Morning Report: Job openings up 8% 4/13/18

Vital Statistics:

Last Change
S&P futures 2676 12.5
Eurostoxx index 380.54 1.72
Oil (WTI) 66.97 -0.24
10 Year Government Bond Yield 2.83%
30 Year fixed rate mortgage 4.42%

Stocks are higher after it looks like cooler heads are prevailing in a trade war with China. Bonds and MBS are down.

Donald Trump told his aides to explore re-joining the Trans-Pacific Partnership trade deal after withdrawing early in his administration. Does this mean “re-negotiate?” Unclear, but that would encounter heavy resistance. Still, it is better than throwing around tariff threats. Markets are breathing a sigh of relief.

Job openings were little changed at 6.1 million in February. They are up almost 8% YOY however. The quits rate was stuck at 2.2%. The quits rate is a metric the Fed invariably mentions in their analysis of the job market and wage inflation. A higher quits rate usually presages wage inflation. Construction and manufacturing had big increases in openings.

Consumer sentiment slipped in the preliminary April reading. Market volatility could be driving it, however higher gas prices could be playing a role as well.

Acting CFPB Head Mick Mulvaney appeared before the Senate Banking Committee yesterday, and noted that Dodd-Frank only requires him to appear, not answer questions. Jeb Hensarling made a crack about the Chairman could sit and play Candy Crush in front of Congress if he wanted to. Mulvaney did answer questions, however he was making a point about how little accountability the agency has, and perhaps a point from his memo earlier – that the CFPB would follow the law, but go no further. The big question for the CFPB is the status of the PHH case. If that goes to SCOTUS, the only one that has standing to defend the agency is the Administration.

Wells Fargo reported earnings, and it looks like they have been affected less by higher rates than other independent bankers. Mortgage origination was down 19% QOQ, which is simply seasonality at work, but they were only down 2% YOY. As you would expect, the purchase business is a higher percentage, and it looks like they were able to maintain flat YOY growth by getting more aggressive in the correspondent channel. The price of that was a sizeable drop in margins – 31 basis points.

JP Morgan saw a more typical drop, with originations down 19% YOY. The servicing portfolio fell as well. Citi reported better earnings on equity trading.

Californians may get to vote for a divorce from each other – to separate the state into 3 separate ones. One will contain the coast between LA and SF, another will be Northern CA, and the other will be Southern CA. As of now, LA and SF basically control the whole state, and there is a big conflict between the coastal environmental types and the farmers who supply something like half of the US’s agricultural output. Still, given that Democrats control the state and the ag belt will probably vote R, this probably isn’t happening.

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