Morning Report: Uptick in delinquencies 8/6/13

Posted on August 6, 2013 by Brent Nyitray

Vital Statistics:

  Last Change Percent
S&P Futures  1700.7 -1.8 -0.11%
Eurostoxx Index 2811.4 2.4 0.08%
Oil (WTI) 107 0.5 0.44%
LIBOR 0.266 0.001 0.38%
US Dollar Index (DXY) 81.74 -0.138 -0.17%
10 Year Govt Bond Yield 2.63% 0.00%  
Current Coupon Ginnie Mae TBA 104.6 0.0  
Current Coupon Fannie Mae TBA 103.9 0.0  
RPX Composite Real Estate Index 200.7 -0.2  
BankRate 30 Year Fixed Rate Mortgage 4.37    

 

Markets are flattish on no real news. This week is relatively data-light. Bonds and MBS are flat.
 
Mortgage delinquencies rose 10% month over month in June, according to Lender Processing Services, breaking a downtrend that has lasted since late last year. 700,000 people who made their May payment missed their June payment. Is this a blip or the start of a new trend? Interesting fact regarding geography – Non-current inventory is still close to peak levels in New York State (only down 5%). By contrast, California is down 59%, Arizona is down 66% and Nevada is down 47%. This explains why Northeast real estate prices are still bumping along the bottom of the bathtub while the Southwest is not. 
 
Home prices increased 11.9% year-over-year, according to CoreLogic. According to chief economist Dr. Mark Fleming: “In the first six months of 2013, the U.S. housing market appreciated a remarkable 10%. This trend in home price gains is at the best pace since 1977.” They are forecasting prices to increase 12.5% in July. You can see what markets are hot and what markets are not below:
 

 
There were some interesting observations out of mortgage REIT Invesco Mortgage Captial (IVR). They noted that spreads have widened on agency paper and believe there is good value here. They are taking the view that the spread widening is temporary and was due to a perfect storm of REIT de-leveraging, mutual fund outflows and dealers clearing inventory for quarter’s end. What does this mean to us? That mortgage rates have room to fall, even if the 10 year bond doesn’t move.

 

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Morning Report – slow data week 8/5/13

Posted on August 5, 2013 by Brent Nyitray

Vital Statistics:

 

  Last Change Percent
S&P Futures  1701.8 -2.2 -0.13%
Eurostoxx Index 2807.7 -3.3 -0.12%
Oil (WTI) 105.9 -1.0 -0.95%
LIBOR 0.265 -0.001 -0.45%
US Dollar Index (DXY) 81.99 0.077 0.09%
10 Year Govt Bond Yield 2.62% 0.03%  
Current Coupon Ginnie Mae TBA 104.6 -0.1  
Current Coupon Fannie Mae TBA 103.8 -0.2  
RPX Composite Real Estate Index 200.7 -0.2  
BankRate 30 Year Fixed Rate Mortgage 4.38    

 

Markets are flattish after a wild week with an unexpectedly strong GDP report, a dovish FOMC statement, and a disappointing jobs report. This week is very data-light, so I don’t expect a whole lot of movement. We do have some Treasury auctions this week, but I don’t see that as market moving. Bonds and MBS are down small.
 
The 10 year traded in a range of 2.57% to 2.74%. So far, it is looking like 2.74% is acting as resistance.
 
Another data point showing the first time homebuyer is being put off by higher rates – Beazer Homes announced a drop in orders as traffic has slowed due to higher interest rates. So far we have seen drops in orders from Pulte and Beazer – both geographically diverse builders with an emphasis on lower price points. 

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Open Thread Plus Bites & Pieces

Posted on August 4, 2013 by lmsinca

I’m still catching up from last week’s news and propaganda but I did read a couple of pieces that I thought were pretty interesting.

This was from the AP Friday.

MILWAUKEE (AP) — Abortion is still legal but getting one in many states will be difficult if laws passed this year are upheld by the courts. In a march through conservative legislatures, anti-abortion Republicans passed a wave of new restrictions that would sharply limit when a woman could terminate a pregnancy and where she could go to do so.

The push brought the anti-abortion movement closer to a key milestone, in which the procedure would become largely inaccessible in the three-fifths of the country controlled by Republicans even if still technically legal under Roe vs. Wade.

But rather than continuing to roll across the GOP heartland in synch with the pro-life movement’s plan, the effort may now be hitting a wall. The obstacle comes not from opposing Democrats but from GOP leaders who believe pressing further is a mistake for a party trying to soften its harder edges after election losses last year.

The resisting Republicans include governors and top legislators in more than a half-dozen states, including some of the largest and most politically competitive in the party’s 30-state coalition. They are digging in to stop the barrage of abortion proposals, hoping to better cultivate voters not enamored with the GOP’s social agenda.

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This one’s a little long but a fascinating read on our 40 year war against marijuana.  I don’t indulge but it’s pretty clear, I think, that it’s time to change our policies.  I loved this Nixon quote.

President Nixon had already made up his mind. In May 1971 he told H.R. Haldeman, “I want a goddamn strong statement about marijuana. Can I get that out of this sonofa-bitching, uh, domestic council? I mean one on marijuana that just tears the ass out of them.” And Nixon told Shafer directly, “You’re enough of a pro to know that for you to come out with something that would run counter to what the Congress feels and what the country feels, and what we’re planning to do, would make your commission just look bad as hell.”

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I’m pretty sure this isn’t going anywhere but it’s the thing I’ve been talking about since 2009…………..jeeze.  Medicare for all.  Here’s the money quote that makes it dead on arrival.

