Morning Report: the third party election 5/11/16

Stocks are lower this morning on no real news. Bonds and MBS are flat.

Slow news day, with no economic data

Mortgage Applications rose 0.4% last week as purchases rose 0.4% and refis rose 0.5%. Refis accounted for 52.8% of all originations.

Bernie Sanders and Donald Trump won their respective primaries in West Virginia yesterday. Hillary looks to have sewn up the Democratic primary, despite Bernie Sanders’s determination to play it out. Neither Trump nor Hillary are especially popular in their respective parties. 2016 could be the year of the third party candidate, with Sanders supporters going for Green Party candidate Jill Stein and establishment GOP voters siding with Libertarian candidate Gary Johnson.

Stonegate Mortgage announced earnings yesterday, missing estimates on both the top line and the bottom line. Originations decreased by 15%, while the company took a $36 million writedown of its MSR portfolio. The write-down lowered revenues to $5 million from $47 million at the end of the fourth quarter. Originations decreased 15% to $1.94 billion sequentially and fell 26% on a YOY basis. The stock is trading at $4.16 early, down 28% in May alone.

22 Responses

  1. Have we seen any uptick in polling with the third party candidates? Mary Matalin’s announcement of her switch to the Libertarian Party caught some of the news cycle but I don’t see any sort of statistically significant groundswell yet.


    • I’m dubious there will be more than a few percentage points. While individual Republicans and Democrats may be disgusted with the party nominees, I think awareness and excitement about 3rd party candidates will be tepid. They are doomed to lose, and unless there is a great deal of news coverage and social media momentum for a 3rd party candidate, there’s going to be very little interest for people under 30, I suspect.

      I think old school Republicans disgusted with Trump with either vote HRC or 3rd party, and those that often vacillate and vote only when emotionally enthused will stay home. I think the majority of BernieBros will either vote for HRC to stop Trump, or not vote. I get the impression from some of my daughter’s friends that a Trump presidency is, to their way of thinking, what the Democrats deserve for not nominating Bernie.

      While Nader may have helped spoil the 2000 election for Gore, that was mostly because of how close it was a what a poor campaigner Gore was. Otherwise, his campaign would not have been notable at all.

      The last 3rd party candidate that had any chance and momentum was Perot, who was a billionaire and was able to buy hour long programs on ABC, mostly devoted to attacking GHW Bush (which is why I suspect Perot was a spoiler in the 1992 election, despite the broadly held opinion that Perot had no effect on the 1992 election—this is not remotely credible to me, despite being conventional wisdom). And he screwed it for himself by dropping out and then jumping back in.

      There may be some slight uptick in interest in Libertarian or Green party candidates, but I suspect it will be slight and ultimately irrelevant.


      • I have no idea how it became conventional wisdom that Perot drew from both sides in 1992. He clearly took away Bush’s margin of victory and sent Clinton to the White House.


        • yello:

          I have no idea how it became conventional wisdom that Perot drew from both sides in 1992. He clearly took away Bush’s margin of victory and sent Clinton to the White House.

          That conventional wisdom baffles me, too.


        • Because exit polling showed he was taking roughly equal from registered Republicans and Democrats, although many of those registered Democrats were the old Reagan Democrats, and likely did not vote for Carter or Mondale or Dukakis. Also . . . exit polling. But a not-insignificant factor was Perots campaigning, which include, I think, two purchases of a full hour of advertising on ABC (if I recall correctly, maybe on two different networks? I’m working from memory here) and a lot of media coverage in 1992’s version of media-Trumpmania, where Perot devoted 80% of his time to attacking Bush, Bush policies, the Reagan/Bush deficit, etc. At the end of the Gulf War, Bush’s approval was something like 90% (92%) and went steadily down from there, with the most precipitous drop happening as Perot and Clinton simultaneously campaigned against him.

          I had some discussions about the different treatment of Nader and Perot by the media (Nader being asked—repeatedly—how he was going to live with himself if he spoiled the election for Gore, versus Perot never getting those kind of “What if you’re campaign for president just elects Bill Clinton?” questions) in 2000. The people I was discussing this with (all very liberal) argued that it was because it was clear BEFORE THE 1992 ELECTION that Perot would only draw exactly evenly between the two parties, so could not possibly be a spoiler, while it was obvious that Nader could only hurt the Democrats, even though Perot polled much higher even right before November 1992 than Nader ever did.

