POCATELLO’S ELECTRONIC NEWSLETTER
August 1997
Volume 1 * Issue 8
WELCOME to the seventh edition of POCATELLO’S ELECTRONIC NEWSLETTER.
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THE ECONONY & FINANCE UPDATE
by Larry Bell with Citizens Community Bank
Senior Vice President, Manager Mortgage Lending
Phone: (208)232-5373
Email:
Site Address:
Whether you are buying or refinancing now is the time to act. Interest rates are the lowest they have been in many months. Today (7-29-97) a thirty year rate is 7.50% and a fifteen year rate is 7.125%. These rates are ten day rates without any discount points to obtain a lower rate. Rates this low should stimulate house sales now may be a good time to consider moving up to a larger house. These low rates will help buyers qualify for larger loans. The lower rates help keep prices up as more buyers move into the market.
Many buyers call several lenders to shop for the lowest rate when they apply for a mortgage loan. There are several items a shopper should keep in mind when they call to check rates. First, the lowest quoted rate is not always the best deal. It is a good idea to check with previous customers to insure the loan officer you are talking to has the ability to close the loan on schedule and at the rate that was promised.
Lenders usually quote rates with a 1.0% loan origination fee. The applicant needs to make sure the quote does not include any discount points to buy the rate down but, increases the cost of borrowing. The rates generally quoted over the phone are for a ten day lock, which means the loan must ready to close within ten days. Obviously few loans are processed within ten days therefore the rate quoted does not really apply to the caller if their application is not in process. The applicant needs to check on the thirty day rate to insure the loan can be processed and closed before their lock expires.
The next items to inquire about are the fees associated with the loan closing. The applicant needs to compare the other lender fees such as underwriting fees, document preparation fees, and flood certification fees. It is a good idea to prepare a checklist before you call to check rates.
There are many factors to consider when you shop for a new loan. It is a good idea to check with local lenders as they provide competitive rates and quality service. Should you visit with a local lender they can provide you with information a large number loan programs.
Check the rates on your current home mortgage and give me a call at Citizens Community Bank if the on your current loan is 8.75% or higher. We may be able to lower your payments with very little cost at closing.
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PUBLIC SCHOOLS
by Chris Williams, Public Information Officer
School District #25
Phone: (208)235-3257
Email: mailto:williach@d25.k12.id.us
Site Address: http://www.d25.k12.id.us
TEACHER IS FIRST CLASS AWARD WINNER
Here's proof once again that School District No. 25 is filled with
highly talented and qualified teachers.
Kimberly C. Martin, a first-year ninth-grade English teacher at
Franklin Junior High School, has been named as a "1997 Sallie Mae First
Class Teacher Award" winner.
Martin was selected by a panel of education experts, assembled by
the American Association of School Administrators on behalf of Sallie Mae,
based on the first-year evaluation provided by the school district.
Of the more than 1,300 nominations received, only 53 teachers from
across the nation, Virgin Islands and Mariana Islands are recipients of the
award, and Martin is Idaho's representative.
Franklin Junior High School Principal Bill Watkins characterized
Martin as "the epitome of a teacher that all students would like to have.
"She is extremely talented and bright, always has a smile on her
face and works hard with her students to see that they all succeed," Watkins
added.
Martin's talents were also recognized by Idaho State University last
year when she was named as the Outstanding Student Teacher of the school.
Watkins also credits Franklin Junior High English teacher Peggy
McCune for serving as Martin's mentor, adding, "she really is also deserving
of the award."
In recognition of her outstanding first year of teaching, Martin
will be awarded $1,500, a trip to Washington D.C. and a personalized memento.
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REAL ESTATE
by W. James "Jim" Johnston, Associate Broker
Coldwell Banker Landmark
Phone: (208)232-9010
Email: mailto:jimj@mykro.com
Site Address: http://www.HomeSpecialists.com
REAL ESTATE IS GREAT!
Increased emphasis from outside groups pointing to the quality of life in Idaho is spurring additional positive activity in home and land sales.
The Washington, D.C. based Children's Rights Council ranked Idaho 16th , out of the 50 states and the District of Columbia, of places considered best for children to live. The worst place for children to live is the nation's capital and the best place is North Dakota. Other states near Idaho and their rankings are Utah 6; Wyoming 17; Washington 18; and Montana 22.
The compiling of rankings was based on considerations of such factors as the rate of divorce, teen-age pregnancy, poverty and infant mortality, and the number of low birth-weight babies and un-wed mothers.
Idaho was recently recognized as the 2nd fastest growing state behind Nevada for percentage of growth in new home starts.
Pocatello is experiencing great real estate activity in spite of employment shifts with Union Pacific Rail Road who is a major employer in the area. As of this date, there are 441 single family homes on the market. This is steady from our report last month. Homes have sold for 98.5% of asking price with the average days on the market at 108 which is up 20 days from our last report.
Homes are selling nicely with our average sales price $90,954. This is up over $2,000 from our last report.
