Morning Report – A Republican wave and housing reform 11/5/14

Stocks are up in NY on the Republican win and a decline in gold. Bonds and MBS are down.

MBA mortgage applications fell 2.6% last week. Purchases rose 2.6% while refis fell 5.5%

The ADP Employment Change is predicting 230k jobs were created in October. The Street is forecasting Friday’s number will come in at 232k.

Republicans won convincingly last night, taking the Senate and building on gains in the House and at the State level. If you are a political junkie, here is a great backgrounder on how it happened. While it is premature to think about potential legislative initiatives, it is a good bet that financial regulation will be addressed at least in some form. Also, Republicans will have a much bigger hand in GSE reform and the infrastructure for the housing market going forward. At the margin, this means less subsidies, or in other words, higher priced MI and maybe slightly higher rates.

Democrats had been hoping that voters would also slap down Republican governors that they think went too far. This primarily means WI governor Scott Walker, who has survived in spite of unions throwing the kitchen sink at him, and KS governor Sam Brownback who cut taxes and services and lived to tell about it. Walker’s 2016 stock is rising.. Democrats made a big deal of putting these GOP policies on the ballot and they survived. The only bright spot for the left was seeing a few minimum wage increases get approved by voters.

Here is left wing economist Dean Baker’s take on GSE reform. He is afraid the government will be backstopping subprime mortgages, which I do not think is on the table. Also, he misunderstands the government is moving from an insurer role to a re-insurer role, with private capital taking the first 10% of losses. At any rate, I think he either does not understand or is misrepresenting what housing reform will do. And Dean Baker is a respected economist from the left, although he is an economist / ideologue in the mold of Paul Krugman. My point is that there will be a lot of partisan posturing and a lot of ideological collisions as the housing reform sausage gets made. The WH is most concerned with access to credit for underserved populations and probably imagines that its “disparate impact” theory on lending discrimination can take the place of hard quotas and targets.

Speaking of mortgage credit, it declined in August, according to the MBA Mortgage Credit Availability Index. However the decline was driven by the removal of special loan programs which only pertain to REO sales.

15 Responses

  1. Worth a note:

    “Meet Mia Love. You’ll be seeing a lot more of the Republicans’ first black congresswoman.
    By Justin Moyer November 5 at 5:02 AM”

    http://www.washingtonpost.com/news/morning-mix/wp/2014/11/05/meet-mia-love-youll-be-seeing-a-lot-more-of-the-republicans-first-black-congresswoman/?tid=hp_mm&hpid=z6

    Like

    • jnc:

      Worth a note:

      Indeed. If not for the fact that she has an R after her name, her story would have been front page fodder across the nation.

      Also worthy of note, as I mentioned yesterday, Elise Stefanik did indeed beat her Democratic opponent to become the youngest woman ever elected to Congress.

      Thought this was interesting too: 18 year old Saira Blair crushed her Democratic opponent 63% to 30% in West Virginia to become the youngest state legislator in the nation.

      Finally, a reminder of something Obama said earlier this summer: “I don’t really care to be president without the Senate.”

      Like

  2. If the Rs can shift the African American vote even by 10 percent. look out.

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    • nova:

      If the Rs can shift the African American vote even by 10 percent. look out.

      As I said a couple years ago, if Dems lose their monopoly on the black vote, they may never win another presidential election.

      BTW, I was on the Mia Love bandwagon very early on.

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  3. Mia Love won because she’s LDS and Jim Matheson didn’t run for re-election. I wouldn’t look to her as a bellwether.

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    • Mich:

      I wouldn’t look to her as a bellwether.

      My point was that she is the type of candidate with the type of biography that would make her an instant media darling if not for the fact that she has an R after her name. Being a Mormon doesn’t help either.

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  4. Brent, you may find this comment of interest:

    “When I travel to Asia or I travel to Europe, their biggest envy is the incredible, homegrown, U.S. energy production that is producing jobs and attracting manufacturing, because locating here means you’ve got lower energy costs.”

    http://www.washingtonpost.com/politics/transcript-president-obamas-remarks-on-midterm-election-results/2014/11/05/491a02b2-6524-11e4-9fdc-d43b053ecb4d_story.html?hpid=z3

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    • Cheaper energy is a game changer for US manufacturing. Wages are being bid up in India and China and the cheap labor arbitrage is shrinking. It becomes more and more advantageous to locate energy-intensive manufacturing (things like chemicals) to the US.

      And a carbon tax is the way to stop that dead in its tracks.

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  5. Sarvis exit polling is on Reason. Also, looks like Democrats are blaming the Libertarian in the NC race for Hagan’s loss.

    http://reason.com/blog/2014/11/05/exit-polls-for-haugh-sarvis-who-did-they

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  6. I knew you believed that, but I thought you might like some confirmation that President Obama was actually aware of it too.

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  7. the type of biography that would make her an instant media darling if not for the fact that she has an R

    I disagree. It’s exactly what makes her a media darling. Look what saying Very Conservative Things has done for Ben Carson.

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    • yello:

      It’s exactly what makes her a media darling. Look what saying Very Conservative Things has done for Ben Carson.

      Ben Carson is a media darling? In an alternate universe, maybe. Sure he has gotten a lot of attention on conservative websites and even on FOX, but I’d bet the house that Wendy Davis (to pick a typical media darling) has gotten far more fawning coverage from the likes of the NYT, the WaPo, the cable news networks (ex-FOX), than Ben Carson’s coverage of any kind.

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  8. @jnc4p: “Indeed. If not for the fact that she has an R after her name, her story would have been front page fodder across the nation.”

    Serious liberals in the media will not be able to touch the story without being racist. Because they can’t help themselves. So they are smart not to put it on the front page.

    I voted for Charlotte Bergman Tuesday:

    http://charlottebergmann.com

    I love her! She had no chance of beating the Cohen machine (given his domination of a Democrat-gerrymandered district: they all do it!) … but she won 23% of the vote. Which is down a little bit, but typical. A Republican will not win that district. Not against Cohen, at any rate.

    I have an affirmative action policy towards African-American Republicans. They are a minority within a minority, and are seriously underrepresented in politics. So they always get my vote.

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  9. @Brent Nyitray:

    “And a carbon tax is the way to stop that dead in its tracks.”

    And lots of other things. And not raise enough revenue to pay for implementation and enforcement once loopholes are severely and mercilessly exploited. Not to mention, if you don’t exempt utilities and consumers across the country see the tax added (and maybe added to again) to their utility bill, nobody who voted for it will survive the next election cycle in districts where constituents pay their electric bills.

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  10. @michigoose: “Mia Love won because she’s LDS and Jim Matheson didn’t run for re-election. I wouldn’t look to her as a bellwether.”

    There are no real bellwethers in politics. It’s repeatability that demonstrates the trend. Outliers are everywhere.

    I expect Charlotte Bergman here is more typical: able to run as a Republican, unchallenged (and unsupported), because the GOP has abandoned a majority black district (in no small part, to be fair, because Cohen is all but unbeatable unless and until the district is redrawn).

    Like

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