Morning Report: OCC wants to update the CRA 9/4/18

Vital Statistics:

Last Change
S&P futures 2897 -4.25
Eurostoxx index 379.06 -3.45
Oil (WTI) 71.13 1.33
10 year government bond yield 2.88%
30 year fixed rate mortgage 4.55%

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

The highlight of the upcoming week will be the jobs report on Friday, although we will get a lot of Fed-speak on Wednesday. Productivity and costs on Thursday will be an important report as well.

Construction spending rose 0.1% which was lower than the Street 0.4% expectation. Residential construction rose 0.6% MOM and 6.6% YOY.

Manufacturing expanded in August, according to the ISM PMI Index. The August PMI increased 3.1% to 61.3, driven by increases in production and new orders. Employment rose as well. Many of the participants noted that trade is injecting some uncertainty into their business, especially with respect to price negotiations with suppliers. The reading of 61.3 is unusually strong, and is typically associated with 5.6% GDP growth.

The OCC is asking for input regarding the CRA and modernization. “As a long-time banker, I have seen firsthand the benefit of CRA investment and how it makes communities vibrant. I applaud the effort of community development practitioners and bankers who work together to make an important difference in our nation’s neighborhoods,” said Comptroller of the Currency Joseph M. Otting. “I have also seen how limitations in the current CRA regulation can fail to provide consideration to a bank that wants to lend and invest in a community with a need for capital, including many low- and moderate-income areas. Unfortunately, the operation of the current CRA regulation can result in restricted resources. It is time for a national discussion on how we can make the CRA work better.”

The ANPR solicits comment on a number of questions regarding improvements to the CRA regulations related to

  • increasing lending and services to people and in areas that need it most, including in LMI areas;
  • clarifying and expanding the types of activities eligible for CRA consideration;
  • revisiting how assessment areas are defined and used;
  • establishing metric-based thresholds for CRA ratings;
  • making bank CRA performance more transparent;
  • improving the timeliness of regulatory decisions related to CRA; and
  • reducing the cost and burden related to evaluating performance under the CRA.

Donald Trump was jawboning Canada over trade and threatening China with $200 million in higher tariffs. I think markets are pretty much shrugging off trade threats any more. Note that Trump will need legislation to carry out some of the changes he wants to make with Canada, which isn’t going to happen.

Home prices increased 0.3% MOM and 6.2% YOY in July, according to CoreLogic. They are forecast to rise about 5% over the upcoming year. We are seeing sellers in the hot markets decide to pull properties off the market to see if they can ride the home price appreciation for a bit longer. This is adding to the supply crunch. CoreLogic’s model always seems to predict a slowdown in home price appreciation that never seems to materialize.

An interesting tidbit – the median lot size fell to 8.560 square feet in 2017 (about 1/5 of an acre). Lot sizes had been trending downward, but climbed during the bubble years as more and more building was done in the exurbs. New England has the largest lot sizes at about 0.4 acres, while the left coast has the smallest (.15 acres). Note this study is only looking at single family spec homes. It looks like this is basically a secular trend, and the the bubble years (building in the exurbs) was largely a blip. It also could be a function of building activity being dominated in regions (like the West Coast), where lots are smaller.

The ultra-high end luxury market has been getting whacked as foreign investors step away. Changes in tax laws might be having an impact, but it could have also been driven by overbuilding at the top end. I suspect it is the latter, since we are seeing softness in states like Florida which benefit from the tax law.

36 Responses

    • The lack of self awareness on how the media got to be distrusted is evident throughout the piece.

      This isn’t the explanation:

      “Then, as now, that hatred was artificially stoked by people who found that it could deliver them some combination of fame, wealth, and power.”

      There are far easier ways of getting fame, wealth and power than media bashing.

      Matt Taibbi is much closer to the mark:

      “The public has grown to hate the national press over the years because they see media celebrities as elite supplicants who’d rather be up there than down here.”

      But someone like Chuck Todd is one of the least likely to engage in some critical self examination on how perhaps being a celebrity as a reporter and journalism are fundamentally incompatible.

      Liked by 1 person

      • I think that’s fair (Taibbi’s assessment). They come across as arrogant and entitled and precious quite a lot of the time, and way overvalue themselves as purveyors of truth when, in fact, all they offer are fictionalized, simplified narratives. Anyone who has been close enough to something newsworthy to have personal knowledge knows how inaccurate they can be, and how often they “miss the point”, or interpret things backwards. They frequently can’t even get quotes right.

        They are not a special class of human beings imbued with unique powers who the proles should be subservient to. And less and less do they do anything interesting, like investigative journalism. Or so it seems.

        Some people I’m sure dislike the press for ideological or tribal reasons. But I think a lot of people don’t like the press because their sense of superiority and entitlement and general specialness, of being a class of our betters with special rights that only they have, and that only they should have.

        The recent confusion between Trump telling folks not to believe the press and a number of journalists rephrasing of this simple, available comment is a perfect example to me. He said people shouldn’t believe the press and journalists reported that he said people should not believe the truth. A common refrain was that Trump told people not to believe their own eyes, but instead believe him. Which I’m not sure is that far from Trump’s orientation, but the same people were saying the same thing: don’t believe your own faculties, believe us.

        Eh. Tired of ’em.


      • the campaign to destroy the legitimacy of the American news media.

        The campaign is real, and it’s being waged by the media on all fronts.

        The closest parallel in recent American history is the hostility to reporters in the segregated South in the 1950s and ’60s.

        Conflate objections to the arrogance and entitlement of the news media with racism in the Jim Crow south. Heavy-handed, much?

