Morning Report – Improving attitudes about the economy 1/12/15

Stocks are higher this morning on no real news. Bonds and MBS are up small.

Earnings season kicks off tonight in the traditional way with Alcoa. This week will be dominated by bank earnings, however we will hear from Lennar and KB Home. Analysts will be focused most on how the slide in oil prices has affected housing markets in Texas. It is probably too early to get a read on the Spring Selling Season, but they may have some anecdotal data. Certainly the precipitous drop in interest rates is a gift that no one expected.

In economic data this week, we have the JOLTs job openings data as well as industrial production. Nothing should be market-moving.

Last week’s FHA announcement caused Ginnie Mae TBAs to underperform Fannie Mae TBAs. At the margin, this means that FHA / VA loans will be somewhat more expensive relative to Fannie Mae loans. The new MI pricing sent fears into the MBS markets that prepayment speeds will pick up. So, for FHA loans the MI may be cheaper, but the rate went up. So it is probably all a wash.

Consumers are still somewhat cautious, according to Fannie Mae in the latest National Housing Survey. While they are tempering their outlook for further home price appreciation, the number of people who believe the economy is on the right track increased 5 percentage points, a big move. Perceptions of credit availability improved, with 52% of respondents believing a mortgage is easy to get versus 44% who believe it would be hard to get. The spread is the biggest in the survey’s history.

Delinquencies ticked up to 6.08% in November, according to the Black Knight Financial Services Mortgage Monitor. That spike could have been caused by technical factors however and might not mean much. The judicial states continue to lead the delinquency league tables. Foreclosure starts fell, however to 73,900, a 35% drop from last year.

8 Responses

    • I thought Samuelson was accurate as I recall it. The absolute credit crunch of 20% interest killed inflation, and just about killed me on a land deal. And for Congress and the POTUS to look the other way pissed everyone off – until the economy turned around.


  1. ha. what a clown show on the PL today.


    • I went there on a whim over the weekend, offered a criticism of BHO’s federal community college initiative, and was mired in muck. I am a great believer in CCs and think every state and locality that pushes them will gain from their presence. My point was that they serve local needs and are a perfect example of when one size does not fit all – and besides, education is central in every state constitution and nowhere to be found in the fed constitution. Made no friends, but influenced one person, who took up my local needs argument against Cao, who was nearly hysterical trying to goad me with the argument that “education is education – it’s not local”.

      I was super polite in my responses to shrink and rashomon and ignored everyone else.


  2. This strikes me as exactly the right tone that moderate Muslims should take towards the Islamists:

    “Muslim Mayor of Rotterdam Tells Islamists To F*** Off On Live Television”


  3. Add this to your list of inconvenient PPACA supporter quotes:

    ““To make eventual losers feel like winners, you’ve got to go slow,” Frakt astutely cautioned in the law’s early days. “To do otherwise spells immediate political failure.””


    • jnc:

      Add this to your list of inconvenient PPACA supporter quotes

      Unfortunately I don’t think it matters much. The assessment by O-care marketing execs that they could pretty much deceive with impunity in their efforts to get the thing implemented, with few or no repercussions seems to have been a pretty good assessment. The article you linked actually presents that quotation in a positive light as an example of how the creators of O-care have been “astute”. And look at McWing’s link to Ezekial Emmanual’s latest. Emmanuel obviously has no compunction about taking to the pages of the NYT repudiating one of the primary selling points he was pushing 5 years ago. No shame whatsoever.


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