Every Friday I recap “news you can use” from the week: a handful of quotes from major (and often expensive) news sources, so you can stay up to date on the news that affects your money without spending a dime and in less than a minute.
Here’s an overview of what happened this week.
Housing Demand Climbs as US Market Starts to Show Signs of Life (Jan. 25, Bloomberg) Housing demand is starting to show signs of recovery, with pending sales of US homes rising for the first time in more than a year, according to new data from Redfin Corp.
After soaring borrowing costs battered the US housing market for months, buyers are starting to see the pressure ease up slightly. The average rate on a 30-year fixed mortgage dropped to 6.15%, the lowest level since September, Freddie Mac said last week. Loan applications have also ticked up.
The Fed and the stock market are on a collision course this week. What’s at stake. (Jan. 29, MarketWatch) Here’s the conflict. Fed policy makers have steadily insisted that the fed-funds rate, now at 4.25% to 4.5%, must rise above 5% and, importantly, stay there as the central bank attempts to bring inflation back to its 2% target. Fed-funds futures, however, show money-market traders aren’t fully convinced the rate will top 5%. Perhaps more galling to Fed officials, traders expect the central bank to deliver cuts by year-end.
Consumer confidence slips at start of 2023 as recession worries grow (Jan. 31, MarketWatch)
A survey of consumer confidence slipped in January to 107.1, reflecting growing worries about a potential recession as rising interest rates and high inflation degrade the U.S. economy.
The closely followed index fell almost 2 points from 109 in December, the nonprofit Conference Board said Wednesday. The index had hit an 11-month high at the end of 2022.
U.S. stock market hits the ‘January Indicator Trifecta,’ but can the rally last for the rest of 2023? (Jan. 31, MarketWatch) The stock market hit the “January Indicator Trifecta,” which means all three seasonal indicators — the Santa Claus rally, the First Five Days Early Warning System and the January Barometer — logged gains after the closing bell on Tuesday.
Housing Slump From US to China Adds Risks to Global Economy (Jan. 31, Bloomberg)
Reports this week have shown the US housing slump stretched into a fifth month, China’s home sales slide continued and price declines persisted in both Australia and New Zealand. In Britain, prices are now in their worst losing streak since 2008.
Sliding home values threaten to undermine consumer confidence and weigh on household spending…
Private payroll growth slowed to 106,000 in January as weather hit hiring, ADP says (Feb. 1, CNBC) Companies added just 106,000 new workers for the month, down from an upwardly revised 253,000 the month before. Economists surveyed by Dow Jones had been looking for a gain of 190,000.
The numbers come with the Federal Reserve trying to slow the economy through a series of interest rate hikes specifically aimed at bringing down inflation.
Fed Slows Its Tightening With Quarter-Point Interest Rate Rise (Feb. 1, Wall Street Journal)
The Federal Reserve approved an interest-rate increase of a quarter-percentage point and signaled plans to raise rates again next month to continue lowering inflation.
The decision Wednesday followed six consecutive rate rises that were larger, including an increase of a half-point in December and a 0.75-point increase in November.
Payrolls increased by 517,000 in January, crushing estimates, as unemployment rate hit 53-year low (Feb. 3, CNBC) The employment picture started off 2023 on a stunningly strong note, with nonfarm payrolls posting their strongest gain since July 2022.
Nonfarm payrolls increased by 517,000 for January, above the Dow Jones estimate of 187,000. The unemployment rate fell to 3.4% vs. the estimate for 3.6%. That is the lowest jobless level since May 1969.
BofA Warns Investors Risk Sleepwalking Into Selloff (Feb. 3, Bloomberg) The US stock rally has already gone too far, and investors face brutal declines if economic growth crumbles in the second half of the year, Bank of America Corp. strategists say.
The risk is that inflation flares up again over the next few months, and that the US economy faces a deeper recession in the second half of 2023….
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I founded Money Talks News in 1991. I’m a CPA, and I have also earned licenses in stocks, commodities, options principal, mutual funds, life insurance, securities supervisor and real estate.