There are 160 real estate agents in the Pocatello area and there are 28 real estate companies. Great service is provided by the trained agents and a cooperative effort of exchange of information through the Multiple Listing Service (MLS).
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WEATHER HISTORY
by Steve Cannon, weatherman
KIDK TV 3
Phone: (208)522-5100
Email: mailto:kidktv3@msn.com
Site Address: http://www.srv.net/~kidktv3/homen.html
August (named for the roman emperor Augustus) signals the continuation of hot, dry summer weather. Although temperatures begin to drop during August, we still enjoy (or suffer thru) summer-like conditions… meaning warm temperatures, mixed with an occasional heavy thundershower or thunderstorm!
The average August high temperature starts the month with a sizzling 89… then cools to an average high temperature of 81 on the 31st… the monthly average high temperature comes out to 86.4. Overnight, the low temperature starts out at 54... then cools to 48 by the 31st; with the monthly average low temperature set at 51.7. Precipitation averages pick up a little bit in August, rising from .47'' in July, to .60'' for August.
Still, records indicate August can be a scorcher! The record high temperature for the month was set on August 2nd, 1969, with a reading of 104… one degree shy of the all-time record high temperature for Pocatello. But, it can cool quickly in August, as evidenced by the record low temperature for the month… a cool 28, set on August 25th, 1910. The wettest August was back in 1968, with 3.98'' recorded… the driest August… 1944, when no measurable precipitation was recorded! August is the only month for which no measurable snowfall has been recorded in Pocatello!
If you like astronomical events, August is a great month! From August 2nd through the 4th, you can view Mars in the southern sky… look for a bright red object. Beginning on the 5th, you will be able to see Venus, Mercury and a crescent moon low in the twilight sky. August 9th marks Jupiter's closest position to the Earth. On August 11th and 12th, you'll be able to see the most vivid meteor showed of the year… the Perseid. The meteor shower peaks just before dawn, and the Perseid shower is noteworthy for fast meteors, displaying long, glowing tails!
Notable events for August include the birthdays of Francis Scott Key, (August 1st, 1779) Garrison Keillor (August 7th, 1942), Orville Wright (August 19th, 1871), and Mother Teresa (August 27th, 1910). The Mormon Tabernacle Choir gave its first public performance on August 22nd, 1847, U.S. and French troops liberated Paris from the Nazis on August 25th, 1944, and construction began on the Berlin Wall on August 13th, 1961.
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ECONOMIC SUMMARY- STOCKS & BONDS- INVESTMENTS
By Lynn Baldwin
Manager & Regional Trust Officer
U.S. Bank of Idaho
120 N. Arthur * Pocatello, Idaho 83204
Phone: (208) 234-5544
Email: f_baldwin@usbc.com
Site address: http://www1.usbank.com/personal/investing/
SUMMARY
· The most recent economic statistics suggest that the economy is slowing,
and that the robust economic growth during the first quarter of this year
will not be repeated.
· The Federal Reserve (Fed) elected not to increase short-term interest rates
at its last meeting in early July. If the economic data stay within a
moderate range, the Fed may refrain from taking any action in the Fall.
· Investors continue to channel money into the market, sending the major
averages to all-time highs. The stock market is overbought in the
short-term, and will likely consolidate prior to resuming any upward
movement.
· Small cap stocks are cheaper on a price-to-earnings basis, providing a
cushion if the market starts to decline. We believe that small cap stocks
are very attractively priced relative to large cap stocks.
THE ECONOMY
Although GDP surged above trend to 5.8% during the first quarter, there has
been persistent evidence that economic growth has since slowed to the trend
range of 2-3%. Still, the economy has hardly ground to a halt. What
continues to confound the experts is the economy’s ability to generate
consistent, non-inflationary growth. Producer prices (PPI) have now fallen
for six straight months, with the latest PPI figure actually reported to be a
negative 0.1% relative both to last month and the prior year. Both the GDP
deflator, and the Consumer Price Index (CPI) have risen only 2.2% during the
past 12 months. Slipping commodity prices have also been consistent with the
declining inflation indices: oil prices have fallen $7/barrel since the
beginning of the year, and gold prices have plunged to the $330/ounce range.
The unemployment rate has fallen as low as 4.8%, and is currently at 5.0%.
Both auto and retail sales continue to be soft, despite rising consumer
confidence. Workers apparently continue to spend less and invest more, which
is consistent with aging demographics in the U.S. and other major
industrialized countries.
Empirical evidence indicates that increasing inflation has historically been
the result of an expanding money supply, rather than either a strong economy
or a falling unemployment rate. And while the money supply seems to be
growing at an acceptable level, many economists still express concern when
either of these indicators move into ranges that indicate a strengthening
economy. Consequently, the calls for the Fed to tighten will inevitably
recur if the economy does not slow markedly by the Fall. We believe that the
economy is more likely to grow in the 2% to 2.5% range throughout the balance
of the year, and that the Fed should not have to tighten credit to slow the
economy or prevent inflation. Increasing productivity has allowed the
economy to grow at a faster rate without generating inflation.
