Unprecedented?!?!

Posted on April 3, 2012 by ScottC

President Obama is nothing if not bold. Yesterday, in an abuse of language for which there is unfortunately a great deal of precedent, the president opined on SCOTUS’s recent hearing regarding the fate of ACA.

Ultimately I am confident that the Supreme Court will not take what would be an unprecedented, extraordinary step of overturning a law that was passed by a strong majority of a democratically elected Congress

Unprecedented and extraordinary? Really? No law passed by Congress has ever been overturned by the court before?

Politics is politics, of course, and we all know the games of semantic deception that are regularly played by politicians. But, especially for a former professor of constitutional law, this is a particularly embarrassing departure from reality. Doesn’t it debase our politics even more than is already the case to have a Chief Executive who is so shameless in his disregard for the meanings of the words he uses and the reality he pretends to describe?

Filed under: 2012, aca, Obama, Supreme Court | 54 Comments »

Morning Report

Posted on April 3, 2012 by Brent Nyitray

Vital Statistics:

Last Change Percent
S&P Futures 1410.0 -2.6 -0.18%
Eurostoxx Index 2486.0 -15.2 -0.61%
Oil (WTI) 104.53 -0.7 -0.67%
LIBOR 0.4692 0.001 0.21%
US Dollar Index (DXY) 78.934 0.114 0.14%
10 Year Govt Bond Yield 2.16% -0.02%
RPX Composite Real Estate Index 170.63 0.1

Equity markets are slightly lower this morning on no major news. Bonds are up half a point and MBS are up about 1/4 of a point. After spiking to 2.38%, the 10 year bond has been slowly rallying, with yields back to 2.16%.

Regulators are trying to figure out how to apply some of the terms of the landmark $25 billion settlement to other financial firms. Iowa AG Patrick Madigan fires a shot across the bow of servicers: “Loan servicing has been a mess for the past four of rive years. Reforming that industry is very important and very challenging.” He goes on further to say that it isn’t only the servicer / borrower relationship that he is focused on, it is also the servicer / MBS investor. Of course this helps explain why you can’t give away MSRs right now. Regulators are going after another 8 banks – SunTrust, US Bancorp, PNC, EverBank, GOldman, OneWest, MetLife, and HSBC.

The $25 billion settlement included a foreclosure moratorium which kept a lot of property off the market. They are about to be released, and RealtyTrac estimates that prices could drop as much as 10 percent. Moody’s estimates sales of REO will probably rise 25% this year. A lot of these properties could be 100% losses. Interesting statistic from the Federal Reserve Bank of Cleveland:  Foreclosures held less than a year lose about 35%.  After two years, the loss is close to 60%.

The NYT has yet another piece on institutional investors buying REOs and turning them into rentals.

The markets will be looking to the release of the FOMC meeting minutes for more clues into QEIII and what replaces Operation Twist. They should be released around 2:00 – 2:15 EST.

Filed under: Morning Report | 21 Comments »

Morning Report

Posted on April 2, 2012 by Brent Nyitray

Vital Statistics:

Last Change Percent
S&P Futures 1402.3 -0.9 -0.06%
Eurostoxx Index 2455.6 -21.7 -0.88%
Oil (WTI) 102.66 -0.4 -0.35%
LIBOR 0.4682 0.000 0.00%
US Dollar Index (DXY) 79.015 0.011 0.01%
10 Year Govt Bond Yield 2.20% -0.01%
RPX Composite Real Estate Index 170.51 0.4

Stocks are flattish this morning on no real news in the US. Bonds and mortgages are up slightly. Construction Spending and ISM reports are out at 10:00 this morning. There was some disappointing economic data out of Europe – Eurozone unemployment was 10.8%, which suggests Europe is in a recession. France, Germany, and Italy Purchasing Managers Indices all came in below 50, indicating manufacturing conditions are in a decline. The Japanese Tankan survey was disappointing as well.

The Washington Post had a long article about rentals over the weekend. Big investors are using proprietary algos to analyze and manage rental properties. Oaktree, Carrington, Starwood, Apollo, and Zell are getting into this business. Private equity fund Waypoint reported a return of 8% to 9% in Q4 buying foreclosed properties and renting them. Interesting. RTWT.

Bill Gross’s Total Return Fund gained 2.83% in Q1, outperforming the benchmark by 2 percentage points on an aggressive bet on mortgages. He increased the mortgage exposures from 38% in September to 52% at the end of February. This is a bet on either (a) QEIII or (b) The fed replacing Operation Twist with a more aggressive stance on mortgage purchases. In other words, mortgage rates have been pushed lower by two big behemoths – PIMCO and the Fed – aggressively buying mortgage backed securities. If the Fed doesn’t provide an exit for Bill (either by not doing QEIII or not replacing Operation Twist with a mortgage support program), then mortgage rates could back up in a hurry. Something for lock desks to think about..

Filed under: Morning Report | 10 Comments »

« Previous Page