          I also did a state by state analysis of the Perot returns at one point that confirmed it for me in my mind, as often even if you split the votes evenly between Democrats and Republicans, or just assumed 10% more Republicans were voting for Perot than Democrats, George H.W. Bush took that state and it’s electoral votes. A Perot-free race would have likely been close, but George H.W. Bush likely would have won.

          I genuinely believe, despite the backlash against H.W. raising taxes after his no-new-taxes pledge, that isn’t (as is the conventional wisdom in some quarters) what cost him the election.


        • I also did a state by state analysis of the Perot returns at one point

          Good. I always assumed the “Perot as non-spoiler” assertion was based on a state by state analysis, but I never read one. So you did one and it looked like Bush 41 got hurt more. I will now assume that to have been correct.

          Addendum: I voted for BigEars twice. First time, it stole a vote from Bush, second time it stole one from Clinton.

          Liked by 1 person

        • Yeah, I wrote out my Perot analysis, went through all sorts of trouble to find it about 8 years ago (had to dig through old Yahoo mail archives on line for a now-defunct mailing list) … found it, posted it to my personal website, but some jackass hacking random websites deleted it and a bunch of other articles. Irritating.

          I think it’s gone for good now, but if you look at the results state-by-state it seems the chances of Perot not acting as a spoiler in the 1992 election are very, very small. I doubt he was much of a spoiler in 1996, and the Reform Party went down the tubes from there. Which seems to me the template for all future 3rd party booms—there may be another guy who really gets a 3rd party going, but it will collapse and peter out soon enough. Pat Buchanan and John Hagelin under the same umbrella! Too many competing interests in a 3rd party, ’nuff said.

          From Wikipedia:

          Buchanan competed in the party’s primary against the Reform Party’s wealthiest contender, real estate mogul Donald Trump and against Dr. John Hagelin, a physicist from Iowa. The party soon erupted into chaos as supporters of the liberal Hagelin fought members of the “Buchanan Brigade.” Trump eventually dropped out of the race, citing the party’s inability to unite. At various points violent confrontation between the two groups required police intervention.

          Heh! I forgot Trump went Reform party in 2000.


    • FYI, I officially resigned my membership in the Republican party yesterday. I am now without a party.


      • Welcome to the Dark side!


      • I’m still a registered Republican. Keep meaning to re-register as Independent but . . . other things to worry about!


      • Just like all of the rest of us who won’t be able to vote in primaries! 🙂

        I heard on NPR this morning that one of the most influential conservative radio hosts (forget her name) changed to Libertarian. . . while on the air. It’ll be interesting to see how this all turns out.


        • Laura Ingrahm?


        • Mich:

          Just like all of the rest of us who won’t be able to vote in primaries!

          Yeah, that was the one thing that gave me pause, particularly with regard to local elections. My town is overwhelmingly Republican, so the real contest takes place in the primaries. Once those are over, who is actually going to take office is a fait accompli, so you really need to vote in the primaries to have any effect. But ultimately that wasn’t a big enough pull to make me change my mind.

          It ultimately won’t change my voting priorities, but I had to engage in at least a symbolic protest of Trump.


        • Mary Matalin… Married to James Carville of all people


    • In that he never argued that we default on our debts, indeed. Just that we buy it back a discount, if interest rates rise (didn’t see that mentioned initially), which outside of revenue raised from a tax hike would have to be debt financed, so more expensive rather than money saving, but I’m sure someone would point that out to him before it got that far. 😉


      • If interest rates rise, that just makes the existing bonds a better deal for the government since the rate is locked in. Only new borrowing has to be done at market rates. The national debt is not an ARM.


        • yello:

          The national debt is not an ARM.

          Actually, it essentially is since the only way to pay back the debt when it is due is to roll it over. The government borrows literally every day, in lots of different maturities ranging from 1 week to 30 years. Most of that is just rollover of old debt, which will be at higher rates as rates rise.


        • That’s why any real interest rate increase is a myth. Yellen’s a BIG GOVERNMENT believer, making it harder for the government to “borrow” ain’t in her DNA.

          She’s full-on MMT.


  2. Like

  3. Like

Be kind, show respect, and all will be right with the world.

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: