The View From The Golden Dome

Views on the week's events plus some of mine.

US Productivity, Raiders, Royals and IRS – Les Berman Weekly 7-11


Hope Solo. Abby Wambach. Megan Rapinoe. Andre Agassiz. Derek Jeter. William and Catherine. And a major 30th anniversary is being celebrated. I’m not a major sports-a-holic but this weekend has been a little different. And it’s been a wonderful change of pace from the garbage that is being spewed forth by the elected politicians in Washington. So let’s get into it!

Andre Agazziz was inducted into the International Tennis Hall of Fame in recognition of an outstanding tennis career. His post tennis contributions to children makes the tennis career even more special. Derek Jeter got his 3000th baseball career hit, the 4th youngest player to accomplish that feat, and the first Yankee to do so. And then there are William and Catherine.

What a refreshing addition to the Royals, she is. Not only did she take Canada by storm, their visit to Los Angeles has been equally remarkable. And no one has complained about any traffic jams that they may have created. She is a beautiful woman, and she also represents a remarkable addition to the Royal gene pool !

Abby Wambach, when interviewed after the game, said it was the indomitable US spirit, and the never-give-up attitude that permeates the American culture that kept the team going. And resulted in an astounding victory in Germany today. Most of you don’t know that these three women, Hope Solo. Abby Wambach. Megan Rapinoe, are amongst the stars of today’s USA victory over a strong Brazilian side (‘side’ is international speak for ‘team’). Women’s World Cup – soccer – played all over the world, is entering the semi finals in Germany this week. The USA tem was down 2 – 1 after 30 minutes of extra time when Rapinoe, pressing, kicked a perfect ball across the front of the net where Abby Wambach headed the ball into the goal, and tied the game, with seconds left to play. This goal was the latest goal ever scored in World Cup play. The match would be decided on penalty kicks, and Hope Solo, one of the world’s best ever goalkeepers, blocked one of the Brazilian kicks, and seized the victory, sending our women into the semis.

So what does that have to do with anything, you say. It’s this same can-do spirit that exemplifies American determination to succeed in the business world. Right now, as the Chinese currency, the yuan, is being revalued upwards, American business is seizing this opportunity to get manufacturing going again domestically. With the appreciating yuan and typically low Chinese individual output, American manufacturers are re-discovering that the US employees’ productivity is amongst the highest in the world. That productivity combined with the yuan appreciation, is making American production viable again. And that is putting people back to work across the country. For the US to have a viable economy again, we must become a manufacturing force. We cannot survive on being a service business. I think that is a lesson that has been learned over the last 20 years. Will the individual states recognize that and support this kind of job growth? Or will they be like California and tax everything that moves, breathes, or is contemplated?

And it was 30 years ago that “Raiders of the Lost Ark” hit the big screen. Here’s some Raiders trivia – Raiders was born when George Lucas and Steven Spielberg, on vacation, were building sandcastles on the beach in Hawaii. The actor who turned down the lead was Jeff Bridges. Indy’s trademark fedora came from Savile Row, and various cast members took turns sitting on it to make it look worn and battered (that worked !!). The big wrestler, APt roach, got killed twice in the movie – once as a giant Sherpa who perishes in the Nepalese bar, and once as the German who lost his altercation with the plane’s propeller. The snakes in the Well of Souls were not afraid of fire – but were attracted to it because they were trying to get warm. And the canyon where Indy threatens to blow up the Ark is the same one where the Jawas take R2D2 in ‘Star Wars’.

We also celebrate the 30th anniversary of the first space shuttle launch. This is also the last flight of any of the shuttles. One of the ships will be on display at the Science Museum near USC later this year.

And finally, for today, I offer the following. If you want motivational, uplifting, go for the gusto, go tohttp://abcnews.go.com/Health/marines-story-recovery-inspiration/story?id=13970663 . If this kid can do what he is doing, any of us can achieve our goals. I could care less about the football coaches ranting about knocking heads, or basketball coaches drilling layups or any other sports coach saying anything. This kid IS relevant. This kid IS inspiring. This kid IS teaching me that if he can do what he does, then I sure as hell can too. Thank you Sgt Jones – for your service to our country, and for demonstrating incredible positive thinking and action. You, Sgt Jones, are the best role model for this country today.

