Vital Statistics:
Last | Change | |
S&P Futures | 2433.0 | 1.3 |
Eurostoxx Index | 387.2 | -1.3 |
Oil (WTI) | 42.9 | 0.1 |
US dollar index | 88.7 | -0.1 |
10 Year Govt Bond Yield | 2.15% | |
Current Coupon Fannie Mae TBA | 103.31 | |
Current Coupon Ginnie Mae TBA | 104.375 | |
30 Year Fixed Rate Mortgage | 3.92 |
Stocks are flattish after the Fed gave a clean bill of health to the banks it stress-tested. Bonds and MBS are up small.
One year ago today, the UK voted to leave the EU, which ignited a big rally in the bond market and pushed the 10 year down to a 1.37% yield.
New Home Sales ticked up in May to a seasonally adjusted pace of 610k. This was up 2.9% MOM and 8.9% YOY. The median new home sales price was $345,800 and the average price was $406,400. There are 268,000 new homes for sale at the moment. The 610k print was pretty much the average for the US from 1965-1995. New home sales peaked at over 1.3 million during the bubble years, but we are still a long way from normalcy, given population growth and obsolescence.
34 systemically important banks passed their stress tests yesterday. The banks are getting better at passing these exams, and the sense is that the Trump Administration will nominate someone to the Fed who will dial back these exams a bit. Next week, the Fed will release its comprehensive capital review, which will determine whether the big banks can increase their dividends or buy back stock.
Here is a good way to determine how tight a local housing market is: compare the ratio of new jobs to new building permits. In the Bay Area, that ratio is 6.4x: over the past 5 years, that MSA has added 373,000 new jobs, but has issued permits for only 58,000 new units. Lack of land, along with regulatory issues are holding back building there. In less constrained MSAs (both land and regulation) like Houston, the ratio is 1.3x. For the whole US, the country added just about 2.2 million jobs in 2016 and building permits totaled about 1.2 million, or a ratio of 1.8x.
The Canadian housing bubble continues to defy gravity, but the signs are there that its days are probably numbered. Warren Buffet took a 38% stake in troubled Canadian lender Home Capital and agreed to provide a $2 billion line. You can see from the chart below how far the Canadian bubble has exceeded the US one: Note that these are inflation-adjusted indices which is why US prices appear to have not recouped the losses from the bubble years. They have on a nominal basis, but not an inflation-adjusted basis.
The current median house price in Canada is about 520k and the median income is about 76k, putting the median house price to median income ratio at 6.8x. The US ratio peaked at 4.8x, which gives you some idea of how far prices have gone up North. Once the bubble bursts, it is bound to have some knock-on effects in the US, especially at the high end of the market which is probably more linked to China’s bubble than people care to admit.
The US Government has recommended that the new benchmark short term rate become the Treasury repo rate instead of LIBOR, which is subject to manipulation (as we saw in the UK). Not sure how this will affect current adjustable rate mortgages, but new ones will probably lose LIBOR and will use constant maturity treasuries or some alternative index.
Filed under: Economy, Morning Report |
Don’t help your kid. Because equality. Or something.
https://www.brookings.edu/interactives/are-you-a-dream-hoarder/
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Thought the argument on the left was that Trump was totally wrong when he said that things are zero sum.
Yeah, people are going to chose the left’s social engineering projects over their own kids. Someone should tell all those liberals with kids in private school to get with the program.
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Thinks aren’t a zero sum. Yet what are the Democrats saying that would make me think they are the folks to expand the pie and to grow the wealth?
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Brent:
Don’t help your kid. Because equality. Or something.
Truly sickening.
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i’m awesome at this game!
your kid is supposed to get to the top, first, right?
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This game is fun. I lost points for not donating to my alma mater. I’d be happy to use my legacy status, but I’m not donating to those leeches.
I still ended up a dream hoarder. Yay! My family wins.
As it should be.
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And when you win you’re rewarded with a video of some scold lecturing me that my kids shouldn’t be as awesome as they are. Sheesh, that game sucked at the end. Way to not stick the landing.
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The funniest part is the ending video where some brit lectures us about “hoarding tax expenditures.”
What the hell does that mean? Taking the mortgage interest deduction is “hoarding it?” Can I donate my state income tax deduction to someone else?
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so true:
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“Senate Republicans ready themselves for a massive theft from the poor
The GOP proposal is the first step in redistribution of wealth from struggling wage-earners to the rich.
Eugene Robinson”
https://www.washingtonpost.com/opinions/senate-republicans-ready-themselves-for-a-massive-theft-from-the-poor/2017/06/22/902a1a96-5777-11e7-a204-ad706461fa4f_story.html
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The GOP proposal is the first step in redistribution of wealth from struggling wage-earners to the rich.
I can’t read the link (already over my monthly quota of free stories) but I wonder whether Eugene Robinson is really this stupid, or if he is just a shameless liar.
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The later. This is all being done with a purpose.
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Go to private browsing mode or open a private browsing window in your browser. Flushes the cookies (for that mode period or window) and you can read as much as you like.
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KW:
Go to private browsing mode or open a private browsing window in your browser. Flushes the cookies
Great tip…thanks. (I am a technology buffoon.)
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The Post goes to 11.
