By: Fred Arnold

This morning, the September payrolls and unemployment results were announced. Nonfarm Payrolls were expected at 215k (after only being up 142k last month) and came out at 248k with a back-month revision to 180k.

The Unemployment Rate, expected to be unchanged at 6.1%, came in at 5.9% (the lowest since July 2008), and Hourly Earnings were roughly unchanged.

When bonds do well, it is usually a sign of market and economic instability. This week the bond rally has been driven by concerns about the global economy. The economic concerns in Europe and Asia are beginning to take their toll on the U.S. stock market and the mindset of investors.

There is the index called the “Vix” which is used to measure investor fear about the current economic climate. The higher the Vix, the great the fear. This week the index has been in similar territory as when the great recession was beginning to take hold. The Vix is a very volatile index and it can change dramatically in the span of a week.

Santa Clarita Real Estate News

The reason it has been rising is because there are more and more reports coming out about the potential for another economic slowdown. However, this one is NOT being driven by the United States. However, we cannot remain insulated from it.

In the U.S., there are signs of growth slowing as factory orders (might be skewed this month because of huge airline orders in the past months), manufacturing, and construction spending were all reported unexpectedly down. The numbers are not terrible however they are concerning in that all of the reports showed declines.

The previously mentioned reports all coming in negative seems to coincide with the latest report on consumer confidence. In recent weeks the measure of confidence has been rising. This latest report however shows a reversal in direction that was not necessarily expected.

In the housing market the number of pending home sales continues to remain flat. Sales declined 1.0 percent for the month of August. Additionally sales are down 2.2 percent from the same time last year. The challenge to the market appears to be the lack of first-time buyers and the increased demand for rentals.

Santa Clarita Housing Market

As is expected, with the decline in demand for homes, home prices dropped 0.5 percent for the month of July according to the Case-Shiller Home Price Index. This is the 3rd straight month of declines and the steepest decline dating back to November 2011. The bright side to the report is that values continue to remain above the levels from the same time last year by 6.7 percent.

With all that said, I spoke with a wealth planning expert I get valued advice from and he strongly believes that the US equity markets have a ways to go on the positive side for many reasons (I have included a few of my own).

They include, corporate earnings are strong, lower unemployment, a lot of cash on the sidelines, stabilized economy, normalized housing market, low rates, we are a safe haven for many investors throughout the world, and many other positive. That’s not to say we don’t have a correction, just the belief that we should have strong corporate earnings and equity markets for some time.

Next week’s potential market moving economic reports are:

Wednesday October 8th – MBA Mortgage Applications and FOMC Minutes Release

Thursday October 9th – First Time Jobless Claims

As your mortgage professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends.  I welcome the opportunity to serve you in any way I possibly can.  Please feel free to reach me at 661-505-4300.