Morning Report – What if? 2/4/15

Stocks are lower this morning on no real news. Bonds and MBS are down as well.
The ISM Services Index rose in January to 56.7. The ISM manufacturing index fell however.
Mortgage Applications rose 1.3% last week. Purchases were down 2.3% while refis were up 2.5%. Note that FHA purchases and refis soared after the proposed change in MI.
The ADP Employment Survey came in at 213k jobs in January, lower than expected. The Street is looking for 230k jobs in this Friday’s employment situation report. The big number for Friday will be wage growth, not necessarily the payroll number of the unemployment rate.
Sign of the times: On the American Capital Agency conference call yesterday, one of the analysts asked the mortgage REIT giant “What happens to mortgage REITs if US Treasuries fall to German Bund type yields, below 50 basis point? What happens to the mortgage market? What happens to mortgage backed securities?” Six months ago, the question would be dismissed out of hand. No longer.
One thing is for sure – if that happens, stand by for the mother of all refi waves.
Partying like it is 1997. Staples and Office Depot are merging. Interestingly, the Obama administration has had a very laissez-faire attitude about antitrust enforcement. Arbs better watch and see if Obama’s newfound progressivism extends to antitrust. They could be in a for a rude shock.

15 Responses

  1. Note that FHA purchases and refis soared after the proposed change in MI.

    MI = ?? I’m pretty sure it’s not Michigan. 🙂

    Oh, and frist!


  2. MI = mortgage insurance


  3. Feature, not bug.


  4. @scottc1:

    That’s amazing. I’ve noticed that when thoughtful liberals turn reflective about why conservatives are they way they are and why anyone other than the super rich would ever vote for Republicans, they have a kind of mystification as to how people can so blithely vote against their own self- interest. Yet I have a difficult time thinking of an example where someone who just lost their business due to GOP policies still concluded that those policies were beneficial.

    Of course, I think there should be no minimum wage. The market will decide, and better. The only countries that can truly benefit from minimum wage laws don’t have them and will not get them until they are generally opulent enough that minimum wage legislation is just, as it is here, about feeling good and patting oneself on the back.


    • Two regulatory [not statutory] tax changes threaten small businesses in America this year. One is a direct result of ACA. The other is a gratuitous change in the definition of capital items versus expenditures with Draconian penalties, effectively requiring every business to file a change of accounting method even when the accounting method has not changed. The AICPA and the Tax Section of the ABA fought the latter reg, then fought its early implementation, then fought the penalties, to no avail.

      I will post links to practitioner articles for anyone affected.


      • I have FP questions. Do we have any treaty position that binds us to Ukraine? Do we have any treaty position that binds us to any middle eastern state, including Israel? What national security interests of ours are at stake in the Ukraine? I understand Persian Gulf stability as affecting our national interest but wonder if we are adding to stability there, on the whole. I loved the documentary Carrier, btw.

        I thought NATO was our line in the sand. What am I missing?


  5. @kevinwillis1

    How do you feel about your governor’s change of heart on expanding Medicaid?


  6. Seems legit.


  7. Like

  8. I can’t believe he honestly thought he could get away with that….


    • Brent:

      I can’t believe he honestly thought he could get away with that….

      He did get away with it for quite some time. Should have quit while he was ahead.


  9. More tales from Brian Williams when he was in the shit.


  10. @michigoose:

    “How do you feel about your governor’s change of heart on expanding Medicaid?”

    I don’t think it’s going to happen.

    Not clear to me whether the deal would have unburdened us from any of the cost of TennCare or not. I don’t think it would have.

    This sounds reasonable, from a state perspective: “The program will not create any new taxes for Tennesseans and will not add any state cost to the budget. The Tennessee Hospital Association has committed that the industry will cover any additional cost to the state. The program will automatically terminate in the event that either federal funding or support from the hospitals is modified in any way.” I can see why Haslam, as our governor, would go for that. It’s not so much a change of heart, as the problem with earlier expansion options would have put more of the burden on the state.

    Anyway, it’s not happening. I think if there was some restructuring to TennCare, that might help something like that pass. Just expanding it, even with mostly federal dollars, is going to be tough to get done in Tennessee.


  11. Thanks, Kevin! I heard an interview with Gov Haslam yesterday about this and it made me curious as to what the man-on-the-street viewpoint is.


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