“Obama’s secret struggle to punish Russia for Putin’s election assault
By Greg Miller, Ellen Nakashima and Adam Entous
June 23, 2017”
https://www.washingtonpost.com/graphics/2017/world/national-security/obama-putin-election-hacking/
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Voters: “And what are you going to do for me? How is electing you going to improve my circumstances?”
Democrats: “PUUUUTTTTIIIINNNNNN!!!!”
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How to lose credibility:
“Rev. William Barber: Obamacare repeal would be the greatest moral failing since slavery
Updated by Jeff Stein
Jun 23, 2017, 12:10pm EDT
…
“We’re really talking about, in a sense, political murder. I know that’s a strong term, but it comes out of the bible,” Barber said. “The bible talks about in Ezekiel 22, when politicians become like wolves devouring the people and do not care for the needy.””
https://www.vox.com/policy-and-politics/2017/6/23/15860414/william-barber-obamacare-repeal
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And I thought the Republicans were moving to a point where the spoke to exclusively to the base.
These folks are speaking only to a tiny sliver of people within a very modestly sized bubble. I don’t think 2018 is going to be as awesome for them as they think, mostly because of them.
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Someone gets it:
“Trump 2020 Is No Joke
Roger Cohen
JUNE 23, 2017”
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I have difficulty why it is so different from so many people to grasp. Or understand the significance of it. If I was a strategist wanting to win in 2018 and 2020, and I would be trying to find ways to blunt it. Not poo-poo it and move on, or ignore it, or–as so much of the press and critics seem to do–actively take it seriously.
Exactly. This was in the NYT? I’m surprised it got through. I guess it was seen as being critical of Trump, so why not?
That was good. But still, nothing on how to counter it. Observational, but no concept as to how to actually address it.
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None of this speaks to what the politicians are going to do for the people. The old way was: I’ll give you this, we’ll do this for you. Elect me, and I’ll improve your life in this way. Now it’s all kind of abstract “the other guy hates babies and rainbows” stuff.
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I think the left’s argument re: the AHCA fails the “this is about me” test. For most voters, even some of those on Obamacare, I don’t think this feels like it’s about them. Most insured people who really want and need their insurance consider their insurance part of the work arrangement, irrespective of any influence the ACA had.
So they feel like they are talking to the vast majority of Americans, when they are only talking to their own hardcore partisans. Again.
The Republicans used to have this problem. Which is one of the reasons they were the minority in the house for 40 years. I think it has a lot to do with why McCain and Romney lost (not all of it, of course). I think it’s why Reagan won. His message was: this is about you. This is what we’re going to do for you. We’re going to get government off of your back. But we’re not going to do much of anything to the things that government actually does for you.
Even Dubya had a serious “I’m going to protect you” vibe going on that blew Kerry’s Lurch-with-a-heart-of-gold schtick away.
I get the sense that most Americans, certainly those with a swinging vote, have no sense that Obamacare is something that is for them, or does something for them. And the Democrats aren’t doing anything to change that. I’m not sure they could if they wanted to.
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Interesting bellwether:
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New Yorker to New Yorker. I suspect if anyone gets Trump, it is him…
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Scott Adams on the Republican health care bill.
http://blog.dilbert.com/post/162106845381/why-the-new-healthcare-bill-will-be-a-loser
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Good insight:
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Still doesn’t make me want me to be ruled by Chuck Schumer or Elizabeth Warren….
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How to lose half your investors with one gaffe.
http://nypost.com/2017/06/23/biden-tells-bill-ackman-to-shut-the-hell-up-after-joke-goes-awry/
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Proof positive that Obamacare has killed people.
http://www.nationalreview.com/article/445260/obamacare-no-lives-saved
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Clearly, what the Democrats intended all along. To kill millions of innocent Americans. Truly, it’s treasonous. They should all be impeached.
… I think I’m getting the logic of this debate, now. 😉
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“these claims describe an imaginary health-care reform that works”
It also describes a world in which the mere possession of insurance coverage improves your health. Which I don’t think has ever been demonstrated. Ultimately, the impact on longevity has to be minimal. Most longevity gains have been due to antibiotics and sanitation (or germ theory: we eventually got to the point where medical care was not automatically more fatal than doing nothing). Nutrition probably plays a role. While decent medical care (and insurance coverage for it) no doubt helps improve quality of life, I don’t think there’s a lot of evidence that more widespread insurance coverage can do anything except perhaps create fewer medical bankruptcies. Most expensive healthcare (heart surgeries and cancer treatments near end of life for most folks) doesn’t actually do much to improve longevity in a statistical sense.
There will be anecdotal cases where it makes all the difference. But 36,000 people a year dying because of mild tinkering with Obamacare and Medicaid? Seems unlikely. I would expect Medicaid cuts could result in making nursing home access a lot harder for poorer Americans . . . that should probably be the focus of the attack.
“Had mortality continued to decline during ACA implementation in 2014 and 2015 at the same rate as during the 2000–13 period, 80,000 fewer Americans would have died in 2015 alone.”
I’d bet money insurance coverage is not the problem here, at least not directly. Certain drug prescriptions that do more harm than good may have played a role. Nutrition. Lifelong habits of an aging population. Insurance isn’t a frickin’ magic elixir.
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