Morning Report: Bank earnings coming in

Vital Statistics:


Last Change
S&P futures 2609 2
Eurostoxx index 347.72 0.2
Oil (WTI) 51.15 0.64
10 year government bond yield 2.74%
30 year fixed rate mortgage 4.44%


Stocks are flattish as bank earnings continue to come in. Bonds and MBS are down.


Inflation at the wholesale level declined 0.2% MOM and rose 2.5% YOY. Ex-food and energy, it rose 0.1% MOM and 2.3% YOY. Rising food prices more than offset declines in energy. More and more strategists are thinking the Fed will stand pat: “We expect the Fed to sit tight until June, and odds are rising that it could be an even longer pause given the absence of an acceleration in inflation, past tightening in financial market conditions, slowing in the global economy and uncertainty surrounding geopolitical events,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania.


Mortgage applications jumped 13.5% last week as rates fell to the lowest levels in 9 months. Purchases rose 9% while refis rose 19%.


Last week United Wholesale announced that they were removing most LLPAs from their loans in order to guarantee the best rate. Yesterday cross state rival Quicken announced they would cut pricing as well to compete. We have a wholesale price war in Amityville.


Wells Fargo announced earnings that disappointed the street as revenues declined. Mortgage banking volumes were down 28% on a YOY basis. Despite a flattening yield curve, net interest margins were flat with Q3 at 2.94%.


JP Morgan reported a sequential drop in revenues as well, however earnings were up smartly. There is some tax cut noise in the numbers however. The mortgage business had a rough go of it as originations fell 30% to $17.4 billion.


Fitch sees a stable mortgage market in 2019, after a 9% decline in 2018. Good news: delinquencies and arrears continue to fall. Bad news: lack of affordability will depress origination.


Kansas City Fed Head Esther George thinks now would be a good time to pause in the normalization process. FWIW, she doesn’t think we are quite at “neutral” yet but we are close. Note that she is on the hawkish end of the spectrum.

29 Responses

  1. …rates fell to the lowest levels in 9 months.

    Thanks. I would not have picked that up from any other source but you. Realtor websites are all pushing their agendas based on rate rise. While the trend is likely to continue upward [I assume] any news to the contrary is not being trumpeted, as far as I know.


  2. It is fascinating how bad expert systems are at directing job opportunities to candidates.

    Linked In is awful as well. If they are this bad on the candidate side, I can’t imagine they are any better on the recruiter side.

    Indeed thought I would be a perfect candidate for being a medical director. They actually sent me an email

    Hi Brent,
    Based on your resume data, Indeed thinks this job is for you!
    Job Title: Medical Director
    Company: Adamov & Associates, Inc.
    Location: Town of Philipstown, NY

    What specifically on my securities analyst resume tells you I would be a good medical director / researcher? My MBA? My banking experience?

    It is absolutely fascinating how bad they are at this.


    • That’s funny, I’m in the job market right now and get alerts from Indeed and LinkedIn, A lot of the pitches are for high-turnover positions related to auto and alarm sales. My assumption is that those companies are paying Indeed and LinkedIn to push those out to members, spam in other words. As far as opportunities, LinkedIn seems better though a couple of years ago I would have said Indeed. Where LinkedIn really excels is at personnel research and links to recruiters.


  3. Given the Gillette ad, I can see that the Super Bowl this year will be insufferable.


  4. Does this read like they think they’re winning?


  5. also:

    Marge Simpson:
    This all seems a little elaborate for sloppy joe’s. Hmm, I know what the other eleven forks are for, but what do you do with this one?

    Homer Simpson:
    Why Marge, I believe you’re supposed to scratch your ass with it.



  6. Good read. I missed this back in December.

    “The Virtue Signalers Won’t Change the World

    Third-wave antiracism makes sense, and fits into the longer struggle, but it’s a dead end.

    Dec 23, 2018
    John McWhorter
    Contributing editor at The Atlantic and professor at Columbia University”


  7. Yet again originalist justices stick to their principles and progressives can’t understand it.


  8. First of all, kudos to the squid, he’s a hero and an inspiration. He’s living the dream and deserves a medal!

    Serious question, if the orgy were with 10 ladyboys would he still be shitcanned?


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