Morning Report: 5.4% mortgage by the end of 2014? 11/12/13

Vital Statistics:

Last Change Percent
S&P Futures 1763.2 -4.4 -0.25%
Eurostoxx Index 3039.5 -13.3 -0.44%
Oil (WTI) 95.06 -0.1 -0.08%
LIBOR 0.239 0.000 0.00%
US Dollar Index (DXY) 81.12 0.028 0.03%
10 Year Govt Bond Yield 2.77% 0.02%
Current Coupon Ginnie Mae TBA 105.2 -0.8
Current Coupon Fannie Mae TBA 103.9 -0.1
RPX Composite Real Estate Index 200.7 -0.2
BankRate 30 Year Fixed Rate Mortgage 4.39
Markets are lower as bond traders come back from a long weekend. Bonds and MBS continue their post jobs report sell-off.
The Chicago Fed National Activity Index ticked up a bit in September, while the 4 month moving average remained negative.
The NFIB Small Business Optimism Report fell from 93.9 to 91.6. He points out that small business is still struggling. That is an important point to remember – the S&P 500 is not a representative sample of U.S. business. Most of the big S&P names have exposure to fast-growing overseas markets and benefit from all the liquidity being pumped into the system by the world’s central banks. Small business is more affected by weak demand domestically. The government shutdown weighed on sentiment as well.
With not a lot of economic data, Fed-speak becomes more important. Dallas Fed President Richard Fisher told CNBC that the markets should bear in mind that QE cannot last forever. The balance sheet is $4 trillion and there are limits to what the Federal Reserve can do. Minneapolis Fed President Kocherlakota will talk about monetary strategy at 1:00 pm EST and Atlanta Fed President Dennis Lockhart will discuss the economy at 1:50 EST.
Homebuilder D.R. Horton reported earnings in line with estimates. Average selling prices climbed 15% as a combination of tight supply and low inventory allows the builders to hike prices at will. The stock is up in the pre-market.
NAR’s Chief Economist Lawrence Yun is making predictions about 2014. Exiting Home Sales will be flat at about 5.1 million units, prices will rise by 6% and the the 30 year fixed rate mortgage will end the year at 5.4%. New Home construction will increase to meet demand (at some point the builders will stop seeing price increases and will have to pump up volume to achieve growth). Lending standards will continue to ease and an improving job market will increase activity. If cash sales drop as a percentage of total sales, the purchase business should improve, but probably not enough to offset the end of the refi boom.

28 Responses

  1. First!

    And, seriously, O.M.F.G.

    Who here is now comfortable with the Obamacare site?


    • AFAIK it remains utterly failed.


      • FYI all, I will probably be pretty sporadic for the rest of the week, thru Sunday. Off to North Carolina for golf. So, jnc, try to keep the bank-bashing to a minimum until I can provide a proper defense. Or, alternatively, get your licks in while you can, I guess.


  2. How did the administration react to concerns from the IT guys to deliver the site on time?

    Failure is not an option.

    I guess that approach might work on The West Wing, but not in real life…


  3. I’ll hold the fort in the temper tantrum department.

    I worry though, who will fill the parsing void?


  4. Oh, for god’s sake, “Carl”. Would you stop lighting your hair on fire?

    Based on the “partial transcript” from Issa’s committee, Chao didn’t know about a Sept. 3 memo on website problems identified by another official at the Centers for Medicare and Medicaid Services. Confronted with the document, the partial transcript shows Chao saying, “I just want to say that I haven’t seen this before.”

    The CBS report sounds troubling, right? Probably, at least until one picks up the phone to ask Democrats on the committee whether the CBS report is accurate.

    I talked to a Democratic staffer this morning about the partial transcript and the aide said Issa’s staff “basically sandbagged this witness with a document he had never seen before and then failed to inform him that it has nothing to do with parts of the website that launched on October 1. In fact, it relates to a function of the website that is not currently active and won’t be until the spring of 2014. Rather than seeking out the truth, this press release tries to scare the public by capitalizing on confusion caused by the Chairman’s own staff.”

    Oh. So, when Republicans and CBS suggest the project manager in charge of building the federal health care website was apparently kept in the dark about serious failures in the website’s security, they’re leaving out pretty much every relevant detail that points in a more accurate direction.

    Emphasis mine and h/t to Steve Benen. Get a fucking clue, Carl.


  5. The Democratic staffer added that even when this part of the website is active, it “will not submit or share personally identifiable information,” but rather, will only include “insurance information plan data.”

