Morning Report – Government shutdown looms 09/30/13

Posted on September 30, 2013 by Brent Nyitray

Vital Statistics:

	Last	Change	Percent
S&P Futures	1670.9	-15.5	-0.92%
Eurostoxx Index	2882.4	-36.9	-1.26%
Oil (WTI)	101.7	-1.2	-1.15%
LIBOR	0.249	0.001	0.20%
US Dollar Index (DXY)	80.14	-0.382	-0.47%
10 Year Govt Bond Yield	2.61%	-0.02%
Current Coupon Ginnie Mae TBA	105.7	0.1
Current Coupon Fannie Mae TBA	104.9	0.1
RPX Composite Real Estate Index	200.7	-0.2
BankRate 30 Year Fixed Rate Mortgage	4.33

Markets are lower as participants contemplate a government shutdown. The Street has viewed this issue as a kabuki dance, but we are now getting to the short strokes. Bonds and MBS are rallying.

Aside from the government shutdown issues, this week also contains the all-important jobs report. The Street is at an increase of 182k and an unemployment rate of 7.3%. St Louis Fed Head James Bullard raised the possibility of tapering at the October meeting. I think if we have any sort of shutdown, tapering will be off the table until the Dec meeting at the earliest. Of course if there is a shutdown, we won’t be getting any economic data this week.

One potential issue coming down the pike is the fee limit on mortgages starting Jan 1. The cap makes sub $100k loans uneconomic for originators. I wonder how the CFPB will handle the sudden unavailability of loans below 100k. Not sure if they thought this through or they just plan on hitting everyone with fair lending / CRA lawsuits.

Housing equity rose 30% or more than $2 trillion over the past year, according to NAR.

Another interesting data point on the manufacturing renaissance in the US – low value added industries like textiles are onshoring. The problem is finding people.

Filed under: Morning Report |

22 Responses

Troll McWingnut or George, whichever, on September 30, 2013 at 8:07 am said:

Can we engage in cannibalism at midnight?

#fingerscrossed

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jnc4p, on September 30, 2013 at 8:33 am said:

Even ThinkProgress admits it now:

“In just over 2 years, Republicans have been successful in extracting around $1.7 trillion in budget cuts or 72% of the total deficit reduction over that period. ”

http://thinkprogress.org/economy/2013/09/30/2699221/21-things-republicans-demanded-shutdown-default/

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jnc4p, on September 30, 2013 at 8:51 am said:

Courtesy NoVA:

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Troll McWingnut or George, whichever, on September 30, 2013 at 11:22 am said:

Just like in The Road Warrior.

@nbcwashington: The National Zoo’s Panda Cam would go dark in the event of a govt. shutdown, zoo officials confirm:

Shit just got real!

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Troll McWingnut or George, whichever, on September 30, 2013 at 11:34 am said:

Interesting.

Longer Maternity Leave Not So Great for Women After All

Solutions?

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Troll McWingnut or George, whichever, on September 30, 2013 at 12:00 pm said:

Uh…

http://www.realclearpolitics.com/video/2013/09/30/sen_boxer_government_shutdown_threat_war_on_women.html

Thanks Sen. Ma’am.

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- ScottC, on September 30, 2013 at 12:42 pm said:
  
  McWing:
  
  Thanks Sen. Ma’am.
  
  I don’t knwo which is more depressing, the notion that these women actually believe this, or that they don’t.
  
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jnc4p, on September 30, 2013 at 12:27 pm said:

Good piece from Steve Pearlstein:

“How Obama can win the debt standoff in 3 steps
By Steven Pearlstein, Published: September 28 at 3:34 pm”

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/09/28/how-obama-can-win-the-debt-standoff-in-3-steps/?wprss=rss_ezra-klein

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jnc4p, on September 30, 2013 at 1:12 pm said:

Interesting take:

“It seemed like a pretty simple case: Why should you keep your job if you’ve consistently failed to stop your company from repeatedly violating the law? Even if Dimon wasn’t personally complicit in any of JPMorgan’s myriad violations (and even that is a hard case to make), it’s obvious that he’s unable to competently oversee and manage his sprawling international megabank.

