Market Overview

Macro Update: Small Business Sentiment Falls, Homeowners Remain Overly Optimistic

Macro Update: Small Business Sentiment Falls, Homeowners Remain Overly Optimistic

  • Small business sentiment, as measured by the NFIB, declined in November to 94.8 from 96.1.
  • On Tuesday, Quicken Loans, the second largest retail mortgage lender, said the average appraisal in November was 1.87 percent lower than what the homeowner expected.
  • U.S. equities were sharply lower on Tuesday, but the Dow index bounced off its lows and regained nearly 100 points.
  • Heading into Tuesday's afternoon session, U.S. equities were sharply lower on weak data and ongoing oil and commodity concerns. The S&P 500, as measured by its corresponding ETF, SPDR S&P 500 ETF Trust (NYSE: SPY), bounced off its morning lows of $205.78 and was trading above the $207 mark – a loss of around 0.60 percent.

    The Dow Jones Industrial Average also reversed some of its morning losses. The index hit an intraday low of 17,485.39 before recovering 100 points. However, shortly before noon, the index was still lower by 144 points, near 17,585.

    Related Link: How To Bet On Rebounding Eurozone Titans

    Decline In Small Business Sentiment

    While oil and China data dominated the headlines, the NFIB reported its small business sentiment index unexpectedly declined in November to 94.8 from 96.1. In fact, the decline proved to be the largest monthly decline since June.

    "This is not necessarily the type of action you want to see heading into what will be the first rate hike by the Federal Reserve in nearly a decade," Bespoke Investment Group said in a research report.

    The index has once again fallen below its historical average of 96.1 over the past 15 years. However, Bespoke Investment Group suggested that November's reading "wasn't so bad." It added that the percentage of businesses citing poor sales as their main concern declined to 9 percent – the lowest reading since December 2007.

    Quicken Loans: Appraised Home Values Lower Than Expectations

    Quicken Loans, the second largest U.S. retail mortgage lender, released on Tuesday the results from a study examining the spread between the average appraisal value of a home in November to what the homeowner was expecting.

    According to Quicken Loans and the national Home Price Perception Index, the average home appraisal in November was 1.87 percent lower compared to what the homeowner was expecting.

    Quicken Loans noted that the spread in perception in November marked the third consecutive month the gap between the values has narrowed.

    "The variation in HPPI values across the country is a reminder of how localized real estate truly is," said Bob Walters, Quicken Loans chief economist in the press release. "While home values continue to make leaps forward on the west coast, it takes time for the homeowner to recognize those gains. In the same vein, home value increases are moderating in much of the country, causing homeowners to be overly optimistic about their property's value."

    The highest observed spread in appraiser value versus the homeowner's expectations remains in San Jose, California, at 5.15 percent. On the other hand, the spread is the most negative in Philadelphia, Pennsylvania, at negative-3.3 percent.

    Image Credit: Public Domain


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