Markets are flat coming off a 3 day weekend. Bonds and MBS are up small. The Empire Manufacturing Survey came in lower than expected. We also have a big merger in the pharma space with Forest Labs buying UK-based Actavis.
We should get the FOMC minutes this week, but judging by the way the market behaved after the FOMC decision, it should be a yawner. Plus, we just had Janet Yellen in front of Congress last week so I can’t really imagine much coming out of the minutes that wasn’t already addressed there.
This week will have some interesting housing-related data, but nothing much that should move markets or create rate volatility. We have inflation numbers this week, but the Fed isn’t really concerned about inflation these days. On Thursday, we get housing starts and building permits, and on Friday existing home sales and leading economic indicators.
The Philly Fed has put out a projection of economic forecasts based on a survey of professional economists. 2014 GDP forecasts have been taken up from 2.6% to 2.8% and unemployment has been taken down from 7% to 6.5%. They are forecasting a 5.5% to 6% increase in home prices for 2014.
Markets are higher in spite of some disappointing manufacturing data this morning. Bonds and MBS are flat. We are headed into a 3 day weekend, so volumes should be somewhat light.
Industrial Production and Manufacturing Production came in well below estimates, and capacity utilization dropped by 80 bps, a huge amount. Weather seems to have been the culprit so that is why the market is shrugging off the numbers.
Consumer confidence came in unch’d for February.
The spring selling season is off to a slow start, according to Redfin. FWIW, the homebuilders are reporting exactly the opposite.
Markets are lower this morning after a lousy retail sales number. Bonds and MBS are up small. Initial Jobless Claims came in at 339k.
Another major snowstorm has hit the New York area today, so expect volumes to be on the light side and rates to be a little more volatile than normal.
The low retail sales number was based on bad weather, so it might be tough to read too much into it.
Big merger in the cable TV space – Comcast is buying Time Warner cor $45 billion. Gives the arbs something to chew on for a while. And brings the NFL network to the New York area.
Delinquencies continue to drop. According to TransUnion, only 3.85% of mortgages were 60 days down, the lowest in 6 years.
In a true “man bites dog” situation, Ralph Nader is contesting the effective nationalization of Fannie and Freddie. Just before the companies started generating cash, the WH changed the rules and decreed that all funds must flow to Treasury and that they would not count as “debt repayment.” In other words, they nationalized the company without taking the existing shareholders out. The fate now resides in the courts.
Markets are stronger this morning on no real news. Bonds and MBS are down. Stocks loved the Yellen testimony yesterday, bonds not so much..
Janet Yellen’s testimony was pretty much as expected. She is a primary architect of the Fed’s current course of action, so it makes sense she will pretty much continue with doing what they have been doing. Her Congressional testimony had few interesting tidbits, although she is pretty unconcerned about the debt. According to her, it should become an issue in about 30 years. She also sees no bubbles right now (of course when has the Fed ever seen bubbles until after it is too late?). She also made a comment regarding the decline in the labor force participation rate – saying that some of it is structural. So, once unemployment hits their target, the Fed may not wait for the labor force participation rate to return to pre-recession levels because in their minds, it won’t.
Maxine Waters praised Janet for her “viligance.”
Mortgage applications fell 2% last week, which is disappointing given that rates fell a couple basis points. Both purchases and refis fell, but purchases fell the most.
The House passed a clean debt limit bill, so that takes the risk of another debt ceiling hike off the table. Separately, the House is working on a bill to clip CFPB’s wings a little, and subject it to some sort of Congressional oversight.
Markets are flat on no real news. Bonds and MBS are down.
Janet Yellen will have her first sit-down with Congress today in her new role as Federal Reserve Chairman. The prepared remarks are here. Regarding monetary policy, she will more or less continue on the path that the Bernanke Fed started:
“Turning to monetary policy, let me emphasize that I expect a great deal of continuity in the FOMC’s approach to monetary policy. I served on the Committee as we formulated our current policy strategy and I strongly support that strategy, which is designed to fulfill the Federal Reserve’s statutory mandate of maximum employment and price stability.”
Other than that, the Fed expects the economy to improve moderately. Testimony begins at 10:00 am EST.
Separately, hawkish voting member Charles Plosser is speaking today as well.
