On Stage
/I had the pleasure, once again, of getting the Disney experience on spring break this week. I'm not sure there is a company that has had more of an entertainment influence on American families over the past few decades. One very unique aspect about Disney is that they do not have employees. They have cast members, and as cast members, they are always "on stage."
You see, every "cast member" that has contact with a patron, regardless of the task they perform, has a responsibility to be part of the magic that is Disney. So, regardless of whether you are at a park, a cruise or staying at one of their hotels, a cast members responsibility is to make their visitors feel like they are not only being treated with special customer service, but like they are part of the total Disney experience. Every single person plays a significant role in making our visits memorable.
How about us? When we are dealing with our customers and referral partners, should we not maintain that same philosophy? We are always on stage. Every aspect of our interaction with our clients should be treated as another opportunity to make them feel special – that they are getting treated to something extraordinary. That is the kind of attitude and approach that will create loyal customers and fans that tell others about us. Plus, it makes our job a lot more fun!
How will you create an extraordinary experience for your customers this week?
The Week Ahead
There is a wide range of economic data for investors to consider next week. The primary reports will be New Home Sales, Durable Orders, Pending Home Sales, and Core PCE inflation, the Fed's preferred inflation indicator. Personal Income, Consumer Sentiment, and Consumer Confidence will round out the schedule. In addition, there will be Treasury auctions on Tuesday, Wednesday, and Thursday. Changes in the situation in Ukraine also could influence mortgage rates.
The Week That Was
A short comment by Fed Chair Janet Yellen caught investors off guard on Wednesday, and the reaction was not good for mortgage rates. In addition, a reduction in tensions in Ukraine cause investors to return to riskier assets, hurting safer assets such as mortgage-backed securities (MBS). As a result, mortgage rates ended the week higher.
As widely expected, the Fed scaled back its bond purchases by $10 billion to $55 billion per month. According to Yellen, if the Fed's economic outlook does not change significantly, the bond purchases are expected to end in the fall of this year. Fed officials have long maintained that they expect that the fed funds rate, the Fed's primary tool for monetary stimulus, will remain near zero for a "considerable period" of time following the end of the Fed's bond purchases. The big surprise came during Yellen's first press conference as Fed Chair, when she defined the meaning of a "considerable period" as about six months. This would place the first fed funds rate hike in the spring of next year. Before Yellen's comments, the market consensus was for the first rate hike to take place near the end of next year. While mortgage rates are not directly tied to the fed funds rate, the economic strength implied by the expected timing of the first fed funds rate hike was unfavorable for bonds of all maturities.
The housing reports released this week revealed that conditions in February were little changed from January. February Existing Home Sales decreased slightly, while Building Permits increased 8%. The March NAHB Housing Index showed that home builder confidence increased slightly. It is widely believed that housing activity over the last couple of months has been depressed by the usually severe winter weather, which means the pent up demand could be a positive in coming months.