After weeks of coming in higher than expected, initial jobless claims settled back to more recovery like levels last week, and payroll processor ADP reported a net gain of 157,000 jobs in the private sector, the only place job growth really matters. This news sent stock markets higher and had the builder group swimming in a see of green (for gains) by early afternoon.
Taken together with an increase in retail sales in June and signs that the President and the GOP are moving closer to a deal on spending cuts and raising the national debt ceiling, the jobs data was welcome, though analysts were keeping a wary eye out for the monthly jobs report from the Labor Dept. due Friday.
The National Association of Realtors also came out in favor of the Miller-McCarthy bill in the House that would reform the secondary mortgage market by instituting a new government agency called the Secondary Market Facility for Residential Mortgages that would replace Fannie and Freddie. Its purpose would be solely to facilitate liquidity in the mortgage markets. It would not be publicly traded but would be financed by private capital.
All good news. On the flip side, however, came news that the Obama Administration will nowpostpone foreclosure proceedings for up to a year for unemployed homeowners. Many of those unemployed homeowners, unfortunately, became unemployable due to lack of skills, education or talent as low-skilled bubble and make-work public sector and non-profit jobs were permanently eliminated. The further delay of foreclosure on these households will only postpone the inevitable and assure a continuing shadow inventory of foreclosed properties. On the bright side of that issue, however, is that elements of the mainstream media are starting to catch up with the idea that foreclosures are distorting house price data and even that much foreclosed inventory is neither desirable nor saleable to a mainstream home buyer.
Also on the flip side is the interest rate story, which was evidenced in Thursday’s report that the benchmark 30-year rate moved up to 4.6%. Interest rates are rising globally. The European Central Bank announced an increase Thursday. Rates in China also are rising. Rates in the U.S. are nearly certain to rise in the wake of the end of the Fed’s QE2 Treasury buying program, the only question is by how much, how fast.
Food prices are near all-time highs. Oil was bumping up against the $100-per-barrel mark before sliding back in later trading, and Goldman Sachs advised clients to go long on December 2012 oil futures contracts in anticipation of a tightening of supply. (Ummm, isn’t that when the Mayan calendar abruptly ends?)