Morning Report 10/24/12

Vital Statistics:

Last Change Percent
S&P Futures 1411.8 5.0 0.36%
Eurostoxx Index 2489.5 11.6 0.47%
Oil (WTI) 86.67 0.0 0.00%
LIBOR 0.314 -0.001 -0.32%
US Dollar Index (DXY) 80.02 0.041 0.05%
10 Year Govt Bond Yield 1.77% 0.01%
RPX Composite Real Estate Index 194.1 0.3

Stock index futures are stronger this morning after yesterday’s rout. Dow Chemical reported better than expected earnings in spite of a leaked memo that said the company was considering laying off 5% of its workforce. Facebook surprised to the upside by cracking the code on monetizing mobile. Mortgage aps dropped 12% last week.  The Markit PMI (a predictor of the ISM PMI) came in light, but still improved from Sep. Bonds and MBS are down small.

The FOMC rate decision is scheduled for 2:15 EST.  Historically the Fed has tried to stay out of the way this close to the election – in fact, the last announcement on QE (Infinity) was pushing it.  Which means the smart bet is going to be that this is a non-event.  That said, the Street is expecting some change – where the Fed adds Treasuries to its QE mix – so there is the possibility of market movement, especially MBS versus Treasuries. I wouldn’t want to be floating going into that announcement.

The FHFA House Price Index rose .7% in August, and is up 4.7% YOY.  This index covers only conforming mortgages, so it is less noisy than Case-Schiller or Radar Logic.

Freddie Mac’s latest US Economic and Housing Market Outlook expects QEIII to spark a further pick-up in housing activity, noting that housing has turned from a headwind to a tailwind for the economy. They are forecasting $2 trillion in originations this year, followed by a 15-20 percent contraction in 2013 as the refi boom plays out. They do worry about the fiscal cliff taking 2 percentage points out of GDP, although Obama is playing cat and mouse with the defense budget cuts, as he says one thing in the debates “cuts will not happen” and his advisers walk back the comments afterward. Elmer Fudd is quite concerned about the fiscal cliff as well.

Finally, Rob Chrisman gives you the data dump from the MBA Conference in Chicago.  Originators are adding capacity, the CFPB wants a flat fee for all mortgage originations, and the Street gets ticked when clients have the gall to check multiple dealers in order to get the best price on their TBA transactions.

20 Responses

  1. Elmer Fudd is quite concerned about the fiscal cliff as well

    Thanks for making me spew my coffee all over my keyboard. But now that you point it out, the resemblance is striking …


  2. I went to the Bruce Springsteen show in Charlottesville, VA last night and also caught the earlier Obama 2012 rally where he played six songs solo, including the official Obama campaign song (“Forward”) which he wrote. This is a link to the Rolling Stone write up about the rally which may be of interest to some here:

    Last night’s set list:


  3. Here we go:

    “Federal Prosecutors Sue Bank of America Over Mortgage Program

    Federal prosecutors in New York sued Bank of America on Wednesday, accusing it of carrying out a mortgage scheme that defrauded the government during the depths of the financial crisis.

    In a civil complaint that seeks to collect $1 billion from the bank, the Justice Department took aim at a home loan program known as the “hustle,” a venture that has become emblematic of the risk-fueled mortgage bubble. The complaint adds to a flurry of federal and private lawsuits facing Bank of America’s beleaguered mortgage business.

    Bank of America inherited the “hustle” home loan program with its purchase of Countrywide Financial in 2008. Prosecutors say the effort, kept alive by Bank of America through 2009, was intended to churn out mortgages at a rapid pace without proper checks on wrongdoing. The bank then sold the “defective” loans without warning to Fannie Mae and Freddie Mac, the government-controlled housing giants, which were stuck with heavy losses and a glut of foreclosed properties.


  4. Geez, jnc. You give us a teaser that you went to the show but then don’t give us a review? Was it awesome?


  5. Oh, and one more reason to fear The Matrix:

    Over the past two years, the Obama administration has been secretly developing a new blueprint for pursuing terrorists, a next-generation targeting list called the “disposition matrix.”

    The matrix contains the names of terrorism suspects arrayed against an accounting of the resources being marshaled to track them down, including sealed indictments and clandestine operations. U.S. officials said the database is designed to go beyond existing kill lists, mapping plans for the “disposition” of suspects beyond the reach of American drones.


  6. “Mike, on October 24, 2012 at 1:50 pm said:

    Geez, jnc. You give us a teaser that you went to the show but then don’t give us a review? Was it awesome?”

    Bruce Springsteen’s shows are consistently awesome. Having said that, the first one I saw was for The Rising tour back in 2003.


  7. I think Frank drew a distinction between those deals that the government asked the banks to undertake and others. My understanding is that the current lawsuit relates to the Countrywide acquisition which Frank excluded from his statement.


  8. This was linked incorrectly from the PL but is worth a read. It’s President Obama’s “off the record” pitch for a newspaper endorsement.

    The Obama campaign gave permission for it to be published in full after this blog post:

    Glad that they did so, but the original “off the record” request doesn’t seem to live up to the “Most Transparent Administration in History” promise that they made.

    Edit: Ezra Klein’s take on it:


  9. It’s not clear to me why BHO’s campaign would want that interview to remain off the record. The comment about Republicans alienating Latinos?

    Not a lot of news there.


  10. Thanks for the Springsteen link. That was pretty funny. I saw Bruce down in Tampa back in March. That was the week after the Trayvon Martin story broke so he played ’41 Shots’ to somber reaction.


  11. It’s not clear to me why BHO’s campaign would want that interview to remain off the record.

    Perhaps it was just a ploy to make it seem more newsworthy.


