Inside Lending Newsletter - For the week of November 21, 2011 – Vol. 9, Issue 47

>> Market Update  QUOTE OF THE WEEK..."Our greatest glory is not in never falling, but in rising every time we fall."--Confucius INFO THAT HITS US WHERE WE LIVE...Last week some observers felt there were signs home building may be starting to rise. October Housing Starts came in above expectations at a 628,000 unit annual rate. Off a mere 0.3% from the month before, starts are now up 16.5% versus a year ago. Single-family starts were up 3.9% in October, so the slight monthly decline was all from those very volatile multi-family units. Multi-family starts are actually up 88.6% over a year ago. Even better, Building Permits, which indicate where Housing Starts may be a few months out, were UP 10.9% in October, to a 653,000 annual rate. Over the last year, permits are UP 6.6% for single-family homes and UP 48.0% for multi-families. The total number of homes being built has increased three times in the last four months, after posting no increases from 2006 until four months ago. In line with all this, a national home builder index rose to its best reading since May 2010. BUSINESS TIP OF THE WEEK...The best way to handle a complaint is to quickly address it. Studies show this often makes a customer even more likely to come back. >> Review of Last Week WEAK WEEK...In last week's financial and economic news, all the stories seemed to be coming out of Europe. Coverage of the debt crisis continued, and was joined by concerns that economic growth was slowing, putting some of the more troubled countries on the brink of recession. All this Euro trashing sent our stocks on a mighty slide down, the market ending up with its worst weekly performance in almost two months. Over here, our Leading Economic Indicators (LEI) Index headed up, bolstering hopes for the U.S. economy. New jobless claims dropped by 5,000 last week, to 388,000, while Continuing Claims declined by 57,000, to 3.6 million. Some analysts feel November could be another month with respectable job growth. Retail sales rose for the fifth consecutive month in October and are 7.2% higher than a year ago. Vehicle sales in November are tracking at a 14 million annual rate. And consumer confidence was up for the third month in a row in early November. For the week, the Dow ended down 2.9%, at 11796; the S&P 500 was down 3.8%, to 1216; and the Nasdaq slid 4.0%, to 2573. The plummeting stock market help bonds somewhat. But economic data that beat expectations prevented bond prices from really taking off. The FNMA 3.5% bond we watch ended the week up .03, at $101.22. National average mortgage rates were little changed, according to Freddie Mac's weekly survey, staying at their recent extremely low levels. DID YOU KNOW?... This week's Durable Goods report measures consumer spending on products expected to last more than three years, such as cars, TVs and appliances. The data provides insight into the future of manufacturing. >> This Week’s Forecast NO TURKEYS... We can be thankful this holiday-shortened week isn't expected to serve up any turkeys via its economic reports. October Existing Home Sales shouldn't ease off too much and the Second Estimate for Q3 GDP is forecast to stay at a modest level, but none of this is awful news. Meanwhile, Initial Weekly Jobless Claims are predicted to remain under 400,000, with Core PCE Prices expected to show inflation under control in October. The markets are closed Thursday and Friday for the holiday. Happy Thanksgiving to you and yours!             >> 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 21 – Nov 25  Date Time (ET) Release For Consensus Prior Impact M Nov 21 10:00 Existing Home Sales Oct 4.85M 4.91M Moderate Tu Nov 22 08:30 GDP - Second Estimate Q3 2.5% 2.5% Moderate Tu Nov 22 08:30 GDP Deflator - Second Estimate Q3 2.5% 2.5% Moderate Tu Nov 22 14:00 FOMC Minutes 11/2 NA NA HIGH W Nov 23 08:30 Initial Unemployment Claims 11/19 391K 388K Moderate W Nov 23 08:30 Continuing Unemployment Claims 11/12 3.620M 3.608M Moderate W Nov 23 08:30 Personal Income Oct 0.3% 0.1% Moderate W Nov 23 08:30 Personal Spending Oct 0.3% 0.6% HIGH W Nov 23 08:30 Core PCE Prices Oct 0.1% 0.1% HIGH W Nov 23 08:30 Durable Goods Orders Oct -1.0% -0.6% Moderate W Nov 23 09:55 Univ. of Michigan Consumer Sentiment-Final Nov 64.2 64.2 Moderate W Nov 23 10:30 Crude Inventories 11/19 NA -1.056M Moderate >> Federal Reserve Watch    Forecasting Federal Reserve policy changes in coming months...The Fed wants to keep the Funds rate where it is through mid-2013. Economists don't see any reason why they won't be able to. 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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