Morning Report: Dovish FOMC minutes 4/7/16

Stocks are lower this morning on no real news. Bonds and MBS are up and the 10 year is flirting with a 1.6 handle

Initial Jobless Claims fell to 267k last week, while consumer comfort dipped slightly.

The Fed re-affirmed their dovish bent in the March FOMC minutes, which were released yesterday afternoon. In discussing the global financial situation, the money quote was: “Nonetheless, many participants indicated that the heightened global risks and the asymmetric ability of monetary policy to respond to them warranted caution in making adjustments to the stance of U.S. monetary policy.” The markets have been saying that via the Fed Funds futures for a while now. An April hike is off the table. With the US economy improving, while the rest of the world deteriorates, the Fed doesn’t have to be aggressive in hiking rates. We are in uncharted territory here with zero and negative interest rates. They are going to be cautious raising rates when the rest of the world is cutting rates. 2016 could be shaping up to be a great year for mortgage bankers.

The German Bund yield is now a single-digit midget, trading at a 9 basis point yield. The Japanese 10 year yield has been negative since February.

Hedge fund giant Apollo is into the “seller financed” market for low income / bad credit borrowers. It is a hybrid purchase / rental model, where the seller keeps the title and the borrower is responsible for upkeep. Some have called this a predatory model. “Whether the process is called a land sale, contract-for-deed, bond-for-title or something else, the idea is the same: While it gives some low-income Americans a path, though long and winding, to homeownership, it can also be a way for investors to profit from borrowers who don’t qualify for mortgages.”

28 Responses

  1. Contracts-for-deed have been widely used in TX for many years. The Lege has passed protections for the Buyer, over time, and it can be a useful mechanism.

    I sold a home on such a contract back in 1980 or so, to a Nurse Practitioner who had recently moved to Austin. After one year, she refinanced and paid me off in full.

    She was a good credit risk on her new job, but was thousands short of a down payment, until after a year in her new position.



  2. Jonathan Chait has apparently been reading PL:

    “Every Marxist government in history has been a repressive nightmare. Marxists — aside from the ones who defend the remaining Marxist regimes — consider this a strange coincidence that has no bearing on Marxist ideology.”


  3. Good article on media bias for and against Sanders.

    “Is the media biased against Bernie Sanders?
    Updated by Ezra Klein on April 7, 2016, 2:10 p.m. ET”


    • Good article on media bias for and against Sanders.

      Generally, a revealing, and for once, self aware piece, I think.


  4. This should be interesting:

    “Liberia is outsourcing primary schools to a startup backed by Mark Zuckerberg

    Updated by Jennifer Williams on April 8, 2016, 8:20 a.m. ET”


  5. So Springsteen is canceling his NC concert.

    How did allowing drag queens to use the womens’ room become a cause celebre of the left?


  6. Another reason why Houston has been so economically dynamic, less restrictive zoning. It’s the Wild West here (at least outside the Loop).


    • The goal has to be to motivate fence sitters to vote Trump, or just really motivate his supporters to go the extra mile. Or the press remains delusional about how a majority of Americans regard them and think the average blue collar worker still views them like Cronkite in the 1960s.

      I expect it’s the latter. “Now that we’re telling our devoted minions what we really think of Trump, they’ll totally not vote for him.”

      Don’t even get into the part where the front page completely ignored American civics. In 1 year Trump got everything he wanted through the house and senate, got all his bureaucratic appointees confirmed, and—most dubious—actually took literal action on his pledges? Rather than, say, “deporting 11 million illegals” by putting additional teeth in e-Verify?

      So what they’re actual effect is: Draw attention to him, agitate and energize his base, make conservatives who don’t like him say “the enemy of my enemy is my friend” and hold their nose and vote for him … Maybe Donald Trump paid for it?


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