Morning Report: Negative equity falls 6/10/16

Stocks are lower this morning on no real news. Bonds and MBS are up as sovereign bonds rally globally.

The 10 year has broken out of its range and is now trading at 1.65%. The catalyst has been lower rates throughout the world. The German 10 year Bund is now trading at 2 basis points. The Japanese Government Bond yields negative 13 basis points. At some point, gold has to become interesting as an investment. The knock on gold was always that there is no yield, but compared to long term sovereign bonds that have no yield and (probably) no upside, why not? Definitely a better risk / reward.

Mortgage originator and servicer Walter Investment got slammed yesterday after the CEO resigned. Regulatory difficulties and costs were the catalyst. The stock has lost 82% of its value over the past year.

In economic news, initial jobless claims fell to 264k from 268k the week before. So in spite of the low job creation numbers, we aren’t seeing firms lay off people yet.

Consumer confidence fell slightly in June to 94.3 from 94.7 according to the University of Michigan Consumer Sentiment Survey

268,000 homes regained positive equity in the first quarter, according to CoreLogic. They estimate that 4 million homes (or about 8% of the homes with a mortgage) have negative equity. 18% of homes have less than 20% equity. Negative equity remains a problem in the Northeast, the Rust Belt and FL, NV, and AZ.

Ex Fed Head Narayana Kochlerakota argues the Fed should be doing more to get inflation up. Not only should they hold off on raising rates until the core PCE is above 2%, but it should pay nothing on excess reserves.

15 Responses

  1. Frist!

    … is Obama planting a poison pill for Hillary? The administration presiding over a huge increase in energy prices would be doomed, I’m prone to think. Won’t likely effect the 2016 election but 2018 and 2020? Hmm.

    http://www.washingtonexaminer.com/report-obamas-oil-tax-would-mean-huge-tax-hike-for-gasoline/article/2593503

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  2. Fuck these colluders!

    http://hotair.com/archives/2016/06/10/house-considering-changes-to-obamacare/

    Ckoke. On.It. You evil scum! I hope they all go under. There is no recourse to severe for any Republican that votes for it.

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  3. It is funny watching the left make Orlando all about gun control. As if disarming law-abiding citizens will prevent terrorism.

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    • What’s funnier is it would not be “all about gun control” (although that would definitely be part of it) if this was a Sovereign Citizen or some lone white guy driven to murder-suicidal ideation by SSRIs. Then it would be half-caused by the poisonous ideology of conservatism/libertarianism, the hate speech of Donald Trump, yada yada yada. Because if it’s a white duded with some possible association with conservatism or Christianity, it’s fine to talk interminably about the guy’s religious beliefs or political affiliation and explain how, yes, gun control is important, but what is also important is understanding just how conservatism or libertarianism and/or Christianity leads naturally to racist homophobic sexist violence. But since the guy was a Muslim, the whole problem is the ability to purchase high capacity firearms.

      I personally don’t have an issue with reasonable regulations on what firearms can be purchased by the common citizen, background checks, limits of magazine capacity, etc. These things are fine, if largely ineffectual, IMHO. The idiots who think their ability to purchase high-capacity, high-power semi-automatic weapons is going to allow them to fight government tyranny in the US are nuts. It’s not going to make a difference if there’s a 50% power/capacity difference . . . but it’s equally a fantasy that any gun control legislation that can possibly be passed (and even draconian outlawing of guns, which cannot) will stop terrorism, either of the Muslim or Sovereign Citizen kind.

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      • On guns, agree with KW, and would add 2 points.

        At a liberal blog, seeing the inevitable piling on against guns, I asked why liberals seem to ignore both the raging asshole behind the gun and the fact that a weekend of handgun deaths in Chi, Baltimore, and New Orleans dwarfs even Orlando. Is that because of the dramatic effect, or just “whose ox”, and if it is happening in the these three gang plagued inner cities but they are suburbanites do they just not give a shit?

        As I have written before, coming from a traditional law enforcement view, I want the items on KW’s list. Not so much to prevent gun crime, at least not until we have had the regulation in place for a generation, but to make it easier to solve cases. We are no longer in the era of 90%+ murders occur among family and friends.

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        • Concur. Couple making gun crime easier to solve—at least in theory—with decriminalizing drugs, at least at consumer level, and gun crime would reduce.

          Liked by 1 person

        • with decriminalizing drugs, at least at consumer level, and gun crime would reduce.

          Yep. Add in the removal of paper money from circulation on that side of the ledger.

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        • Removing paper money just builds the market for BitCoin.

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        • JNC, that would be irrelevant to my point. Guns are used in urban muggings. No cash, no muggings.

          Assuming that bitcoin were as easy to use as a debit card or PayPal I suppose it might. So what?

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        • Ahh. I thought you were referring to the proposals to phase out cash or at least large denomination bills, to impede drug trafficking and money laundering.

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        • Got ya. Yes, the other benefits would have applied to some extent 20 years ago but for the ability to trade in foreign currency. It might still make it hard for small biz to skim cash to reduce the tax bill, or Las Vegas to be skimmed by the Mob.

          But thanks for the reply. I agree. Decriminalizing drugs is the best way to manage drug trafficking.

          I wonder if Johnson gets into the debate if decrim of MJ wouldn’t get a big boost.

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