Vital Statistics:
Last | Change | |
S&P Futures | 2459.5 | 1.8 |
Eurostoxx Index | 384.1 | 1.5 |
Oil (WTI) | 46.5 | 0.0 |
US dollar index | 86.9 | -0.4 |
10 Year Govt Bond Yield | 2.27% | |
Current Coupon Fannie Mae TBA | 103.31 | |
Current Coupon Ginnie Mae TBA | 104.375 | |
30 Year Fixed Rate Mortgage | 3.96 |
Stocks are higher this morning as the ECB starts its two day meeting. Bonds and MBS are flat.
Bonds staged a strong rally yesterday after the Senate was unable to repeal and replace Obamacare. Obamacare repeal was to be the source of funds for infrastructure spend and tax reform, and this failure largely means the rest of the Trump reflation trade is pretty much dead.
Mortgage applications rose by 6.3% last week as purchases rose 1% and refis rose 13%. Treasury yields fell last week on dovish comments by Janet Yellen.
Housing starts rose to 1.22MM and building permits rose to 1.25 million. Starts were up 8.3% MOM and 2.1% YOY. Activity rebounded in the Northeast and the Midwest while falling in the South. The West was unchanged. This is a strong rebound after a terrible May. Tariffs on framing lumber are increasing home construction costs, just as the first time buyer re-enters the housing market. Historically starts have averaged around 1.5 million a year, which largely explains the current housing shortage. In reality, we should be closer to 2 million a year, which is typical for a post-recession rebound.
CNBC discusses the pros and cons of a 30 year mortgage versus a 15 year mortgage. Yes, the payments on a 30 year will be lower, but the interest paid over the life of the loan will be much higher. One thing worth remembering: you tend to get a decent drop in rate for moving from a conforming 30 year to a 15 year. That pickup is much, much smaller on a FHA or VA loan, due to the illiquidity of 15 year TBA. The one thing the article doesn’t really touch on is inflation. US Treasuries are priced as if inflation is never, ever coming back – if you are buying Treasuries at 2.27%, you are really betting that “this time is different,” which are the 4 most dangerous words in investing. If you can borrow money for 30 years at under 4%, you will almost assuredly see inflation running hotter than that at some point during the mortgage’s life. The world’s central bankers are on a mission to create inflation. Eventually they will succeed.
Filed under: Economy, Morning Report |
The left gets the vapors over the possibility of DeVos hearing something other than the straight feminist line:
https://www.vox.com/first-person/2017/7/19/15990454/betsy-devos-title-ix-campus-rape-mens-rights
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“As a survivor, I’m terrified.”
They sure are “terrified” a lot.
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Literally. Shaking.
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She, like me, is now considered pro-rape. It’s about time our voices were heard and respected.
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re: 15 or 30 year mortgage: “You could have a paid-off home by the time your kids graduate from high school.”
that was a big reason we refied into a 15 year*. we can swing the higher payment, and if we can either clear the debt entirely or build equity on the front end of the loan should we sell.
*5/1 ARM at 2.75%. bit of a gamble, i know.
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I refinanced to a 15 year when I did some home remodeling. I’ve been making extra payments and will actually have it paid off entirely by the end of the year.
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and that’s how you build wealth. government policy seems to be the housing market is not allowed to lose value.
of course, i’m sure both of our homes will eventually be seized and given to more deserving people.
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I’m sure Aletheia will let you come visit.
😀
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no, but the left hates, hates, hates the mortgage interest deduction…
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“no, but the left hates, hates, hates the mortgage interest deduction…”
I like it. Because I always seem to end up primarily paying interest on my mortgage.
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Wow! That’s a nice asset to have!
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You’re smart. Also, you have the cash to do that. Probably because you’re smart.
I’m not so smart. Seems like every time I’ve finally made progress in my mortgage, there’s some reason to buy a new house, and I start (practically) all over again. I finally got my last loan to where I was paying more on the principal than interest, and what did I do? I got a more expensive house (moving because of school districts, and my wife wanted something more feature-rich than what we got, but I was willing to forego the half-bath in order not to go bankrupt).
I’m 26 years away from paying off this house (unless I can refinance at some point, which might happen, one day). I’d say there’s a 60% chance I will end up starting all over again in 7 years. But I’m keeping my fingers crossed!
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It’s nice when the left is clear and dispenses with the pretense:
“However, to the pragmatists out there and the people who don’t like purity in politics, yes, let’s come together. But get this through your fucking head: You must bend the knee to us.”
https://newrepublic.com/article/143926/dirtbag-left-problem-dominance-politics
Reminds me of this:
“Cersei of House Lannister, First of Her Name, Queen of the Andals and the First Men, Protector of the Seven Kingdoms, summons the rebel and bastard Jon Snow to King’s Landing, to bend the knee to his rightful Queen or suffer the fate of all traitors.”
http://www.makinggameofthrones.com/production-diary/read-cerseis-dragonstone-summons-to-jon-snow
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Interesting Milo interview that NPR seems hesitant to air for some reason.
http://www.breitbart.com/milo/2017/07/18/exclusive-milo-npr-killed-book-interview-because-i-sounded-too-reasonable/
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Of course they did.
The media is nothing but vipers.
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Wow, that escalated quickly!
https://twitter.com/LouiseMensch/status/887641703817121793
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Left wing conspiracy porn.
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She’s crazy enough that I’d hit that.
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i have no idea who this person is..
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https://en.m.wikipedia.org/wiki/Louise_Mensch
She is a gift for Trump.
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i have no idea who this person is..
Ditto. Her tweet aptly is used to exemplify crazy.
George, I remember where you are coming from, but my fear, those many years ago when I was coming from a similar place, would have been that she might have kept right on talking.
—
I don’t think we are supposed to know who she is, Brent.
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“My sources say the death penalty, for espionage, being considered for @StevenKBannon.”
No. No, it is not.
Like the folks who thought Hillary was going to get locked up once Trump was elected. I’m disappointed in the huge number of people who believe that people at the Trump/Bannon/Clinton level of the world are going to be punished for practicing politics they don’t like. The worst that ever happens: they resign or get fired. And few of them suffer any long term real financial damage.
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Impressive:
“Poll: Hillary Clinton Is Less Popular Than Trump
By Osita Nwanevu
July 18 2017 2:12 PM”
http://www.slate.com/blogs/the_slatest/2017/07/18/poll_hillary_clinton_is_less_popular_than_trump.html
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Twice as impressive:
“Democrats are somehow less enthusiastic than Republicans about the 2018 election.”
https://www.washingtonpost.com/news/the-fix/wp/2017/07/19/this-poll-is-a-warning-sign-for-democrats/
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election night 2016 was some great TV.
election night 2018 if the Ds lose again? i don’t know if i can handle that much schadenfreude
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nova:
election night 2016 was some great TV.
Whenever I am feeling down, I’ll youtube The Young Turks election night, and it always cheers me up.
For those particularly bad days, the longer version:
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The Young Turks is a great thing to watch if you wonder how the pollsters and the media all got it so wrong, or if you wonder about the claims that there’s no bias in the media.
Of course, there’s always some excuse as to why the Young Turks on election night is not illustrative. But it is.
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You see the Showtime series “The Circus”?
http://www.sho.com/the-circus-inside-the-greatest-political-show-on-earth
The last episode that juxtaposes Mark Halperin on Cobert & Clinton’s election night victory party that wasn’t is probably the best for schadenfreude.
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I’ve never watched The Circus. I’ve got Showtime, I should do that.
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Statistically, the GOP is likely to lose seats. But I would not be surprised to see the Democrats fail to get any kind of sweeping 1994/2010/2014 style “mandate” election. And if they can’t do that with Trump in the Whitehouse, and they don’t do a little soul searching (spoiler: they won’t!, two more seats in the house and they’ll claim a sweeping victory and be done with it) 2020 won’t look that good for them.
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“A Baltimore police officer accidentally recorded himself planting drugs at a crime scene”
https://www.vox.com/policy-and-politics/2017/7/19/15999806/baltimore-police-body-camera
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i wonder how common that is…
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Common enough. The incentives are present, and when the incentives say: “do this”, human beings do that which has been in some sense incentivized.
