mortgage notes of Fannie/Freddie/Ginnie.
•  Weekness in the sale of durable goods may reduce interest rates.
• Less demand for durable goods,  slows down manufacturing.  Financing of the piled-up inventories of durable goods may reduce interest rates.
• Hyper-inflation is expected in the months ahead.

Week of 8/11/2011

• Homeownership falls due to increased foreclosures and tighter underwriting standards.  Thus, demand for Apartments and Multi-fmaily has increased.
• Foreign homebuyers have been buying properties in California due to the weak US dollar.  They come from these places:   China, South America and Canada…
• Home Prices and Rents are rising in the High Tech areas like Silicon Valley.
• Mortgage Interest rates are expected to increase in the comming months.

Week of  7/18/2011

•  Italy claimed high levels of debt, much bigger than Greece.  Investors  and Banks owning Italian Government Bonds would drive Global economy back to recession.  This has resulted in the long-term US Treasury interest rates to fall.  ECB-  European Central Bank has been trying to buy Italian and Spanish government bonds but is running out of resources.
•   Inflation is up excluding food and energy.
•   Housing Starts are at a good level.  Rise in housing starts can lead to a fall in the demand for bonds, since housing starts exemplify cosumer confidence in most other areas.
•  US Treasury shall auction 10-year tips.    10-year tips are Treasury bonds that lock in a steady yeild that is adjusted for inflation over the next 10 years.   High demand for these 10-year tips may lower mortgage rates.
•  Other leading economic indicators showed an increase, which may lead to lower interest rates.

Week of  7/11/2011

•  Economist feel that the residential home market has bottomed out, and  it now resides at a turning point.
•  Unempoyment remains on almost every area.
•   Investors sold off bonds to join stocks.
•   Interest rates on Residential properties may be heading up.   Therefore, good time to buy.
•  Auto Sales went down last month.  Other Retail sales stayed the same from last month.
•  Inflation is low.
• Service Sector continues to expand.

Week of 6/27/2011

• Fed forcasts that the Unemployment rate remains elevated for the next few years.   Higher claims may lower interest rates.
• Chairman Bernanke thinks that Food and Energy prices will go down.   This should calm fears of inflation.
• High-level of debts in Greece could impact rates in US Banks.