Vital Statistics:
Last | Change | |
S&P Futures | 2265.3 | -1.3 |
Eurostoxx Index | 362.4 | -0.7 |
Oil (WTI) | 51.6 | 0.5 |
US dollar index | 91.9 | 0.0 |
10 Year Govt Bond Yield | 2.45% | |
Current Coupon Fannie Mae TBA | 103 | |
Current Coupon Ginnie Mae TBA | 104 | |
30 Year Fixed Rate Mortgage | 4.13 |
Stocks are lower this morning after the ECB decision to stand pat. Bonds and MBS are lower after Janet Yellen’s bullish comments on the economy and some decent data this morning.
Janet Yellen spoke yesterday, saying the economy was close to the Fed’s target, which warrants gradual rate hikes. Here are her prepared remarks. “That said, as of last month, I and most of my colleagues–the other members of the Fed Board in Washington and the presidents of the 12 regional Federal Reserve Banks–were expecting to increase our federal funds rate target a few times a year until, by the end of 2019, it is close to our estimate of its longer-run neutral rate of 3 percent.” That should have been a relative uncontroversial statement, given that roughly corresponds with the December dot plot. However, bonds sold off anyway.
Housing starts rose to 1.23 million in December from 1.1 million in November. Building Permits were flat at 1.21 million. Starts beat expectations while permits missed. Multifam drove the increase in starts, while single fam fell slightly.
Initial Jobless Claims fell to 234k last week nearly matching a low set in November. You would have to go back to the early 1970s (during the Vietnam war draft) to see claims this low. That is even more impressive when you factor in population growth. Employers are hanging onto their employees.
The Philadelphia Fed survey jumped last month as conditions improved for manufacturing. New orders and employment drove the increase.
Treasury Secretary nominee Steve Mnuchin travels to Capitol Hill today for his confirmation hearing. The questions will largely center on his role in the IndyMac turnaround, as well as his recommendations for the GSEs. He will also be asked about his comments regarding possible tax reform and whether the rich will receive an “absolute tax cut.”
The nonbank share of FHA lending is worrying some in Washington. As banks have retreated from FHA lending, nonbank lenders like Quicken and Freedom have taken up the slack. GNMA is conducting a push to lure banks back into the business.
The Fed’s Beige Book survey was a non-event. Most districts described their employment markets as “tight” and expansion as “modest.”
One bond investor thinks the bond bull market is still going to last a while longer. Why? The velocity of money has hit a floor since the Great Recession and hasn’t picked up. The velocity of money measures how many times a dollar has been “turned over” in different transactions. It peaked at 2.2x in 1997 and is currently sitting around 1.4x. This has been driven by the Great American Deleveraging which began with the bursting of the real estate bubble – income growth has been nonexistent, and the marginal dollar has been saved, not spent. The lower velocity is keeping a lid on inflation.
Bridgewater CEO Ray Dalio sees a mild bear market in bonds as economic growth picks up. He views the nascent populism being exhibited worldwide as a threat to multinational corporations and emerging economies. How politicians direct and engage that populism is going to be critical. Note that the Fed is addressing some of this by launching a new think tank: The Opportunity and Inclusive Growth Institute, which will be run by Minneapolis Fed head Neel Kashkari. Of course there isn’t much the Fed can do to address income inequality, however quantitative easing has largely benefited those that own assets, who are primarily rich.
Here is a good article on determining how much house you can afford.
Filed under: Economy, Morning Report |
Meltdown Day Whatever: Russian hacking as the new Zimmerman Telegram.
https://www.washingtonpost.com/national/secret-wwi-telegram-holds-lessons-for-today-historians-say/2017/01/15/f4a6c1ac-db23-11e6-8902-610fe486791c_story.html
Do they seriously view WikiLeaks leaking DNC E-mails as an act of War?
I’m started to be reminded of Hunt For Red October:
“Admiral Josh Painter: This business will get out of control. It will get out of control and we’ll be lucky to live through it.”
http://www.imdb.com/title/tt0099810/quotes?item=qt0458293
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but Manning is a hero for exposing actual state secrets.
go figure.
edit — but they won’t even see their “act of war” thing through. okay, it’s an act of war. so we … issue some sanctions?
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That’s been my point, if it’s an act of war how many American lives are you willing to sacrifice to win the war?
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what? what are you, some sort of warmonger?
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i cannot get over how the left is going overboard over some embarrassing DNC emails confirming what we already knew: that the MSM and the D party coordinate messaging, and the DNC thought hillary should get the nom because it was her turn and they wanted a woman.
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jnc:
I’m started to be reminded of Hunt For Red October:
A great reference. I very much agree.
The left is creating the very conditions which it claims to be so worried about coming to pass. If Russia actually has the goal of making Americans doubt the legitimacy of their electoral process and hence its government, it couldn’t have a better partner than the post-election left and its mouth pieces in the press.
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useful idiots
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Good interview with Keith Ellison by Ezra Klein on the DNC chairmanship.
http://www.vox.com/policy-and-politics/2017/1/19/14322998/keith-ellison-dnc-ezra-klein
This is an interesting point for him to make give how often I see progressives make the fixed pizza or cookie analogies vis-a-vis the rich taking too much:
& the classic divide over taxes:
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“There are no statewide Republicans in Minnesota. Not any, not one. Amy Klobuchar, Al Franken, Democrats. Mark Dayton, our governor, Democrat; Attorney General Lori Swanson, Democrat. We don’t have no statewide Republicans. We used to. You remember Tim Pawlenty, who used to be the governor, and you remember Norm Coleman. Why can’t a Norm Coleman or a Tim Pawlenty get back into statewide office? Because in the Fifth Congressional District, we spike the vote so high they cannot get in.”
somebody learned how to putt.
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Yeah, he seems to get it better than most. Again, like with Biden, not a single word about Russia, Putin, or Comey vis-a-vis Clinton’s loss. Instead he noted this:
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“The truth is that based on the tax code, that’s actually the government’s money that we’re allowing you to keep.”
Thus why they’ll always have trouble winning across the country, but will handily sweep California.
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what a quote:
“I find it hard to believe that he rushed to some hotel to meet girls of loose morals, although ours are undoubtedly the best in the world,” Putin said.
https://www.bloomberg.com/politics/articles/2017-01-19/kremlin-said-to-fear-trump-won-t-be-such-a-great-deal-after-all
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This really was a good read:
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so if Trump learns to speak bureaucrat …..
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This really is a perfect PC formulation:
“women of decreased social responsibility”
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roberts trolls wyden
http://www.youngcons.com/mnuchin-confirmation-hearing-gets-testy-when-sen-roberts-asks-sen-wyden-if-he-needs-a-valium/
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Lotta butthurt in that room.
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Wyden has that perfect whiny liberal voice…
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Someone gets it:
https://www.washingtonpost.com/blogs/post-partisan/wp/2017/01/19/at-least-this-time-we-dont-have-to-pretend-the-presidents-good/
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