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Friday Market Update for the Week of February 5th

Happy Friday! Brian Manning here with the weekly update. Let’s get right to it. I can’t believe it, another month has rolled by it’s already job’s week. We are going to talk about the jobs report here in just a minute. Monday of this week we had drama continuing in the stock markets with GameStop and AMC and certainly just a roller coaster there.

Tuesday of this week, we had CoreLogic giving us feedback on home appreciation for the month of December. So CoreLogic says that home appreciation is up 9.2% so everyone is pretty much in line. We really follow three main providers of information for what the housing market is doing. As far as appreciation is concerned there’s Case Shiller, FHFA and CoreLogic and this report happened to be CoreLogic. They also reported that inventory is down 24%. All of us are feeling that right now in the market for sure but certainly, you know, just continuing information on inventory being down.

 

Wednesday of this week we got ADP and we get the employment report from ADP the first Wednesday of every month, I mean prior pandemic these reports were such market movers depending on the way that they would go and here we are in the pandemic right now unfortunately, and they just are not as impactful as they used to be. A lot of them are pretty lackluster, so ADP expected that we’d have 50,000 new jobs created in the month of January and there was 175,000 new jobs that were created. So normally that would be considered a blockbuster report, but it kind of just went very much overlooked right now because when we have the amount of unemployed people that we do that just wasn’t a very moving number.

Thursday of this week, we had an interview with Loretta Mester, she’s a Fed voting member and she was very much speaking about the Federal Reserve not moving to negative interest rates because usually, around the world, it seems that when you move to negative rates this is not very impactful and it doesn’t do anything but she was very much in favor of really pushing out what’s called “Yield Curve Control”. So right now the Federal Reserve is buying assets. Specifically, they’re buying US treasuries and mortgage back securities. So the Federal Reserve is really one of the reasons right now why interest rates are forced very low because they are buying a lot of assets and she’s very much in favor of yield curve control which means that they kind of continue to buy enough assets to keep rates at a certain level which should be a very low level. So, you know, the Fed has our back and I think we have a really long future in front of us of a low interest rate environment. Today, what really… Last night, we had congress pass a budget resolution and this pretty much means that they will be able to go through probably and pass this $1.9 trillion stimulus package, then they won’t need the normal republican votes to make this happen, so it looks like we might have some stimulus on the way for the US economy.

Today first Friday of every month, we get the BLS . The BLS is the Bureau of Labor Statistics , it’s the government’s report on what’s happening with employment. It was expected that in the month of January, we’d see 105,000 new jobs created but we got 49,000 and not only that, for the month of December there’s a revision to the prior month, being December and they lower the report there by a negative 150,000. So, unfortunately, the job market is not looking very rosy. Now, certainly if you watch the news right now, they’ll tell you: “Oh my Gosh! Unemployment went down!” but unemployment really didn’t go down if you look at all the right numbers. So, unemployment went down because they look at what’s called a household survey. That means they call households around the country and in the household survey, looks like there were 210,000 new jobs created in the month of January. So that’s why it looks like you’re seeing unemployment go down but if you dig deeper into this we also had 406,000 people left the labor force. So retirement or couldn’t work, whatever it was. Also we have right now about 4.7 million people that are unemployed and looking for work but can’t get a job for pandemic-related reasons. In addition to that, there was about 6/10th of a percent misclassifications. So when they’re putting out those reports on a weekly and monthly basis there’s a misclassification just due to errors that take place. So if we look at true unemployment, we look at 4.7 million people that are looking for work but don’t have a job or can’t find a job right now, misclassification it really puts our unemployment rate, unfortunately, at around 10% right now.

Hopefully we get some light at the end of the tunnel. That’s really going to be wonderful to see some more vaccines come into place because we desperately need this to get our economy back on track but those are the numbers we are working with right now. I’m available all weekend, if you have any questions let me know. Call me on my cellphone, text me, I’d love to help you in any way I can. Happy Friday, I hope you have a great day.

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