Brent Nyitray
Fairlington Blade
Let the mutherfuker burn!
jnc4p
Kevin S. Willis
Michigoose
lmsinca
markinaustin
Memetrics
novahockey
quarterback
ScottC
yellojktVital Statistics:
| Last | Change | |
| S&P futures | 2887.25 | -1 |
| Eurostoxx index | 372.16 | -0.77 |
| Oil (WTI) | 74.82 | -0.14 |
| 10 year government bond yield | 3.23% | |
| 30 year fixed rate mortgage | 4.95% |
Stocks are flat this morning on no real news. Bonds and MBS are flat as well.
Mortgage Applications fell 1.7% last week as purchases fell 1% and refis fell 3%. The average contract interest rate for conforming loans increased to 5.05% from 4.96% last week. This is the first print over 5% since 2011.
Donald Trump jawboned the Fed a little yesterday, saying “I think we don’t have to go as fast” referring to the Fed’s pace of tightening. Politicians universally love loose central banks and loathe hawkish ones. Ronald Reagan tolerated Paul Volcker’s tightening campaign, which caused the worst recession since the Great Depression only because the inflation of the 1970s was so bad that a recession was preferable. Inflation isn’t bad right now, and if we weren’t retreating from the zero bound, the Fed probably wouldn’t need to be as aggressive as it is being. Jerome Powell said we were “a long way from neutral” last week, but what “long way” means is anyone’s guess. The market thinks another 75 bps in the Fed Funds rate and then a pause.
Fannie Mae reported that serious delinquencies (90+) fell to 0.82% in August, down .06% from July and down from 0.99% a year ago. DQs are back to 2007 levels, and more or less are sitting at historical pre-crisis averages. DQs will probably increase due to Hurricane Florence (those loans won’t go down 90 days until the holiday period), but for now the strong labor market has DQs back to normal.
Venerable retailer Sears is expected to file for bankruptcy this week. Fun fact: in the late 1960s, the 5 biggest retailers in the US were the 5 geographic divisions of Sears. The company has been kept on life support by hedge fund manager Eddie Lampert, but he wants to see a bigger reorganization of the company.
Earnings season starts in a couple of weeks, and the banks are the first to report. Generally speaking, analysts expect the third quarter to be the strongest for the sector since the crisis, largely driven by volatility and tax effects. The bigger question is what will drive growth going forward, especially if rising rates lowers borrowing demand. We certainly see it in mortgage banking, but it could be an issue for corporate borrowers as well. Corporate borrowers took advantage of the ZIRP years to refinance existing high coupon debt and borrow at cheap rates for general corporate purposes. That may crimp borrower demand going forward. Note that the banking sector has been underperforming the market over the past 6 months or so:
Speaking of banks, HSBC reached a settlement with the Justice Department for $756 million relating to MBS issued during the bubble years. HSBC (a UK bank) bought Household Financial in the early 00s to enter the US residential real estate lending market.
The mortgage industry is a boom and bust business, and we are seeing layoffs at places like Movement, Wells, and JP Morgan. Fannie Mae’s Chief Economist thinks this is still in the early innings. “I do believe you will see more layoffs…We are at the beginning of that I would say,” he said. “It is a cyclical business and it is driven by the cyclical behavior of interest rates. So, none of that should be a surprise to anyone. The only thing different in this cycle was that it was policy that drove rates, so they were so low for so long.” We are headed into the lean Q4 and Q1 time of year – I wouldn’t be surprised to see more announcements, especially at the banks during earnings calls.
Filed under: Economy, Morning Report |
All Things in Moderation 
This thread is funny. Part of me thinks this is a hoax. If true though, who are these people?
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I say hoax. Easy to be a barefoot runner and a troll, be irritated by acorns, and then think: you know what would be funny? Could be serious, though. Because people are entitled.
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The last tweet in the string had another post by the same dude that was of a consistent tone re “competitive unicycling” that lends the air of believability to the whole thread. If it’s a hoax is very well done.
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Well, it’s more comforting for me to think it’s a hoax. Because I’m biased towards wanting to believe that such absurdity isn’t seriously advanced in public forums without a thought as to how it sounds.
