Brent Nyitray
Fairlington Blade
Let the mutherfuker burn!
jnc4p
Kevin S. Willis
Michigoose
lmsinca
markinaustin
Arcanaut
novahockey
quarterback
ScottC
yellojktVital Statistics:
| Last | Change | Percent | |
| S&P Futures | 1675.5 | -8.5 | -0.50% |
| Eurostoxx Index | 2744.8 | 4.5 | 0.16% |
| Oil (WTI) | 104.4 | -1.1 | -1.03% |
| LIBOR | 0.265 | 0.001 | 0.45% |
| US Dollar Index (DXY) | 81.77 | -0.203 | -0.25% |
| 10 Year Govt Bond Yield | 2.55% | -0.02% | |
| Current Coupon Ginnie Mae TBA | 104.5 | 0.2 | |
| Current Coupon Fannie Mae TBA | 104 | 0.1 | |
| RPX Composite Real Estate Index | 200.7 | -0.2 | |
| BankRate 30 Year Fixed Rate Mortgage | 4.38 |
Markets are lower on no real news. Bonds and MBS are up small.
There isn’t much in the way of economic data this morning. I would expect activity to dwindle as most of the Street will be on the L.I.E. by noon.
Yesterday was a big day for real estate-related earnings – we heard from three homebuilders – Meritage, D.R. Horton, and Pulte. As far as the question “Has higher mortgage rates affected traffic and purchase activity?” goes, the answer is yes, at least in some areas. Meritage (who is primarily in the West / Southwest) noted an increase in orders, as did Pulte. Pulte noted that buyers still have a “sense of urgency.” On the other hand, D.R. Horton, which is more geographically diversified reported a decrease in orders. That was huge. D.R. Horton said that buyers are “alarmed” at the rapid rise in rates and it has affected sales. I guess it makes sense when you think about it – on the West Coast, inventory is depleted and prices are rising at double digit rates. So it would make sense that buyers would feel a sense of urgency – the fear is not being able to find a house. Elsewhere in the country, with prices flat / up small, that doesn’t exist. Horton is at the lower price points as well, so maybe you are starting to get into DTI issues with first time homebuyers. Anyway, the increase in rates is starting to bite as far as purchase activity goes.
Filed under: Morning Report |
All Things in Moderation 
I will no longer allow a post to go “comment free.”
#StandWithBrent!
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Brent, I think this squares with your comments about higher capital requirements. No?
http://www.project-syndicate.org/commentary/why-financial-reform-has-been-so-slow-by-simon-johnson?wpisrc=nl_wonk_b
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Thanks, Troll…
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“DTI issues” ?
debt-to-income. doh
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I HOPE THEY CHOKE ON IT!
http://m.washingtonexaminer.com/irs-employee-union-we-dont-want-obamacare/article/2533520
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More Republican War on Women.
“I’m going to look at it. I’ve voted to end late-term abortions,” Landrieu said, referring to her vote for the partial-birth abortion ban.
http://m.weeklystandard.com/articles/viable-political-strategy_741035.html?nopager=1
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McWing:
I’ve voted to end late-term abortions,” Landrieu said
By “late term” I wonder if she meant 4th trimester abortions.
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I agree with Obama!
http://m.washingtonpost.com/politics/white-house-hardens-stance-on-budget-cuts-ahead-of-showdown/2013/07/25/8894c6f6-f53c-11e2-a2f1-a7acf9bd5d3a_story.html
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Tweet of the day from AP.
@allahpundit: Also for the good of the next thousand women Filner would otherwise headlock and molest https://t.co/Id4fSTHPDm
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At least somebody’s getting their money back.
(Reuters) – UBS will pay $885 million in a settlement with a U.S. regulator over allegations the Swiss bank misrepresented mortgage-backed bonds during the housing bubble, paving the way for billions more to be paid by other banks.
European and U.S. lenders such as Credit Suisse and Deutsche Bank have set aside money to cover the cost of any losses arising from the dispute with the Federal Housing Finance Agency but estimates vary widely.
Fears it will face a hefty settlement added to uncertainty around RBS, which is striving to attract a replacement for Hester while the government conducts a review into whether it should be broken up.
