Morning Report – the week ahead 05/20/13

Vital Statistics:

Last Change Percent
S&P Futures 1660.1 -2.9 -0.17%
Eurostoxx Index 2806.9 -11.1 -0.39%
Oil (WTI) 95.7 -0.3 -0.33%
LIBOR 0.273 -0.001 -0.18%
US Dollar Index (DXY) 84.01 -0.240 -0.28%
10 Year Govt Bond Yield 1.92% -0.03%
Current Coupon Ginnie Mae TBA 104.2 0.2
Current Coupon Fannie Mae TBA 102.7 0.2
RPX Composite Real Estate Index 198.2 0.3
BankRate 30 Year Fixed Rate Mortgage 3.66

Markets are slightly weaker to start the week on no real news. The Chicago Fed National Activity Index came in at -.53, indicating that manufacturing activity is decelerating. We saw the same thing in the Philly Fed last week. Merger Monday is back with a few new deals. Bonds and MBS are up small

This week is very data-light. The main market-moving event will be the release of the FOMC minutes from the April 30 meeting. The focus will be on the tapering of quantitative easing. We will also get existing home sales  – it will be interesting to see if the lack of inventory is concentrated only in the hot markets like Phoenix and San Francisco, or is it more widespread. New Home sales come out on Thursday – given the good earnings we have seen from the homebuilders, this number should be good. Finally, on Friday we get durable goods. Expect activity to start to tail off after the FOMC minutes. By noon on Friday, most of the street will be on the LIE ahead of the long weekend, so spreads will widen and pricing will be lousy.

Wells has briefly suspended foreclosures after new questions from the OCC. Meanwhile, the payments from the settlements has been slow to arrive.

The bond market bloodbath bumped up borrowing rates quite quickly. After bottoming out at 3.4% in early May, the average 30 year fixed rate mortgage is 3.66%. That is a big move in a short period of time. In times of excessive volatility, it makes more sense to lock than float. LOs tell your customers they are basically speculating on interest rates if they choose to float.

14 Responses

  1. They are out of control:

    “Obama DOJ formally accuses journalist in leak case of committing crimes
    Glenn Greenwald
    Glenn Greenwald
    guardian.co.uk, Monday 20 May 2013 08.16 EDT

    New revelations emerged yesterday in the Washington Post that are perhaps the most extreme yet when it comes to the DOJ’s attacks on press freedoms. It involves the prosecution of State Department adviser Stephen Kim, a naturalized citizen from South Korea who was indicted in 2009 for allegedly telling Fox News’ chief Washington correspondent, James Rosen, that US intelligence believed North Korea would respond to additional UN sanctions with more nuclear tests – something Rosen then reported. Kim did not obtain unauthorized access to classified information, nor steal documents, nor sell secrets, nor pass them to an enemy of the US. Instead, the DOJ alleges that he merely communicated this innocuous information to a journalist – something done every day in Washington – and, for that, this arms expert and long-time government employee faces more than a decade in prison for “espionage”.”

    http://www.guardian.co.uk/commentisfree/2013/may/20/obama-doj-james-rosen-criminality

    Washington Post article cited:

    http://www.washingtonpost.com/local/a-rare-peek-into-a-justice-department-leak-probe/2013/05/19/0bc473de-be5e-11e2-97d4-a479289a31f9_story.html

    Like

  2. Meh, FauxNews.

    What if a NYT reporter had been killed in Benghazi? Wonder what the coverage would look like.

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  3. “AMY GOODMAN: “You say that President Obama is worse than President Nixon.

    JAMES GOODALE: “Well, more precisely, I say that if in fact he goes ahead and prosecutes Julian Assange, he will pass Nixon. He’s close to Nixon now. The AP example is a good example of something that Obama has done but Nixon never did. So I have him presently in second place, behind Nixon and ahead of Bush II. And he’s moving up fast. . . .”

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  4. Good piece on the mechanics of why using the Fed overnight discount rate for student loans (i.e. the Warren proposal) is absurd and will cost the government money.

    http://www.washingtonpost.com/blogs/wonkblog/wp/2013/05/20/no-the-federal-government-does-not-profit-off-student-loans/

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    • jnc:

      The CBO does not do that. It discounts all government loans using the returns on Treasuries of similar maturity.

