Today in history – September 18

Posted on September 18, 2013 by ScottC

1996 – Boston Red Sox Roger Clemens strikes out 20 batters for the second time in his career. Subsequent allegations of steroid use will place forever make Clemens’ many achievements suspect. I’m ashamed he became a Yankee.

1975 – Patty Hearst, 19-year old daughter and heiress of newspaper magnate Randolph Hearst, is finally captured in a San Francisco apartment after a months long manhunt for her. Over 7 months earlier, Hearst had been kidnapped by a leftist (!) terrorist group calling itself the Symbionese Liberation Front (SLF). Initially the SLF had demanded that Randolph Hearst hand out $70 worth of food to every needy person in California in exchange for her return, but after her father had donated more than $6 million worth of food to the Bay area’s poor, an audiotape was released in which Hearst herself announced that she had willingly joined the SLF and had changed her name to Tania. Two weeks after her announcement, Hearst is captured on a surveillance camera wielding an M1 carbine while robbing a San Francisco branch of the Hibernia Bank. A warrant is issued for her arrest, resulting in her capture in September. Despite claiming that she was a victim of brainwashing, Hearst will go on to be convicted and sentenced to 7 years in prison, although her sentence will be commuted by President Jimmy Carter and Hearst will join Marc Rich as a beneficiary of President Bill Clinton’s controversial pardon program executed on his last day in office, January 20 2001.

1862 – Following the battle of Antietam, Union General George McCLellan misses a chance to end the Civil War by allowing the retreating Confederate army to escape across the Potomac. Although the Union army had superior numbers and fresh troops following the original inconclusive battle, and might well have been able to destroy General Robert E. Lee’s battered rebels, McClellan allowed Lee’s army to cross the Potomac unmolested and refused to give chase for nearly the next 2 months, despite the urging of both the War Department and President Lincoln himself that he do so. Lincoln eventually dismisses McClellan from his command. The war will carry on for nearly another 3 years.

Filed under: This Day in History | 10 Comments »

Morning Report – Taper Day 09/18/13

Posted on September 18, 2013 by Brent Nyitray

Vital Statistics:

Last Change Percent
S&P Futures 1698.8 0.5 0.03%
Eurostoxx Index 2907.4 16.4 0.57%
Oil (WTI) 105.8 0.4 0.39%
LIBOR 0.252 0.001 0.20%
US Dollar Index (DXY) 81.14 0.001 0.00%
10 Year Govt Bond Yield 2.86% 0.01%
Current Coupon Ginnie Mae TBA 103.7 0.0
Current Coupon Fannie Mae TBA 102.8 -0.1
RPX Composite Real Estate Index 200.7 -0.2
BankRate 30 Year Fixed Rate Mortgage 4.48
Markets are flattish ahead of the FOMC meeting this afternoon. The announcement is expected around 2:00pm, so don’t try and lock anything around that time period. Bonds and MBS are down small.
Mortgage applications rose 11.2% last week, which was a big increase after a depressed short Labor Day week. The refi index jumped 18% as rates ticked down a little. The purchase index was up 2.5%.
Housing starts and building permits came in lower than expected, with housing starts at an annualized 891k and permits at an annualized 918k. SFR continued to increase while multi-fam dipped. Sub – 1 million levels in housing starts is still a highly depressed level. After touching 1 million units in March, activity has been slowing. You can see from the chart we have been underbuilding for a long time. I guess you won’t see a major increase in starts until the first time homebuyer returns to the market and that is going to be jobs-driven. In related news, the National Association of Homebuilder Confidence Index was flat last month, but still at post-crisis highs. The builders are also noting that momentum seems to have stalled for the moment.

Certainly the Fed is noticing the drop-off in housing sector activity as rates have risen. This will probably make them want to maintain current purchases of MBS and cause them to lower Treasury purchases only. The consensus seems to be the “tiny taper” scenario, where the Fed cuts Treasury purchases by $10 billion a month starting in October.
The SEC is going to force companies to disclose the ratio of CEO pay to the median pay of employees at the firm. Glad to see the SEC is on class warfare beat – much more important than, say, doing something about high frequency trading  /sarc.

Filed under: Morning Report | 19 Comments »