The bank has already paid out $612 million to settle separate allegations that it manipulated benchmark interest rates and the government is anxious that the lender gets back on track so it can start to offload its 80 percent shareholding.
Ronnie Chopra, head of strategy at TradeNext, said fears RBS could face a multibillion-dollar payment in the U.S. “puts more negativity on the bank and highlights concerns regarding the finances of the behemoth”.
Analysts at Credit Suisse earlier this year said European banks could take an $11 billion hit from a raft of mortgage-related litigation costs in the United States.
They estimated RBS alone could face an FHFA litigation loss of $1.6 billion, Barclays a $1.1 billion loss and HSBC could take a $900 million loss.
http://www.reuters.com/article/2013/07/26/us-usa-ubs-settlement-idUSBRE96O1FH20130726
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At least they had to plead guilty. I don’t think that’s always the case right?
(Reuters) – Halliburton Co has agreed to plead guilty to destroying evidence related to the 2010 Gulf of Mexico oil spill, the U.S. Department of Justice said on Thursday.
The government said the guilty plea is the third by a company over the spill, and requires the world’s second-largest oilfield services company to pay a maximum $200,000 statutory fine. Halliburton also made a separate, voluntary $55 million payment to the National Fish and Wildlife Foundation, the Justice Department said.
Halliburton also agreed to three years of probation, and to continue cooperating with the criminal probe into the April 20, 2010 explosion of the Deepwater Horizon drilling rig.
Court approval of the settlement is required.
http://www.reuters.com/article/2013/07/25/us-gulf-spill-halliburton-idUSBRE96O1HF20130725
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Mark, I bought James’ book for my kindle yesterday. Will probably start it next week.
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LMS, I hope you like the book. There is a character in it – mid novel – who lives in Madrid, NM and does auto repair, who I know is drawn on a living person. A case of truth stranger than fiction, I promise.
The 82 YO swimmer is in the shape we all aspire to at 82. At this moment I am about 12 lbs above completely flat gut, but I will be a mere 70 on August 11 so I can get there at a pound a year.
Seriously, that is one competitive dude. I swim 500-1000M doing the elementary backstroke for a water workout. That is a non-racing, survival stroke (for those of you unfamiliar with nomenclature this is not a stroke you see during the Olympics) I prefer because it stretches my back and works my bad shoulder without hurting it [much]. I do generally become euphoric at 400M and can continue indefinitely after that but don’t b/c of time constraints. This was my sole “drug of choice” during the three year marriage crumble of 1987-90, but then I would do 1500M – 1750M just because it felt so liberating. Part of it is not hearing anything as my ears stay just below the waterline; part of it is looking up at the steel joists and feeling like I am gliding weightless as they seem to pass above me.
The Y pool has overhead flags two strong racing backstrokes from the wall so I do change strokes as I pass under the flags so that I don’t drive my head into the wall.
I think that I could handle a five mile swim, but not overarm crawl for more that 200M at a time. What actually amazes me is that you are doing this in open water. Even lake swimming is more difficult than laps. And I have never attempted to swim even 100M in the sea. I did swim some more-than-two mile lake swims as a ‘ute. Perhaps I am overestimating the difference, but I do not think so, from experience. And there is that temperature differential, too. No danger of hypothermia in an 81F YMCA pool!
You should try the elementary back stroke in a lap pool, LMS. If you want to take all the stress off the lower back, tie on a belted flat floatie at your waist. It converts all of your frog strokes and kicks to horizontal energy expenditure and truly stretches the back.
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2nd Tweet O’ The Day.
@DrewMTips: Has @BarackObama called any of Filner’s victims to comfort them like he did Sandra Fluke? Or are mean words worse than assault? #WarOnWomen
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I can’t decide which is worse, that Madame Speaker served with Filthy Filner for 20 years and didn’t know or that she knew and didn’t say anything.
I blame the Republican War on Women.