“Paradoxically, by expanding Medicare to everyone we’d end up saving billions of dollars annually,” he said. “We’d be safeguarding Medicare’s fiscal integrity while enhancing the nation’s health for the long term.”

Friedman said the plan would be funded by maintaining current federal revenues for health care and imposing new, modest tax increases on very high income earners. It would also be funded by a small increase in payroll taxes on employers, who would no longer pay health insurance premiums, and a new, very small tax on stock and bond transactions.

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And since we have peppers coming out of our ears (garden) here I thought I’d post my Baked Jalapeno Poppers recipe.

I use a combination of whatever peppers we have in the garden.  I can usually get about 15 to 18 poppers from this recipe.

Slice peppers in half lengthwise and remove seeds and membrane.  I like to leave part of the stem on.

Combine:

8 oz cream cheese

1 1/2 cup mozarella, jack or pepper jack cheese

1/2 tsp cumin

1/2 tsp or less cayenne

Stuff peppers with cheese mixture.

Bowl one:  1/2 cup seasoned flour

Bowl two:  2 eggs

Bowl three:  1 cup seasoned bread crumbs (I use plain bread crumbs and season them myself)

Seasoning:  salt, pepper, paprika, garlic powder, onion powder, cayenne pepper and Mexican oregano to taste.  I just wing it and add to both flour and bread crumbs.

Roll peppers in flour, then dip in egg and finally dredge with bread crumbs.  Refrigerate several hours and then bake in a 350 oven for about 1/2 hour……………..yummy

Filed under: cooking, healthcare, Medicare, recipes, Republican Party, War on Drugs | Tagged: , , | 12 Comments »

Morning report – meh jobs report 8/2/13

Posted on August 2, 2013 by Brent Nyitray

Vital Statistics:

  Last Change Percent
S&P Futures  1698.2 -2.0 -0.12%
Eurostoxx Index 2801.2 -7.4 -0.26%
Oil (WTI) 107.4 -0.5 -0.42%
LIBOR 0.267 0.001 0.38%
US Dollar Index (DXY) 82 -0.336 -0.41%
10 Year Govt Bond Yield 2.61% -0.09%  
Current Coupon Ginnie Mae TBA 104.3 0.6  
Current Coupon Fannie Mae TBA 103.8 0.6  
RPX Composite Real Estate Index 200.7 -0.2  
BankRate 30 Year Fixed Rate Mortgage 4.46    
If you went to sleep just before Wednesday’s GDP report and just rolled out of bed, you would be forgiven for asking what all the hoopla is about. If not, you would be suggesting that Webster’s put the 3 day intraday chart of the 10-year bond yield as the illustration for the word “whipsaw.”
 
Bonds are rallying hard after a weak jobs report. Stocks are selling off as well. TBAs are up 3/4 of a point. 
 
The July jobs report sent yields down 14 basis points (yes) on disappointing numbers. 162,000 jobs were added in July, and June was revised downward. The unemployment rate fell from 7.6% to 7.4% as the labor force participation rate dropped from 63.5% to 63.4%. Hourly earnings ticked down month-over-month and weekly hours fell. Overall, a “meh” report, with the caveat that summertime jobs reports tend to be volatile and no matter how hard the Bureau tries to make seasonal adjustments for all the things going on (seasonal work, students, teachers, etc) it is a difficult task. 
 
Given that GDP growth has averaged about 1% over the past 3 quarters and the labor market is improving at a snail’s pace, it makes you wonder what the Fed is thinking about when they say they want to taper this fall.
 
The Fed seems to alternate between characterizing growth as “modest” and “moderate.”  Ever wonder what the line between the two is? The WSJ attempts to parse.

Filed under: Morning Report | 21 Comments »

Morning Report – Dovish FOMC 8/1/13

Posted on August 1, 2013 by Brent Nyitray

Vital Statistics:

 

  Last Change Percent
S&P Futures  1692.9 12.4 0.74%
Eurostoxx Index 2797.4 29.2 1.06%
Oil (WTI) 106.9 1.9 1.82%
LIBOR 0.266 0.000 0.00%
US Dollar Index (DXY) 82.06 0.605 0.74%
10 Year Govt Bond Yield 2.63% 0.06%  
Current Coupon Ginnie Mae TBA 104.3 -0.2  
Current Coupon Fannie Mae TBA 103.7 -0.3  
RPX Composite Real Estate Index 200.7 -0.2  
BankRate 30 Year Fixed Rate Mortgage 4.39    

 

Stock markets are higher after a dovish FOMC statement yesterday and lower than expected initial jobless claims. Bond and MBS are down.
 
The FOMC statement was interpreted as dovish yesterday. There wasn’t any discussion of tapering, as the Fed seemed to go back to its older language that said QE could increase or decrease depending on the data. They are forecasting that the economy will improve through the second half of the year. The only other notable change was that they reaffirmed the risks of dis-inflation, which was enough to get previous dissenter James Bullard back in the fold. 
 
The 10 year had sold off hard on the ADP jobs number and the GDP number, but it rallied hard after the statement. The range was 2.57% to 2.7%. You can see just how big the swing was below:
 

 
The final shoe to drop will be the jobs report on Friday. 
 
The Case-Shiller first quarter report is out. Most of the info is old news, but some is not. CoreLogic is forecasting that prices increase 6.5% year over year over the next 12 months. Over the next 5 years, they expect prices to increase at a 4% per year rate. The usual suspected – Phoenix, Sacramento, etc are leading the charge. Bringing up the rear are Long Island, Hartford, Edison NJ, Kansas City, and Newark. 

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