Morning Report: Financial reform looks to pass House 6/7/17

Vital Statistics:

Last Change
S&P Futures 2432.0 1.3
Eurostoxx Index 390.4 1.6
Oil (WTI) 47.7 -0.5
US dollar index 88.1 0.1
10 Year Govt Bond Yield 2.15%
Current Coupon Fannie Mae TBA 103.47
Current Coupon Ginnie Mae TBA 104.33
30 Year Fixed Rate Mortgage 3.92

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

Mortgage Applications increased 7.1% last week. There was an adjustment made for the Memorial Day holiday. Purchases rose 10% while refis increased 3%. Mortgage rates fell to the lowest levels since November, however the refi share of applications fell again to 42%.

HSBC is calling for a 1.9% 10 year yield by the end of the year. This call is well below the average Street consensus view of a 10 year yield around 2.7%. Given the fact that nothing much is changing between Trump and Obama policy-wise (at least as far as legislation that will be passed) that probably is the right call. That move will be good for mortgage origination activity, however it will generally be bad for banks which rely on a big spread between short-term rates and long-term rates. Given that the Fed does tend to follow the markets, it will be interesting to see if they continue on their plan of 3 hikes this year.

House Democrats look like they aren’t going to offer much in the way of resistance to the financial deregulation bill (the CHOICE act). The bill is expected to pass the House this week on a party line vote, but Democrats have chosen not to force their Wall Street friendly members to walk the plank for the banks. The bill will go to the Senate, where it will undoubtedly need 60 votes to pass and will be watered down. There is a good chance that something will pass, as there is a pretty much bipartisan consensus that Dodd-Frank imposed too big of a regulatory burden on smaller banks.

Gallup’s Job Creation Index ticked up to a record last week. In May, 46% of respondents said their company was hiring, a 1% uptick from April, while the number of respondents who said their company was laying off workers was steady at 9%. The East Coast is lagging the rest of the country, which makes sense in that it is the most levered the financial industry which has been going through a wrenching technologically-driven transformation over the past 20 years. In fact, states like Connecticut (which have historically funded the majority of their budget on taxes from Fairfield County) are having major issues as the tax receipts have fallen off a cliff. This helps explain why the Northeast real estate indices have lagged the rest of the country (especially if you strip out New York City).

Realtors reported low inventory as a major issue in the latest survey. Lender closing delays was also cited as a major issue.

41 Responses

    • Trump and Putin are definitely kindred spirits.

      Understand why its bad that Russia may have attempted to influence the election, although by the mechanisms cited I don’t see how they could have had any real impact. The fake news was directed at people who were never going to vote for Hillary, anyway. As were the leaks, of real things, that did not reflect well on HRC. None of that did as much damage, IMHO, as “I’m With Her” as a campaign slogan, versus “Make America Great”. If her slogan had been “Jobs, Jobs, Jobs” we might be dealing with president Clinton right now.

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  1. Let this sink in:

    “Political scientists have long acknowledged that referendums are a poor gauge of voters’ actual preferences. Electorates are especially vulnerable to manipulation when complex issues are reduced into a simple yes or no question.”

    https://www.washingtonpost.com/news/democracy-post/wp/2017/06/07/dont-be-fooled-by-the-u-k-election-theres-nothing-democratic-about-brexit/

    Up is down, Left is right, having voters decide something directly isn’t democracy.

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    • Polling 101….

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    • I read this as “I don’t like the results of referendums, ergo voters are stupid.”

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    • I love stuff like this because I think the idea is to cast doubt on referendums, but who in politics is going to want to tell their voters that they (the voters) are idiots and have no right to vote on things, leave it to your betters, now vote for me. I’m sure they’d like to, but this is just ideological masturbation. “You’re voting for things you really don’t want, so we want to take that choice away from you,” is never going to sell.

      If the argument is that the system can be manipulated, the obvious response seems to me to be that every system can be manipulated, and a congress or parliament is much more amenable to direct manipulation by a few special interests than an entire country of voters. By definition. Referendums, manipulated and propagandized or not, are by definition more democratic and more representative of the voter’s will than a handful of politicians voting on things in the proverbial smoke-filled room.

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    • I assume they want Sessions to ignore the outcomes of all the medical and recreational marijuana referendums? Because, you know, the electorate was vulnerable and manipulated when they decided to legalize Mary Jane?

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    • The left is in favor of democracy as long as they get the results they want, they are in favor of free speech as long as they approve of what you say..

      Liked by 1 person

    • I’m fine with them saying that the results of the referendum and whatever other arguments they want to marshal show that democracy is bad (or imperfect, etc).

      Pretending that they show that the EU is somehow more “democratic” than the referendum is simply bullshit. In fact, it’s Trump level bullshit.