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Here’s a feel good story on a Friday for Mark and I, as the oldest. I think Mark even mentioned he still swims. I competed locally until I hurt my back 6 years ago. That took the competitive edge out of me but I’ve been thinking about trying again. Senior Olympics……..huh. I’ve helped train our niece for the Special Olympics the last three years and she took two Golds and a Silver this year.
I admire people like this guy. His spirit is still young.
http://www.npr.org/2013/07/26/205125550/age-hasnt-stopped-this-man-from-swimming-and-winning
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Consider me educated.
http://m.nationalreview.com/corner/354549/msnbc-analyst-zimmerman-peruvian-american-not-hispanic-dimitrios-halikias
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History’s Greatest Monster has now conned The New Republic.
http://pjmedia.com/instapundit/173086/
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I blame the Republican War on Women
Not the same thing at all.
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Wow.
I have to say that I will have to deal with only a little of this, but I’ll be getting some of my dad’s ashes next weekend.
And then, in a couple of weeks, I’m going to drive across country with him and Brian. I still don’t know if I’m really glad I read this story, but it’s so true.
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Kelley, you will be driving from Baltimore to Michigan, right? I don’t know whether driving with ashes would at all feel like traveling with them. I have on two occasions traveled with them. Once by train with my HS buddy who was half burned in ‘Nam and died 90 days later in the burn facility at Brooke Army Hospital in SA; and, about ten years ago, to take my Irish friend home to Boston by plane. In each case I was conscious of the “presence” – reflecting on my memories of a friend. It would be more intense with a father and also with an ex-H.
But driving may change that. On an open empty western highway, it might be similar, but I am imagining that Baltimore to Lansing will require undivided attention to traffic for most of the drive. Still, I know there will be moments that the boxes will cause you to reflect and at least with your dad that should be a blessing.
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I’m looking forward to the book Mark. 70 isn’t exactly young, but it’s not old either.
I’ve been swimming in open water since I was about 12. My dad was a terrific swimmer, pools, ocean, lakes, it didn’t matter. I think we got left behind in the evolutionary chain or something. My son and youngest daughter, my twin nephews and my cousin are all ocean swimmers, and surfers I might add. I won’t swim my ocean lap (swim down and walk back up…..lol) any more unless the water’s at least 65 and of course I watch the swell height as well. I used to be a lot braver. I’ve made the swim four times this year so far and hope to get in at least two more. Generally I only last about a mile, sometimes a little more but I managed one and a half about a month or so ago, and I alternate between freestyle and backstroke and can do it in about an hour or a little more. The only thing swimming in a pool prepares you for, as far as ocean swimming, once you’ve perfected your stroke is endurance. It’s a completely different experience with different challenges. I know what you mean about being on your back in a pool and feeling as though you could go forever. It’s not like that in the ocean unfortunately, but it’s definitely invigorating. A good swimmer will add at least 10 to 15 minutes to their mile time, and an old swimmer like me, considerably more.
In the pool I swim about a mile and a half to two miles usually three times a week. I used to compete in both back and free so still alternate those strokes. Luckily for me I married a swimmer the second time around so we swim together. He doesn’t care too much for open water swimming but he’ll do it because he loves me, hah. The lifeguards watch us and hand us off from lifeguard stand to lifeguard stand. If I’d been born about 10 years later, I’d probably have been a lifeguard myself….hahaha, I’m no Pamela Anderson though.
We’re having the grandkids this weekend and I’m helping the 7 year old with his back stroke… 🙂
Speaking of ashes, our daughter is taking the last remaining little bit of my niece’s ashes to Africa with her next month to scatter. It was a dream of hers to spend time in Africa. She was a zoologist and loved the big cats. We held back a few ashes just in case. Mine will be scattered over the Pacific Ocean………….I’ve made everyone promise me they’d do that.
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BTW Mark, I don’t do the elementary backstroke unless I get really tired and need a break but I may try that with the belt on. We have those in our warehouse as we sell a lot of swim gear. Interesting idea.
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Mark:
No, I’m still in SLC, so I’ll be flying to MI and back, then driving from here to Baltimore in a couple of weeks.
