Morning Report: Good numbers out of Lennar 6/20/17

Vital Statistics:

Last Change
S&P Futures 2446.3 -1.3
Eurostoxx Index 391.2 -0.8
Oil (WTI) 43.1 -1.1
US dollar index 88.9 0.1
10 Year Govt Bond Yield 2.18%
Current Coupon Fannie Mae TBA 103.31
Current Coupon Ginnie Mae TBA 104.375
30 Year Fixed Rate Mortgage 3.92

Stocks are lower as oil continues to fall. Bonds and MBS are flat.

No economic data today, however we do have some Fed-speak. Overnight Stanley Fischer observed that some countries have real estate bubbles and low interest rates might have played a role. (Gee, ya think?) The planet’s central bankers are on a mission to create inflation, however the inflation they want (wages) is not happening – it is going into inflation they don’t necessarily want (asset prices). Fischer noted that the US government basically IS the mortgage market in the US and that government support for MBS should be made explicit.

Lennar reported better than expected earnings this morning, with revenues up 19%. Deliveries increased 15% and backlog was up 20% in dollar terms. While revenues rose, margins are falling, with gross margins down 160 basis points. Lennar CEO Stuart Miller said: “We are now seeing, contrary to recent reports on housing starts and building permits, more of a reversion to normal in the housing market than the slow and steady recovery pace of the last several years.” The stock is up a couple of percent pre-open.

Meanwhile, the lousy housing starts number prompted a number of houses to take down their Q2 GDP estimates. Merrill took their estimate down to 2.2%, while the Atlanta Fed took their estimate down to 2.9%. The NY Fed’s estimate is coming in at 1.9%.

Credit risk for new mortgages edged up according to CoreLogic. The index is at similar levels to 2001-2003, which CoreLogic considers a baseline for credit risk. Part of this is due to the effect higher interest rates have on credit scores. As CoreLogic observes: “Since 2009, for every one-half percentage point increase in mortgage rates, the average credit score on refinance borrowers has dipped by 9 points, and this pattern will likely continue if mortgage rates move higher. That is because when rates rise, applications drop off and loan officers spend more time with the applicants that have less-than-perfect credit scores, require more documentation or have unique property issues.”

21 Responses

  1. Sleeping Giants – the anonymous lefty group that targets corporations for whatever lefty cause celebre is hip at the moment..

    Wonder who is behind them…


  2. I guess advertising isn’t PC enough yet….

    I guess this means we’ll be forced to watch Lena Dunham model underwear?


  3. That’s handy.


    • MSM gonna take any interest? Nothing to see here, folks.

      But that Trump-Russia collusion is rock fucking solid..


      • I know very smart people who are convinced there’s this clear, undeniable where-theres-smoke-theres-fire connection between Trump and Putin and that there was collusion with Russia and that Russia threw the election to Trump. Because how else could a winning campaign like “I”m With Her” fail? What American would not want to be with her?

        I refer you to McWing’s link to the article on the Kellers below as an analog to how people get to this point.


  4. Holder 2020? How many skeletons are in THAT closet?


    • Brent:

      Holder 2020? How many skeletons are in THAT closet?

      I know, right? That would certainly be interesting.


    • Lost in the hubbub was that,given Kelly’s professional and prosecutorial credentials, her interview with Jones — who has a massive audience and the ear of the president — carried the potential to be an act of journalistic service.

      Which is why there is no good journalism, for the most part. The left doesn’t want it.

      Which is why there is a “right wing echo chamber”, as well. Because there is no actual journalism. Or so little as to make no difference. Folks not interested in a one-dimensional view from the left side of the spectrum on all things, to have the news reported as if conservatives and Republicans exist only in the sense that they are obstacles to progressives creating Utopia, aren’t going to spend much time reading the NYT or WaPo or watching CNN. If they were actually news organs that practiced journalism, they just might.


  5. Handel up by 6… Deadlocked polls my ass…

    Liked by 1 person

    • The commenters at DailyKos are not taking the losses well tonight.

      I’ve been there.



      • I love this one:

        Stop blaming no- shows and weak organizing, and stop denying the hard fact: Republicans manufactured, own, and control the voting machines.



        • I am consistently amazed how people want to indulge their emotional craving to have a bad group or tribe or Scary Other to blame and rail against, at the expense of actual activities, efforts, and focus that could help advance them and their agenda. Motor Voter and allowing felons to vote are sensible efforts from the standpoint of Democrats, if perhaps not as useful as they might hope (that is, most of those so registered will still not vote without serious inducement). Railing about who supposedly manufactures, owns, and controls the voting machines is just a fantasy that says: “Most right-thinking people agree with me, so my candidate would always win if not for every election whose outcome I don’t like being stolen”.

          Also, for the side that says “facts have a liberal bias” and consider themselves all fact and science-based, that take on who manufactures, owns, and controls voting machines is not accurate (in just the way Soros does not “control” all the voting machines).


      • “Polls show an incredibly tight race between Democrat Jon Ossoff and Republican Karen Handel.”

        And still, they want to trust the polls.

        ” This suburban Atlanta seat has been in GOP hands since its creation in 1992″

        But tonight it will change because folks in Georgia will inevitably respond positively to a lot of left-wing money in California trying to buy their congresscritter! And surely all the yelling and the good work of the antifa folks will have convinced rural and suburban Georgians to strike a blow against Trump! It just makes good, logical sense. Anything else would be racism!

        One commenter wrote: “You don’t mock kids, like Ken Jennings did. You don’t hold up a severed head for sport, like Kathy Griffin did. It just plays into Trump’s tiny hands—and turns off swing voters.”

        There are other explanations, of course, but the responses were predictable. That’s unfair, the point is Republicans are evil. I love the “Democrats get punished if the move one inch outside the rule book, but Republicans tear it up and nobody cares”. It’s so profoundly self-unaware. Show me the prominent celebrity conservative that held up a bloody Obama head and then got a pass.

        And, again, more self-unawareness: “Because Jon Ossoff didn’t pin it on her and make her responsible for it. We are way too fucking nice.”

        They really think that’s the problem. The American left is too peaceful and kind.


  6. Jeebus.

    I remember the hysteria over this one and the McMartin case in CA. That was CA’s longest trial up till the OJ Simpson case, same judge on both, Lance Ito.


    • It’s an excellent example of how people can be seduced by mass hysteria and work together, as a group of supposedly intelligent people, to cultivate their own confirmation bias and create a general conviction that a complete fantasy is really real, even when there’s a great deal of objective evidence that it’s not, and plenty of red flags.

      Expert witnesses.

      After reading the report, it was not hard to understand why the department had fought to keep it secret. It was an ALL-CAPS, run-on-sentence fever dream full of breathless accusations and absent any actual investigation that could prove or disprove the claims.

      American justice!


    • Seems high. I would expect it tends to be higher in states like California where there is more of a Get Out Any Vote You Can efforts where you’ve got an infrastructure of encouraging and enabling illegal voting. If there were any way to tell, I would guess the vast majority of illegal votes are cast in CA.


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