Morning Report: Retail Sales strong

Vital Statistics:

 

Last Change
S&P futures 3019 5.35
Oil (WTI) 59.54 -0.07
10 year government bond yield 2.13%
30 year fixed rate mortgage 4.10%

 

Stocks are flattish as earnings season kicks off. Bonds and MBS are down.

 

June Retail Sales came in much higher than expectations. The headline number was up 0.4% MOM and 3.4% YOY. The control group, which excludes volatile products like autos, gas, and food was up 0.7%, well above the 0.3% Street estimate. May’s numbers were revised upwards as well. The upside surprise in retail sales pushed up the 10 year from 2.09% before the number to 2.13% after. Since consumption is such a big component of the economy, expect to see Q2 GDP estimates to be revised upwards.

 

Despite the strong retail sales numbers, the street is still handicapping a 25% chance of a 50 basis point cut and a 75% chance of a 25 basis point cut at the July FOMC meeting. I can’t believe we are talking about rate cuts when the economy is this strong, but here we are…

 

fed funds futures

 

In bank earnings, JP Morgan reported an increase in net income, but mortgage banking revenue was down 17% QOQ and YOY, driven by an unfavorable mark on the MSR portfolio. Volume increased 14% YOY to 24.5 billion. Wells also reported stronger earnings, with origination volume increasing to $33 billion. Margins fell from 105 basis points to 98, and it looks like they took a hit to their servicing portfolio as well.

 

Industrial Production was flat in June, driven by a drop in utility output. Manufacturing production was up 0.4%. Capacity Utilization increased as well, from 75.6% to 75.9%. So, despite all the concern about tariffs, we aren’t seeing it flow through to the numbers yet.

 

The FHA has been trying to figure out a way to bring more lenders back into the program after many exited in the aftermath of the housing crisis. The Obama administration aggressively fined lenders for minor errors which pushed banks largely out of FHA lending. The Trump Administration is changing enforcement policies and is working to bring more clarity to to the program. A number of trade groups however have argued that the reforms don’t go far enough, and don’t provide enough certainty to encourage banks to re-enter the business.

 

30 day delinquencies fell 0.7% YOY to 3.6%, according to CoreLogic. The only places that saw increases were due to hurricane-related issues. Flooding in the Midwest could boost these numbers in the future however. The foreclosure rate fell from 0.5% to 0.4% as well.

9 Responses

    • what is the left’s endgame on this?

      Like

      • It’s a schism. Certain feminists and lesbians don’t buy into the “men can be women” argument at all. So they get the tools of progressive approbation turned on them.

        For those who are pursuing it, I assume the end game is to normalize everything and argue that everything is acceptable, from pedophilia to bestiality. So let’s you figure out whose who in this system.

        I mean, where else are the folks arguing we ought to put men with functioning penises into women’s prisons going to be coming from?

        Like

        • If memory serves, the more radical feminists (who are often lesbian) are the ones not on board with the Tranny thing since they hate all things male. For them, maleness is an immutable characteristic.

          Of course, everybody knows that this whole tranny thing is bullshit, it’s just that they’re afraid to say it. It’s like when they ask Christians if the Ten Commandments should be the law of the land or if they ask muzzies if Sharia law should supersede the Constitution, peer pressure compels them to say yes but their real beliefs and actions are the opposite.

          Like

  1. welp, the gasden flag is now a white supremacist symbol

    https://www.yahoo.com/entertainment/why-people-have-an-issue-with-chris-pratts-tshirt-142825294.html

    Like

    • A: They can just f**k right off.
      B: These whiners apparently need real jobs.

      Like

    • We really do need a national divorce.

      Like

    • Top comment:

      “I like him, but all these small things about his politics makes me wonder when he’ll say something transphobic, tank his career, and do the full heel-turn into a Fox commentator ”

      Because not being on board with the tranny thing is the litmus test of wokeness.

      Like

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