But for CNBC, and for Wall Street, billion dollar fines for violations of the law are just part of the price of doing business, along with litigation costs and “compliance.” (And, indeed, Dimon has been praised for belatedly hiring hundreds of new “compliance” officers, to, you know, make sure the bank stops repeatedly violating the law, over and over.) So my point, that Dimon should be fired because he has failed to prevent his firm from violating the law, was a non sequitur.

Their question was, who would do a better job than Jamie Dimon of running JPMorgan in a way that delivers maximum value to shareholders? Who else could keep JPMorgan’s stock price so high amid all these tawdry scandals and this “witch hunt” from the regulators? I don’t have any good answer to that.”

http://www.salon.com/2013/09/30/how_i_botched_it_on_cnbc/

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- ScottC, on September 30, 2013 at 2:08 pm said:
  
  jnc (from the link):
  
  it’s obvious that [Dimon]’s unable to competently oversee and manage his sprawling international megabank.
  
  That isn’t obvious to me at all. What Pareene seems not to understand is that there is a difference between competently overseeing and managing a business and competently overseeing and managing the federal bureaucratic maze that regulators have created. He also seems to erroneously think that the number of charges brought by regulators, and the size of the the settlement sought by the regulators, is a meaningful measure of one’s competency in this regard. He’s wrong.
  
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Troll McWingnut or George, whichever, on September 30, 2013 at 1:24 pm said:

If it’s impossible for a individual not to violate several laws a day why is it possible for a company to do so?

Meh, fuck ’em, it’s all about the government teat no?

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Troll McWingnut or George, whichever, on September 30, 2013 at 1:25 pm said:

Again, if individual depositors make up a very small portion of accounts, why are banks and invesent houses regulated?

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Troll McWingnut or George, whichever, on September 30, 2013 at 1:27 pm said:

Warning !!! Counter-Narrative !!!

@allahpundit: Serious question: Why doesn’t Pelosi offer a discharge petition on the Senate CR? There are probably 30 or so Repubs who’d vote for it, no?

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Troll McWingnut or George, whichever, on September 30, 2013 at 2:54 pm said:

Jesus, these chest bombs itch in the heat.

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jnc4p, on September 30, 2013 at 3:52 pm said:

No, he was dead on right about this:

“So my point, that Dimon should be fired because he has failed to prevent his firm from violating the law, was a non sequitur.”

I happen to think that Dimon is very competent and like most of Wall Street views the fines as the cost of doing business.

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- ScottC, on September 30, 2013 at 5:10 pm said:
  
  jnc:
  
  No, he was dead on right about this:
  
  Well, he was right about it being a non sequitur. But he was wrong about what I was talking about, ie in thinking that the amount of charges and size of the fine is a reflection of his competency.
  
  I happen to think that Dimon is very competent and like most of Wall Street views the fines as the cost of doing business.
  
  I agree, and he is right.
  
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jnc4p, on September 30, 2013 at 5:47 pm said:

And the conclusion I draw from that is that the entire business model is criminal.

It’s not just a few bad apples. It’s systematic.

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- ScottC, on September 30, 2013 at 8:09 pm said:
  
  jnc:
  
  And the conclusion I draw from that is that the entire business model is criminal.
  
  The conclusion I draw is that the regulations are designed to create revenue for the government. There is so much regulation that it is virtually impossible not to fall afoul of them in some way at some point. And the government can pick and choose who it wants to go after and why. Dimon pissed off the wrong people by being a high profile challenger of the need for yet more regulations, and is now paying the price.
  
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Troll McWingnut or George, whichever, on September 30, 2013 at 5:55 pm said:

So, legalize drugs but criminalize investment?

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jnc4p, on September 30, 2013 at 6:13 pm said:

Criminalize fraud.

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Troll McWingnut or George, whichever, on September 30, 2013 at 7:20 pm said:

So, enforce the law and seek convictions rather than allow plea bargains.

What if the goal is revenue rather than regulation? What I mean is the laws don’t exist to prevent fraud but instead exist to raise revenue?

Was te anti-trust suit against Microsoft years ago about lawlessness or the fact that the worlds richest mad was not financing enough politicians?

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- markinaustin, on September 30, 2013 at 7:31 pm said:
  
  I think it was a very serious anti-trust suit, George. Microsoft had colluded with the mfrs to close the market to competitors. It happened amazingly fast.
  
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