Home sales are at a nine year high but stocks dropped sharply this week.  Does that mean it’s safe to say we’re over this ‘bubble’?  To see what Syd Leibovitch thinks of how everything in our financial markets are doing, read on.

Stocks down sharply this week – DOW loses over 1,000 points for the week – Stocks dropped sharply this week as overseas markets and commodities fell sharply. China, the world’s second largest economy, showed signs that their slowdown was deeper than previously reported. Following the Chinese Government’s sharp devaluation of the yuan last week to spur investment and to make Chinese goods cheaper overseas more financial data showed that the Chinese economy was worse than anyone thought. Friday, a Chinese Manufacturing Index stood at its lowest level since March 2009, the depths of the financial crises. Following that reading U.S stocks dropped sharply in their worst day since 2011. Oil dropped further falling below $40 per barrel. A level not seen in 6 1/2 years during the depths of the Great Recession. This continued to hit energy companies’ stocks hard. At the same time Greece asked for another bailout, which hit European markets. News at home with the exception of energy, and companies with exposure to China, and stocks were positive. This included: higher existing home sales, high builder confidence, and above expected second quarter sales reported by some retailers. A Federal Reserve report released Thursday showed that The Fed is very cautious of just how fragile the U.S. Economy is, citing spill over from China’s slowing, energy sector profit and job loss, a strong dollar which will hurt exports to already slowing overseas markets, and inflation levels at only 2% annual levels, well below the 3% target. A sign that an interest rate hike may not occur as soon as perviously expected.

The Dow Jones Industrial Average dropped 162 points on Wednesday, 358 points on Thursday and 531 points on Friday. It closed the week at 16,456.75, down over 1,000 points from last week’s close of 17,477.40.  The S&P 500 closed the week at  1,970.89, down from last Friday’s close of 2,091.54.  The NASDAQ closed the week at4,706.04, also down sharply from last week’s close of 5,048.23.

Mortgage rates fall to lowest levels of the year   –  The 30 year fixed rates ended the week around 3.75% for loans up to $417,000, and around 3.875% for loans over $417,000.  The 15 year fixed rate loans are about 3.125% for loans up to $417,000, higher loan amounts have rates that are around 3.25%. The 5 Year-ARM rate is around 2.75% and 1 Year-ARM mortgages are under 2.50%.

Treasury Bond yields drop this week – Investors fled stocks and moved to the safety of U.S Treasury Bonds pushing yields down to the lowest levels of the year. The 10 year Treasury bond yield closed week at2.05%, down from 2.20% last Friday.  The 30 year treasury bond yield closed Friday at 2.74%, down from last week’s close of 2.84%.

California home sales at 9-year high
 – CoreLogic reported that existing home sales in July hit a 9 year high.  The number of homes sold in July increased 16.9% from last July. Home prices were also higher with the medianprice up 5.5% year over year. The California Association of Realtors reported that sales were up 2.7% from June and 12.7% from July 2014. CAR reported that prices were up 5.4% year over year. Housing remained at a 3.3 month supply, well below normal levels of 6 a 7 months. CoreLogic uses information from recorded sales at counties throughout the state, while The California Association of Realtors uses reported sales from its Realtor members.

U.S. home sales at highest rate since February 2007 – The National Association of Realtors reported Thursday that existing home sales rose 2% in July. Home sales in July were at at their highest level since February  2007 on an annualized basis.

Home builders index shows homeowners and builders are the most optimistic in over a decade – The National Association of Home Builders reported that the confidence level of homeowners to home builders rose to its highest reading since November 2005.

Have a great weekend!
Syd


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