Big day today. Finally, at 2:00 am ET the FOMC statement: by 2:15 the 10 yr note rate +2 bp to 2.93%. At 2:30 Fed chair Powell had his news conference.


As expected, the Fed increased the Federal Funds rate by 0.25% to a range between 1.50% and 1.75%. As usual when the FOMC meets markets exhibit a good deal of volatility; the initial reaction sent the 10 yr note yield to 2.93% 4 bps higher than yesterday, MBS prices swung back and forth before settling. The 10 found support at 2.93% and by 4:00 back at 2.88% -1 bp. Fannie 4.0 30 yr coupon up 14 bps on the day and up 20 bps from 9:30. The stock market rallied initially then cooled, the DJIA ran up 237 points before giving back all of the knee-jerk reaction and went negative.


  • labor market has continued to strengthen and that economic activity has been rising at a moderate rate.
  • Recent data suggest that growth rates of household spending and business fixed investment have moderated from their strong fourth-quarter readings.
  • On a 12-month basis, both overall inflation and inflation for items other than food and energy have continued to run below 2 percent.
  • The Committee expects that, with further gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace in the medium term and labor market conditions will remain strong.
  • In view of realized and expected labor market conditions and inflation, the Committee decided to raise the target range for the federal funds rate to 1-1/2 to 1-3/4 percent.
  • The Committee expects that economic conditions will evolve in a manner that will warrant further gradual increases in the federal funds rate.


As far as more rate increases after a lot of back and forth from market participants it now looks like the Fed will do what we have been projecting; three hikes this year, not four as some were thinking. The initial reactions from media, as usual, talking in circles. Making more of the statement than is necessary. One thing not in the prepared statement, any inference or reference about the trade issues. Overall nothing new in the statement that has much direct significance. The same thing as usual; pending the economic performance and inflation will dictate what the Fed will do in the future.


The Fed increased its growth estimates somewhat for 2018; from 2.5% in Dec to 2.7% now; unemployment in Dec for 2018 was 3.9%, now 3.8%, 3.6 in both 2019 and 2020. Inflation in the data unchanged from Dec at 1.9%; also core inflation unchanged from Dec at 1.9%. The range of Federal Funds rate this year 2.1%, 2019 2.9%, 2020 3.4%.


Asked about whether there was a discussion in the meeting about the potential of trade problems, Powell said the belief at the Fed is that trade changes will not affect the Fed’s outlook for growth longer term. He remarked some members have spoken with business leaders and that businesses are not as confident as the Fed appears to be.


Feb existing home sales this morning were better than expected. Sales of single-family homes rose 4.2 percent in the month to a 4.960 million rate with this yearly reading at plus 1.8 percent. This offsets continued weakness for condo sales which fell a sharp 6.5 percent in the month for a year-on-year minus 4.9 percent. Supply increased to 1.590 mil +4.6%. On Friday, Feb new home sales will be released and expected to show improvement of 4.3% from Jan.


Tomorrow not much scheduled news; weekly jobless claims expected about unchanged from the prior week. Feb leading economic indicators thought to be up 0.3 percent.


Source: TBWS

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We won’t say that in recent years the process of finding a good contractor has become easier. Finding a communicative, astute, responsible contractor is still like finding gold. But home repairs still tend to attract con artists. If you know a few things to look for and avoid, however, you may be spared a less-than-HGTV-happy experience.

There are a number of reasons a relationship with a contractor goes south. Unrealistic expectations find homeowners assuming their builder can snap his fingers and — poof! — their dream remodel appears. Keep in mind very few contractors have the wherewithal to hire administrative employees, meaning they end up doing most of the scheduling and paperwork while trying to get your kitchen remodel done. So cut these guys some slack.

And then there are the Craigslist con artists who see a trusting, vulnerable homeowner with little-to-no knowledge about their home’s inner workings and bells go off. This is what we’re covering here — how to sniff one out before they turn your dream home into a nightmare. Here are a few danger signs.

Their credentials aren’t handy when you ask for them. Be a detective. In most states, skilled work, like the jobs performed by electricians and plumbers, must be completed by a licensed contractor. So don’t be afraid to ask to see a copy of your contractor’s license—a pro won’t be offended. You can jot down their full name and contractor number and access a database online through your local state contractor licensing board to verify they are legit as well as study any challenges made to their license as well.

Always, always ask to review their proof of insurance as well as a list of references. Even if you had a guy come into your home and suede shoe you into believing he was the best guy for the job, if he gets cagey or can’t produce credentials like these, set him loose. And there is no shame in calling his past clients and asking if they would hire him again.

The public has a bully pulpit these days with online consumer reviews. You can look contractors up on HomeAdvisor, Yelp!, or AngiesList to read about other homeowners’ experience with them. If you see tons of 5 star reviews of them with only a few exceptions, usually the contractor can explain what might have gone wrong with those few jobs. If all he does is badmouth the homeowner, however, you may not want him on your team.

If your contractor hands you a bill before he gets started, don’t panic. It’s not uncommon for pros to ask for a portion of their initial quote up front—but typically, it’s no more than 30 to 50% of the quote. He uses this money to purchase the building supplies without dipping into his own pocket to get the job started. If it makes you feel better about it, ask him for receipts for the materials purchased. However, what he should not do is ask for the entire estimate amount on the spot. It makes it way too easy for him to cut and run. Anyone worth his salt knows better than to ask for 100%.