    Let’s say this again: beware of partial transcripts from Issa’s office. They keep pulling this trick; there’s no reason anyone should keep falling for it.


  6. Bill Clinton is being helpful to the administration again:

    “Bill Clinton: Health Care Law Should Be Changed To Allow People To Keep Their Plans
    The Huffington Post | By Luke Johnson Posted: 11/12/2013 10:48 am EST

    Former President Bill Clinton said Tuesday that the health care law should be changed if necessary to allow people to keep their health care plans that have been cancelled as a result of the implementation of Obamacare.

    “I personally believe, even if it takes changing the law, the president should honor the commitment the federal government made to those people and let them keep what they got,” Clinton told OZY TV. ”

    Give the Big Dog his due, he knows which way the political winds are blowing.


  7. “So, jnc, try to keep the bank-bashing to a minimum until I can provide a proper defense.”

    Duly noted. Unless another scandal breaks that’s larger in scope than LIBOR, I’ll let you enjoy your golfing.

    Don’t forget to get some BBQ while you are there.


  8. “markinaustin, on November 12, 2013 at 9:47 am said:

    AFAIK it remains utterly failed.”

    Reporting in the NYT indicates they are working on Plan B now to bypass the portal and allow insurers to enroll directly.


  9. This should be good:

    “For de Blasio, Contract Talks Offer Problem
    Published: November 11, 2013

    Mayor Michael R. Bloomberg has promised all sorts of assistance to ease Bill de Blasio’s transition, but the mayor has nonetheless bequeathed one particularly thorny, potentially explosive issue to his successor: New York City’s 300,000 municipal workers are angry that their contracts expired years ago, and they are demanding more than $7 billion in retroactive pay to make up for their years without a regular raise.

    It could prove devilishly difficult for Mr. de Blasio — long a favorite of the city’s unions — to deliver even a small part of what labor leaders are demanding because the city faces an anticipated $2 billion deficit next year. ”


  10. would the US AA merger result in a Star Alliance or One World carrier?


    • JNC – I read the Pearlstein piece back then – is this an addition?


      For you from Ezra: The irony of Bill Clinton coming out to advise that Obamacare be changed — somehow — to let everyone keep their current plans is that he’s the reason Obama made the disastrous promise in the first place.

      Veterans of the effort to pass Clinton’s health-care plan believed that their core mistake was producing a plan that upended the insurance arrangements of almost every American.

      Where the 1990-1991 recession left most Americans terrified that they could lose the health care they had, the Clinton bill promised they would lose that care. The sort of comforting lines reformers offer today — “if you like your current care, nothing will change,” or “you’ll get the same health care members of Congress have” — couldn’t be uttered because they weren’t true. The line the Clinton campaign did use, “health security that can never be taken away,” foundered because, before the plan offered that security, the health security that Americans currently trusted would be taken away.

      In this, the plan violated the fundamental paradox of health-care polling, which is that even though most Americans believe the health-care system is a mess, they’re reasonably happy with the insurance they have.

      In the aftermath of Clinton’s failure, health-care reformers swung far to the other side. Rather than building a plan in which almost everyone lost their insurance, they began trying to build plans in which almost no one lost their insurance — and selling them under the promise that literally no one would.

      That promise, as the Obama administration is now learning, went too far. Saying “everyone who likes their health insurance can keep it” is very different from saying “95 percent of people who like their health insurance can keep it.”

      But it’s a bit rich for Clinton to argue for a plan that leaves everyone’s insurance unchanged. When he managed this policy process, he believed the optimum policy upended almost everything. He knows that it’s functionally impossible to reform the health-care market if you upend nothing. This is the kind of argument that, in another context, Clinton would be delighting in explaining, carefully and persuasively, why it’s so very wrong.



    • I hate flying. It is one of the most unpleasant experiences that I ever have to put myself through. Just went through security. After taking off my shoes, my belt, putting myphone in the basket, etc, instead of going through the simple metal detector which is right in front of me, I get directed to the full body scan machine. Fine. I go through. “Do you have something in your pocket?”. Yes I have my wallet, so I take it out to show them. “Come with me over here, please.” I go over there. “Hold out your hands in front of you.” What is this? “I have to check your hands for explosives.” Why? “Because you had something in your pocket and you put your hand in to take it out.” What? You asked me if I had something in my pocket so I showed it to you. It’s a wallet. He wipes my hand with something. Then some supervisor comes over. Tells me to do the same thing. I tell him the other guy already did it. “I know. I’m doing it again.”. Why. “I have to check for explosives. You shouldn’t have anything in your pockets. Otherwise I have to do a pat down. And I’m not talking about a simple pat down.”

