Morning Report: Treasury and FHFA disagree on the GSEs 5/19/17

Vital Statistics:

Last Change
S&P Futures 2370.5 6.8
Eurostoxx Index 390.7 1.5
Oil (WTI) 50.0 0.6
US dollar index 88.8 -0.4
10 Year Govt Bond Yield 2.24%
Current Coupon Fannie Mae TBA 103.27
Current Coupon Ginnie Mae TBA 104.21
30 Year Fixed Rate Mortgage 4.03

Stocks are up this morning on no real news. Bonds and MBS are down small.

Slow news day.

No economic data this morning, but we have Fed-speak at 9:45 and 1:40.

Treasury Secretary Steve Mnuchin and FHFA Head Mel Watt disagree on what to do with Fannie Mae’s dividends to Treasury. A week ago, Watt suggested that Fannie and Freddie may have to retain some of their earnings in order to build / maintain their capital base. Yesterday, Mnuchin said that he expected the dividend payments to continue. Despite a Republican president, Mel Watt is going nowhere – his term expires in 2019 and he can only be removed for cause.

Ellie Mae’s Origination Insight Report is out, and it shows that fallout increased, along with the purchase share of mortgages. Cycle times improved by a day across the board.

St. Louis Fed Head James Bullard believes that the unemployment rate could fall further without igniting inflation. He seems to think the new normal is about 2% GDP growth and sees that sort of pace for the immediate future. That will probably be the case until wage inflation picks up, and who knows when that will be?

Guess who’s back? Ex-NJ governor, MF global collapse Jon Corzine, who is apparently fundraising for a new hedge fund

43 Responses

  1. Interesting article. Seems correct to me.

    Arguably, what has been branded as “The Resistance” — but in actuality is the totalitarian might of the administrative state and their partisan allies — began with the Democratic Party’s scorched-earth campaign against the political nominations of the Trump White House. But beyond the partisan rancor of the legitimate and often frustrating nomination process, more sinister forces were at work.

    Mother Jones, unwittingly, sheds light onto the mindset of the administrative state in a piece detailing the resistance of EPA bureaucrats. An anonymous and unelected government employee wrote to Mother Jones laying out a lengthy argument justifying his or her resistance to reforms by EPA Administrator Scott Pruitt and objection to directives from the White House:

    What type of nation are we when we allow our leaders to sign into law a rule that makes it EASIER for mining companies to pollute local waterways? These same politicians will try to convince their voters that making it easier to pollute local streams is somehow good for them… [The anti-democratic notion that careerists at the EPA have a greater authority than the will of the people and their elected representatives is astounding and stands against concept of a representative republic]
    Here in the US, those of us who work to protect the environment and human health from corporate pollution are lucky enough that we do not live under the specter of murder. We are, however, acutely aware that the forces behind these heinous crimes against environmental activists abroad are the same forces that are working against us in the US today. And make no mistake: These forces are poised to grow even stronger…
    ..Will the capture of EPA by corporate interests be swept up in all the other horrifying news of the day or week? Or will the public finally decide that it is not acceptable to allow EPA, the only agency with a mission dedicated to protecting the environment, to be systematically dismantled, allowing those at the top to further concentrate wealth and power among themselves? Despite the long odds we face, we will never stop working to protect every person’s right to have a healthy place to live, work, and play. And if the new administrator casts me out of the job I love, I will not stop working toward the principles that have always animated my life. This is who I am, and that will never change. I stand in solidarity with brothers and sisters that work to protect human rights, human health, and the environment here in the US and all over the world. The struggle continues.

    These are not the words of a dutiful civil servant but of a partisan tyrant who would see his own view, his own agenda, and his own lens of politics dominate over that of the elected government of the United States. In their minds they are but a guardian of the people, albeit one that must stand up to and ultimately negate the will of that very same people. Were the United States governed by a different political system, this view of the role of the unelected and their duty to act as sovereign over the people might even be admirable, but that is not a republican system.


