Morning Report – Risk spreads back to bubble levels 3/21/14

Vital Statistics:

Last Change Percent
S&P Futures 1869.8 3.7 0.20%
Eurostoxx Index 3093.3 4.4 0.14%
Oil (WTI) 99.25 0.3 0.35%
LIBOR 0.233 -0.001 -0.32%
US Dollar Index (DXY) 80.17 -0.023 -0.03%
10 Year Govt Bond Yield 2.78% 0.01%
Current Coupon Ginnie Mae TBA 104.8 0.0
Current Coupon Fannie Mae TBA 103.6 -0.1
RPX Composite Real Estate Index 200.7 -0.2
BankRate 30 Year Fixed Rate Mortgage 4.42
Markets are up small on no real news. Bonds and MBS are down small. There is no economic data this morning.
KB Home sold $400 million of 5 year senior notes at 4.75%. The proceeds are going to be used to acquire land. I think we can expect to see more bond issuance as companies take advantage of low rates and tight spreads. Bond investors are paying up for paper at the moment, as spreads are about as tight as they have ever been. This means that (a) the bond market is vulnerable to shocks and (b) we could experience some turbulence as rates start rising. Look at the chart below – high yield spreads are back at bubble levels.

Existing home sales fell yesterday, as professional investors begin to balk at high prices. According to RealtyTrac, institutional investors bought 44,087 properties in Q4, down from a peak of 60,648 in the second quarter of last year. As the labor market improves, we should see a return to a more normal level of cash vs mortgage buyers.

60 Responses

  1. Drip, Drip, Drip

    “A glitch in Obamacare marketplace no one noticed
    Don Sapatkin, Inquirer Staff Writer
    Last updated: Friday, March 21, 2014, 1:08 AM
    Posted: Thursday, March 20, 2014, 9:26 PM

    Nearly six months after the disastrous launch of, with the website running smoothly and more than five million people signed up as open enrollment heads to a close, a new glitch has come to light: Incorrect poverty-level guidelines are automatically telling what could be tens of thousands of eligible people they do not qualify for subsidized insurance.

    The error in the federal marketplace primarily affects households with incomes just above the poverty line in states like Pennsylvania that have not expanded Medicaid. The mistake raises the price of their insurance by thousands of dollars, making insurance so unaffordable many may just give up and go without.”


  2. Why do you want people to not have insurance and die, bagger?


    • Brent:

      Why do you want people to not have insurance and die, bagger?

      Remember, the only available choices are government run health care or Just Let Everyone Die. And that is just inhuman. Immortality for everyone! Spare no expense.


  3. Because I don’t feel obligated to pay for them.


  4. Now that’s interesting.

    “At the same time, what becomes clear after looking at the houses along the Industrial Canal is that they are the product of the same spirit of moral uplift and edification that in an earlier era led missionaries to house and feed the unfortunate while requiring they listen to a sermon or a series of Bible verses. The only difference is that now the sermon is about the environment.”

    Should a Katrina victim be forced to listen to a sermon about AGW before receiving services?


  5. Immortality for everyone! Spare no expense.

    Hmmmmm, speaking of strawmen.

    Nova, that license plate is hysterical…………thanks, I needed the laugh!


  6. “Spare no expense”

    reminds me of Jurassic Park. and we know how that ended.


  7. lms. that plate made the local news. i think, but i might be wrong, that the person had to turn it in because someone took offense. i think the justification was it was distracting to other drivers.


  8. Hah, nova, some people are so easily offended.


  9. This is THE funniest thing you’ll read this week, the travails of Pacifica radio.

    Later Reese read for all the staff, in her deep and booming voice, from the Book of Joshua: “Whosoever he be that doth rebel against thy commandment, and will not hearken unto thy words in all that thou commandest him, he shall be put to death: only be strong and of a good courage.”…

    “I’m not leaving the building until this is resolved by either the Attorney General’s Office or the court,” Reese told the Weekly. “I don’t want these people to destroy Pacifica.”

    You go girl! (Sorry if I gender-normed you.)

    I gauran-fucking-tee that the Koch Brothers are behind this withholding.

    Making matters worse, the federal government, via the Corporation for Public Broadcasting, is withholding Pacifica’s grant money, thanks to the network’s “failure to provide documentation” for a 2012 audit.


  10. what was the license plate?


