Tuesday, September 20, 2011

Inflation Heats Up

Last Week in Review: Inflation is heating up, but what does that mean for home loan rates?

Forecast for the Week: Several pieces of housing news will hit the wires, plus the Fed meets.

View: No one wants to get a bad rap, especially online. Check out these tips for building your brand on the web.

Last Week in Review

"Inflation, all we've never wanted." The Go-Go's may have sang about vacation being all we've ever wanted in the 1980's, but if we were to re-write the lyrics about last week, we could sing about inflation. Read on to learn why this matters.

We saw a double dose of inflation news last week and while the Producer Price Index (which measures inflation at the wholesale level) remained unchanged in August, the year-over-year Core Consumer Price Index (CPI) jumped up to hit the upper-end of the Fed's threshold of 2%.

So why is this significant? The concept is very simple: If inflation rises, investors in Bonds demand a higher yield to offset the lost buying power inflation imposes on a fixed payment. And as home loan rates are tied to Mortgage Bonds, this would mean home loan rates move higher.

What’s more, in light of last week’s higher consumer inflation reading, the Misery Index—which is the Unemployment Rate (9.1%) plus the level of year-over-year headline Consumer Price Index (3.8%)—is at a disconcerting 12.9, which is the highest in nearly 30 years. Our great country needs a whopping dose of certainty, clarity and confidence...and in the absence of it, this index will continue to rise.

Remember: Once inflation starts to emerge it can manifest rather quickly. Future inflation readings will be closely watched to see if a trend higher is emerging, and last week’s elevated number will certainly heat up the debate surrounding more stimulus, as more money into the system fuels inflation further. If inflation heats up even more, the Fed will likely back off their "low rates until mid-2013" mandate. Inflation really does change everything, and I will continue to follow this story closely and keep you informed.

The bottom line is that home loan rates remain near historic lows, and now is still a great time to purchase or refinance a home. If I can answer any questions at all for you or your clients, call or email me anytime.

Forecast for the Week

This week we’ll see less economic data than last week's litany of reports…but that doesn’t mean there won’t be some big news to watch!

  • Housing Starts for August will be delivered on Tuesday and are at extremely low levels given the current environment. The July reading was down 1.5% from June…but it was actually up 10% from a year ago in July 2010. Building Permits, a sign of future construction, will also be released on Tuesday.
  • More housing news follows Wednesday with the Existing Home Sales Report.
  • Also on Tuesday and Wednesday is the regularly scheduled Federal Open Market Committee meeting. With inflation heating up, it will be important to see what the Fed has to say.
  • Weekly Initial Jobless Claims will be reported on Thursday as usual, and they continue to remain above 400,000 rising to 428,000 last week.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.

As you can see in the chart below, Bonds and home loan rates did not react well to last week’s inflation news. I’ll be keeping a close eye on what happens this week.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Sep 16, 2011)

Japanese Candlestick Chart

The Mortgage Market Guide View...

What Does the Internet Say About You?

Part 1: Building Your Brand Online

Managing your online persona is all about building your brand. That means taking a proactive role in determining how people see you when they search for you on the Internet. Here are a few simple ways you can take control of your online persona:

Create a Profile:

One of the easiest ways to make sure positive attributes, qualifications and accomplishments stand out on the Internet is to create a profile that features those aspects. A profile only takes a matter of minutes to create and can help boost positive information about you higher in an Internet search.

One of the best profiles to start with is a Google profile. Once you create a Google profile, your name, occupation, location and a photo (if you upload one) will appear on the first page of Google when your name is searched.

Participate in Social Networking:

You’ve no doubt heard about popular social networking sites like Facebook.com and LinkedIn.com, as well as micro-blogging sites like Twitter.com and online photo sites like Flickr.com. These sites offer you fun, interactive ways to connect with potential clients, peers, and of course family. In addition, they are great for improving your online persona because they often climb near the top of searches.

That said, there are few things to keep in mind. First, you need to “participate” not just “join.” The more information you include in your profile and the more you participate, the more useful these sites will be in building your brand.

Second, when you do participate make sure it’s relevant. Your status updates don’t have to be all business and no play; it’s okay to have a balance of your personal and professional life on these sites. But make sure that you keep it appropriate. That means keeping slang to a minimum and avoiding inappropriate words, humor, photos or stories.

Finally, make sure you take advantage of other online communities or discussion threads hosted by professional organizations. Not only will your peers and potential clients get to know you on those sites, but your posts will often find their way into your search results.

But remember: make sure you only join online groups or communities that reflect the positive image you’re trying to portray. Before joining any group or discussion thread, ask yourself if you’d feel comfortable discussing your membership in that group during a meeting with a client.

Start a Blog or Website:

One of the most productive ways to control your online persona is to create new content on a blog or website that highlights or reflects your expertise.

A blog or website not only gives you the space necessary to regular write about your areas of expertise, but they can also rank high in Internet searches if the content is updated regularly. While this step may seem a bit overwhelming at first, a number of providers such as Wordpress.com or Blogger.com make it fast and convenient. You don’t need to know how to program html or JavaScript. They do all the work for you. All you have to do is sign-in and post.

So what should you post? Use your imagination. But remember to take the pressure off yourself – after all, you don’t have to write a professional white paper in every post. Maybe you want to post about the top three things you learned at a professional conference and include a link to the conference website. Maybe you just received an award or professional certification… write about that and put a link to the site that awarded it. As long as you’re not divulging trade secrets, write about what you do, what you know, and what your job growth goals are for the future.

Interlink Your Sites:

Once you’ve created a few online profiles, started participating in social network sites, and developed a quality blog with a few posts, it’s time to make sure people notice. That means promoting each of these sites in other sites by linking to them.

So, on your Facebook page, you should include links to your Twitter account and your blog or website. On your blog or website, create a Contact Information page that includes links to your online profiles, Facebook page, Twitter account, and so on. On your profile pages, include links to your blog and social networking sites.

It sounds a bit repetitive, if not overkill. But it’s not. It’s important. Why? The simple reason is that links are factored into Internet searches. When someone does a search of your name on the Internet, the sites that typically rank the highest have the most sites linking to them. That means, the more sites that link to your blog, the better chance you have of it hitting the first page of search results.

And that’s the ultimate goal here…getting the positive information that you create to rise to the top, so people see the online persona that you’ve strategically developed and that you want them to see.

Economic Calendar for the Week of September 19 - September 23

Date

ET

Economic Report

For

Estimate

Actual

Prior

Impact

Tue. September 20

08:30

Housing Starts

Aug

575K

 

604K

Moderate

Posted via email from philipjensen's posterous

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