Morning Report – Mel the “enigma?” 1/6/14

Posted on January 6, 2014 by Brent Nyitray

Vital Statistics:

S&P Futures 1831.2 5.7 0.31%
Eurostoxx Index 3080.1 5.7 0.19%
Oil (WTI) 94.1 0.1 0.15%
LIBOR 0.239 -0.001 -0.21%
US Dollar Index (DXY) 80.87 0.083 0.10%
10 Year Govt Bond Yield 2.98% -0.02%
Current Coupon Ginnie Mae TBA 104.1 0.1
Current Coupon Fannie Mae TBA 103.1 0.1
RPX Composite Real Estate Index 200.7 -0.2
BankRate 30 Year Fixed Rate Mortgage 4.55
Markets are higher this morning on no real news. Bonds and MBS are up small.
This week will have a couple big items – the FOMC minutes and the jobs report. The big question with the minutes will concern whether tapering is in fact on autopilot. Ben Bernanke indicated in the press conference that it more or less is on autopilot, but we will want to read the minutes to get some more clarity. Given that the mystery over whether the Fed will begin tapering is over, the jobs report will probably not have that much of an impact, unless it is extraordinarily strong. Finally, Janet Yellen will be confirmed this week, which should be a nonevent.
This week also kicks off earnings season, with Alcoa reporting after the bell on Thursday. Given the huge run-up we have seen in the stock market, companies better deliver. FWIW, perma-bull Jim Paulsen is cautious going into 2014.
Bloomberg has a piece on the enigma that is Mel Watt. The only thing we know for sure is that he has suspended the g-fee increases and the LLPAs for the moment. Since he has yet to be officially sworn in, he is playing things close to the vest. I don’t know why people would call him an “enigma.” Mel couldn’t even bring himself to come out against the eminent domain policies that some localities are pursuing. That says it all, IMO. At the end of the day, Mel Watt is a liberal CRA guy. All you need to know about how he will conduct policy is to see him through that lens. He wants credit to be easier for low-income borrowers. He likes government involvement in the mortgage market. Whether that means Fannie and Freddie continue in their current form or not is an open question. But at the end of the day, he is going to err on the side of more government involvement, not less. Whether that makes the Fannie Mae prefs a buy is another question.

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Saturday Open Thread–Polar Vortex Edition

Posted on January 4, 2014 by Michigoose

It’s set to be a cold, cold weekend as the NFL playoffs begin.  One news story had it thusly:

This “polar vortex,” as one meteorologist calls it, is caused by a counterclockwise-rotating pool of cold, dense air. The frigid air, piled up at the North Pole, will be pushed down to the U.S., funneling it as far south as the Gulf Coast.

Ryan Maue, of Tallahassee, Fla., a meteorologist for Weather Bell, said temperature records will likely be broken during the short yet forceful deep freeze that will begin in many places on Sunday and extend into early next week. That’s thanks to a perfect combination of the jet stream, cold surface temperatures and the polar vortex.

“All the ingredients are there for a near-record or historic cold outbreak,” he said “If you’re under 40 (years old), you’ve not seen this stuff before.”

And three of the wildcard games are being played outdoors, which will separate the men from the boys (as it were):

Philadelphia: The Eagles host the Saints with an 8:10 p.m. Eastern kickoff on Saturday, and it will be cold: The forecast calls for an overnight low of 21 degrees, with a 20 percent chance of precipitation, and wind at 5-10 mph. Those conditions should favor the Eagles, who went 4-4 at home this season, winning their final four at Lincoln Financial Field, and already proved that they can play well in bad weather when they beat the Lions at home last month, in one of the snowiest games in NFL history. The Saints have been a bad road team all season (they went 8-0 at home but just 3-5 on the road), and Drew Brees and Co. will have a tough task on their hands dealing with the elements.

Cincinnati: The Bengals host the Chargers with a 1:05 p.m. Eastern kickoff on Sunday, and although it won’t rival the Freezer Bowl when these two teams met in the playoffs 32 years ago, it will be cold: The forecast for Sunday in Cincinnati calls for a daytime high of 34 degrees and an 80 percent chance of snow. (The game will end before it turns bitterly cold and dips below zero on Sunday night in Cincinnati.) With a Southern California team coming to town, the bad weather is good news for the Bengals, who were 8-0 at home in the regular season. The Chargers, who were 4-4 on the road, may be in for an unpleasant Sunday.

