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.