Morning Report: TRID to delay closings 10/6/15

Stocks are unchanged this morning as there is very little in the way of economic data / earnings to move markets. Bonds and MBS are down small.

The trade deficit widened to 48 billion in August as the strong dollar cuts exports and increases imports.

The IMF cut is global growth estimate to 3.1% from 3.3%. Blame weak commodity prices.

Economic Optimism improved markedly according to Investors Business Daily and TIPP Online. Many of these consumer confidence indices are merely inverse gasoline price indices. Falling gasoline prices makes people happy.

Home prices rose almost 7% in August on a year-over-year basis, according to CoreLogic. They are forecasting home price appreciation around 4.3% over the next year.

Bill Gross sees another 10% downside in stocks and is recommending sitting in cash for a while. His point is that corporate profits are flatlining as commodity prices hurt earnings in the energy patch and the strong dollar hurts manufacturers. Expect more layoffs in the energy sector. Bill Gross called the Chinese sell-off earlier this year as well as the German Bund sell off.

TRID is expected to delay closings as people get adjusted to the new rules.  CFPB Chairman Richard Cordray says the agency will give lenders who are making good-faith efforts to comply with the new rules a break: “Nobody believes that market participants are going to be trying to abuse consumers here; they’re trying to change their systems. So we’ll be diagnostic and corrective, not punitive, and there will be time for them to work to get it right and not be perfect on the first day,” said Cordray. We’ll see if that actually happens.

What to the French do well? Food, lifestyle, and labor strife. Propose job cuts and you are likely to get the shirt ripped off your back by an angry mob.

22 Responses

  1. Worth a note:

    “In Ben Bernanke’s Memoir, a Candid Look at Lehman Brothers’ Collapse
    OCT. 5, 2015
    Andrew Ross Sorkin

    It is astonishing to hear a former Federal Reserve chairman acknowledge that he may have misled the public as part of an agreement with another senior government official about one of the most crucial moments in recent financial history — and that he now questions whether he should have “been more forthcoming.” But that is what Ben S. Bernanke says in his new memoir, “The Courage to Act: A Memoir of a Crisis and Its Aftermath.”

    That crucial moment? The bankruptcy of Lehman Brothers. Mr. Bernanke, in perhaps the most candid explanation of Lehman’s 2008 collapse, writes that he and Henry M. Paulson, then the treasury secretary, purposely obfuscated when asked about Lehman’s demise early on, allowing a narrative to develop that the government had purposely let the firm fail.

    “In congressional testimony immediately after Lehman’s collapse, Paulson and I were deliberately quite vague when discussing whether we could have saved Lehman,” Mr. Bernanke writes. “But we had agreed in advance to be vague because we were intensely concerned that acknowledging our inability to save Lehman would hurt market confidence and increase pressure on other vulnerable firms.””


  2. When you’re a hammer and you find a problem that’s not a nail.


    • Ever notice how reporters characterize certain businesses as “unregulated” (eg Uber or Draft Kings) as a matter of course, but they rarely characterize a business as “highly regulated”? Part of that probably reflects the biases of the reporter, but I still think it is a sign of how successful the left has been on a cultural level, and how utterly backwards we have become, in that government control over business is now the expected, default assumption, while operating a business in the absence of government control is so out of the ordinary that it must be noted, lest anyone be confused by assuming otherwise.


  3. “Unregulated” means “not regulated enough.” How many leftists have you heard claim that the banking system was unregulated before obama took over?


    • Brent:

      “Unregulated” means “not regulated enough.”

      Yes, that is an whole ‘nother layer of leftist propaganda.


  4. Not gonna lie, the GOP debate over the TPP is going to be fun to watch.


    • Can someone please read this article and tell me exactly how it is that the employees have used “insider information” to gain an advantage? The article repeatedly claims that “insider” information was used to gain an advantage, but I have no idea what information was used, nor how it provided an advantage to those who had it. I’ve actually read three articles on this “scandal” and I still have no idea what the actual wrong doing alleged is. This is either totally incompetent reporting, or it is an attempt to create scandal where none actually exists.


      • I don’t know enough about the mechanics to comment. I did note the following:

        Many of these employees set the prices of players and the algorithms for scoring. In short, they make the market.

        How having that information ahead of the public would advantage the player is not explained. I can imagine a possibility if the two sites set “prices” and “algorithms” differently, and the employee trusts his own info to permit him to negotiate a “bargain” purchase at the other site.


        • Mark:

          It seems to have something to do with knowing which players are the most used by other participants. Which I guess would be useful in that it allows you to differentiate yourself from the pack by avoiding those players, but of course it would depend upon both the relative cost of the players involved (which is publicly known) and the amount of points the player ultimately gets (which is a future event and hence unknown by everyone). If everyone is using Tom Brady, who costs twice as much as any other player, and Brady goes on to score 3 times as many points as any other player, then you will have put yourself at a disadvantage relative to everyone else in not choosing Brady.