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  2. You would think the ability to distinguish between legal and illegal immigration would be a job requirement to become governor of a state, but apparently it isn’t….

    http://www.cnn.com/videos/tv/2017/06/06/nancy-pelosi-andrew-cuomo-2018.cnn

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  3. They’ve lost it again:

    “President Trump is violating my constitutional rights by blocking me on Twitter
    The president can unblock me, or see me in court.
    By Holly Figueroa O’Reilly


    When I realized that he’d blocked me, I couldn’t help but laugh at the absurdity of it all. Then I started getting angry. It’s one thing if the president blocks me; I’m just one person, and I can certainly do something else with those five minutes of my day. But when he began systematically blocking dozens of people who simply didn’t agree with him, that’s when I started to worry that this is something more than just one person blocking another one. This is an elected official trying to silence an entire sector of the dissenting populace. This is what dictators and fascists do. This isn’t what we do here in America.”

    No, a dictator or a fascist would have you arrested or shot.

    https://www.washingtonpost.com/posteverything/wp/2017/06/07/president-trump-is-violating-my-constitutional-rights-by-blocking-me-on-twitter/

    Liked by 1 person

    • “No, a dictator or a fascist would have you arrested or shot.”

      I love that first-world snowflakes think the ultimate expression of authoritarian dictatorship would be the dictator blocking them on Twitter. That says so much about America (well, that and the fact a guy like Trump was elected president) right there.

      I feel like the underlying implication here is that Twitter needs to be nationalized and turned into a national public utility. For freedom.

      Seriously. Anyone can block anybody in Twitter. That’s the whole point. It’s the only mechanism on social media to control stalkers and harassers and trolls.

      Don’t want Trump to block you? Don’t troll him. That’s his job, and don’t waste time trying to teach the master, padawan.

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    • This is an elected official trying to silence an entire sector of the dissenting populace

      Not talking to someone is now silencing them… Good to know…

      Like

  4. Juiceboxers attempt to explain why the right hates Gaia…

    https://www.vox.com/2017/4/22/15377964/republicans-environmentalism

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    • A year ago, the US was making notable progress on some of our toughest environmental problems.

      Really? Was it really? I mean, other than the progress that has been made incrementally year over year like forever, no matter who was in charge?

      The rest of the world, even China, was coalescing around a commitment to curb greenhouse gases, and the Paris accord had been signed into force.

      Really? I can see them perhaps looking to curb obvious pollution for the sake of appearance and quality of domestic life, but curbing CO2 for climate alarmism, or an accord signed in Paris? Really.

      In 1970, it was Richard Nixon who created the Environmental Protection Agency and signed many foundational laws.

      Which is just one of the many ways that Nixon was a big government liberal, and awful in his faith in the state to micromanage everything. Also, the law of unintended consequences might be in play there, too.

      Even during the last Republican administration of George W. Bush, longtime EPA employees have told me there was considerable if often tacit support by party leaders.

      Never, ever heard this at the time. Again, if the only good Republican is always an out-of-office Republican, you’re going to get the Tea Party and you’re going to get Trump (not just because of that, but it’s part of the mix).

      But for these Republican anti-environmentalists, the power of the Presidency was not enough. A Democratic Congress, still bolstered by the party’s Southern bloc, stood in the way. Democratic committee chairs geared up for Congressional hearings that spotlighted the ensuing consequences and corruption at agencies under fire. The hue and cry then raised, and courtroom battles the Administration then lost, turned out to be much more than it had bargained for. Within two years, Gorsuch and Watt had resigned and restoration of federal environmental agencies was underway.

      Note what is missing here is “public outcry” or “Reagan heard from the voters”.

      In the South, as well, enterprising Republicans such as Gingrich successfully moved to convert white Democratic voters to their party.

      And, there you go. The go to explanation: racism!

      Yet its proposals—for instance, requiring government compensation for regulation-related declines in property value–would have hand-cuffed agencies like the EPA

      What a crazy proposal: that people who purchase and build and use property and good faith with the government steps in to destroy the economic model that the built their livelihoods on.

      Trump’s 2016 victory was a testimony their successes. This time around, a stealth anti-environmentalism was no longer necessary; he unapologetically denied climate change and despised the EPA. Capitalizing on post-recession bitterness, he not only won the South and Mountain West, he became the first Republican in a generation to win several northeastern and Midwestern states, where environmentalism had long been strong.

      Hmmm. Well, nothing to learn there. Nope. No lessons to be drawn. Whatsoever.