Take the few minutes out of your day – click on the link, watch the videos. Do it now. Yes, now.  And if you don’t click on the link and watch the videos you will never understand what makes you better than you are today. Go back and click on the link.

Remember, that I am a mortgage advisor, and that I appreciate your referrals to anyone that is thinking about buying a home or refinancing. I have funds available for people who want to buy and keep homes for investment . My phone number is 818.305.4695.

Have a great week !

Les

Berman’s Factoids of the Week

There are two kinds of pedestrians: the quick and the dead !

I used to eat a lot of natural foods, until I learned that most people die of natural causes.

Life is sexually transmitted.

First California Mortgage
Provided to you Exclusively
By
Les Berman CMC
Les Berman CMC
Senior Mortgage Advisor
NMLS ID # 227675
First California Mortgage
Office: 310-271-1588
Cell: 818-305-4695
Fax: 877-707-8823
E-Mail: lberman@firstcal.net
Website: www.firstcal.net/berman
Les Berman CMC
For the week of Jul 11, 2011 — Vol. 9, Issue 28
In This Issue… sym_arrow.gif
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Last Week in Review: Mixed reports and volatility stirred up the markets. Read what happened.Forecast for the Week: Get ready for a busy and possibly another volatile week. Why? Read on!

View: If you drive for work or a charity, you’ll want to read this! See what’s changed and what it means to you.

Last Week in Review sym_arrow.gif
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“HE THAT SPEAKS MUCH, IS MUCH MISTAKEN.” Those words by Benjamin Franklin rang true last week, after a report earlier in the week had the markets buzzing about the potential for a strong Jobs Report… only to have those expectations crash at week’s end. Here’s what happened and how it impacted Bonds and home loan rates.topimage_7-11-11.gifMajor shocker. According to the Labor Department’s “Non-Farm Payroll” Jobs Report, only 18,000 jobs were gained during the month of June. That number was significantly below the recently upwardly revised gain of 125,000 new jobs that were expected, and showed employers hiring the fewest number of workers in 9 months.

Unemployment ticks up. The Unemployment Rate was also a disappointment, rising from 9.1% to 9.2%. While this facet of the report isn’t unexpected – as the Unemployment Rate can rise as more people re-enter the labor market in “job seeker” mode – the overall disappointing report re-ignites fears that the economic recovery is slowing and remains a bit stagnant.

Is there a silver lining? There was one somewhat bright spot in the Jobs Report. All of the job gains came from the private sector, with government agencies being the ones losing jobs as they deal with budget pressures. So while gains have slowed, the growth that exists is at least coming from the private sector.

Why were expectations so high? Just one day before the Jobs Report was released, the markets saw the ADP Employment Report, which was far better than anyone expected. Instead of the 60,000 job gains that were expected, the report showed 157,000 jobs added in June. That pleasant surprise boosted Stocks… and also boosted expectations that the Jobs Report would come in better than expected too.

In addition, the weekly Initial Jobless Claims Report also gave the markets a positive outlook on employment, as the report showed a decrease in the number of new unemployment claims. Although the number was still above the important 400,000 mark, it indicated that the previous week’s higher number could have been an “anomaly” week – with the July 4th holiday slowing down the count for many states as well as Minnesota’s state government shutting down and forcing several thousand state employees to file claims themselves.

Speaking of Minnesota, the state may serve as a warning. In the wake of the state government shutdown, many political and market experts are looking to Minnesota as a glimpse of what could happen at the federal level if Congress and the White House can’t reach an agreement. The political climate in the state has mirrored what is happening on the federal level, as the battle continues over a budget deal. And just last week, Fitch Ratings has downgraded Minnesota’s debt rating, which means the State will need to pay higher interest rates to investors due to increased risk. No matter how you look at the situation, it’s not a pretty picture of what happens when compromise isn’t reached.

Overall, the news last week led to volatility both in expectations and in market movement. In the end, Bonds made some strong gains at the end of the week to help home loan rates finish strong. That means rates are still near historic lows and represent a great opportunity. Call me today at 818.305.4695 or email to see how the situation may benefit you.

Forecast for the Week sym_arrow.gif
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Get ready for another busy week… and possible volatility. This week’s inflation reports and upcoming auctions will determine if the rally continues.

