Morning Report: FOMC week 9/18/17

Vital Statistics:

Last Change
S&P Futures 2501.0 3.8
Eurostoxx Index 381.9 1.2
Oil (WTI) 49.6 -0.3
US dollar index 85.2 0.1
10 Year Govt Bond Yield 2.22%
Current Coupon Fannie Mae TBA 103.33
Current Coupon Ginnie Mae TBA 104.21
30 Year Fixed Rate Mortgage 3.83

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

The big event this week will be the FOMC meeting, which starts tomorrow. No changes in interest rates are expected, although the markets expect the Fed to announce their plan to gradually unwind their balance sheet. The market is anticipating a “baby steps” move where they reinvest less than 100% of bonds that are maturing. While it certainly won’t help MBS spreads, it probably won’t have much of an effect on mortgage rates given that QE itself didn’t have a huge impact to begin with.

Homebuilder sentiment slipped in August as the NAHB Housing Market Index fell from 67 to 64. An active hurricane season, along with labor shortages isn’t helping things. Rising costs of building materials is an issue as well.

Trump’s deal with Nancy Pelosi and Chuck Schumer to keep the government open may have increased the chances for tax reform. While the Democrat’s red lines pretty much foreclose anything aside from making the tax code more progressive on the individual side, we might see something on the corporate side. Perhaps the Trump reflation trade isn’t dead yet, but getting to agreement on tax reform will be hard since Democrats and Republicans want fundamentally different things. Here is a good discussion of what could be happening.

The MBA released a white paper on the CFPB, urging them to provide more detailed guidance to the industry as opposed to “regulation by enforcement action.” CFPB Director Richard Cordray has resisted providing guidance to the industry, believing that bright lines merely makes it easier for companies to approach, but not cross the line. The industry argues that the CFPB should provide more guidance as to how it thinks, warn the industry when it is changing rules, abide by its own guidance, and allow due process for the accused.

Here is some background on the Equifax hack. Can Equifax’s data breach affect your ability to buy a home? It probably cannot in the end, if you were a victim of identity theft. Ultimately it will be time consuming and a nuisance, however it can be overcome. Loan Officers should be aware that there could be an uptick in mortgage fraud, so be careful in the near term.

47 Responses

  1. Frist!

    I intentionally avoided watching the Emmys. I use to enjoy Colbert on his Comedy Central show, too.


    • Sean Spicer on the Emmy’s proves that it’s all one big joke that everyone is in on.

      You don’t invite Goebbels to the Emmy’s as a special guest star.

      Edit: Actually I take that back. They would do exactly that if they thought it would boost ratings. That’s what Trump understands about the media.

      Liked by 1 person

      • You don’t invite Goebbels to the Emmy’s as a special guest star.

        That’s an excellent point. Perhaps the most insightful thing I’ve heard said about Spicer on the Emmys. It’s all just theater of the absurd.

        And, yes, I get the “if it would boost ratings” thing, but that just speaks again to “if they really thought he was Hitler”. If they really thought that, or understood what “being Hitler” really meant and thought he was Hitler, then they wouldn’t try to assimilate him. Ratings would not be an important enough goal for that kind of moral compromise . . . if they were serious. But they aren’t. Not really.


  2. Reading the Plum Line this morning (not commenting). First, I think I hurt my eyes with how frequently I was forced to roll them dramatically. The drama! The pathos!

    I was reading this:

    And the comments are just full of how people would die, how if someone votes to repeal Obamacare they have no soul, how the Obamacare repeal is all about “racism”, yada yada. One comment: Passage of this bill is the best thing that can happen for the Democrats in 2018. However, because I am not a sociopath like the GOP, I don’t want people getting hurt for this goal.

    The GOP is a sociopath? How does that work?

    But really, how many people are going to be hurt–other than their feelings–by the modest repeal of Obamacare, especially compared to where it is now? I’ve said it before (and have found nothing to contradict it) that insurance coverage doesn’t have a significant bearing on health outcomes, and I expect it will have less an impact on people who can’t get their lives together enough to hold down a job and buy health insurance–which is the status of a large number of the uncovered-who-wanted-coverage-if-someone-else-paid-for-it before the ACA.

