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Economic News Week:
July 18, 2011
Stocks advanced this past Friday
ending at 12479 as Google reported huge earnings (a 36% jump in profits)and a
corporate takeover of Petrohawk Energy which was purchased by BHP Billiton
Australia helped the advance in stocks. The energy sector was the biggest
advancer on Friday.
Lower gas prices helped
consumers in June as U.S. inflation fell for the month. Gas prices
fell 6.8%, the deepest decline in 2 1/2 years. The Consumer Price Index
fell 0.2 percent in June the labor department said. Retail Sales
were up slightly for June as well. A larger U.S. corn crop is easing
concerns of a grain shortage and could slow food inflation this year.
Financial giant J.P. Morgan Chase reported better than expected profits
for the 2nd quarter. In anticipation of larger than
expected corporate earnings, the question still remains, “where are the jobs?”.
We get more corporate earnings this week from Bank of America, Apple, and Coca
Cola to name just a few.
Bernanke and the Boys (Fed) may
be talking about another QE3 or intervention as it may-if the economy continues
to slump. This will be a wait and see game depending on jobs and
inflation. Another game to watch is the Debt-Ceiling game played by both
parties. House Republican members said they would vote on a bill tying a
$2.4 trillion debt-ceiling increase to spending cuts and a balanced-budget
amendment. What happened to the $4 trillion in cuts that everyone says we
need? More political posturing is about all I am seeing from both
parties. Americans will remember who was willing to compromise and who
was “locked into ideologically rigid positions,” President Obama said in
a White House news conference recently. Our U.S. credit rating is what is at
stake if a debt-ceiling agreement is not reached. How far-reaching the
consequences would be if an agreement is not made is up for debate as
well. I just don’t want to have to find out. The so-called
“cure-all” for our slumping economy is jobs. When Americans are working,
they are paying their bills and spending their money buying certain products,
buying homes, electronics, etc. Congress seems to have no problem in
making Americans squirm. I’ll bet at the next elections, they’ll
(Congress) be the ones squirming; Democrats and Republicans alike.
Local Economic News
Once again, San Antonio has
scored another job maker-Baker Hughs Inc. which is an oilfield supplier.
The company plans on building a $30 million operations center in Southeast
Bexar County bringing an estimated 435 fulltime jobs by the year 2013.
Hopefully, the company can find enough workers to fill the positions.
Reported just last week, some local businesses are having to hire
“headhunters’ to find enough qualified workers, especially in the software
market. Also reported last week is that the San Antonio and Austin
tourism industry is attempting to use the “web” as a different marketing tool
in order to lure visitors who in-turn spend their money at local
restaurants, hotels, theme parks, etc. Now, that is what I like to
see-Cities that invest in order to achieve a more robust local economy. A
headline read last week that “San Antonio ranked No. 4 ‘Boom Town’. San
Antonio ranked No. 4 among the nation’s next ‘boom towns’ in a recent
Forbes magazine article. Austin is ranked No.1, Houston # 5 and
Dallas # 7. “ Aided by relatively low housing prices and buoyant economies,
these Lone Star cities have become major hubs for jobs and families,” according
to the article by Joel Kotkin.
Local Real Estate and
Mortgage News
San Antonio’s Real Estate market
for resale homes looks OK halfway through the year according to a report in the
S.A. Express News last week. “The numbers actually are pretty good,” said
James Gaines, research economist with the Real estate center at Texas A&M.
San Antonio and Austin are holding steady when a year when home buyers have not
had any federal tax credits to hang their hat on. “This year, the year
over year comparisons in the second half of 2011 should start to look rosier;
Gaines said. The local rental-house market is doing better as well,
related in a different report.
The Wall Street Journal reported
this past weekend that “Big Mortgages” are back. The article continued to
state that low interest rates are driving high-end home buyers to supersized
mortgages at a pace unseen since the housing boom. Jumbo loans are loans
that are bigger than $417,000. The average rate on a jumbo loan mortgage
is about 5.15% on a 30 year fixed index. Only two years ago jumbo rates where
averaging around 6.41% for the same term. Freddie Mac reported that
conforming rates dropped slightly last week to 4.51%. Conforming or
Non-conforming (jumbo), now is a terrific time to buy a home. But
BEWARE! If Congress defaults on our debt by NOT raising the
debt-ceiling, rates will jump on everything from Credit cards,
Automobiles, and Mortgages! A little advice: Lock-In a mortgage rate now
in order to head-off any volatility. Find a local Realtor and Mortgage
Lender and let them be your guide.
Economic Data due this week: Both sides of the isle are going to be in deep
discussions regarding the ‘debt-ceiling’. Plus, Corporate earnings
for the 2nd quarter continue to roll-in. Tuesday:
Housing Starts for June. Wednesday: Existing Home sales
report. Thursday: Weekly Jobless Claims. Thursday:
Freddie Mac releases weekly mortgage rates. Thursday: Philly
Manufacturing Survey released.