  • The week starts with the Balance of Trade report on Tuesday and the release of the Fed’s FOMC Meeting Minutes on Wednesday.
  • The big news hits toward the end of the week, when inflation will be in the spotlight. The Producer Price Index (PPI) will be released on Thursday and the Consumer Price Index (CPI) is due on Friday. If the inflation readings are hot, the rally inspired by last week’s Jobs Report could be short lived. I will monitor this issue closely to see how it may impact you or your home loan plans.
  • Retail sales will also be released on Thursday. This is the most timely indicator of broad consumer spending patterns.
  • Thursday we’ll also see the weekly Initial and Continuing Jobless Claims Report. After last week’s mixed employment reports, the markets will be watching this as closely as ever.
  • We’ll see a triple dose of manufacturing news this week. The Empire State IndexCapacity Utilization, and Industrial Production are all on tap Friday.
  • Finally, the Consumer Sentiment Index is due out on Friday. This index is important because the level of consumer sentiment is directly related to the strength of consumer spending, which accounts for two-thirds of the economy

In addition to those reports, Bonds and home loan rates may be impacted by the Treasury Auctions this week. Remember, the Fed buying (known as the second round of Quantitative Easing or QE2) is over – so this week’s auctions will be interesting and may stir up the markets.

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 experienced a volatile week but finished strong after disappointing employment news pressured Stocks. I’ll be watching closely to see if the slower economic recovery continues… and how this week’s news impacts home loan rates.

Chart: Fannie Mae 4.0% Mortgage Bond (Friday Jul 08, 2011)
Japanese Candlestick Chart
The Les Berman Weekly View… sym_arrow.gif
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Mileage Rates Go Up Due to High Gas PricesIf you drive a car, truck or van for work, you’ll be able to get an additional 4.5 cents per mile. Beginning July 1, here are the standard mileage rates for the remainder of 2011:

  • Businesses = 55.5 cents per mile driven (up from 51 cents through June)
  • Medical or moving = 23.5 cents per mile driven (up from 19 cents through June)

The Internal Revenue Service (IRS) increased the mileage rate in response to the recent high gas prices. These mileage rates are used to calculate deductible costs for driving an automobile for business, medical and moving purposes. NOTE: The rate for driving that is related to charities remains unchanged at 14 cents per mile, since that rate is set by a statute. You can read the official release in the IRS’ Announcement 2011-40.

Make Sure You Qualify

Before you calculate your deduction, make sure you qualify. The IRS reminds taxpayers that they cannot use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle.

Additional Option

Although the IRS provides the standard mileage rate for ease and convenience, you’re not required to use it. If you prefer, you can calculate the actual costs of using your vehicle instead of using the standard mileage rates.

Remember, if you have questions are concerns, talk to a tax consultant or accountant to discuss your options and unique situation.

Economic Calendar for the Week of July 11-15, 2011

Remember, as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise.

Economic Calendar for the Week of July 11 – July 15

Date
ET
Economic Report
For
Estimate
Actual
Prior
Impact
Tue. July 12
08:30
Balance of Trade
May
NA
-$43.7B
Moderate
Wed. July 13
02:00
FOMC Minutes
Jun
HIGH
Thu. July 14
08:30
Retail Sales ex-auto
Jun
NA
0.5%
HIGH
Thu. July 14
08:30
Retail Sales
Jun
NA
-0.2%
HIGH
Thu. July 14
08:30
Producer Price Index (PPI)
Jun
NA
0.2%
Moderate
Thu. July 14
08:30
Core Producer Price Index (PPI)
Jun
NA
0.2%
Moderate
Thu. July 14
08:30
Jobless Claims (Initial)
7/09
NA
NA
Moderate
Fri. July 15
08:30
Core Consumer Price Index (CPI)
Jun
NA
0.3%
HIGH
Fri. July 15
08:30
Consumer Price Index (CPI)
Jun
NA
0.2%
HIGH
Fri. July 15
08:30
Empire State Index
Jul
NA
-7.8%
Moderate
Fri. July 15
09:15
Capacity Utilization
Jun
NA
76.7%
Low
Fri. July 15
09:15
Industrial Production
Jun
NA
0.1%
Moderate
Fri. July 15
10:00
Consumer Sentiment Index (UoM)
Jul
NA
71.5
Moderate
The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is without errors.
As your trusted advisor, I am sending you the LES BERMAN WEEKLY because I am committed to keeping you updated on the economic events that impact interest rates and how they may affect you.
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July 11, 2011 - Posted by | Uncategorized

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