    Most people presently covered aren’t going to immediately die if the ACA disappeared overnight. But there’s just this universally accepted, totally unquestioned assumption that most people are kept alive by the ACA, and the minute it is rolled back any at all, people will start dropping like flies. And I don’t see objective that supports this.

    I also don’t see the ACA is a major tragedy. It’s just one element in the ongoing, inevitable major tragedy that is the human race’s unquenchable desire to be a species primarily made up of passive consumers of processed entertainment and “information”, whose primary concern is “never being offended”, which results in them being offended constantly, by everything, while holding others responsible for the state of their lives (and their livelihoods, such as they might be).


  3. I had no idea that Don’t Normalize Trump was still a thing.

    I gather we’re still in the denial phase.

    For those out there that don’t want to normalize Trump, who was the last R POTUS that was legitimately elected and derserved to be normalized and respected?


  4. OK, who is going to be calling this guy their congresscritter?

    Liked by 1 person

  5. Jacobin calls out progressives for something that they do all the time, present a political argument as a technical one.


    • You raise taxes. Rampell seems to know this is how you pay for it, but then shifts into an argument not about the technical possibility of raising taxes in one of the most lightly taxed countries in the developed world

      He doesn’t want this to be a technical problem, but in a democracy, especially one that just elected a guy like Trump and has been electing more Republicans at the state and local level than ever, it is 100% a technical problem. A potentially insurmountable one that does not go away with a “Phhttthpt! You just raise taxes! Done!”

      How do you raise taxes? That’s a technical problem. It doesn’t just happen. Legislation has to be authored and congresspersons up for reelection soon enough have to vote for it. President has to sign it. All this has to happen to an atmosphere of fear-mongering and protest and general outrage from at least 40% of the country. Putin might start posting ads on Facebook again. Who knows?

      How you pay for Medicare for All is 100% a technical problem. If you pay for it with tax hikes, which seems the only way to do it, then actually raising those taxes is a thoroughly technical problem. Engineering the passage of that kind of legislation would be nearly impossible. Technical problem.

      He’s trying to say technical arguments are political because he doesn’t want to believe they are technical.


  6. Heh.

    Liked by 1 person

    • I have no problem with wanting to hold good cops accountable for not holding bad cops accountable, etc.

      Sure would be nice if we felt that way about Islamic terrorism, too. Why can’t it be the same in both cases?


  7. Poor greg… Not woke enough…

    Liked by 1 person

    • in response to this:


      • On the one hand, I have little sympathy for guys walking around LARPing as Nazis, or surprise that one managed to get punched in the face. Yes, it’s a bad idea. Yes, it’s unproductive. Still, people are going to punch Nazis. And, you know, we fought a war against Nazis. It remains uncool to be a Nazi in a country that was in an existential struggle against Nazis.

        But it’s my opinion modern Nazis are not actual Nazis, but mentally ill people acting out. And it’s kind of uncool to punch people because they are suffering from a mental illness.

        There are real groups that can be plugged into the Nazi box on the org chart, and real sympathizers with those groups, but its radical Islam. So definitely not cool to punch those guys.


        • I’m not sure most of the Antifa terrorists actually believe that neonazi’s are a threat. They’re Stalinists really, wanting to eliminate their perceived enemies. Plus, it’s an excuse for psychopaths who want to beat up and potentially kill someone in a consequence free environment.

          We’re six months to a year from various right-wingers that the antifa terrorists have labeled as nazis turning up with bullets in the back of their head. Lefty’s, be it of the neonazi or communist types always resort to violence.


        • McWing:

          Lefty’s, be it of the neonazi or communist types always resort to violence.

          That is because it is an ends-justifies-the-means ideology.

          Liked by 1 person

        • I’m not sure most of the Antifa terrorists actually believe that neonazi’s are a threat.