  11. Brent, it’s at the end of the previous thread. I was perusing yesterday’s thread before looking at this one.


  12. “During an average 15-minute period, just 700 people listen to its Los Angeles station, 90.7 FM KPFK, for at least five minutes, according to Nielsen Audio, which monitors radio ratings.”

    I had more people listening to my college radio show.


  13. Nova, that story’s the gift that keeps on giving.


  14. i can’t look away. our college station shard studio space with a community radio types. so i know the type featured in this story. it’s fascinating.

    the easy solution is for them to buy a laptop and just do podcast that they can send each other.


  15. OT: Good critique of the decline of labor from the left.

    “Saving Labor From Itself
    by Jon Flanders

    For union officials, too often “saving the union” means maintaining union dues from a workforce suffering under bad contracts.”


  16. “Four days later, Reese sent an email to the entire Pacifica staff announcing that she was not recognizing the board’s authority: “I want to assure you that I am in possession of a signed and valid contract for three years of employment from the board of directors and that I fully intend to complete that contract.”

    And so it was that Reese marched to the Pacifica national office in Berkeley on March 17, bolt cutters in hand, removed a padlock placed on the front doors over the weekend, and essentially occupied the building. When newly appointed interim executive director Margy Wilkinson showed up, Reese and 12 of her compatriots — including Reese’s mother, a longtime anti-war and civil rights activist — refused to let Wilkinson, her husband and two of her allies pass.

    “You’re all going to be personally liable — and I’m going to enjoy your houses!” Reese shouted at them, according to former board member Sasha Futran, who backs Wilkinson.”

    Interesting rhetorical mixture of simultaneously rejecting property rights and contract law while at the same time threatening to utilize them. Someone has a pretty self contradictory ideology.


  17. Scott, it’s hard to tell what ISN’T snark with this group. 😉 And I read that thread the first time, no thanks on doing it again.


  18. I can’t say enough good things about that Pacifica article.

    Plus, Rees doesn’t have a SS number? Beautiful!


  19. Like

  20. “Whitaker. Motherfucking. Chambers, on March 21, 2014 at 1:09 pm said:

    I can’t say enough good things about that Pacifica article. ”

    Thanks for that hand grenade. I tossed it in.


  21. troll, you have to click over to read the response. its derp-tastic.


  22. Village Voice companion piece:

    “Ask the people who have lived through the slow, sad decline, and they will tell you that the very thing they thought would save the organization—democratizing the network—nearly killed it entirely.”


  23. Wow, that was hair-raising.


  24. @jnc4p: I am shocked, shocked I tell you, that warring activist would turn out to be a negative thing for a public radio station. That’s why direct democracy sucks. Representative republic is better.

    From the Plum Line thing on Medicaid: “Sure, it meant giving up a huge quantity of federal dollars and leaving millions of their own citizens without health insurance. But it wasn’t as though the plight of poor people without coverage was exactly keeping them up nights before.”

    Ugh. I love the mind reading of their opponents that goes on in partisan analysis. None of these people can earnestly be doing the right thing, but be wrong, no: they know they are doing the wrong thing, but are evil. And don’t care about the poor, or children, or rainbows and lollipops.

    “Might conservative loathing of Obamacare begin to dissipate once Obama himself leaves office in January 2017? Maybe.”

    Might the fact that it’s a godawful mess and has made insurance generally worse and more expensive for everybody. Things I like about Obamacare: guaranteed coverage for pre-existing conditions. Things I don’t like: everything else. Either unnecessary, or worse than before. I say as a layperson.


  25. @Brent: “Why do you want people to not have insurance and die, bagger?”

    I do not. I want everybody to have at least some kind of coverage.

    I’m not sure there is a way to do that. I don’t think this is it, I’ll tell you that much.


  26. From the Village Voice piece, apparently the station was really good in the old days:

    “Back then, Albertson says, “you could walk into the hallway and find the janitor—we had a janitor back in those days—deep in conversation with Ayn Rand,” who had a weekly commentary show. “Where else could you find that?””


  27. Kevin, I think that the statement is fair. Republicans typically don’t campaign on expanding entitlements.


  28. I think it’s more reasonable to make a goal to reduce costs so that more people can afford coverage.

    I’m unwilling to utilize the amount of coercion necessary to have universal coverage.


  29. “deep in conversation with Ayn Rand”

    could you imagine the shit storm if NPR interviewed her today.


