Morning Report: Corporate America senses a shift in the winds 1/4/17

Vital Statistics:

Last Change
S&P Futures 2257.0 4.5
Eurostoxx Index 365.7 0.0
Oil (WTI) 52.5 0.1
US dollar index 93.2 -0.3
10 Year Govt Bond Yield 2.47%
Current Coupon Fannie Mae TBA 103
Current Coupon Ginnie Mae TBA 104
30 Year Fixed Rate Mortgage 4.17

Stocks are higher this morning on some good economic news out of Europe. Bonds and MBS are up small.

The FOMC minutes are scheduled to be released at 2:00 pm EST today. The focus will be on the dot plot, which showed the Committee members predicting 3 Fed Funds rate hikes this year. At her press conference, Janet Yellen downplayed the change, so investors will be looking closely at the discussion to get some more color on what the Fed is thinking. There is a chance that rates could get volatile around 2:00 pm, so just be aware if you are looking to lock around then.

HSBC took up their estimate for world growth on better US and Chinese growth prospects.

Mortgage Applications fell 12% last week as purchases fell 2% and refis fell 22%. It was a holiday week, so the numbers aren’t as bad as they look.

The Gallup Job Creation Index was unchanged last week and is at post-crisis highs.

China recently imposed new capital controls in order to prevent outflows of their currency, which restricts Chinese companies from buying foreign real estate. You are starting to see the effect of that in the high end real estate markets. Apartment prices fell 6.3% in Manhattan and you are seeing the same thing in Central London (which has been in bubble territory for years). Though we have yet to see it, you should expect to see some of the froth come off other high flying real estate markets, particularly on the West Coast.

CoreLogic looks at the change in Administrations (and ideologies) regarding housing going forward. Think tanks like the Urban Institute will take a backseat to think tanks like Cato. Expect to see a de-emphasis on fair housing issues like zoning and more of a focus on free-market solutions. Steve Mnuchin has been out calling for a re-privatization of Fannie Mae.

“Buy the election, sell the inauguration” is Morgan Stanley’s advice to equity owners. Their call is that uncertainty about Trump’s policies and the Fed will overshadow the optimism over regulatory relief and lower taxes going forward.

Wall Street lawyer Jay Clayton is the leading candidate to run the SEC. Along with Treasury Secretary Steve Mnuchin, they will hopefully get the private label securitization market back on track.

A fascinating read on the CFPB and how it operates.

It is interesting to see Corporate America begin to tout bringing jobs back to the US post-election. You have seen Ford, GM, Sprint, etc all out with headlines about planned job creation and shifting production back to the US. This could be the beginning of a trend. IMO, Corporate America has read the tea leaves from the election and realizes that they too are in the spotlight and want to get ahead of it. Ironically, Obama would have been crucified if he took on companies directly via Twitter the way Trump has. I guess only Nixon could go to China.

25 Responses

  1. Already had one leftist call me a liar for my take on job repatriation. LIE! LIE! LIE! These were planned years ago! LIE! LIE! LIE!

    gee you would be excused for thinking they don’t want this to happen..

    Liked by 2 people

    • Living in their own bubble of self delusion simply inhibits them from making rational decisions. It’s literally the same thing that the right was accused of for years with Fox News etc.

      They even have their own version of WMD’s and Iraq with “Russia Hacked the Election”.

      https://theintercept.com/2017/01/04/washpost-is-richly-rewarded-for-false-news-about-russia-threat-while-public-is-deceived/

      Liked by 1 person

      • He told me I better never lecture my son on integrity…

        I told him Ford admitted it openly in one of their tweets..

        I don’t even know why I respond to some of these people…

        Liked by 1 person

        • Because it’s like shooting fish in a barrel?

          Just link the Steve Pearlstein article in the future.

          Like

    • “gee you would be excused for thinking they don’t want this to happen..”

      This remains amazing to me. I can’t think of a clearer example of a political group doing things that result in the exact opposite of what they think they are doing. He’s not even sworn in and they are essentially running a Trump 2020 campaign.

      The message left from the original news reportage: “Trump = Jobs, probably”.

      Then the attacks come, and it’s like that Gary Larson cartoon “Blah blah blah blah Trump blah blah blah blah Sprint blah blah blah Ford blah blah blah Carrier blah blah Trump blah jobs blah Trump blah blah Jobs”

      Until at the end it looks to everyone but the diehard true believers that Trump is creating and saving jobs and the Democrats are really mad about it and want him to stop.

      I understand the realities are more complex, and it could be a lot of these companies are just touting things that were in the works for months or years anyway, just to get ahead of the PR curve. But the optics for the left are so awful, they shouldn’t be touching this stuff with a ten foot pole. Instead, they are all in on “all these reports about American jobs staying in America is all lies and anyway is bad and you’re all idiots and small-town America is what’s wrong with this country, also gun-owners, church-goers, and farmers”.

      Like

  2. How is what trump doing with twitter any different than any progressive #hashtag campaign that is intended to shame/highlight a particular issue/action? He stole their game and they’re pissed.

    Like

  3. They can’t be parodied.

    “exercise inequality”

    http://www.vox.com/science-and-health/2017/1/4/13982272/exercise-inequality-luxury-gyms-cheap-workout-spaces

    The Gold’s Gym here costs $10 per month. It’s not about the money.

    Like

    • Taking a walk around your neighborhood is free…

      Like

    • That’s idiotic. And you know where exercise is free or cheap? Pretty much everywhere in red-state America. It’s only in dense urban areas where walking or running in the street represents a potential crime-hazard, and where regular gyms are replaced or overtaken by high-cost gyms (and where $10 a month gyms have problems staying in business, thanks to high rent and gentrification and whatnot).

      My gym is Planet Fitness. $10 a month, or the price of 1.5 full McDonald’s meals. And I’m told the poor don’t eat healthily because the only food they can afford is cheap fast food from McDonald’s. If they skip one-and-a-half meals a month, that pays for their gym membership.

      Like

    • jnc:

      They can’t be parodied.

      Just when you think it can’t get any more absurd.

      “World to end tomorrow: women, blacks hardest hit” really could be a totally unironic Vox headline.

      Liked by 1 person

    • there is a reason i pay $20 for a Manhattan. and it’s not because of the superior ingredients.

      Like

  4. Don’t know how to post a picture, but this is pretty good:

    Like

    • Of course they didn’t. I think some private firms provided the analysis, which is interesting given the contentiousness of the issue, but perhaps to provide plausible deniability in case it ever became indisputably clear it wasn’t a Russian state hack.

      Still doesn’t address the problem of Russian “hacking the election” by—if they did it—just releasing actual correspondence of Democrats.

      Like

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