Morning Report – Quits lead raises 12/19/14

Markets are flattish this morning after a torrid 2 day run courtesy of Santa Yellen. Bonds and MBS are up small.

Fannie Mae is forecasting that wage growth is just around the corner and focuses on an interesting indicator out of the JOLTS job report – the quit rate. The quit rate is a leading indicator for job growth, and it has has been moving up for quite some time while wages have been flat. Another reason to be somewhat optimistic about 2015.

Are the high premiums for FHA loans creating an adverse-selection problem? The MBA thinks so. Creditworthy borrowers are going for the cheaper Fannie and Freddie loans, leaving only the borrowers with poor credit in the FHA risk pool. The new 3.5% down Fannie Mae loans will undoubtedly exacerbate this trend.

The drop in oil prices is causing pain in economies that rely on oil revenues, particularly Russia and Venezuela. It looks like Russian banks are going to need some sort of bailout. This could have impacts on the US real estate market, particularly at the high end. On one hand, Russian billionaires will want to move assets out of Russia ahead of the capital controls that are probably coming, On the other hand, in a crisis, you sell what you can, not necessarily what you want to. Not sure how this will shake out, but it bears watching. It will probably be a preview of what happens when China’s real estate bubble bursts as well. The Asian Crisis of the late 90s did have some reverberations in US credit markets, so we may feel a bit of credit tightening as banks back away from each other.

13 Responses

  1. I’d argue this is a inevitable and necessary part of immigration. We need the human capital and since we ain’t breeding enough this is the only was to ensure our survivability.

    It’s fascinating that continued immigration as contributing to this stagnation isn’t even discussed. All actions have trade offs but I guess in the Progressive world view they shouldn’t and therefore must not be discussed.


  2. Knock me over with a feather.

    Don’t these rubes know the pre-Obamacare days were horrific?

    Buncha ungrateful bastards if you ask me. They don’t bitch like this in Cuba!


  3. This is good:

    “How Sony Should Have Handled the Hackers”


  4. @McWing: “Knock me over with a feather.”

    Even so, it’s a cognitively dissonant version of “if it saves the life of just one child, then it’s worth it, whatever the price tag” argument. Which is the argument, frequently made, that any expense is justified if it “saves just one life”, especially of a child. Although it’s hard to justify taking billions away from things that benefit millions in order to “save just one life”, just as it’s difficult to justify things that put huge economic drags on a society that negatively impacts huge numbers of people because it benefits a small minority.

    Almost everybody, especially Obamacare supporters, know people who have benefitted from Obamacare. Even some of the people grumbling about higher prices may have access to healthcare previous unavailable, thus actually coming out ahead, despite the overall increase in what the spent on healthcare and coverage. And their insurance didn’t go up “too much”, so it’s a success.

    Except the beneficiaries seem few and far between and the people who are just paying more, sometimes a lot more, with no improvement in service seem fairly plentiful, in my experience. And nothing was done to improve some of the big problems with actually getting healthcare, which you’ll notice should you have reasons to make repeated trips to the emergency room or enjoy an extended hospital stay. Alternatively, if you are lucky enough to have a doctor or receive care in a hospital with excellent all around healthcare (and a fine bedside manor), Obama care has, at best, not effected that at all. At worst, regulations and the time-consumption of increasing strata of paperwork has actually made problems worse. I wonder what future stats on misdiagnosis and mortality will tell us about the wisdom of further bureaucratizing healthcare.


  5. @jnc4p: ““How Sony Should Have Handled the Hackers””

    Tom Cruise’s best role. And yes. And now Paramount has pulled “Team America” from release (meaning, movies theaters can option to play for their own reasons, typically revivals and special events or because of some other reason (ala, Rocky Horror Pictures . . . those theaters had to have permission to keep playing Rocky Horror every Staturday at Midnight) . . . because some theaters, like the Alamo Draughthouse, was going to play “Team America” to substitute for the now pulled “The Interview”. So Paramount is even douchier than Sony.

    That is all.


  6. Heh.


  7. I’d forgotten about that BS. Another fine example of administration hypocrisy.


  8. Put me down as a misogynist today. A major national news organization is not one’s personal blogging platform to “tell your story” without any attempt at fact checking, even if it is labeled as an opinion piece.


  9. Looks like the AIG trial is over and the government stands a good chance of losing.


  10. Not to minimize or make light of the situation in NYC, but doesn’t this have all the feel of a Law and Order episode?

    Fun L&W fact: The bar most featured in the show is called 7B aka Vazacs or the Horseshoe Bar. My wife and I met there.


  11. Why would BHO comment on SONY pulling movie from general distribution AFTER THEATER CHAINS REFUSED TO SHOW IT?

    Shoooting off mouth before engaging brain?


  12. Big corporations and government are intertwined in Japan. I will guarantee you the response was hashed out between Sony and the Japanese government…


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