Brian is already in an “urn” so to speak (I chose to have his ashes that I’ve got put into a vase made by a local potter that he and I both liked–it seemed appropriate). Dad’s ashes are supposed to be in a tiny urn that I ordered. . . but my mom still hasn’t ever picked it up from the funeral home, which adds a whole ‘nother layer onto things. She got the majority of his ashes in a box, but she hasn’t decided what to do with them.
Lulu: once I decided to leave SLC it made me think about Brian’s ashes–some of them are now in various places that we enjoyed hiking and skiing. Some of them will be in Michigan Stadium soon. The more I think about it, the more I think that’s the beauty of being cremated–all of your loved ones can have a bit of you (so to speak) and all of your loved ones can take you to places that you shared. My Uncle Ted’s ashes are in about 12 different places now, between my aunt and their three daughters.
I want some of mine taken and scattered at a couple of places in Scotland (the MacRae clan church [established ca 800 AD] and our family castle), and the rest I’d like my family to divide up and take to places that are important to them.
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http://www.kqed.org/arts/literature/article.jsp?essid=123900
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Mark,
I’m not sure I buy the capital requirement explanation. AFAIK, D/F doesn’t go any further than Basel III. Yes, there are pieces of Basel III that are restricting credit, particularly in the mortgage space, but I don’t think it is restricting regular commercial lending in any way. Yes, credit is tight, probably too tight, but that is the normal credit quality pendulum doing its thing. And in the mortgage space, now that the low-hanging fruit of QE-driven refis has been picked, banks are realizing they need to go further out on the risk curve if they want to make any loans.
But then Simon goes on to way:
“There are three possible explanations for what has gone wrong. One is that financial reform is inherently complicated. But, though many technical details need to be fleshed out, some of the world’s smartest people work in the relevant regulatory agencies. They are more than capable of writing and enforcing rules – that is, when this is what they are really asked to do.”
He is being, shall we say, generous to the regulatory structure in Washington.
The obama administration was so worried about regulatory capture that they didn’t consult anyone in the financial industry at all. Even Goldman was shut out. So, they came up with something that looked good on paper, and had the broad brush strokes, but needed the details filled in. And where they filled in the details, they inevitably were rife with unintended consequences.
The regulators may indeed be smart, but as any economist will tell you, just because you are smart doesn’t mean you understand the intricacies of how these markets work. Economists have a term for this – it is called specific knowledge – and no one in Washington (except for maybe Gensler and a few others) have it. Washington is very insular and they missed an opportunity (IMO) in the bust to hire people who lost their jobs and could have told them how things worked. Instead they would rather have a newly minted PhD than someone with a Bachelors and 20 years in the business. Kind of short sighted.
Perfect example: HUD wants to encourage people to refi at lower levels, and since not enough people were qualifying for refis, they introduced the streamline refi, where you refinance your FHA loan and didn’t need an appraisal or income verification. The reasoning was that since the government is already on the hook for the first loan, it wasn’t really increasing the total risk to the taxpayer. Enter QM. CFPB’s ability to repay rule (Reg Z) demands the lender verify income and ability to repay. So you can’t do a streamline because of QM.
QM basically says that if you originate a loan within the guidelines and the borrower later defaults, they can’t come back and sue the lender saying “you should have known that I couldn’t repay the loan.” But, there is the fear that falling afoul of QM in a judicial state foreclosure could drag out the foreclosure process for even longer than it already is. This is an unfair characterization, but the banking industry almost views non-QM loans as giving the borrower a “get out of jail free” card.
Now, you could go ask Richard Cordray if that was the intent, and he would say “no.” But there isn’t a compliance officer at any bank that will tell you you’re not taking big litigation risk if you make that loan. And you know what, it isn’t worth the headache. It is a business decision as well as a legal one.
There are some intrepid lenders that are looking at doing non-QM loans, based on taking a holistic view of “ability to repay” and looking beyond their bright line of a 43% DTI. (we are one of them, full disclosure). But it is very difficult for a non-bank to do these loans because they are non-securitizable. It is a product that works for hedge funds, primarily. And hedge funds aren’t going to lend money for this kind of product at 4 3/4%. Think 9%.