Green Bay: There’s cold, and then there’s really, really cold: The Packers host the 49ers with a 3:40 p.m. Central kickoff on Sunday, and it’s going to be brutally cold. The National Weather Service has issued an advisory that warns of “An Arctic outbreak” with “near record temperatures and dangerously cold wind chills.” Temperatures at Lambeau Field could rival those of the famous 1967 Ice Bowl, when game time temperatures of 15 degrees below zero made for the coldest game in NFL history. The forecast calls for a high of 5 degrees below zero and an overnight low of 20 degrees below. The Packers, who went 4-3-1 at home this season, are more accustomed to cold temperatures than the 49ers, who went 6-2 on the road this season. But neither team is accustomed to cold like this.

I wish you all a happy and warm weekend. . . Go, Pack!

Filed under: Football, Open Thread, Weather | Tagged: | 13 Comments »

Morning Report – Disappointing vehicle sales 1/3/13

Posted on January 3, 2014 by Brent Nyitray

Vital Statistics:

S&P Futures 1830.5 3.9 0.21%
Eurostoxx Index 3074.7 14.8 0.48%
Oil (WTI) 95.11 -0.3 -0.35%
LIBOR 0.24 -0.003 -1.24%
US Dollar Index (DXY) 80.72 0.089 0.11%
10 Year Govt Bond Yield 3.00% 0.01%
Current Coupon Ginnie Mae TBA 103.8 -0.2
Current Coupon Fannie Mae TBA 102.9 -0.1
RPX Composite Real Estate Index 200.7 -0.2
BankRate 30 Year Fixed Rate Mortgage 4.55
Markets are higher this morning on no real news. Bonds and MBS are flattish. A snowstorm in the Northeast has many traders at home, so I don’t expect a lot of movement today. The Bernank speaks at 2:30 EST. Can’t imagine he is going to steal any of Janet’s thunder, but you never know.
It is looking like December domestic vehicle sales are not coming in as strong as hoped. Many analysts attributed the disappointment to bad weather.
The ISM New York index of business conditions fell, but is still at the high end of its range. It looks like most retailers deferred releasing comp store sales to next Thursday, so that will be an important data point for the state of the consumer.

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Morning Report – Hello Hercules 1/2/14

Posted on January 2, 2014 by Brent Nyitray

Vital Statistics:

Last Change Percent
S&P Futures 1836.4 -4.7 -0.26%
Eurostoxx Index 3086.9 -22.1 -0.71%
Oil (WTI) 97.66 -0.8 -0.77%
LIBOR 0.243 -0.003 -1.32%
US Dollar Index (DXY) 80.69 0.581 0.73%
10 Year Govt Bond Yield 3.02% -0.01%
Current Coupon Ginnie Mae TBA 104 0.1
Current Coupon Fannie Mae TBA 103.1 0.1
RPX Composite Real Estate Index 200.7 -0.2
BankRate 30 Year Fixed Rate Mortgage 4.55
Markets are down to kick off the new year. Bonds and MBS are down. Initial Jobless Claims came in at 339k, a little lower than expected. We are scheduled to get hit with a big snowstorm this afternoon in the Northeast, so I would imagine bonds are going to become a little more illiquid this afternoon.
Some more bullish economic data – the Dec ISM manufacturing index came in a little better than expected at 57, and construction spending increased 1% month-over-month, topping expectations.
The buy-and-rent business is getting tougher. Part of the reason why the origination business has been so tough is that the most aggressive buyers these days are cash institutional buyers. Depending on who you ask, cash buyers are anywhere from 40% to 50% of buyers these days. Historically they have been closer to 20%. So even if existing home sales stay the same, the number of homes with mortgages on them could increase 45% or so if we went back to normal cash / mortgage percentages.

Filed under: Morning Report | 14 Comments »

Happy New Year 2014 Open Thread

Posted on January 1, 2014 by Michigoose

I hope all of you have the very best year ever!

(I was trying to get all artsy-fartsy and add some fireworks, but for some reason my links keep breaking. . . oh, well, the thought was there!)

Filed under: 2013 and beyond, Open Thread | 8 Comments »

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