      F-ing hilarious. And this is the kind of thing that is driving public policy.

      We are doomed.

      Like

  5. OT: On the IRS scandal, Democrats are trying to out do the Republicans and are in some cases succeeding.

    ““We should not only fire the head of the IRS, which has occurred, but we’ve got to go down the line and find every single person who had anything to do with this and make sure that they are removed from the IRS and the word goes out that this is unacceptable,” – Senator Claire McCaskill.”

    Quote For The Day

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  6. Heh.

    @iowahawkblog: In the media’s defense, who could have anticipated a Chicago Machine pol neck-deep in ACORN/SEIU would be anything but squeaky clean?

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  7. Good Mother Jones piece on the larger context of Obama’s war on leaks:

    “Obama’s War on Whistleblowers
    The president has been accused of allowing the Stuxnet leaks to help in the election, but his overarching policy has been extraordinarily tough on whistleblowing.

    —By Peter Van Buren
    | Tue Jun. 12, 2012 1:30 PM PDT”

    http://www.motherjones.com/politics/2012/06/obamas-whistleblowers-stuxnet-leaks-drones

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  8. Nova, from PL.

    http://www.robertsarvis.com/

    “”NoVAHockey
    3:03 PM EST
    have you heard of this guy before? I haven’t. “”

    I signed a petition for him but I haven’t heard much about him beyond that. I tend to be wary of relaying to much personal details on PL, so if you want to discuss Sarvis, I’d prefer to do it here.

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  9. jnc:

    Your campaign slogan (“I Walk the Line”) comment on PL was hilarious.

    Like

    • Good article today by James Taranto on the Obama admin scandals and what they mean.

      Moral authority entails a moral hazard: the temptation to abuse political and cultural power. Today’s liberal left conceives of itself as being on the side of all that is good, right and reasonable. It caricatures the right as racist, extremist, greedy, dishonest, fanatically religious, prone to violence–and dangerous because, through the Republican Party, it has maintained parity in the political arena. Of the 10 presidential elections since Watergate, each party won 5; and voters haven’t entrusted the Democrats with full control of government for more than two years since the Carter era.

      If ordinary politics are a battle between good and evil, then winning becomes an overriding moral imperative. The end justifies the means: Journalists shade or conceal the truth in the service of a “larger truth.” Government restricts political speech in the name of promoting democracy. Administrative agencies perpetrate injustice in the name of “social justice.” That’s how IRS agents could think it was their patriotic duty to help fix an election for the party in power.

      These wrongful actions subvert the institutions with whose stewardship the perpetrators have been entrusted. They also undermine the moral authority of those institutions’ leaders. National Journal’s Ron Fournier offers five suggestions for how “Obama can restore the public’s trust and rescue his presidency.” None of the ideas are likely to achieve those goals, but three of them seem worthy: Bring in some adult supervision at the White House, appoint a special prosecutor for the IRS, and adopt a more media-friendly policy on leak investigations. One of them–“appoint a bipartisan oversight board to oversee the implementation of Obamacare”–won’t fly. Even Republicans are savvy enough not to share responsibility for that fiasco.

      But the final proposal is downright ludicrous: “Reset the narrative and public expectations with a major speech on trust.” It’s not just that Fournier continues to imagine, against all evidence, that Obama is a dazzling orator. He fails to see that whether or not the president is personally culpable in the scandals, they all flow from his basic political character. Fournier’s fantasy that Obama could “reset the narrative” with a speech suggests that he has not yet abandoned the fantasy that Obama is some sort of savior.

      If Obama is no savior, neither is he the devil. He is but a man who, through a combination of ambition, talent, character and luck, became the central figure in the left’s crisis of authority. That crisis had been building for decades, seems to be reaching a culmination now, and will be resolved we know not how, except that we expect the process to be convulsive.

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      • From Ace, on a new poll just out:

        On IRS scandal, 56 percent think it’s a deliberate attempt to harass conservative organizations. (The other 44 percent are apparently dumber than dirt.)

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        • Interesting stats on hate-crime reporting by state. DC is number one (as percent of population). Eight of the top ten were blue states in 2012. The bottom 3? The deep south contingent of Louisiana, Georgia, Mississippi.

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