          Oh, I think plenty of them believe it. Human beings are capable of convincing themselves, and being convinced of, any number of things. If it gives them the excuse to do something they want to do anyway, if it paints them as a noble hero fighting injustice or otherwise makes them feel really special and amazing without actually being special or amazing, they can totally convince themselves that they are fighting the good fight.

          At the root, though, you are right. They want excitement. They want to beat on people. They want violence and they want control. The threat of neo-Nazism, sincerely believed or not, ultimately just serves those goals.

          They have to lay off the press. I’ve already seen suggestions percolating that Antifa is a right wing false flag. That story can go one of two ways: Koch brothers planting violent agitators amongst peace loving Antifa, or that the Antifa is entirely a astroturfed operation full of hidden Nazis trying to make peace loving liberals look bad. Either narrative is BS, but the one that will take hold depends on how much energy they devote to attacking their defenders and apologists.


        • “Ends justifies the means” means never having to say you’re sorry.


        • They aren’t the same as the original ones, but they aren’t mentally ill either.

          Liked by 1 person

        • Extreme, and generally reviled ideologies tend to appeal to me, they do so because they make sense to me on a visceral and intellectual level, and, if I’m being honest with myself, that they’re reviled is also another important draw. Knowing myself and my inclinations, and my own mental failings, I’m going to say that many, if not all, individuals drawn to neonazi/antifa are mentally ill.

          The difference between myself and neonazi/Antifa is that neither of their underlying ideology is noble. I’m a believer in an extremely limited social power structure. I don’t want to eliminate, for example, private property or reEngineer society based on racial lines, therefore, there is no need for me to want to use the force of government to eliminate a majority of the population, antifa and neonazi’s do. That desire, annihilating those that disagree, remove nobility from their motivations and make them indistinguishable from each other and exceedingly distinguishable from myself or, say, a pacifist.


        • “That is because it is an ends-justifies-the-means ideology.”

          And some of the actual elected officials on the Democratic side have decided not to properly enforce the law or police the demonstrations adequately.


        • @jnc4p: They aren’t the same as the original ones, but they aren’t mentally ill either.

          In the modern conception of mental illness, I think I can make the case that they are. I imagine a non-trivial number of them are now or have been on medication for any of a laundry list of mental disorders.

          If you put on a Nazi swastika and call yourself a Nazi and loudly espouse hyper-racist views and are either excited about getting violently attacked for them, or surprised when it happens, there is something wrong with your brain. If you are part of a group chanting anti-semmitic slogans in a public setting in full view of cameras . . . there is something wrong with you, mentally, or you are a serious conman being financially remunerated to be an agitator.

          Dressing up like a Nazi and confronting people or holding very public I’m-A-Nazi rallies with a few of your mentally unstable friends is prima facie evidence of mental instability (unless you are a paid agitator, I suppose). But I think the cultists that killed themselves in expectation a some spaceship coming down and sweeping them off to heaven or wherever were also mentally ill. You don’t get in that kind of situation without your brain being off, and you don’t draw people into that kind of situation without your brain being off.

          There is something wrong with these people. At the very least, they have some sort of serious anti-social disorder. But I go back to mentally ill–exceptional paranoia, excessive credulity towards implausible conspiracy theories, delusions of grandeur, inability to distinguish fact from fantasy, etc. There may be one or two who somehow reasoned out that being a Nazi was a good strategy, or where it might be more fetish than mental break, but I would argue that any kind wearing a Nazi armband in public and getting into arguments with minorities, in the present day, about the minority’s supposed racial inferiority to the fat, bald, unemployed white guy with a swastika fetish . . . I don’t question that they sincerely believe awful things and are serious about their convictions, but you can have both those traits and be mentally ill.


        • “In the modern conception of mental illness”

          Which I reject. Mental illness implies that they are not responsible for their choices and actions. That’s false. Also, not every undesirable personality trait is mental illness.

          Richard Spencer does not suffer from a mental illness:


    • Greg catching a clue? Or will he back down and apologize for not being woke enough?


    • someone who has twitter should point out he is now the moral equivalent of his regulars: NoVA and JNC. One of us. One of us.


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