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Mortgage Market Guide: Retail Sales Rebound

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Mortgage Market Guide: Retail Sales Rebound


  In This Issue  
Last Week in Review: Retail Sales rebounded in December after a disappointing November.

Forecast for the Week: Consumer inflation is an important data point to watch. Plus, look for news on housing and manufacturing.

View: Meet your personal assistant: Alexa.

Last Week in Review  
“Hey big spender. Spend a little time with me.” Shirley Bassey. Consumers spent more time ringing up sales in December.

The Commerce Department reported that Retail Sales rose 0.6 percent in December from November. The increase was due in part to strong sales for autos. The year ended with momentum that could signal sales growth in 2017. From December 2015, sales were up 4.1 percent year over year. Overall, sales were up 3.3 percent for 2016 after a 2.3 percent gain in 2015.

Meanwhile, wholesale inflation ticked up in December, increasing 0.3 percent from November, as reported in the Producer Price Index (PPI) from the U.S. Bureau of Labor Statistics. From December 2015 to December 2016, PPI climbed 1.6 percent, which was the largest 12-month gain since 2014. Core PPI, which strips out volatile food and energy prices, also increased 0.2 percent from November to December.

Inflation, at both the wholesale and consumer levels, is an important measure to track because increasing inflation reduces the value of fixed investments like Mortgage Bonds. When Bond prices worsen, the home loan rates tied to them can worsen as well.

Although Bond prices and home loan rates took a hit recently following economic news releases, home loan rates are still near historic lows.

If you or someone you know has any questions about current home loan rates or products, please don’t hesitate to contact me.

Forecast for the Week  
The Consumer Price Index is a key report to watch in a week that kicks off Tuesday with a full slate of manufacturing, housing and other data. Markets are closed Monday, January 16 in recognition of Martin Luther King Jr. Day.
  • Regional manufacturing data will be released in the Empire State Index on Tuesday followed by the Philadelphia Fed Index on Thursday.
  • Wednesday brings the closely watched Consumer Price Index along with the Fed’s Beige Book.
  • Look for housing data via the NAHB Housing Market Index on Wednesday and Housing Starts and Building Permits on Thursday.
  • As usual, weekly Initial Jobless Claims will be reported on Thursday.
Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. In contrast, strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.

When you see these Bond prices moving higher, it means home loan rates are improving. When Bond prices are moving lower, home loan rates are getting worse.

To go one step further, a red “candle” means that MBS worsened during the day, while a green “candle” means MBS improved during the day. Depending on how dramatic the changes are on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, Mortgage Bonds recently lost some of the footing gained heading into 2017.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Jan 13, 2017)
Japanese Candlestick Chart
The Mortgage Market Guide View…  
Amazon’s Alexa is at Your Command
A virtual personal assistant is like a genie you can summon 24/7.
By Kaitlin Pitsker, Kiplinger.com

Five years after Apple added Siri to the iPhone, many smartphone users are accustomed to talking to a disembodied voice and expecting a helpful response. Now, Amazon has taken the concept of a virtual personal assistant a step further. Set up one of the devices in the Echo lineup in your home or office and Amazon’s virtual assistant, Alexa, will do your bidding. The technology is completely hands-free: You don’t have to stop what you’re doing and fiddle with your smartphone to handle a robust list of tasks.

Make a wish. Amazon’s trio of virtual assistants are essentially Wi-Fi-connected smart speakers that you control with the sound of your voice. At just 9.25 inches tall, the Amazon Echo ($180) is small enough to sit on your kitchen counter, yet it contains two speakers with surprisingly good audio quality. A group of seven built-in, far-field microphones are always listening for your call. When you summon Alexa, the blue ring atop the cylinder lights up and Alexa jumps into action, whether it’s to check the weather, read you news headlines, schedule events on your Google calendar or keep track of your family’s shopping list.

For less than a third of the price, the Echo Dot ($50) packs nearly as much punch into a diminutive device that looks like a hockey puck. The Dot is just as smart as its larger sibling and can complete the same tasks. However, the Dot’s speaker isn’t as powerful, so you’ll get better sound by connecting the device to your home audio system. The Amazon Tap ($130) has a rechargeable battery that makes it an easy grab-and-go option (you have to stay within Wi-Fi range).

To program any of the three devices, load the Alexa app on your phone (Apple or Android), or visit http://alexa.amazon.com on your PC to connect the device to your Wi-Fi network. You use your phone or computer to set it up and add skills, but you won’t need either for day-to-day use. Many of Alexa’s capabilities, such as answering basic questions and looking up information on Wikipedia, are built-in, but you can use the app to select skills you want to add.

Amazon continues to enhance Alexa’s repertoire. Among the current tricks up her sleeve: checking stats on your Fitbit, ordering a pizza from Domino’s and checking the balance of your Capital One account. Or ask Alexa to play music from Spotify, and the speakers will pipe in your favorite tunes. The device also serves as a control center for an array of compatible smart-home devices, such as thermostats, garage-door openers and lighting systems (see A Smarter Way to Heat and Cool Your House).

Google Home knocks. After two years on the market, Alexa may finally have some serious competition. Like Amazon’s line of products, Google Home ($130) can look up information, stream music through speakers comparable to the Echo’s and perform other tasks. The virtual assistant inside Google Home’s 5.6-inch-tall speaker — it answers to the command “Okay Google” — will seem familiar to many Android smartphone users. And Google Home devices can communicate with one another, so you can have multiple speakers around the house playing the same music. Expect Google Home to work with many popular apps and devices, including Chromecast, Google Calendar, Nest learning thermostats and Spotify.

Reprinted with permission. All Contents © 2017 The Kiplinger Washington Editors. Kiplinger.com.
Economic Calendar for the Week of January 16 – January 20
retail sales




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