      Fine. He does it again. Finally he finishes. “OK, you can go.”. Do me a favor, I tell him, can you tell the guys in front of the machine to tell people to make sure they don’t have anything in their pockets so they don’t have to go through this? “You should know not to leave anything in your pocket.” Why? I thought I was going through the metal detector, and a wallet doesn’t set off a metal detector. (I restrain myself from saying that a wallet isn’t made of explosives, either.) If you are going to direct people to a machine that requires empty pockets, you should say so. I also restrain myself from closing with…asshole.

      I repeat…I hate flying. Almost as much as I hate dealing with the government. Combine the two together and e situation is almost unbearable.


  11. I wonder at what price point chartering a plane becomes a realistic alternative.


    • I would definitely pay more to avoid the unpleasantness, but unfortunately I can’t afford what it takes.

      I did fly on a private jet once. Fantastic experience. Literally drove up to the plane, got out and walked up the steps as someone parked my car. No security hassles, no boarding hassles, nothing. It was awesome. And likely never to be repeated again, unfortunately.


  12. “You should know not to leave anything in your pocket.” Why? I thought I was going through the metal detector, and a wallet doesn’t set off a metal detector.

    Because they told you (multiple times) before you got there to not have anything in your pockets. They told you, you just weren’t listening.


  13. Give people power and they will use it.

    There is a solution though.


  14. “If what she’s saying is you can keep your health plan forever if you like it, that basically repeals the market reforms,” Jost said. “You’re continuing to allow people to buy a defective product. You’re segmenting the risk pool again with respect for coverage. Does that mean you can say you’ll cover physical health without mental health? Does that mean you don’t have to cover maternity coverage? … The whole idea here is we’re trying to create a community — a system based on mutual aid rather than everybody paying for exactly the care that they are likely to need in the next few moments.”

    Not wanting to be part of the “community” doesn’t make the insurance plan “defective”.


    • But those insurance plans are mostly “junk” insurance plans that cover pretty much nothing which does make them defective as no one is immune to major illnesses.. One of the reasons car insurance is regulated, to ensure when one is in an accident their insurance at least covers the minimum. Most of these cancelled insurance plans don’t even come near to covering the minimum for even the most “normal” health care.


      • Geanie – it was an exaggeration and an over-promise as simply stated and restated and restated.

        Most self-employeds can keep their coverage. But BHO did not hedge – he said “all” and “everyone”. Serious political gaffe. Opponents will call it a lie. Whatever.

        BTW, my wife, and my daughter and granddaughters, all will come out better on their unsubsidized high deductible ACA plans than under their previous high deductible plans. However, we had to explore this outside of I was not surprised that Rosanne [age 58+] did better under ACA but I was surprised that daughter and granddaughters will be doing better.

        The popularity of the plan, if it gets off the ground, will be based on the number of folks who see themselves as “winners”. Its effectiveness will depend on who signs up. Its fiscal success depends on so many factors that it is likely that critics will be able to yell “failure” for years and in fact, as NoVA predicts, it might well fail.


  15. No, they aren’t.

    Edit: More details here:

    “But there are real people who must pay more and, in some cases, put up with less. Some of them are people walking around with junk insurance, the kind are practically worthless because they pay out so little. Some of them are young people, particularly young men, whom insurers have coveted and wooed with absurdly low premiums—and make too much money to qualify for substantial subsidies. And some of them are reasonably affluent, healthy people with generous, open-ended policies that are hard to find even through employers. Insurers kept selling them because they could restrict enrollment to healthy people. Absent that ability, insurers are canceling them or raising premiums so high only the truly rich can pay for them.”

    The most complaints are coming from the last category.

    See also:


  16. Why would a progressive state like CA allow junk insurance to be sold?

    Why do you think millions off Americans buy junk insurance? I don’t think they do.


  17. The Abomination needs responsible people in the risk pool to counter the higher risk customers who will be motivated to buy Abomination insurance ( because they couldn’t get covered before). People who buy insurance on the individual market tend to be very responsible ( they want insurance rather than need insurance) and are generally healthy (otherwise the insurance would be unaffordable.). To say they have junk insurance is to denigrate some of the most saviest and responsible people in the country. Would those people buy junk? Obviously not.

    But the Abomination and it’s enablers need an excuse to kill the existing individual market, a reason to destroy a system that fulfills needs. Hence the bullshit “junk” meme.


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