      Success against earlier assaults offers cues for today’s opposition. As our Republican Congress is unlikely to wield the hearings and subpeonas that brought down Gorsuch and Watt, others must step in. Journalists, environmentalists, former and current agency officials, any and everyone with a story to tell, need to get word out about the coming cuts, corruption, and their fallout, making the most of all tools at hand, from marches to digital and social media.

      OMG. Juiceboxers. Millennials. Journalism, and profession about as respected by the general public as “used car salesman”, and social media is how they are going to rule the world. No wonder they keep losing.

      Science, we’d do well to argue, is not some elitist conspiracy, but vital to environmental democracy.

      I predict they will not do well with that argument.

      Districts like Georgia’s 6th, once held by Newt Gingrich and currently conducting a special election, offer a first, best hope for electing a Congress that will rebuff the Trump anti-environmental agenda.

      Not familiar with this election, but I’m guessing that it’s going to be close.

      around half of all Republicans do worry about climate change

      Which does not remotely suggest they see Democratic solutions or things like the Paris Accord as being useful to addressing climate change.

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      • Or, perhaps the early environmental policies were things that everyone could get behind – i.e. not permitting Eastman Kodak to dump chemical waste into the Genessee River, litter prevention, etc. Tough to oppose that stuff.

        Now, it is all about using environmentalism as a Trojan Horse for a bunch of items on the leftist wish list that are only tangentially related to the environment.

        Lot easier to get people behind not letting the Cuyahoga River burn than getting them behind taxes that will double their electricity bill and gasoline bills..

        Liked by 1 person

  5. Damn those Republicans who hate people who make a living wage….

    http://thehill.com/blogs/ballot-box/336698-republican-in-georgia-race-i-do-not-support-a-livable-wage

    I’ll never understand the logic of the left which says that if a person’s labor isn’t yet worth a living wage, the thing to do is to prevent them from working and gaining the experience necessary to earn a living wage.

    Like

    • I hear a sad trombone noise coming from the pro-impeachment MSM…

      Liked by 1 person

    • It’s hard to express to people who are not steeped in federal law enforcement just how inappropriate these inquiries are, particularly when they involve an investigation in which the President has such deep and multifaceted personal stakes.

      Which kind of leads to the presumption that Trump, also not steeped in federal law enforcement, was not aware that he was doing anything particularly inappropriate. My presumption would be that Trump was just doing what he does. And without explicit warnings that lines of inquiry or conversation were inappropriate and potentially illegal, he would actually have no way of knowing. And those, such as Comey, failing to provide those warnings even though they did know would turn out to have been derelict in their duty, and perhaps even viewable as attempting to leverage Trump’s ignorance against him and set him up.

      Both men said they could not conceive of their bosses having the conversation Trump reportedly had with Comey in February, urging him to back away from any further investigation of former national security adviser Michael Flynn….

      I continue to have a problem with the characterization that Trump urged Comey to drop the case, based on what Comey himself has reported. “I hope you can see clear to drop this” or whatever is not “urging”, at least in a laymen, man-on-the-street sense. It’s expressing a preference. I expect Trump hoped his preference might influence Comey’s decisions, but that is not “urging”, it’s not even saying, “look, I want you to drop this case. Find some way to drop it.” That would be a command, an attempt to directly compel.

      “It would not have happened while I was in the White House,” the former White House counsel said. “We would not have been talking to the FBI director or attorney general about a specific investigative matter… That just would not happen.”

      Which gets to why Trump so offends the DC establishment. It’s like Jon Stewart’s tirade about Trump eating pizza with a fork. It just isn’t done.

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    • Women who have been raised on CGI girls kicking boys asses movies have no idea just how far behind men they are athletically.

      World class Olympian women would not be fast enough to qualify for the state high school boy’s championships in their own states.

      Just wait until some drag queen who can crush the ball 300 yards decides to become a millionaire by dominating on the LPGA tour…

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  6. Comey seems like he was desperate to keep his job. In what way is different than any other politician?

    Liked by 1 person

    • I think the problem is everybody fantasizes that everything they don’t like is impeachable. I think this is because of the inclusion of “misdemeanors” in the impeachment clause. Take that out, that should raise the bar enough to suggest that looking meaningfully at the wrong person while you saying you hope something happens (or denying you had extramarital sex with someone) is not impeachable.

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  7. Who over at The PL is the wokest?

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  8. Breaking: NYT Thinks Comey Is A Goddamned Liar!

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    • This is something that has always bugged me:

      Mr. Comey did not say exactly what he believed was incorrect about the article, which was based on information from four current and former American officials, all of whom spoke on the condition of anonymity because the information was classified.

      Wouldn’t it be more honest and accurate to say “…all of whom spoke on the condition of anonymity because they are breaking the law and do not want the FBI to know who they are”?

      Like

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