Morning Report: Obamacare lite 3/7/17

Vital Statistics:

Last Change
S&P Futures 2372.0 -3.5
Eurostoxx Index 372.8 -0.5
Oil (WTI) 53.6 0.4
US dollar index 91.7  
10 Year Govt Bond Yield 2.50%
Current Coupon Fannie Mae TBA 101.86
Current Coupon Ginnie Mae TBA 103.19
30 Year Fixed Rate Mortgage 4.19

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

Home prices rose 0.7% MOM and are up 6.9% YOY, according to CoreLogic. Including distressed sales, home prices are about 4% below their April 2006 peak. Other indices like the FHFA House Price Index have already surpassed their old bubble peaks. Of course they haven’t really surpassed the bubble peaks on an inflation-adjusted basis – over the past 11 years, inflation has increased prices 20%. Currently, we have pockets of overvaluation in Florida, the Pacific NW, Texas, and parts of the Northeast.

Rising prices are helping homebuyer sentiment. The latest Fannie Mae Home Purchase sentiment index rose 5.6 percentage points to 88.3, a new record. Note that the index only started in 2010, so it has a limited history. The employment-related questions showed big improvements. People are not worried about losing their jobs, and a net 19% of respondents reported increased income over the past year.

Redfin has some advice for Ben Carson regarding affordable housing policy. Punch line: increase subsidies, and try and coax local governments to change their zoning laws using carrots of infrastructure investment.

Meanwhile, construction executives are the most optimistic they have been in years. Of course some of that optimism is predicated on a big infrastructure plan out of DC, which may or may not happen.

The Republican replacement for Obamacare is out. The major changes include an elimination of the individual mandate, and block-granting Medicaid to the states. The Cadillac tax gets deferred until 2025 as well. The popular parts of Obamacare (allowing kids to stay on their parents’ plan until their mid twenties and the the pre-existing condition coverage mandate) remain in place.

9 Responses

  1. Great article on regulation and how the press frames it.

    http://reason.com/blog/2017/03/07/new-york-times-thinks-businesses-are-dog

    Like

  2. The search for new villains by the media & progressives is never ending:

    “‘Big Candy’ gives business to Trump while craving federal policy shifts

    The National Confectioners Association, which wants the Trump administration to roll back government sugar subsidies, has booked three events at Trump-owned venues, including its industry conference being held this week at the Trump National Doral resort near Miami.

    By Amy Brittain and Jonathan O’Connel”

    https://www.washingtonpost.com/politics/big-candy-is-lobbying-the-trump-administration-its-also-holding-events-at-trump-hotels/2017/03/07/a07cf3a2-0027-11e7-8ebe-6e0dbe4f2bca_story.html

    Like

  3. From your post:

    The major changes include an elimination of the individual mandate, and block-granting Medicaid to the states.

    And creating tax credits.

    This remains focused on coverage, and not on the cost of delivery of health care.

    I believe in the laboratory of states models for a great many perceived wants and needs. I actually think block grants undermine that laboratory by separating the joy of spending from the pain of taxing. It always feels to the states like OPM, and then they powerfully lobby for more OPM.

    And except for the idea of reviving Wyden-Bennett, I got nuthin.

    Like

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