  2. Worth a read. For once a source goes on the record.

    “What James Comey Told Me About Donald Trump
    By Benjamin Wittes
    Thursday, May 18, 2017, 8:02 PM”

    I think the related Times piece is the first time I’ve seen a non-anonymous source cited in years.


    • jnc:

      Thanks for the lawfare link. I thought this line was notable:

      “Rod is a survivor,” he said. And you don’t get to survive that long across administrations without making compromises. “So I have concerns.”

      Hasn’t Comey himself survived across previous administrations?


    • This is good advice for dealing with both the press and Trump:

      “For the same reason, I insisted that Schmidt record the conversation and give me a copy of the recording, so that we had a good record of what was said: both what was said by Comey as reported by me, and what was said by me about the conversation. “


    • This says a lot about Comey and the author.

      Comey understood Trump’s people as having neither knowledge of nor respect for the independence of the law enforcement function. And he saw it as an ongoing task on his part to protect the rest of the Bureau from improper contacts and interferences from a group of people he did not regard as honorable. This was a general preoccupation of Comey’s in the months he and Trump overlapped—and the difference between this relationship and his regard for Obama (which was deep) was profound and palpable.

      More very revealing information about Comey.

      Comey was disgusted. He regarded the episode as a physical attempt to show closeness and warmth in a fashion calculated to compromise him before Democrats who already mistrusted him.

      So, I ask, is Trump stupid or calculatingly smart? I don’t think he can be both.

      It’s also interesting that he doesn’t want his Tribe to think ill of him.

      I laughed at this description.

      dramatic dinner meeting


  3. Well, Rosenstein is now a hate target.

    “Notwithstanding my personal affection for Director Comey, I thought it was appropriate to seek a new leader,” he told lawmakers, according to his remarks. 

    Poor, dumb fuck.


  4. Still blown away by that Lawfare blog posting. I know his friend thought he was doing Comey a favor, but it makes him look awful.


  5. Dude

    A trove of documents created during a federal investigation into Princeton University offers an unprecedented glimpse at how elite college admissions officers talk about race.

    Outsiders have long debated how the secretive Ivy League admissions system considers the race of its applicants. Within the schools, such discussions form one of the most closely guarded elements of a process that has remained remarkably opaque for decades.

    But documents obtained by BuzzFeed News show Princeton’s admissions officers repeatedly wrote of Asian-American applicants as being difficult to differentiate, referring to them dismissively as having “very familiar profiles,” calling them “standard premeds,” or “difficult to pluck out.” The comments were noted by civil rights investigators at the Education Department as they probed allegations of racial bias in the school’s admissions system.

    Of a Hispanic applicant, an admissions officer wrote, “Tough to see putting her ahead of others. No cultural flavor in app.” Of a black student, another said, “Very few African Americans with verbal scores like this.”

    I’m afraid to keep reading because at some point they’re gonna say Asian women’s vaginas go the other way.


  6. NYT subscribers problem.


  7. Only a bigot wouldn’t bang a tranny.


    • I still find it fascinating that the left has now taken up drag queens as their cause celebre…I guess it goes to show who calls the shots in that party…


  8. Ouch.

    Ivins, by contrast, shared ownership of anthrax patents, was diagnosed as having paranoid personality disorder, and had a habit of stalking and threatening people with anonymous letters — including the woman who provided the long-ignored tip to the FBI).


    Instead, Mueller, who micromanaged the anthrax case and fell in love with the dubious dog evidence, personally assured Ashcroft and presumably George W. Bush that in Steven Hatfill the bureau had its man. Comey, in turn, was asked by a skeptical Deputy Secretary of Defense Paul Wolfowitz if Hatfill was another Richard Jewell — the security guard wrongly accused of the Atlanta Olympics bombing. Comey replied that he was “absolutely certain” they weren’t making a mistake.

    Just the kind of humility we desperately need.

    Mueller could not be bothered to walk across the street to attend the press conference announcing the case’s resolution. When reporters did ask him about it, Mueller was graceless. “I do not apologize for any aspect of the investigation,” he said, adding that it would be erroneous “to say there were mistakes.”


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

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