INFO THAT HITS US WHERE WE LIVE... There appears to be plenty of real estate people who believe they can succeed, as last week saw more housing numbers go through the roof. Existing Home Sales were up 4.2% in May to a 5.18 million unit annual rate, up 12.9% over a year ago. The median price climbed to $208,000, up 15.4% over a year ago, while average prices are up 11.2% over last year. The months' supply dipped to 5.1, all due to the faster sales pace, as inventories were up 7,000, increasing four months in a row. And the median time on the market for all homes was 41 days, down from 72 days a year ago.

Housing Starts were up 6.8% in May. Although most of the gain came from multi-family units, single-family starts were also up for the month and are now up 16.3% versus last year. The total number of homes under construction has been up 21 months in a row. Looking at where starts may be a few months out, Building Permits in May dipped a bit overall, but single-family permits were up for the month and are up 24.6% versus last year. Not surprisingly, the NAHB index of home builder confidence went from 44 to 52, its highest level since March 2006 and its biggest monthly gain in over 10 years.

BUSINESS TIP OF THE WEEK... After you've powered through work for a few hours, give your mind a rest. Go for a walk, have a snack, work out, or just sit quietly. You actually get more done in a day by regularly taking time to clear your head.
>> Review of Last Week
BEN'S BANTER SINKS STOCKS... The major stock indexes fell for the week as investors bailed on equities thanks to Fed Chairman Ben Bernanke's comments after the Fed meeting. The written FOMC Statement indicated the Fed would keep buying $85 billion per month worth of mortgage bonds and Treasuries in its quantitative easing program to boost the economy and keep interest rates down. But Bernanke later commented that if positive trends continue, the Fed could reduce bond purchases later this year and stop them completely by mid-2014. Some experts suggested investors overreacted, and it will be a long time before the Fed raises short-term interest rates.

It didn't help that the economic data coming in was positive, indicating things are indeed improving. The Empire State index of manufacturing in the New York region hit a three-month high in June, showing strong expansion after contracting in May. May Existing Home Sales and the NAHB home builders index surprised to the upside, as did the Philadelphia Fed index, which registered solid expansion for manufacturing in that region. But worried Wall Streeters should have noted CPI inflation was just 0.1% for the month and the May unemployment rate of 7.6% is a long way from the Fed's 6.5% target.

The week ended with the Dow down 1.8%, to 14799; the S&P 500 down 2.1%, to 1592; and the Nasdaq down 1.9%, to 3357.

Fears the Fed might taper its bond buying sooner than expected hammered Treasuries and mortgage bonds. The FNMA 3.5% bond we watch ended the week down 3.04, at $100.12. Yet national average mortgage rates slipped last week, after edging up for over a month, according to Freddie Mac's Primary Mortgage Market Survey. Rates are still up a tad from a year ago, but remain at historically attractive levels. The Mortgage Bankers Association reported purchase loan demand down slightly for the week, but up 12% from a year ago,.

DID YOU KNOW?... Although investors worried the Fed might soon tighten monetary policy, during the past four Fed tightening cycles since the 1980s, the economy was growing an average of 3.68%, versus an average growth rate over the last 12 months of 1.8%.
>> This Week's Forecast
NEW HOME SALES UP, GDP TEPID, INFLATION AND MANUFACTURING OK... Economic data this week should show mild but steady growth, offset by some minor disappointments. New Home Sales are expected to continue their move upward in May, while Pending Home Sales should indicate existing home sales will increase a few months out. The GDP Third Estimate is predicted to show continued economic growth at a modest rate.

Brighter news should come Thursday when Core PCE Prices are forecast to reveal inflation well under control in May. Personal Spending is expected to indicate the beleaguered consumer is staying in the game. The Chicago PMI reading of manufacturing health in the Midwest should dip a little but remain in expansion territory.
>> The Week's Economic Indicator Calendar
Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.

Economic Calendar for the Week of June 24 - June 28
DateTime (ET)ReleaseForConsensusPriorImpact
Tu
Jun 2508:30Durable Goods OrdersMay3.0%3.5%Moderate
Tu
Jun 2510:00Consumer ConfidenceJun74.976.2Moderate
Tu
Jun 2510:00New Home SalesMay460K454KModerate
W
Jun 2608:30GDP - Third EstimateQ12.4%2.4%Moderate
W
Jun 2608:30GDP Deflator - Third EstimateQ11.1%1.1%Moderate
W
Jun 2610:30Crude Inventories6/22NA0.313MModerate
Th
Jun 2708:30Initial Unemployment Claims6/22345K354KModerate
Th
Jun 2708:30Continuing Unemployment Claims6/152.958M2.951MModerate
Th
Jun 2708:30Personal IncomeMay0.2%0.0%Moderate
Th
Jun 2708:30Personal SpendingMay0.4%0.2%HIGH
Th
Jun 2708:30PCE Prices - CoreMay0.1%0.0%HIGH
Th
Jun 2710:00Pending Home SalesMay1.5%0.3%Moderate
F
Jun 2809:45Chicago PMIJun55.558.7HIGH
F
Jun 2809:55U. of Michigan Consumer Sentiment - FinalJun82.682.7Moderate

>> Federal Reserve Watch
Forecasting Federal Reserve policy changes in coming months... Even though there is talk of the Fed tapering its bond buying, economists still don't see the Fed raising the super low Funds Rate until the recovery is strong enough to bring unemployment down to 6.5%. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.
Current Fed Funds Rate: 0%-0.25%
After FOMC meeting on:Consensus
Jul 310%-0.25%
Sep 180%-0.25%
Oct 300%-0.25%

Probability of change from current policy:
After FOMC meeting on:Consensus
Jul 31 <1%
Sep 18 <1%
Oct 30 <1%