The NFIB Small Business Optimism Report is out, and it shows sentiment increased slightly in January, although they note that inventories are too high – remember that the 4.1% Q4 GDP number was driven by inventory build. It looks like the demand for that inventory has yet to materialize. That said, optimism about future sales and hiring jumped, so perhaps businesses are seeing something (foot traffic, inquiries, etc) that has yet to percolate into the data. That said, 94.1 is still a depressed number (100 is more or less average), and government is driving a big part of that, with taxes as the #1 problem and government regulation as #2. Poor sales comes in at a distant third. Bill Dunkelberg is a limited government guy, so take his interpretation of the data with that in mind, but still it does speak to a bifurcation in the market, where the big S&P 500 names are doing fantastic and small businesses are struggling.
Markets are flat without a lot of news out there. Bonds and MBS are flat. The market seems to have been unsurprised by the jobs report on Friday.
The Wall Street Journal did a nice piece on the takeaways from Friday’s jobs report. Punch line: January’s report was almost as disappointing as December, but you can’t blame the weather this time around.
Sometime today, the MBA will release delinquency and foreclosure data.
The CFPB is making data from the Home Mortgage Disclosure Act available on line. It is a way to compare fees and points charged to borrowers. It will also be used by regulators to determine which branches they want to hit. For lenders, it is a good way to gain insight into how you stack up in your geographic area.
Consumer Credit jumped in December, a potentially positive sign for the economy.
Is there any better indication of the perverse nature of progressive ideology than that the left now declares it desirable that able-bodied workers will be able to choose not to work to support themselves as the result of taxpayer funded wealth transfers? It used to be the case that the left would dismiss with contempt the notion that its welfare policies discouraged people from working. Welfare was simply for the unfortunate few that couldn’t possibly support themselves, we were always told. Now, with the announcement from the CBO that Obamacare will result in 2 million fewer workers in the workforce, the true mindset of the left comes out. Paying government subsidies to people who can and do work to support themselves is now apparently a good thing precisely because it allows them to stop working to support themselves.
When it comes to the warped and disturbed, Rod Serling has nothing on the bizarre thinking of progressives.
Retailers cut back jobs after the holidays and government hiring fell. Construction added 48k jobs. Surprising to see weak payrolls in conjunction with a drop in the unemployment rate and a tick up in the participation rate, but it appears to have been driven by annual population adjustments out of Census. It is important to keep in mind that the Employment Situation report is a noisy report that is often very sensitive to modeling adjustments and revisions after the fact. It probably gets more attention than is warranted. This report seems more or less in line with what the Fed has been forecasting, so it shouldn’t have any effect on Fed policy re QE.
Sellers are returning for the Spring Selling season, which should help alleviate the inventory problem. At some point, we should see the pros getting itchy to ring the register as well. What does this mean? Probably (a) more purchase transactions with a mortgage, and (b) a moderation in home price appreciation. Remember, cash sales have been 40% to 50% of all purchase transactions lately, and that number has been historically closer to 20%. Cut the cash transactions in half, and the gettable business increases by 30% to 60%, even if the number of existing home sales doesn’t increase.
Immigration reform appears to be dead for the time being. The reason is that the right believes the WH would only enforce the parts of the law it likes based on the administration’s fast and loose way of handling obamacare.
Markets are up small this morning on overseas strength. Market darling TWTR is down 20% this morning after an earnings miss #bloodbath. Initial Jobless Claims came in at 331k, slightly below expectations.
Other economic data this morning – productivity rose 3.2%, while unit labor costs fell. Challenger, Gray, and Christmas reported announced job cuts increased 11.6% in January.
Regarding obamacare, we are now getting earnings announcements from the big health insurers who are considering pulling out of markets – Aetna and Humana both made such announcements.
Tomorrow we will get the January Jobs report and find out how many people are still liberated from working.The partisan spin war on that CBO report continues… One thing to watch for is a sharp sell-off in the bond market. Emerging markets woes have been on the back burner the past couple of days, which means the bond market could be setting up for a sharp sell off on a strong number. I would highly advise against floating right now.
Brent Nyitray
Fairlington Blade
Let the mutherfuker burn!
jnc4p
Kevin S. Willis
Michigoose
lmsinca
markinaustin
Arcanaut
novahockey
quarterback
ScottC
yellojkt
All Things in Moderation 