Happy Father’s Day to all
you Dads, I hope you all receive some of the coolest ties and barbeques that
Marshalls and Home Depot have to offer!
Financial Markets
The Dow simmered down after nearly reaching the 17,000 barometer
this past week, settling in and closing at 16,787. Much of the equities
sell-off can be attributed to the uprising in Iraq. While there seems to
always be political unrest in the Middle East, this particular skirmish has the
potential to have a significant impact on Iraq’s oil production. Prices
per barrel are already elevated (as can be attested to by the prices at the gas
pump in recent months). Iraq produces roughly 10% of OPEC’s daily
production. A noticeable increase in oil prices would temporarily cause
inflation driving up the price on many products we consume daily, anything from
apples to electronics, and has the potential to have a negative impact on
consumer spending.
On the flip side, the bond market also responds negatively to the
possibility of higher oil prices. Higher oil prices triggers inflation
and is terrible for fixed income investments. Example, an investor
investing in a bond yielding of 4% in an economic environment that is
experiencing 5% inflation actually loses 1% on their investment. The Fannie
Mae 3.5 coupon lost about 100 basis points over the past week, which is
equivalent to nearly .25% to the consumer on a 30 yr fixed.
To make a short story long, political unrest in an oil producing
country is bad for both US stocks and US bonds. The end….
Southern Nevada Real Estate
Related Data
May home sales for Southern Nevada reached approximately 3,450, up
7% from April but down 11% from May of 2013. The median priced home
bobbed back up to $195,000, up 1.5% from April and up 14.7% from May
2013. Less than 17% of the sales were distressed sales (short sales and
foreclosures).
There is an interesting graph in the Lied Institute of Business
latest economic report, where it illustrates the median price of new homes over
the past 14 years. In 2001 the median priced new home was $200,000.
It peaked to nearly $400,000 in 2006, plummeted during the housing crash, and
rebounded to nearly $300,000 today. A 33% increase over a 13 year span is
actually a 2.5% annual increase, which is a very sustainable and healthy
appreciation course. http://business.unlv.edu/lied/
