Morning Report – Boring Boxing Day 12/26/13

Vital Statistics:

Last Change Percent
S&P Futures 1832.1 3.0 0.16%
Eurostoxx Index 3072.9 2.0 0.06%
Oil (WTI) 99.19 0.0 -0.03%
LIBOR 0.247 0.001 0.41%
US Dollar Index (DXY) 80.48 -0.076 -0.09%
10 Year Govt Bond Yield 2.98% 0.01%
Current Coupon Ginnie Mae TBA 103.7 -0.4
Current Coupon Fannie Mae TBA 102.8 0.0
RPX Composite Real Estate Index 200.7 -0.2
BankRate 30 Year Fixed Rate Mortgage 4.51
Stocks are higher this morning on no real news. Today is Boxing Day, which means a holiday for a lot of countries. Bonds are down again, with the 10 year bond yield flirting with a 3 handle.
Initial Jobless Claims fell to 338k last week. The holidays invariably cause distortions in the data so it is tough to read too much into it.
New Home Sales came in at 464k, a little better than expected. Sales in the Northeast and the West rose the most, while the South and Midwest lagged. At the end of October, there were an estimated 167,000 homes for sale, representing a 4.3 month supply. The median price jumped to 270,900 from 245,200 a year ago.
Tony Crescenzi of PIMCO believes the worst of the selling is over. Notes that speculators have gone from huge net long positions in Eurodollar and Treasury futures to huge net short positions. The headline is misleading – he isn’t bullish on bonds in that he thinks yields are going higher, but he thinks the big dislocation happened last summer. In other words, mortgage rates aren’t expected to make another big sudden move higher.
That said, pretty much everyone is in agreement that the economy is improving and 2014 could be the year that we finally break out of the post-crash malaise. You might want to note the date, because I am going to agree with a Brookings Institute economist for probably the first time in my life. Of course conventional wisdom is not always right – here were the big surprises of 2013.
The Republican establishment is working to take back control of the party from the tea party activists that have controlled it since obama took over. What does that mean? No more dingbat candidates for the Senate. Or as the Chamber of Commerce strategist Scott Reed says: “No more fools on our ticket.” Actually I am surprised it took this long. Boehner doesn’t like them and he has all sorts of tools to bring them to heel. Maybe he should take away someone’s parking spot and put it in Anacostia as a way to send a message.
Speaking of Congress, if it doesn’t act, mortgage relief will get a lot more costly. Beginning next year, anyone who has principal forgiveness on a short sale will get a tax bill. If Mel Watt decides to go the principal forgiveness route for conforming mortgages held by the government, he may find people less willing to play along. Also, extended unemployment benefits are scheduled to end starting next year, but there is a possibility that Congress will do something next year. If the benefits do lapse, we should see a drop in the unemployment rate as previously unemployed people take part-time jobs.

8 Responses

  1. Ahem.

    First! (frist!)

    I moving this article up for Brent. About how to make money in the music business with bit-torrent.

    Plus I saw ’em in ’82. Fastway (staring Motorhead’s Fast Eddie Clark) opened for them. awesome show.


  2. Thanks, Maiden / Fastway would have been a great show…


  3. Are these enrollments actually purchases? Why, after all the fuck ups about The Abomination and how each and every state with an exchange, along with the Federal exchange, has flat out lied time and again do so called journalists accept data from these sources without any questions of there veracity whatsoever?

    Meh, we’re all fucked in this thing. Thanks 52%! Really appreciate the rogering!


  4. Shorter WaPo: You fucked up, you trusted us! Now you’re gonna get it good and hard!


  5. Well, they ought to know.

    Palestinian leader Yasser Arafat died of natural causes, not radiation poisoning, Russian forensic scientists have said.


    • Who should win? Why? I’ll take a shot at it. Small biz always needs an advocate. It is in danger of getting lost in the political shuffle among the giants of finance, oil & gas, and multinational corporations. In TX we generally have biz friendly Ds, who do not have to pay more than lip service to big labor. However, nationally, the Ds are on the whole not biz friendly. Thus on the national level small biz needs a home. To the extent TEA is small biz friendly it will not be a huge concern, but if it runs down the rabbit trail of social issues or argues against the lifelines of small biz, then it threatens to push small biz into the centrist wing of the D Party in right-to-work states. I don’t know how that works out nationally, but locally it can have effects from actions like killing the farm bill or collapsing credit (say, by threatening to shut down govt.), or defunding public ed. Healthier for Rs, I think, for NFIB types, doctors, lawyers, CPAs, and other professionals to have a strong voice in the R Party.

      My working theory is that in union shop states Ds must place big labor first and can never be the friend of small biz or the professions. In open shop states, the Ds have a freer hand to be competitive for those votes/donors.

      Finally, there are only two political parties but multiple interests. So each party, to be competitive, must appeal to many interests. The TEA appeal is essentially for smaller national govt., which is too narrow a range of interest to define a whole party.

      On a more skeptical note, I don’t think much of either party. Each has major staying power, because many people identify with one or the other early on and have difficulty shaking the group ID later. George, you may remember former LG Bill Ratliff (R). He refused to run for reelection as LG b/c he had to kiss too many rings. Here is a recent story:

      He also once said he was an R only b/c he agreed with the Rs on 51% or more of the issues. He was a fave of mine. I don’t think TEAs would have tolerated him, but he certainly wanted no home in the D Party.


  6. “Are these enrollments actually purchases”

    I saw that the other day. I’d like to know the current insurance status of the enrollees. Previously uninsured? or just shifted from so-called junk plan.

    FWIW, a broker in the family has seen his small group business get crushed. the majority of his small employer/group clients have shifted employees to to individual plans now. but not through the exchange.


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