There is no longer an excuse for not being able to reach your contractor. His mobile phone is his best friend, and texting should have become an art form to him by now. So if he is tough to reach, it may be time to say buh-bye. Of course, you can’t expect him to answer the phone every time it rings, but he should make an effort to get back to you promptly.

If he doesn’t have your back, confront him. You are paying for a pro to handle emergencies, so his problems should not become yours. Trust is king here, and if you find it faltering, your good feelings may turn into stomach acid. There is no shame in firing a contractor and looking for another one well into the project, either. Just expect a few headaches until you can find another one.

As for bidding the job, if it seems too good to be true it usually is. A deal is a deal, except when it comes at the cost of quality, materials, or skill. Make sure you collect at least three separate bids for a home remodeling project. You may love something different about each contractor, but it’s still a necessary exercise to get a feel for the average price of this kind of work. It will also give you a sense of your contractors’ trustworthiness, creativity, and his desire to keep things as cost-effective as possible so you might hire him for future projects as well. If a bid seems uncharacteristically low, it may be a sign something is wrong. It may indicate his using recalled materials, hiring a less-than-skilled crew or his intention to do the work as quickly—and shoddily—as possible. Whatever the reason, you’ll probably wind up paying for it later, so it’s best to avoid these kinds of unrealistic quotes even if they tell you their overhead is lower than everyone else’s. By the way, working exclusively out of a pick-up truck means they can disappear like a stench in the wind.

Delays do happen in the construction business. Estimates are off, materials need to be reordered, and unpredictable weather happens. It’s always wise to think of that completion date more of a goal than a promise. However, a contractor who keeps missing deadlines without explanation is not one you want working on your home. Do yourself a favor and give him the boot. Even though your memories of your remodel might be less than pleasant, in the long run, your wallet will thank you.


Source: TBWS

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House flipping is not for the faint of heart, and with today’s lack of housing inventory, competition is fiercer than ever. Compared to last year, the biggest difference in 2018 is that the increase in buyers might push home values even higher. In this market, finding a buyer usually isn’t the problem. Finding an affordable property to flip is.


With house flipping careful planning and patience reign supreme. If low inventory means you’re doing fewer flips this year, you’d better make sure your flips are second to none.


Experts point out what to keep in mind when flipping a home so that you are not caught flat-footed. First, set a maximum for the price home in which you would consider investing for the short term. Don’t leave out closing costs, a budget for staging, and carrying costs — things like insurance and taxes. In fact, it’s even more prudent to expect the worst while hoping for the best when flipping.


Next, set a budget for renovations. Best not to compare yourself to reality (fantasy) TV flippers, who can buy the worst home in the best neighborhood and gut it entirely. They have more resources and capital in their hands than most house-flippers, since they are tasked with entertaining you as they renovate. Have you ever watched the credits at the end of each show? You’ll see vendors doing things for free just to see their names scrolling past. Even in the real world, however, this is where relationships come in. Establishing a great buddy-contractor, one dedicated to helping you do high quality flips within a reasonable period of time (without taking on a bunch of side jobs at the same time) will go a long way to permitting you to sleep at night while your flip is in process.


Location, of course, is key. Choose a house in an up-and-coming neighborhood that may be on the brink of gentrification. Study these neighborhoods by driving around as well as pestering the planners at City Hall to check out what businesses, schools, facilities and infrastructure may be planned for the area.


The most important piece of homework you’ll do, however, is to study recent comparably-priced homes and sales in the neighborhood — homes that have closed escrow within the past 3-6 months, asking prices on homes currently for sale, DOM (days on market) and study keenly the ones that never sold to analyze why they failed to find love. A great exercise is to go to every open house you can on weekends in the area you are considering to check out demand as well as the buyer demographic.


Savvy house flippers are super sleuths. They look for houses not yet on the market, going straight to an owner, a bank auction or a housing wholesaler for a better deal. But often you can partner up with a good Realtor who specializes in the area in which you are considering investing. He or she knows the market like the backs of their hands, and may offer you expertise in exchange for being the listing agent after you pound that final nail.


When readying a flip for sale, those in the know advise you to concentrate on kitchens, bathrooms, systems, paint and flooring. Don’t get too fancy. New appliances and fixtures, as well as a bit of discount granite can go a long way to making a gem out of an ugly duckling. Buyers prefer hard surface flooring to carpeting, but there are so many inexpensive (gorgeous) options to tile and real hardwood. You’ll find buyers focusing how the house makes them feel as well as how their lives fit into it instead of whether the floors are real wood.


Lastly, set your expectations realistically. House flipping in general is not a get-rich-quick scheme, even if one good sale might pay off all your credit cards. Football games are won ten yards at a time before players do their happy dance in the end zone. The most cost-effective way to flip is to look at tidy profits rather than a fantasy. Steady house flippers stay the course, establishing a reputation for being prudent investors, all of which impresses local residents as well as real estate agents and makes it easier and easier to find financing.


Source: TBWS

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