          Besides which, knowing the use of a given player at one site, say Draft Kings, does not mean that the use of the player will be the same at another site, although I suppose one could assume a correlation. But that would be an assumption, not known “inside” information.

          I think I need to understand better how these games work.


  5. It’s a gift to Sheldon Adelson.


  6. @mcwing: “Not gonna lie, the GOP debate over the TPP is going to be fun to watch.”

    The TPP is horrible, re: copyright law. I’m amazed at the amount of liberals who apparently think Disney should have perpetual copyright ownership over Mickey Mouse, and that media corporations should be able to have the US government pressure other countries on their behalf to claim copyright over everything that vaguely resembles their IP. Not to mention the global ability to sue ISPs if their services are demonstrably used for copyright violations. The EFF deconstructs what is known about the TPP via leaks, etc., and is critical (rightly so) of the secrecy of the agreement and negotiations (which would be an automatic “this is horrible and terrible” from anyone on the left if this were a Republican administration) . . . but a lot of folks on the left, as far as I can tell, seem to be: “Well it’s Obama. I’m sure it’s great!”


  7. Wonder how many on the right will demand their Senators actually read the bill?


  8. “This is either totally incompetent reporting, or it is an attempt to create scandal where none actually exists. ”

    I’d substitute “and/or” for “or”. They aren’t mutually exclusive.


    • jnc:

      I’d substitute “and/or” for “or”. They aren’t mutually exclusive.

      True enough. I just figured that if they are trying to create a scandal where there is none, they pretty much have to obfuscate what is actually going on.


  9. @scottc1: “in that government control over business is now the expected, default assumption, while operating a business in the absence of government control is so out of the ordinary that it must be noted, lest anyone be confused by assuming otherwise.”

    How else can we assure that companies are not hurting people, that they aren’t stealing from them, and that our products are safe? Government micromanagement is the only way to make sure everything is safe and fair! What, you want children working in factories 18 hours a day and unsafe meat and slave labor and the Triangle Shirtwaist Factory fire all over again? What kind of monster are you?

    The problem is, as it so often is, is that something that clearly has some benefits (child labor laws are a net positive, and if the government had to step in to make sure no unfortunate workers are getting ground up with my hamburger meat, I’m okay with that). Also, not a bad thing to say businesses need to have fire exits. Etc. Laws that make it clearly illegal to mislead people who are giving you their money aren’t bad, generally.

    But at some point, more is no longer better. The same principal of diminishing marginal utility that applies to almost anything, from the drinking of water to the taking of vitamins, applies here. But there are some folks who think you have to be drinking water every waking hour or taking $100 worth of vitamins a day, and similarly there are people who think every single thing is improved by government regulation and oversight. Yet mandating a particular ergonomic configuration of my office chairs is not the same as mandating that exits be open to workers in case the building should catch fire. Sometimes it seems some people cannot make the distinction, even when statistically demonstrable that mandating cars have airbags was nowhere near as beneficial as mandating cars have seat belts.

    And often, mandates almost seem like the government taking credit for what’s happening anyway. By the time ABS was mandated in all new cars, it was in a lot of cars already, and soon to make its way into more (making compliance easier, but still . . . safety features are a selling point for automobiles, so most safety mandates at this point are pointless, but I digress).


    • Kevin:

      child labor laws are a net positive

      Are they? I wonder why you think so. Preventing a 12 year old from earning extra money by refereeing in the town youth soccer league doesn’t strike me as positive in any way at all. And even assuming that such laws were historically a net benefit (and I don’t), the idea that in this day and age only child labor laws stand between us and some Dickensian nightmare strikes me as highly unlikely.

      But in any event, “regulation” doesn’t generally refer to generic laws like fraud that apply to everyone. It refers to special “rules” that target specific types of businesses. To say, for example, that Uber is “unregulated” does not mean that it is immune from traffic laws or fraud laws. It means that the regulatory bureaucracy hasn’t targeted it for special regulation that applies specifically to it or its industry. And I think in a society that valued true freedom, such regulation would be exceptional, not the norm. Alas, ours is not such a society.


    • Kev – I agree completely on this:

      But at some point, more is no longer better. The same principal of diminishing marginal utility that applies to almost anything, from the drinking of water to the taking of vitamins, applies here.

      Scott – The trick with regulation, from where I sit, is defining the diminishing returns spot. For me it is that point where a substantial number of businesses in an industry are hassled in some material respect because someone in the industry cheated, and cheating isn’t widespread, or where the courts are effective in protecting individuals and acting as a prophylactic against bad actors, without any micromanaging regulation. My guess: regulating football fantasy sites is unnecessary.

      There is a move on at the Consumer agency now to regulate against arbitration clauses in consumer contracts that prohibit class actions. This shouldn’t even be done by Congress, assuming Consumer doesn’t have the authority to do this by regulation. This should be left to the states. There are plenty of less intrusive ways to protect the consumer while also not exposing business to unnecessarily huge litigation expense, under the laws in many states.

      Feds should stay out, IMHO.


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