Morning Report: Servicers getting slammed this morning 5/3/16

Stocks are lower this morning on global economic weakness. Bonds and MBS are up.

Sell in May and go away? Certainly that is the tone of the market so far.

Not much in the way of economic numbers this morning. The ISM New York Index rose while the IBD/TIPP Economic Optimism index ticked up as well. Vehicle sales will be trickling in all day as well.

Walter Investment Management is getting pummeled this morning on bad numbers. Tangible book value per share fell from $9.92 to $5.04 on a negative MSR valuation mark. Reverse Mortgages also hurt earnings. Nationstar and Ocwen are down in sympathy. The stock is down 27% to $5.25 a share. This was a $23 stock last summer.

Atlanta Fed President Dennis Lockhart said the markets are underestimating the possibility of a rate hike at the June meeting. Currently the Fed Funds futures market are handicapping a 10% chance of a rate hike. Kind of surprising given that GDP growth in the first quarter was a measly 0.5% and the latest forecasts for Q2 GDP are coming in around 1%.  The possible exit of the UK from the Eurozone is another risk. Ultimately it will all come down to wage growth (or the lack thereof).

Construction spending rose 0.3% MOM and is up 8% YOY. Residential construction was up 7.6% YOY. Office, commercial, and health care were where the action was, increasing close to 20% overall.

Home prices increased 6.7% last year, according to Corelogic. They are forecasting a 5.3% increase this year. Restricted supply continues to drive prices higher, although affordability is falling. Lower interest rates are helping with the affordability issue,

Banks eased standards for residential mortgages in the first quarter, according to the Fed Senior Loan Officer Survey. Conforming loans, non-QM and jumbo loans eased standards.

23 Responses

  1. Brent, we learned this morning that Austin’s homes-for-sale inventory is very short. About 60 days. Down from 66 days a year ago. Average time on market is about 50 days. Median pricing up about 8% over a year ago.

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  2. That’s it for Cruz.

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    • McWing:

      That’s it for Cruz

      Yup. Looks like I will be joining the ranks of the Independents.

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    • I still say if Trump wins, and I think the likelihood is fairly good, it’s going to be the left that gets him elected more than Trump himself. There’s a fine line between going negative on the candidate, and going negative on everybody who agrees with a single thing he says, or has the temerity to disobey the left’s commands to hate him wholeheartedly. People will vote for to vote against. And who doesn’t like a narcissistic billionaire underdog story?

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    • I concur. Plus, I think he’d have a much better case against 9/11 Truthers, Obama Birthers, Moon Landing Conspiracists, and flat earthers.

      Why not go after them? Just trying to open up the door so liberals can sue everybody for disagreeing with them.

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  3. This pretty much sums up my thoughts:

    http://www.nationalreview.com/corner/434914/hillary-is-worse

    Donald Trump is unfit to be president. He’s a braggart and a liar. And a serial adulterer. He’s behaved shamefully during the primary campaign. He wouldn’t recognize the Constitution if he tripped over it in the street. He doesn’t know even the Cliff Notes version of any policy issue. The idea that the party of Lincoln and Reagan, Coolidge and Eisenhower, Justice Harlan and Senator Taft has nominated Trump is appalling.

    And I’m going to vote for him anyway.

    …I would have preferred Cruz. He’s manifestly a better human being and would certainly have made a better president. But that’s over now. Either Hillary Clinton or Donald Trump is going to be sworn in as president in January. It’s not crazy to argue that Hillary would be less destructive in the long run, but it’s an argument I do not find persuasive. So my reluctant conclusion is this: Vote for the bloviating megalomaniac – it’s important.

    The only thing I would have changed is that I would have replaced “but it is an argument I do not find persuasive” with “but it is pretty close to being so.”

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    • We’re doomed anyway, voting for any given candidate (or not) is essentially meaningless.

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      • While I don’t think we’re any more doomed than we’ve ever been (arguably, we’re less doomed, in a general sense), I agree that voting for any given candidate is essentially meaningless. Just a grain of sand on the beach. The overall process is one we have as much a say in as the weather. Either it’s gonna rain or it’s not.

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      • McWing:

        We’re doomed anyway, voting for any given candidate (or not) is essentially meaningless.

        So is Trump or HRC more likely to accelerate the demise?

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  4. Looks like the Department of Labor is trying to get the new overtime regulations implemented prior to the election. I predict unintended consequences.

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  5. and now we get to see if Scott Adams was right or wrong.

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    • Yep. And up until this point, he’s been more right than wrong.

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      • Good points. Also, I find the Democrats argument that you’re an idiot and a Nazi if you vote for Trump, so do what we tell you to do, sheeple . . . is not compelling for me. I’m not sure if it will be enough, and I argue again there is the motivation of independents and never-voters and folks who only vote if a populist is running . . . I think those people are likely to turn out, while millennials unhappy that the DNC did not feel the Bern are likely to stay home. Which I think tends to make it a close election, at least in terms of popular votes. I may be wrong, but I don’t believe this is an easy victory for Hillary, and I think the left is going to make things harder on her, not easier, by continuing to misunderstand how Trump won the primary and what might work against him in the general. I think they will likely preach to the choir, with lots of fire and brimstone rhetoric, and just stoke potential Trump voters in action/decision that does not favor them.

        I think Hillary will likely win, but I don’t consider Trump a longshot. At all.

        Time will tell, I suppose. If the Teflon coating finally wears away, I guess all bets are off. That being said, there’s not much Trump has said that cannot be spun. It just a matter if he can do it, or not get in the way when his team does it.

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