  12. My observation is that the longer any administration stays in office, the more that they view message control as an imperative and any admission of error as something to be avoided at all costs. The Obama administration came into office promising something different on transparency, but they have succumbed to “Politics as Usual” on this.

    I believe that politicians have also concluded that any statement more nuanced than a single sentence talking point is absolutely undesirable in the closing weeks of an election, due to the potential for the media to misrepresent it.


  13. Yellow – “Shackled and Drawn” was a particularly good opening number for the set. This is a video from an earlier show that captures it pretty well.

    I do wish that he had done “American Land” though.


  14. jnc, you crack me up because you’re young. [wistful sigh . . . oh wait, maybe not]. I’ve been going to Springsteen concerts off and on since probably before you were born.

    What was your first concert [directed to all, not just jnc]?


    • Growing up in a very Christian and conservative home, my first concerts were all Christian bands with church groups. The first non-Christian concert I went to was Blues Travelers and Bare Naked Ladies. Oh the horror. *hanging my head in shame*


    • I am on vacation but tuned in while checking my email. Hi, all!

      concert. Hmmm. When I was in HS in northeastern NJ I saw the Shirelles at a YMCA and the Kingston Trio at Montclair St. College. Also, Redd Foxx, at Montclair State. Saw Frank Sinatra walk onto the stage late at the Copa Cabana and say “shit, I don’t feel like singing tonight” and walk off.

      But the first great rock experience was in Houston in 1960 or ’61 my freshman year at Rice. Ray Charles and the Raylettes. My date and I may have been the only whites in the audience. It was a great concert.

      Of the many, many concerts I have attended over the years, a few have stood out for various reasons non-musical.

      There was the 1974 super concert at Memorial Stadium. Eagles, Who, Joe Cocker, Bad Company, Jimmy Page, Santana, and ZZ Top. I didn’t go. However, I walked to the old UT Press building front porch, next to the stadium, to hear Santana about 7 PM. When ZZ Top closed the show late that night, they encouraged the 80000 to tear up the stadium. No more Rock concerts for more than 20 years. Then the Eagles – Henley – convinced the Regents that the bulk of the proceeds from the Hell Freezes Over Tour in ’96 would go to charity and Rosanne and I walked over and paid our $$$ for that one.

      During SxSW I have seen two club impromptu jams worth big $$ for almost nothing. Big Cesar from Los Lobos with Joe Walsh, and Bonnie Raitt with Gatemouth Brown.

      We used to have Riverfest, hosted by the Thunderbirds and Double Trouble, before ACL. In 1989 I caused my oldest daughter, than in HS, heartburn, by assuming Meg Ryan was a waitress at Kerbey Lane Cafe, and talking to her ’til she disabused me.

      ACL is always more simple fun than any other concert because of the sampling of so many different venues and styles, and it is the folks previously unknown to me that catch my attention when I “discover” them, more than the big names. Check out Ruthie Foster, for example.

      Springsteen with the E-Street Band was a better show than without, IMO. Lyle Lovett is a better concert with his large band than acoustic, but his patter is hilarious. Stevie Wonder was a fine concert all by himself. Clapton has no stage personality and merges into his guitar or the song. Willie Nelson is having more fun than you are. In the 70s and 80s, Lil’ Feat was repeatedly an incredibly tight band, live.

      Actual Austin City Limits tapings were done before a free audience in an acoustically terrific studio, until two years ago. I used to have access before 2007 to free tix through one of my clients. 300 in a studio is more like club than concert, of course. Kathy Mattea was among the best of those studio concerts. BB King, too.

      Addendum: I really have had the most fun with my kids at concerts. John Mayall and BB King three times and SRV four times and the Allmans with my son; and Sting and Bobby McFerrin twice and Robert Cray twice with my eldest daughter; and Ani Defranco, and Sheryl Crow in the rain, plus three ACLs with my youngest daughter; and Lyle Lovett with all three of them, plus random good locals in the parks. Writing this makes me realize I have never gone to a concert with Jennifer. I don’t know why. the other three were up for it whether it was my idea or theirs. Rosanne is only up for Clapton, Eagles, Bruce, K.D. Lang – people close to her age! We like them, too.


  15. @jnc4p: “Courtesy of Shrink2 on the Plum Line:”

    I like that article. Bush was very influential, although a lot of it was just a guy bringing ideas whose time had come to the office, and a lot of the innovations Bush brought probably were coming, anyway. Many of the things mentioned are things Obama and the Democrats might have been able to change, but clearly don’t want to. Obama did not have to make is administration opaque just because Bush did (and arguably moreso).

    But the Bush tax cuts are different. Obama and the Democrats have tried in earnest to put an end to the tax cuts (that is, to raise taxes), and haven’t been able to succeed, due to Republican opposition. I think that’s different than just deciding, like politicians usually do, that all that bad stuff the previous guy was doing is actually good, now that they are in charge.


  16. I have been a Springsteen fan since the Nebraska album although I first heard of him when The River came out. Just through the vagaries of missing him over the years, the first time I got to see him in concert was in DC during the Reunion Tour in 1999. Since then I have seen him at Giant Stadium, Fedex Field in DC ( a hellhole I will never visit again), Verizon Center in DC (again), Baltimore Arena, and most recently in Tampa. Yet I hardly qualify as a superfan as I have never seen him more than twice on the same tour.

    My first concert was when I was 15. The opening act was Eddie Money. The headliner was Foghat but by then my mood had been so altered I mostly take their word that they played. But I will attest that somebody played ‘Slow Ride’ for at least 20 minutes.

    My most recent concert was a benefit for George Mason University featuring Sutton Foster. My how times and tastes change.


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