Morning Report: The impeachment process begins

Vital Statistics:

 

Last Change
S&P futures 3968 -2.25
Oil (WTI) 56.35 -0.64
10 year government bond yield 1.65%
30 year fixed rate mortgage 3.91%

 

Stocks are flattish this morning despite overseas weakness and Trump Impeachment news. Bonds and MBS are flat.

 

The news that Nancy Pelosi was opening an impeachment inquiry over the Trump / Ukraine situation was a non-event market-wise. Stocks and bonds didn’t budge. Supposedly Trump will release the transcript of the call today, and will make the whistleblower available to Congress. We will see where this goes, but market-wise it will take a while to play out. Check out the chart of the S&P 500 during 1998 when the whole Bill Clinton impeachment situation was played out:

 

clinton

 

Here is a chart of the bond market during the same time period (10 year yield). Looks like we saw a drop in the 10 year of about 160 basis points peak to trough during the whole process. Note that this is a classic example of the old market saw “buy the rumor, sell the fact.” The market priced in impeachment before the votes even took place. If you got short on the votes, you got your head handed to you. If you bought the Treasury flight to safety in late summer of 98, when the whole thing was coming to a head, you were too late, and were on the wrong side of the trade by that point.

 

clinton bond

 

There was some slight movement in the Fed Funds futures for December, with the current odds at 22% no cut, 52%, a 25 basis point cut, and 26% chance of 50 basis points. Note that the repo market issues has been taken by the Fed that they don’t have as much leeway to shrink the balance sheet as they had anticipated.

 

Mortgage applications fell by 10% last week as purchases fell 3% and refis fell 15%. Rates were more or less flat at 4.01% last week, so the refi number is a surprise. That said, mortgage rates had risen about 20 basis points over the past few weeks, so maybe this was a catch-up phenomenon. Despite the back up in rates, the MBA estimates that 2019 will be the best year since 2016, with originations expected to hit $1.9 trillion.

 

Consumer confidence fell in September on trade fears and darkening expectations. The present conditions index fell but it was mainly future expectations that drove the decline.

17 Responses

    • Nothingburger

      Like

      • I was surprised at how absurd it was too. It literally sounds just like what he says at his rallies.

        The Ukrainian president comes off as a bit of a fanboy too, but part of that could be due to not being a native English speaker.

        Like

        • if you are a member of the resistance, it is prima facie evidence of treason. if you are not, it sounds like he just wants to find out what is going on.

          Like

        • PL is straining this morning:

          “Trump did not mention the military aid to Ukraine as part of this pressure, but keep in mind that Trump had suspended that aid at that point, and Ukraine was eager to get it.”

          Translation, we got ahead of ourselves fantasizing about what Trump could have said and now we look stupid and partisan, again.

          Like

        • The stuff at PL and even the politicians doesn’t really surprise me. But the press has just lost it. Same with the pundits. I think the Russia collusion nonsense just broke their brains. The MSM never should have treated this like a serious story. It was hearsay about hearsay without direct quotes or real corroboration . . .

          Like

      • I’m reminded of Obama stringing out not releasing his birth certificate for years then finally releasing it. I’m pretty sure he did that on purpose, knowing there was nothing in it. Ditto this.

        It’s also funny that Trump was a big voice on that too! His handling of it during the election, where networks showed an empty podium for a half an hour and then a bunch of MoH recipients touting Trumps virtue and then Trump comes out and says, essentially, case closed, I got him to release his birth certificate and I’m satisfied, was the greatest bit of media manipulation I have ever witnessed.

        Like

      • One of these days Trump actually will be guilty of something (all presidents are), and no one will pay any attention. Trump derangement syndrome has caused people to forget one of the most fundamental lessons of childhood…the boy who cried wolf.

        Liked by 1 person

    • as if they’re concerned about limits on presidential power. that really chaps my ass.

      Like

  1. Buncha pussies.

    Liked by 1 person

    • Any chance that a leak in the dam could turn into a deluge? We’ll see. Many people are saying that. This is a scandal like we’ve never seen before. Believe me.

      “Believe me.”

      Yes, because you’ve been so right on stuff for the past four years.

      All the commenters talking like the transcript is obvious evidence of treason …. these folks just don’t seem to know what words mean.

      Like

  2. Whistleblower complaint is out. 100% hearsay.

    Like

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