Morning Report: Fears of a trade war easing 3/6/18

Vital Statistics:

Last Change
S&P Futures 2727.3 9.0
Eurostoxx Index 373.3 2.4
Oil (WTI) 63.1 0.5
US dollar index 83.5 -0.3
10 Year Govt Bond Yield 2.89%
Current Coupon Fannie Mae TBA 102.25
Current Coupon Ginnie Mae TBA 102.5
30 Year Fixed Rate Mortgage 4.4

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

The EU proposed tariffs on some US goods if Trump follows through on his plan to institute higher tariffs on steel and aluminum imports. White House Gary Cohn is working with business leaders in an attempt to change the President’s mind. Think about that. An economic advisor is reaching out to administration outsiders to try and get the President to change his mind. Imagine Austan Goolsbee soliciting the input of the financial industry in 2009 in an effort to derail Dodd-Frank. Supposedly Cohn plans to resign if Trump doesn’t relent on a trade war. House Speaker Paul Ryan has also come out against tariffs. Despite Trump’s warning that he “won’t back down” on tariffs, the markets are starting to bet that a trade war isn’t going to happen, which is probably why futures are up.

Don’t forget that we already have tariffs on Canadian softwood lumber. Prices are at record levels. This is yet one more reason why we have such an affordability problem – not enough (cheap) new construction.


House prices rose 0.4% MOM from December to January, according to CoreLogic. Prices are up 6.6% YOY. They are forecasting prices to rise 5% this year. The fastest appreciation is at the lower price points, where prices are increasing 9% for homes at the 75% of the area’s median home price, while appreciating only 5% for homes at 125% of the area’s median home price. This demonstrates the struggle that the first time homebuyer is facing: rising rates and higher home price appreciation. Below is a chart of where home prices are overvalued and undervalued

Corelogic overvalued

Factory orders fell 1.4% in January reversing a string of gains. This is interesting simply because most of the regional Fed reports and the ISM data are showing strength in new orders, which was the weakness in this report.

17 Responses

  1. We have been following home prices in Fresno and its suburb of Clovis, and, yes, by CA coastal standards pricing is very attractive.

    Liked by 1 person

  2. Worth a read:

    “The New Blacklist

    Russiagate may have been aimed at Trump to start, but it’s become a way of targeting all dissent

    By Matt Taibbi”


  3. My take on the effort to use Black Panther style “diversity marketing” to promote A Wrinkle In Time

    Spoiler. I’m dubious.



    The article begins:

    The U.S. isn’t the only country that has a chip on its shoulder about trade. When it comes to China, so do countless others.

    For President Donald Trump, this could be an opportunity to lead a coalition against China’s predatory trade behavior. Instead, he is threatening trade war with the countries that would make up such a coalition, over commodities that are much less vital to the U.S.’s economy and national security than the sectors threatened by China’s expropriation of intellectual property.

    My views, exactly. I have ranted here and elsewhere about China’s violations of international law and customs. DJT supposedly understood this and spoke of it when he ran for POTUS. Instead we may get tariffs on our legit trading partners who have the temerity to charge the market price for their commodities – unless Ryan and McConnell grow spines and drop testacles.

    Liked by 1 person

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