Morning Report – Home Price Appreciation is slowing in the oil states and DC 1/6/15

Stocks are flattish after yesterday’s bloodbath. The 10 year bond is trading with a 1 handle. Oil is trading below $50 a barrel.

US bonds continue to be dragged lower by bond markets worldwide. You can now get a whopping 29 basis points for lending money to the Japanese government for 10 years. If you invested a million yen in a JGB, your quarterly interest payment would probably not even cover a Venti latte at a Starbucks in Tokyo.

It is looking like the economy took a step back in December, with the ISM Services Index falling to 56.2 from 59.3, and factory orders falling by .7%. I am beginning to wonder if Friday’s expectations might be too high.

Home prices rose .1% month over month in November, and are up 5.5% year over year, according to Corelogic. Growth is slowing in the big oil states and also in Washington DC.

It looks like yesterday’s auto sales were indeed strong. We could have the best year since 2005. I think the average age of an American car is something like 11.5 years, which is a record. We are seriously due for an upgrade cycle. Unfortunately for environmentalists, the low price of gas is encouraging us to buy SUVs and not Prii.

The ground has shifted under cable TV providers. ESPN is going streaming. This is huge and paves the way for a la carte content

Ocwen has been taken to the woodshed after it agreed to sell its government MSR portfolio. The stock is down 77% over the past year. The big question is whether they have a business going forward. At this point, however it is probably trading close to asset value. If Ocwen does a fire sale, that could mean MSR values get hit (as we saw in 2009, 2010). This would mean lower gain on sale (SRPs) which means lower margins for the lenders. Stonegate has been getting hit as well.

13 Responses

  1. Heh–frist!

    I was listening to an economics reporter from (?) Bloomberg being interviewed on Morning Edition this morning; he says that the Eurozone is getting ready to slide into deflation. Any thoughts (other than reporters don’t necessarily know anything about that which they are reporting on)?

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  2. I think that is the fear, however IMO deflation is associated with bad debt and the aftermath of asset bubbles, which doesn’t really seem to fit here…QE prevented deflation in the US by propping up asset prices, especially real estate.

    I think they mean disinflation, which means falling commodity prices and generally low inflation.

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  3. I don’t expect this to turn out well, but it’s certainly a useful comparison.

    “Jerry Brown’s bold climate pledge: California to go 50 percent renewable in just 15 years

    “We must demonstrate that reducing carbon is compatible with an abundant economy and human well-being,” said Brown

    Lindsay Abrams
    Monday, Jan 5, 2015 04:02 PM EST”

    http://www.salon.com/2015/01/05/jerry_browns_bold_climate_pledge_california_to_go_50_percent_renewable_in_just_15_years/

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  4. I’m going to assume that Dylan Mathews isn’t stupid, but is instead is just a liar here and knows exactly what he’s doing:

    http://www.vox.com/2015/1/3/7482635/senate-small-states

    The debunking and key point:

    “I’ll admit it took me a while to figure this out, but the “20 million votes” statistic isn’t what author Dylan Matthews implies. One might get the impression from Matthews’ article that Republicans lost the popular vote overall by 20 million votes, especially since Matthews refers to “vote share” in his concluding paragraph. Worse, Matthews claims that a chart comparing percentages of votes won by each party to seats won represents the 20 million discrepancy “in chart form.”

    If Senate Republicans had lost the popular vote by 20 million votes, yet won 54 percent of the seats, it would be problematic indeed. To put this in perspective, Barack Obama won by just shy of 5 million votes in 2012. Democrats winning the popular vote for the Senate by 20 million votes — 67.8 million to 47.1 million, according to the article — would be a popular vote win equivalent to Ronald Reagan’s margin in 1984. One imagines Republicans would be a bit peeved if Reagan had won by that margin and yet had lost to Walter Mondale.

    But the 20 million statistic isn’t at all about vote share. This is just a total of the number of votes that victorious Senate Democrats won, compared to the number of votes claimed by victorious Senate Republicans.”

    http://www.realclearpolitics.com/articles/2015/01/05/the_myth_of_democrats_20-million-vote_majority_125145.html

    Lies, damned lies, and statistics.

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    • I’m going to assume that Dylan Mathews isn’t stupid, but is instead is just a liar here and knows exactly what he’s doing:

      You have me on ignore now? 😉

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  5. Dude must pack a helluva lunch!

    We sure dodged a bullet with that dumb Palin bitch.

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  6. Scott I just missed it. Normally I think the pejorative “juiceboxer” is a bit excessive for the Vox crowd, but given their recently discovered shock and dismay over the Connecticut Compromise and the structure of the Senate it fits perfectly on this topic.

    I wonder if they can ever connect the relative stability that the United States government has for the most part enjoyed with the limitations on majority rule.

    In any event, if they want to abolish the Senate then dissolve the country. The States can then decide which new (or old) Constitution they wish to join.

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    • jnc:

      Normally I think the pejorative “juiceboxer” is a bit excessive for the Vox crowd, but given their recently discovered shock and dismay over the Connecticut Compromise and the structure of the Senate it fits perfectly on this topic.

      Sadly, I suspect that large numbers of Vox readers saw that and thought “Wow, he’s right, that’s horrible.”

      It really is depressing. People get outraged over a very basic, fundamental feature of our constitutional makeup, yet are entirely unbothered by the unconstitutional (and certainly anti-democratic) regulatory bureaucracy under which we all labor.

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  7. Interesting that abolishing theSenate arguably makes Speaker more powerful than POTUS.

    #JuiceBoxIrony

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  8. For the first time in my life, I agree with obama on something…

    http://det.247sports.com/Bolt/Obama-If-I-Were-A-Detroit-Lions-Fan-Id-Be-Aggravated–34514480

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  9. There’s always that old chestnut about stopped clocks, Brent! 😀

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  10. But would you agree with his likely solution of adding more government oversight to NFL ref calls?

    That’s usually the rub, not identifying the problems but agreeing on what do do about them.

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  11. @brentnyitray: “The ground has shifted under cable TV providers. ESPN is going streaming. This is huge and paves the way for a la carte content”

    That seems bizarre. A key piece of ESPN’s revenue model over the years has been demanding a piece of every subscribers bill. So, if you don’t pay us $2.00 for every subscriber you have, you don’t get ESPN, period. A common complaint of not having a la carte channel selection is that you can’t get cable (aside from super basic cable, which is just your local channels and the shopping networks) without paying for ESPN, even if you just wanted it for the kids channels or something.

    I’m guessing either ESPN has lost leverage with the cable companies and sees their ability for force a percentage for every subscriber ending (or it’s already gone) or they just see the writing on the wall.

    Or . . . the ratings suggest that they can charge something less than half an average consumers cable bill for their channel alone, and make a lot more money that the $2 per cable subscriber model.

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