Daily Commentary by Larry Baer: The Labor Department announced this morning the number of new claims for jobless benefits hit a seven-month last week, dropping 5,000 to 388,000.
In a separate report the Commerce Department released data showing housing starts dropped 0.3% in October - a much better than expected performance. Compared with year ago figures - housing starts are up 16.5%. Building permits were up a very solid 10.9% last month. Even more encouraging, report details indicate single-family starts and permits are showing solid improvement after taking a far back-seat to the multi-family (duplex through apartment) segment of the new home market. The main positive for the new home outlook is the absence of standing inventory, which keeps descending to new all-time lows. Overall, homebuilding will likely remain weak until mid-2012, when better job and income growth boosts demand and a very small standing inventory induces a surge in construction. Until then, apartment building will almost certainly outperform single-family construction.
From this point forward mortgage investors' attention will be split between the shifting tide of events surrounding the European debt crisis and the looming November 23rd deadline for the 12-member bipartisan congressional committee to either "put up or shut up" with respect to delivering on their objective of crafting a $1.2 to $1.5 trillion budget reduction package. If the committee fails in their assignment, or if their proposal fails to impress market participants, the probabilities are high stocks will take one "on-the-chin" which will in-turn directly benefit the prospects for steady to perhaps fractionally lower mortgage interest rates. I'll keep you posted as these two stories continue to unfold.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