FIXED INCOME
The bond market is reacting to fundamental factors, particularly the evidence
of a slowing economy, but it is also being affected by some technical
factors, including an increase in demand from foreigners for dollar
denominated assets and a reduced supply of U.S. Treasuries, particularly
bills. Foreign demand is high because of higher yields available in the U.S.
than in other countries, better liquidity, higher quality, and proposed
budget deficit reduction. In fact, our budget deficit is already being
lowered by larger tax receipts due to the strong economy and rising stock
market. Foreign investors are also nervous about the reduced likelihood for
a European monetary union in the aftermath of election victories by the left
in France and England. Consequently, they see the U.S. dollar as a more
stable currency, at least in the short-term.
Domestic inflation news has been sufficiently good that it may not have much
room to improve—at least in the short-term. Coupling this with the rash of
foreign buying interest and a historical tendency for U.S. bond prices to
peak out when it appears that the news can not get any better, we have become
cautious toward the U.S. bond market. During the past decade, it has
normally been advantageous to buy bonds as long-term yields rise toward 8%,
and sell them when yields decline toward 6%. Yields have now reached 6.5%,
and bond market buyers are relatively bullish, which is normally reason for
caution.
The relative valuation picture in the bond market is the same story, new
verse. Yield spreads remain very tight, and will likely continue to be as
long as the economy continues to grow. However, investors should be aware
that numerous issues in the budget and tax bills may affect various segments
of the fixed income markets. These include changes to the de minimus rule
for corporate holders of municipal bonds (would reduce demand), and changes
to the dividends received deduction for corporations (would cause preferred
stock prices to cheapen).
EQUITIES
The U.S. equity markets are at new all time highs at the time of this
writing. Much of the current rally is due to expanding price/earnings ratio
multiples. Large amounts of money continue to flow into the U.S. stock
market, and, in light of persistent low inflation, investors are becoming
more convinced that these valuations are warranted. However, we are
concerned with investors bidding up the market multiple—especially since the
consensus analyst estimate for 1997 S&P profit increase is only 8%.
We remain concerned about the wide divergence between large cap and small cap
stock performance and valuation. The large blue chip stocks may seem
overvalued, but they rarely correct sufficiently in price to offer a
significant buying opportunity. Meanwhile, many small cap issues either
escape investors’ notice, or see their stock prices hammered if the company’s
earnings disappoint. This has presented opportunities for value investors in
the small cap arena. Because small cap stocks are cheaper on a
price-to-earnings basis, they should hold up better if the market corrects
significantly. The 1997 consensus earnings growth estimate for the Russell
2000 is 26%, which also gives us additional confidence that small cap stocks
are an excellent buy at these levels. A lower capital gains tax rate
proposed by Congress should also be a positive for small cap stocks.
There are still some scenarios that could knock the U.S. stock market off its
track, or at least slow its advance. In addition to a slowing earnings
growth rate, an international crisis such as an anti-democracy crackdown on
the part of the Chinese government, or any event that threatens the renewal
of China’s Most Favored Nation status following Hong Kong’s reversion to
China on July 1, could have a major impact. Such an event could send
negative shock waves through the surrounding Asian economies and stock
markets, and could eventually spread to the West. A further unraveling or
delay of the European Monetary Union could also make investors nervous,
particularly if the newly elected liberal governments in England and France
start stimulating their economies and increase inflation. However,
investors might react by funneling additional money into U.S. investments and
further strengthening the U.S. Dollar. Conversely, if monetary union stays
on its present course engendering even higher unemployment, social unrest and
upheaval might be the catalyst. Passage of new capital gains tax legislation
could also be a catalyst, as a large volume of selling could occur in the
short-term. However, much of the proceeds from any equity sales would likely
be directed back into the stock market, and lower capital gains tax rates
would probably encourage additional interest in equities on the part of
investors over the long-term.
We have allowed cash reserve levels to rise in our value funds because we
have found it difficult to find many attractively priced stocks. Healthcare,
drugs, and consumer staple stocks all seem too expensive. The financial
companies may have some play left if interest rates decline further, or do
not rise significantly from these levels. Cyclical stocks have also lagged
the broad market, and appear relatively attractive at these price levels.
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CHAMBER OF COMMERCE
by Sam Nettinga, General Manager
Greater Pocatello Chamber of Commerce
Phone: (208)233-1525
Email: mailto:pocchamber@sisna.com
Site Address: http://www.sisna.com/idaho/pocycoc
Please visit the chambers web site for a calendar of up-coming events!
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THE LAST WORDS
POCATELLO’S ELECTRONIC NEWSLETTER is published monthly by Michael James Johnston. Any questions, concerns, ideas or criticisms are to be directed to him via Email at mailto:editor@mykro.com
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Copyrighted 1997 by Mykro Computer Company. All Rights Reserved. No part of this material may be used or reproduced in any form or by any means, or stored in a database or retrieval system, without prior written permission of the publisher except in the case of brief quotations embodied in critical articles and / or review.