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http://www.vulture.com/2017/07/the-simpsons-planet-of-the-apes-musical-oral-history-zauis.html
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Awesome.
Man, I miss Phil Hartman on The Simpson’s. His characters were classics. I didn’t care about Maude Flanders, but the disappearance of Lionel Hutz and Troy McClure permanently lessened (ensmallened?) the Simpson’s as a series.
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There isn’t an elected official in the world who wouldn’t say these words. It never the less sounds so officious and bad.
Mayor John Tory acknowledged that the city estimate sounds “completely out of whack with reality” on Wednesday. However, he says that still doesn’t justify allowing private citizens to bypass city bylaws to build public structures themselves.
“I think everyone will understand that it will be more than $550,” he said on Wednesday. “We just can’t have people decide to go out to Home Depot and build a staircase in a park because that’s what they would like to have.”
http://www.ctvnews.ca/mobile/canada/toronto-man-builds-park-stairs-for-550-irking-city-after-65-000-estimate-1.3510237
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“We can’t let citizens do things to improve their community!”
… and anybody should understand why the stairs shouldn’t cost so much money.
“Astl says his neighbours chipped in on the project, which only ended up costing $550 – a far cry from the $65,000-$150,000 price tag the city had estimated for the job.”
Which should be the definition of government in the dictionary.
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Companies that supply services to government entities finance elected officials campaigns. Contracts are how they’re paid back.
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Which, honestly, I have no problem with. In principal.
And if it was $1000 dollar stair project, rather than $550, promptly installed, nobody else would either, I suspect. Not really.
It’s the insane escalation. They’re talking about something that would cost as much as $64,000 more than a citizen was able to do it, and might cost as much as $149,000 more. That kind of cronyism rubs people the wrong way for some reason.
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This is the part where A101 from PL says that the government is always more efficient and cost effective than the private sector.
By definition.
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Single anonymous source in the article here. Pretty obvious attempt at trolling Trump into firing Mueller.
https://www.bloomberg.com/news/articles/2017-07-20/mueller-is-said-to-expand-probe-to-trump-business-transactions
It’ll be fascinating when he does it.
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“The 2013 Miss Universe pageant is of interest because a prominent Moscow developer, Aras Agalarov, paid $20 million to bring the beauty spectacle there. About a third of that sum went to Trump in the form of a licensing fee, according to Forbes magazine.”
I have a hard time believing Bloomberg doesn’t understand that business involves selling your product for the maximum the market will bear. That sounds about as sinister as any other entertainment business transaction, and less so that how a lot of sports financing gets done.
“Another significant financial transaction involved a Palm Beach, Florida estate that Trump purchased in 2004 for $41 million, after its previous owner lost it in bankruptcy. In March of 2008, after the real estate bubble had begun losing air, Russian fertilizer magnate Dmitry Rybolovlev bought the property for $95 million.”
Unless there’s something more to that, there’s is absolutely nothing there. There’s a 4 year gap between those transactions.
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Too funny.
https://pjmedia.com/instapundit/270574/
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It was a tax. A “not having insurance” tax.
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Commitment.
http://www.telegraph.co.uk/news/2017/07/20/woman-tricked-friend-sex-pretending-man-using-fake-penis-jailed/?utm_source=dlvr.it&utm_medium=twitter
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“The complainant agreed to demands for her to wear a blindfold at all times during up to 15 sexual encounters and while watching television, going on a car journey and even sunbathing.”
Might I suggest that you might want to actually see the person you are about to have sex with before doing so. But I suppose that’s “blaming the victim”.
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Why don’t environmentalist kill themselves if they’re so worried about Gaia?
http://www.washingtonexaminer.com/bill-nye-older-people-need-to-die-out-before-climate-science-can-advance/article/2629163
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This is a common old liberal fallacy: all young people will agree with me, because I’m a righteous dude, and will sacrifice themselves (and others, as necessary) for the good of the collective.
The younger generation will be easily convinced to change the equivalent of their Facebook status or change their avatar on Instagram or whatever, but give up stuff they like for Mother Earth? Nah.
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