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Yeah, okay. I guess he’s serious. Looks pretty serious. I can’t even.
Competitive unicycling, though. That’s a thing?
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barefoot runners are like crossfitters or vegans… very cult-like
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Ok, that was hilarious.
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Well shit.
https://www.buzzfeednews.com/article/craigsilverman/competitive-barefoot-runner-acorns-eric-curtis-hoax
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Social media vs reality:
https://www.theatlantic.com/ideas/archive/2018/10/large-majorities-dislike-political-correctness/572581/
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These people have absolutely no self-awareness…
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Not a hoax.
https://www.vox.com/identities/2018/10/10/17952388/magic-ritual-spells-self-care-feminism-brett-kavanaugh
What’s funny is that just a few months ago Vox was busy debunking Gwyneth Paltrow’s lifestyle site for the same magical thinking:
https://www.vox.com/science-and-health/2017/7/19/15988180/gwyneth-paltrow-goop-jade-egg-debunkers
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Interesting piece Brent:
“Millennials prioritize owning a home over getting married or having kids
But they fear another mortgage crisis.
By Gaby Del Valle
Oct 10, 2018, 12:40pm EDT”
https://www.vox.com/the-goods/2018/10/10/17959808/millennial-homeownership-student-loans-rent-burden
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Millenials want the benefits of adulthood without the responsibilities. If there’s a good chance of getting their parents on the mortgage, they want a house and to be dog-parents and spend money on stuff they want and play house with a minimum of actual adult obligations.
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That and they can’t afford both kids and a house with the level of student loan debt they are servicing.
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Having insane amounts of student load debt to service for anything other than high-end STEM degrees is just stupid. Any community college will provide you with employable skills that can often be the first rung on a ladder to make good money. If you’re parents can’t afford to pay for your vanity degree out of pocket . . . hit the trade schools, dummies!
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It’s the reality today for a basic undergraduate degree from a state school.
Community college isn’t a substitute, but some do go the route of two years at community college then transfer to get the degree from a four year college.
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A lot of CC’s (most?) offer Bachelor degrees. It very much should be the preferred route.
In state tuition at the University of Texas, San Antiono is less that $6k a year. That’s pretty reasonable.
https://www.collegesimply.com/colleges/texas/the-university-of-texas-at-san-antonio/price/
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I suspect that’s the exception.This is the rule:
There’s zero reason to have textbooks now vs PDF’s. It’s a racket.
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Also, the total cost in your example is $23,285 per year not $6k.
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The tuition is $6k, the authors added in living, etc, which I assume is campus housing. I don’t think you should count that. I’m looking at the cost of tuition as the driver here, we all have to live somewhere and should not be a factor when looking at education debt. If it takes living at home to get a degree as cheaply as possible the the so be it.
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“I’m looking at the cost of tuition as the driver here,”
Except that’s not accurate and I believe for the first two years students are required to live in campus housing.
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Where was the on campus living requirement? I didn’t see it.
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You are right, they don’t have to at San Antonio.
https://future.utsa.edu/admitted-to-utsa/
Back when I went to my college, it was required.
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Knock me over with a feather.
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Cue the rationalizations as to how this is wrong or irrelevant (plus contrary anecdotes) in 4,3,2 …
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How will we go on?
http://taxprof.typepad.com/taxprof_blog/2018/10/law-students-plan-walkout-today-to-protest-kavanaugh-confirmation.html
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OMG! The law students WON’T BE IN CLASS! We’re already suffering from an EPIC SHORTAGE OF LAWYERS! Whatever will we do?!?!
Maybe they will walk out and they won’t come back. No offense to Mark, but the world might be better off with less lawyers. 😉
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I did not know this.
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He was just letting them know they would need healthcare shortly, after he shot them. It was just a heads up statement. Nothing to read into that.
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I was expecting more butthurt.
https://m.dailykos.com/stories/1803697
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Awesome!
https://www.google.com/amp/s/amp.jsonline.com/amp/1588536002
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Yup, slavery’s legal again.
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