  30. the open secret is that poor people do not need health insurance, as they have no assets to protect. but we call it that because, damn them and their sense of displaced pride, they won’t in large numbers sign up for welfare.

    so we get cutesy with Medicaid and call it “insurance coverage” went it is nothing of the sort. and when that doesn’t work, we get creative with the names. Oh, this isn’t Medicaid. It’s BadgerCare (wisconsin) or “obamacare”


  31. “I’m unwilling to utilize the amount of coercion necessary to have universal coverage.”

    i’ll let you borrow my yacht, “Rent Seeker” if it ever happens.


  32. My vision of Hell is people sitting around me in a meeting talking about Synergy, paradigms and doing things in a “go forward” basis.



  33. Progressives butthurt because Drudge follows the law.

    Additionally, the IRS form (1040-ES) for estimating quarterly taxes specifically recommends adding the mandate penalty to line 12 for “other taxes” — to pay before the first quarterly deadline of April 15.

    “It is true that thousands of small businesses will be forced to pay Obamacare taxes quarterly in 2014,” a Senate Budget Committee aide told Breitbart News on Friday afternoon.



  34. Progressives butthurt because Drudge follows the law.

    Amazing they forgot that small businesses pay tax quarterly. I think they imagined the employer mandate would be off the table until the elections.

    Also, the WH has a director of progressive media? Is he the Journolist marching orders giver?


  35. None of the lefty d-bags have corrected it. Progressives, will you demand a correction? Are you ok with the willful error? If so, why?


  36. These assholes claim a debunking while admitting he’s right.

    Again, why are these Progressives lying?


  37. Drudge is guilty of blasphemy. The state is their religion. Thou Shalt Not Mock Obama or His Policies.


  38. Do they recognize it in themselves or is the aim to protect the Abomination?


  39. We failed him.

    Thank God!

    If he’s what supposed to be served I’d rather reign in Hell.

    I can’t believe I’m saying this but I miss the relative competency of Carter.


  40. I think these people are the least self-aware people out there. They fancy themselves as tolerant, broad-minded people. They remind me of Neidermeyer.


  41. This seems like something out of the Onion.

    “Sinkhole of bureaucracy

    Deep underground, federal employees process paperwork by hand in a long-outdated, inefficient system”


  42. Slowly, the scales fall from their eyes:

    “The Hope Diet: Would the Tea Party fall for this?
    Thomas Frank
    Sunday, Mar 23, 2014 07:00 AM EST

    Barack Obama and Bill Clinton both peddled a diet of hope. It’s time for Democrats to demand more of a sure thing”


    • jnc:

      Where things are headed. If you can’t save everyone, then save no one.

      I think the more relevant point is that, when scarce resources are not allocated based on price, they will be allocated based on influence, whether political or otherwise.


  43. We can learn from the example set by Josh’s story. We’ve talked about this in my family, should it come to that. My wife will handle the doctors. I’ll hire and work with the the public relations team.

    “Instead of getting the drug through the compassionate-use program, Josh got it through the clinical-trial process.”

    And really, you have to be politically savvy to know about that. Well, we’ve politicized medical care and this is the result.


  44. We failed him.

    An entire generation of liberals have debased and embarrassed themselves at Obama’s tiny, clay feet. It’s remarkable. He’s such a feckeless lightweight, and all these smart people still fall all over themselves to fluff him.

    From the comments at the link:

    I’ll translate:

    “”we all fell short of the glory of “god”……”

    Yep. We fell short. The whole country was unworthy of Him. He lowered himself to take the paltry job of President, and we failed him.


  45. uh.

    Each day, progressivism seems to introduce us to a lower ring of its infinite depths of Hell. Where is there to go after something like this? It seems impossible that lower depths of depravity and ghoulish practice could exist, but experience tells us not expect any bottom. Burning babies to power and heat the abortion factories; how do you go lower? Soylent Green? Isn’t this just the same? This is the ultimate “banality of evil.” And to see all those NHS bureaucrats get the pretend vapors over it is appalling. This is their ideology at work. Now they want to wash their hands of it.


  46. That’s what you get when you have to prove safety and efficacy. All the FDA should exist for is to investigate relative safety.

    It’s not like MD’s ain’t smart enought to read a study.

    Instead, we get this


  47. And we’re the heartless one’s.


  48. Correct, but the premise of the article as evidenced by the headline is that’s not “fair” and should therefore be rejected in favor of lowering the standard for everyone.


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