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Is this true?
http://www.nationalreview.com/corner/354592/lew-yes-irs-scandal-phony-eliana-johnson
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FYI…Animal House was released 35 years ago today.
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That the whole IRS “scandal” thing is false? Yes, that’s true.
http://www.politicususa.com/2013/06/18/full-transcript-reveals-darrell-issa-lied-obama-involvement-irs-scandal.html
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I guess what did you expect Lew to say? The administration investigated this with all the thoroughness of a bribed customs inspector.
Tough to make a man find something when his paycheck depends on him not finding it.
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Brent, I could’ve provided dozens of links that said that the IRS scandal was made out of whole cloth; I chose to go with an outrageous one because that mimics what George does.
It’s all a bunch of bullshit and you know it.
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“It’s all a bunch of bullshit and you know it.”
Couldn’t disagree more. I think it is a big deal and I want to get to the bottom of it.
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Brent:
I think it is a big deal and I want to get to the bottom of it.
I agree, but I think it is going to be difficult, mostly because of a lack of media interest.
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Which is worse, there was a Political origin to the scandle or that it orignated organically within the IRS?
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“Which is worse, there was a Political Origen to the scandle or that it orignated organically within the IRS?”
Exactly. The government is behaving like an organism that responds to threats to its livelihood. That is not good.
But if obama didn’t personally send an email directing the IRS to hold up conservative organizations, then this is all a big nothingburger.
Precedent set. It won’t always be a D in the white house.
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Oh, please.
It’s a HUGE nothingburger, along with Benghazi!!!!!™, Fast and Furious, and other Republican constructs. The fact that Gitmo isn’t closed, the FISA court is functioning, and Larry Summers might be appointed to the Fed are actual problems.
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Tell me if this is behind a paywall for any of you.
http://www.economist.com/news/leaders/21582258-it-not-just-detroit-american-cities-and-states-must-promise-less-or-face-disaster?spc=scode&spv=xm&ah=9d7f7ab945510a56fa6d37c30b6f1709
Kelley, I don’t think the IRS screening of c(4)s is either a mountain or a molehill, but I do think the R committee chair is focusing on one body part of the elephant rather than the whole. He asked for a selective report, perhaps with no more motivation than a constituent or donor request, and got a selective response. So as we have said before, c(4)s provide a loophole by reason of redundancy and ill definitions, and are questionable policy as tax breaks even when done according to the rules and regs. So I think if Scott were running the Issa committee it would get to the actual problems, which dwarf the questionable issue of partisan treatment of partisans.
So Brent, I don’t think Issa is going there and the real problems [which all revolve around why the hell anyone gets to deduct political contributions or not be taxed on political income] will not be addressed.
Kelley, on Benghazi the tragedy itself was a focus we could agree upon – secondary outposts that have consulate status in unstable countries need more protection and the State Dept. asked for it but did not get it. Unfortunately, even the level of security requested would not have been enough.
OTOH, the failure to publicly explain the tragedy in a coherent or truthful way for days on end was the focus of the committee hearings and while the explanations might be true the suspicion lingers that the obfuscation was convenient for the presidential campaign. At best, this is of a piece with our whole “security” obsession.
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Mark:
So I think if Scott were running the Issa committee it would get to the actual problems, which dwarf the questionable issue of partisan treatment of partisans.
I agree with you that there is a more fundamental problem here, but the trouble is that that fundamental problem, the granting of any tax exemption for any reason, is not going to be addressed. No one in authority wants to fix that problem, and probably precious few even outside of authority wants to either. So we are necessarily left with trying to figure out how to apply the rules, as objectionable as they may be to some of us, in a non-political manner. That has not been done, for one reason or another. And I think that is a big deal, even if it derives from a more fundamental problem.
and the real problems [which all revolve around why the hell anyone gets to deduct political contributions or not be taxed on political income]
I think the real problem is why anyone gets to deduct any contributions for any reason. The tax code should exist for one, single reason…to finance government expenditures, not to encourage or discourage certain kinds of activity.
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“It’s a HUGE nothingburger, along with Benghazi!!!!!™,”
The liberal media has concluded that, yes. They don’t speak for anyone except liberals.
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