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Market Commentary The Federal Open Market Committee (FOMC) meets today. The Federal Open Market Committee (FOMC) meets today. All are expecting no change in monetary policy but all will scrutinize the post meeting statement. I think the verbiage will be little different than recent comments made by Fed officials. I also believe if March’s nonfarm payrolls rise by 200,000-300,000, the number that is now becoming consensus, and if April posts similar gains, the first change in monetary policy could occur by the May FOMC meeting. I have contended for many months employers panicked and fired too many workers during the fall 2008/winter 2009 to ensure survivability and such a rebound should not be unexpected. This rebound in employment should have possible implications for the housing industry. As per Bloomberg, if job creation occurs at almost any pace in 2010, there could be 1.25 million households formed this year. The number of new household formations has stayed below the 1 million level for the last three years for well known reasons. Historically there are about 1.35 million households created each year. If household formation does occur at the 1.25 million pace, the number of vacant homes which is around 2.09 million, could decline considerably faster than expected. Wishful thinking? If I wrote five months ago consensus may expect 200,000-300,000 jobs created in March, most would think I was extremely Pollyannaish at best. Speaking of housing, housing starts and building permits are released this morning. Consensus is expecting a 3.6% monthly decline to 570K units started on an annual basis. Permits are expected to drop by 3.4% to 601K. Last night the foreign markets were mixed. The Dow should open mildly higher on dwindling concern that Wall Street regulations will hurt profits and speculation The information is the personal views of Kent Engelke and is not necessarily indicative of those of Capitol Securities Management. The information contained herein has been compiled from sources believed to be reliable; however, there is no guarantee of its accuracy or completeness. Any opinions expressed here are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. Capitol Securities Management, Inc. is a Mid-Atlantic based, privately owned brokerage and investment firm with branch offices in Mclean and Richmond, VA, Boston MA, Hickory, NC, Florham Park, NJ and Tampa, FL. Capitol employs over 170 fulltime investment professionals and independent affiliates in locations from New England to Florida and has been serving the needs of its investors for over 25 years. It is a member of FINRA and SIPC. © Copyright 2008 Capitol Securities, Inc. All Rights Reserved. |
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