From Fidelity National Title:
The Week in Review
MONDAY, February 13th
Stocks rallied late today after Greece passed austerity measures over the weekend to help secure bailout funding. The euro ended almost flat against the dollar suggesting lingering uncertainty around the Greek financial situation. The Dow closed up 72.81 to 12874.04 as the NASDAQ gained 27.51 to 2931.39. Gold was steady at $1720 with little change in Treasuries.
TUESDAY, February 14th
Retail sales increased 0.4% in January less than an expected 0.8% gain. Meanwhile, sales in the prior two months were revised slightly lower. Retail sales are now 5.8% above their year ago level though have slowed further in the last few months. Weakness in January was led by a 1.1% decline in motor vehicle sales; excluding auto sales, retail sales gained 0.7%. Necessities led the gains with gas stations, grocery and general merchandise stores posting solid gains last month. Consumers continue to spend moderately slightly above Q4 levels indicating modest positive support to economic growth.
WEDNESDAY, February 15th
The MBA mortgage applications index fell 1.0% to 801.8% for the week ending February 10. The purchase index dropped 8.4% on the week as the refinance index edged 0.8% higher. Purchase activity remains at an extremely low level while refinancing has been on a rising trend over the past nine months amid substantial volatility. Contract mortgage rates were up somewhat in the past week with the 30-year fixed rising 3bps to 4.08%.
THURSDAY, February 16th
Jobless claims fell 13k to 348k for the week ending February 11. This was the lowest level of initial claims since August 2008. New claims have now been on a declining trend since September indicating clearly the pace of layoffs has slowed. Continuing claims are also at their lowest point since August 2008 as some have found employment although most have exhausted their benefits. These data continue to indicate slow improvement in the labor market.
Housing starts increased 1.5% in January to an annual rate of 699k, better than expectations for a small increase to a rate of 675k. Housing starts are now 9.9% above their year ago level. Single family starts slipped 1.0% on the month to an annual pace of 508k as multifamily starts surged 8.5% to 191k. Single family starts have been basically flat at a low level for the past three years while multifamily starts have been trending higher with lots of volatility. Permit issuance was 0.7% higher in January suggesting modest gains in home building could continue in the months ahead.
The producer price index rose just 0.1% in January, as both food and energy prices fell on the month. Excluding both food and energy prices from the index, the core producer price index increased by 0.4% in January and was up 3.0% on the year. The core rate continues to trend higher, climbing from a 0.7% annual gain in October 2009 to a 3.0% annual rate now in January 2012 indicating building inflationary pressures at the wholesale level.
FRIDAY, February 17th
The consumer price index rose 0.2% in January as food prices and energy prices each increased 0.2% last month. Overall consumer prices are now 2.9% above their year ago level which is only slightly above their long term averages. Additionally, headline consumer inflation has been retreating in recent months. Excluding food and energy prices, the core CPI rose 0.2% and is now up 2.3% on the year. This is the fastest pace since September 2008; however, the annual rate of both core and headline consumer inflation is expected to continue to ease modestly this year.
Definitely good news on the Jobless claims. I hope to see this trend continue. In my opinion, the more jobs and the less unemployed people out there, the better for the rest of the economic numbers. We shall see in the coming months if this is a true move, or just smoke and mirrors. I also like the housing numbers, but am a little concerned about the majority of the housing starts coming from multi-family (read apartments). While people don't need to own real estate, it has been a cornerstone of our economy for as long as the country has been around. There is something to be said about the pride of ownership and you just can't get that renting a home. Plus, a home is not just a home - it is a savings account where you get (or the majority of) the equity at the end (depending on the price range of the home). Otherwise, you are just paying someone else's mortgage and making them richer.