For the week of November 28, 2011 – Vol. 9, Issue 48

>> Market Update  QUOTE OF THE WEEK..."One who is a master of patience is master of everything else."--George Savile (1633–1695), English statesman, writer and politician INFO THAT HITS US WHERE WE LIVE...The patient approach advocated by the 1st Marquess of Halifax is proving to be the right tactic for mastering today's housing market. Last week, October Existing Home Sales inched up to an annual rate just under 5 million units. And although things appear to be improving only slowly, existing home sales are actually UP 13.5% from a year ago. Even better, the months' supply of existing homes fell to 8.0 and inventory is now down 13.8% versus a year ago. The naysayers jumped on the fact that the median price was also down. But a large portion of October sales came from distressed properties whose prices are heavily discounted. Although some see this as a negative, it's what's needed for inventories to be worked down and for the housing market to recover. BUSINESS TIP OF THE WEEK...Planning is important but stay flexible. The unexpected often happens in business and flexibility keeps you open to the creative thinking needed to succeed. >> Review of Last Week NO THANKS... People feel positive around Thanksgiving, but folks on Wall Street spent the week in a decidedly negative mood. They were put there at the start by Congressional leaders who couldn't get past partisan politics to deal with our nation's fiscal issues. Then Moody's fed the down vibe with cautious comments about France's debt rating outlook. A third bummer came with Tuesday's downward revision to Q3 GDP, coming in at a measly 2.0%. The net result? The worst ever Thanksgiving week for stocks. There really were some things to be thankful for. The Q3 GDP report showed business investment growing at its fastest pace this year. Chain store sales were UP 3.7% over last year by one study and UP 2.8% by another. Incomes grew in October more than predicted, although spending grew less. Initial jobless claims stayed below 400,000. Finally, October Durable Goods orders were down slightly for the month, but if you take out volatile transportation, they are UP 11.7% from a year ago. For the week, the Dow ended down 4.8%, at 11232; the S&P 500 went down 4.7%, to 1159; and the Nasdaq sank 5.1%, to 2442. With stocks having such an awful week, you'd expect bonds to benefit immensely. Not so this time. With volumes down as usual on Black Friday's shortened trading day, bond performance was mixed. The FNMA 3.5% bond we watch ended the week down .02, at $101.20. National average mortgage rates remained at or near record lows for the fourth week in a row, according to Freddie Mac's weekly survey. DID YOU KNOW?... The 1792 Buttonwood Agreement created the New York Stock Exchange. It was signed by 24 stockbrokers under a buttonwood tree outside 86 Wall Street. >> This Week’s Forecast NEW HOME SALES, PENDING HOME SALES, JOBS... Of great interest this week will be more housing market reports and the jobs numbers that are key to the real estate recovery. October New Home Sales are expected to hold steady, above the 300,000 level. September Pending Home Sales, indicating Existing Home Sales a few months out, look to be up a tad. Friday, we get the November Employment Report. Although payrolls should rise, the number of new jobs is still not enough to bring down the unemployment rate. >> The Week’s Economic Indicator Calendar Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates. Economic Calendar for the Week of Nov 28 – Dec 2  Date Time (ET) Release For Consensus Prior Impact M Nov 28 10:00 New Home Sales Oct 312K 313K Moderate Tu Nov 29 10:00 Consumer Confidence Nov 43.0 39.8 Moderate W Nov 30 08:30 Productivity-Rev. Q3 2.6% 3.1% Moderate W Nov 30 09:45 Chicago PMI Nov 57.5 58.4 HIGH W Nov 30 10:00 Pending Home Sales Sep 0.1% -4.6% Moderate W Nov 30 10:30 Crude Inventories 11/26 NA -6.219M Moderate W Nov 30 14:00 Fed Beige Book Nov NA NA Moderate Th Dec 1 08:30 Initial Unemployment Claims 11/26 390K 393K Moderate Th Dec 1 08:30 Continuing Unemployment Claims 11/19 3.650M 3.691M Moderate Th Dec 1 10:00 ISM Index Nov 51.0 50.8 HIGH F Dec 2 08:30 Average Workweek Nov 34.3 34.3 HIGH F Dec 2 08:30 Hourly Earnings Nov 0.2% 0.2% HIGH F Dec 2 08:30 Nonfarm Payrolls Nov 118K 80K HIGH F Dec 2 08:30 Unemployment Rate Nov 9.0% 9.0% HIGH >> Federal Reserve Watch    Forecasting Federal Reserve policy changes in coming months...The Fed says it wants to keep the Funds rate where it is through mid-2013 and economists expect that they will. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same. Current Fed Funds Rate: 0%–0.25% After FOMC meeting on: Consensus Dec 13 0%–0.25% Jan 25 0%–0.25% Mar 13 0%–0.25% Probability of change from current policy: After FOMC meeting on: Consensus Dec 13      <1% Jan 25      <1% Mar 13      <1%

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