        Figures such as Rush Limbaugh, Matt Drudge, and the trio of Sean Hannity, Tucker Carlson, and Laura Ingraham have attained wealth and power by exploiting the fears of older white people.

        Another way to say that? They’ve all gotten rich by tapping into a neglected market, and what I would argue is a reactive market: if the media was actually in the business of dispassionately reporting objective truth and providing good-faith analysis, there would not have been nearly the market for Rush and Drudge and Hannity there has been.

        They are thriving financially by exploiting the very same free-press umbrella they seem determined to undermine

        Freedom of speech, more accurately, as they are all pundits and not reporters. Also, they aren’t trying to undermine freedom of the press, they are casting doubt upon the veracity of the folks in mainstream media.

        The modern campaign against the American press corps has its roots in the Nixon era.

        Jim Crow racism AND Nixon! This isn’t manipulative at all. I can’t understand why people don’t just take their marching orders from the feudal lords of the press like good serfs.

        allow a president to surround himself with aides who argue for “alternative facts,” and announce that “truth isn’t truth.”

        Two and three word quotes absent of context. And no effort to understand what they were getting at (admittedly, they were bad quotes to make, but still).

        But how does one balance facts?

        Again, tone-deaf to their own arrogance is a big problem. They conflate their opinions and editorial agenda with facts.

        These are real issues, and most journalists labor to correct them.

        There is no visible sign of that.

        And what did we reporters do in the face of this cable onslaught that would eventually turn into a social-media virus and lead us to the election of the most fact-free presidential candidate in American history? Nothing.

        And either he’s intentionally lying or he believes this, which suggests he’s entirely unaware of his own blindspots and biases.

        That eventually, folks will see through the silly name-calling and recognize good reporting.

        Show us some!

        American democracy requires a functioning press that informs voters and creates a shared set of facts.

        This sounds good, and reasonably true, but I don’t want NBC or CNN or MSNBC or Fox News or anyone, really, that currently tries to, being the ones who provide the “authoritative” set of shared facts.

        Eh. Good luck to him.


  1. These Kavanaugh hearings are awesome!!


    • Is there an army of Handmaidens attending?


      • Because that just makes sense.

        It amazes me that the people who show up dressed like Handmaidens from Handmaid’s Tale and suggest that the Handmaid’s Tale is “about to come true” don’t realize how vapid and absurd that all is. I could see the Handmaid’s tale becoming a reality in the Middle East, but the only way it could ever become reality here is by well-meaning progressives doing something that ended up with us adopting Sharia law. Which even so is still unlikely.


  2. Good read:

    “Markets Produce Excellent Failures
    By Chris Ladd
    September 4, 2018”


  3. I just couldn’t resist bringing this over here, knowing what you guys think of cis-gender (I have to tell you that, as a geneticist, that term makes perfect sense. But only if you know what cis- and transgene expression patterns are 🙂 ). A new one for you: non-binary.

    No–makes no sense to me, either. Enjoy!


    • Translation:

      “I’m special and you have to cater to me”.

      That cartoon needs a final frame of the person on the left walking away because the non-binary person is too much trouble to associate with. I suspect they are vegan as well.

      Liked by 1 person

      • I suspect they are vegan as well


        Liked by 1 person

      • I suspect they are vegan as well.

        So does that mean you don’t eat eggs?


        I feel a lot of this is baiting/attention-seeking. You can make decisions about who you are without having to advertise, make it a battle, or react with hostility any time someone doesn’t know “who you are”. Nor do you have to spell it out to every casual acquaintance you meet.


        • And I would say, pretty much every liberal, left-of-center person I’ve met is not like that. On the left as on the right, there’s a number of bad apples that spoil the whole bunch.

          I have met a few. Most of them were from Canada.


    • I never said cisgender didn’t make sense as a term (although I’m not sure I’m a fan of gender-preference balkanization, and do think there is an effort to denormalize traditional language, but time will tell if it will work). I just don’t like it!

      And here’s what not to say.

      As long as I can tell said person what they can’t say around me, on any topic that I feel has any bearing on my life!

      I understand the desire but that’s not *really* an option if you want to engage with the wider world, and it shouldn’t be.

      I’ve encountered “you can’t ask for clarification, you should already know/it’s none of your business even though I’m making it your business” in personal relationships enough to know I’m not going to put up with it from strangers. 😉

      Fortunately, in the case of being non-binary, I’m non-interested, so I don’t expect to need to ask for clarification in those cases.

      Liked by 1 person

    • It still amazes me that an issue (trans self-esteem issues) that affects probably low single digit % of the population has become such a cause celebre for the left…

      I would assume there is some strategy there, but I have no idea what it is. Maybe is is just an edgy way to virtue signal (i.e. take THAT you bible thumping troglodytes!). Maybe there is some feminist / social justice litigation angle.


      • There always a cause de jour for those that like the idea of being more progressive and deconstructing the oppressive social norms of the past. It’s not based on the numbers!


        • There always a cause de jour for those that like the idea of being more progressive and deconstructing the oppressive social norms of the past.

          You have to admit, we’ve got plenty to choose from.


        • Yes, I have to admit that! Of course, at some point it becomes a case where everything is oppressive to someone. But I try to respect their position to the degree it’s not a fresh oppression to somone else.


    • I will pretty much call anyone whatever they want to be called (although I do draw the line at the singular “they”). But don’t make me guess.

      Heck, as I’ve said, I was “sir” most often in the military. And even with short hair they could tell the difference.


  4. $5 says Cory Booker weeps during his questioning of Kavanaugh.


  5. You want to know what will spur the French Navy into action?



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