Morning Report: Service sector decelerates

Vital Statistics:


Last Change
S&P futures 2885 4.25
Oil (WTI) 52.48 0.24
10 year government bond yield 1.58%
30 year fixed rate mortgage 3.87%


Stocks are higher this morning on no real news. Bonds and MBS are flat.


Announced job cuts fell to 41,557 according to the Challenger and Gray report. This looks at press releases, so they don’t represent actual cuts, just announcements. Retail (which has been a perennial weak spot) dominated, along with trade-related industrial cuts. Separately, initial jobless claims rose to 219,000.


The service sector decelerated in September, according to the ISM non-manufacturing survey. Separately durable goods orders fell slightly. We are definitely seeing a deceleration in business spending, and will see if this is only a temporary bump, or something more permanent.


Fannie and Freddie now guarantee about $7 trillion of mortgage debt, 33% higher than before the crisis. The amount of higher DTI loans is rapidly increasing, due to the GSE patch, which permitted them to do riskier loans. About 30% of GSE loans are high DTI, compared to 16% 3 years ago. FHA is even worse, with 57% high DTI, compared to 38% 2 years ago. “There is a point here where, in an effort to create access to homeownership, you may actually be doing it in a manner that isn’t sustainable and it’s putting more people at risk,” said David Stevens, a former commissioner of the Federal Housing Administration who led the Mortgage Bankers Association until last year. “Competition, particularly in certain market conditions, can lead to a false narrative, like ‘housing will never go down’ or ‘you will never lose on mortgages.’ ” The Trump and the Obama Administrations hoped to attract private capital back into the mortgage market, but so far it has been extremely limited.


New Rez has bought Ditech for $1.2 billion, as it works its way through bankruptcy. New Rez is part of Fortress which has been on an acquisition binge, buying Shellpoint last year. Fortress is owned by Japan’s Softbank.


Interesting stat: Remember the HAMP program, which was treated as a way to prevent foreclosures by modifying mortgages? Turns out that 57% of the modified loans from 2008 to 2013 re-defaulted.

13 Responses

  1. This guys a “journalist”.

    Liked by 1 person

    • That of course is exactly backwards. The hacks are the ones who only care about getting Trump and disregard everything else.


      • You made a great point in passing the other day. You asked why a Ukrainian entity would hire Hunter Biden. It began me thinking in general about foreign linked jobs offered to spouses and children of American mucky mucks. Turns out there may have been a lot of that going on for awhile.

        Maybe it should stop, but I don’t see how we could make that illegal, in general. It is obvious why the foreign entity does it, though. George probably remembers how young Griffin Perry got a big job from UBS while Rick was Gov and then UBS got the Texas lottery contract administration job. Chris Heinz is only Kerry’s stepson but he sure did some good Chinese deals, we are told, while his dad was SoS. We tend to think of Wendy Gramm and Enron when we think of family involvements, but she really was in some ways a bigger fish than Phil, and Enron was just Texas crooked, not Chinese or Swiss investors, so I don’t count her for this kind of list.

        I think it would be fair game to investigate all American pols’ family ties to foreign entities just in order to bring them to light. I don’t know what else there is to do about it, really.


        • I don’t know what else there is to do about it, really.

          Start impeaching people, left and right!

          That certainly seems the direction a not-insignificant number of people want to go in.


        • “I think it would be fair game to investigate all American pols’ family ties to foreign entities just in order to bring them to light. I don’t know what else there is to do about it, really.”

          That’s both good and sufficient. If it’s not obviously criminal, just make it public and let the voters sort it out.

          And also happens to be what Trump is asking for, which of course has lead to impeachment proceedings. Of the things to impeach him for, the conversations with Ukraine are some of the weakest.

          Ross Douthat had a good piece on the subject of elite corruption as well:

          Liked by 1 person

        • It’s interesting that the media has not covered this subject.


        • I like the Douthat piece, but I don’t buy that disclosure is what DJT is asking for.

          Addendum: When Joe Biden pressured the Ukraine it was a matter of western and bipartisan policy in this country. A February 2016 bipartisan letter signed by several Republican senators [urges] then-Ukrainian President Petro Poroshenko to ‘press ahead with urgent reforms to the Prosecutor General’s office and judiciary.’ … The 2016 letter, sent by members of the Senate Ukraine Caucus, was signed by Republican Sens. Rob Portman, Mark Kirk and Ron Johnson, as well as Democratic Sens. Dick Durbin, Jeanne Shaheen, Chris Murphy, Sherrod Brown, and Richard Blumenthal and focused on longstanding issues of corruption in Ukraine and urged reforms of the government.”

          I would still draw a distinction between foreign-related and domestic corruption, because in a list of bad stuff that happens selling American sovereignty is worse than Agnew selling street names.



          Worth a read.


        • Of the things to impeach him for, the conversations with Ukraine are some of the weakest.

          It seems like a poor choice, although far better (IMO) then the whole Russian collusion nonsense. Even so, with the abrupt changing of the whistleblower regulations and the lies about Schiff’s office talking to the whistleblower before he/she submitted the report, the optics have become awful and won’t likely improve as actual impeachment proceedings heat up.

          No doubt, Trump lies like a rug and has numerous conflicts of interest, and likes to skirt the line between national interest and personal interest a little too closely. But if they really start to unpack that and it turns out to be effective, then that strategy can be used against many more politicians than just Trump. Which is why I tend to suspect a lot of this is just bluster.

          I do wonder how impeachment will play with actual voters. I really don’t think it will be helpful to the Democrats. I can certainly see a scenario where lazy millennial liberals decide they can skip voting because with the impeachment and everything, Trump is clearly done for. Yet angry Trumpistas may be even more enthusiastic to vote.

          And impeachment of Clinton certainly didn’t help the GOP at the polls during the midterm. Maybe they think their timing will be better,


        • “but I don’t buy that disclosure is what DJT is asking for.”

          I don’t buy the conspiracy theory that he was asking for them to make something up out of whole cloth.

          My theory is that Trump assumes that most everyone else in politics is just as corrupt as he is, therefore there’s always dirt to be found.

          Especially in cases like Biden’s or with the Clintons. It’s just a matter of getting it out there so he can drag everyone else down to his level.

          With regards to the general consensus on Ukraine corruption, that’s a great argument on why someone else, whose son wasn’t tied to an oil and gas company recently under investigation the country in question, should have been point person for the United States on this issue.

          But if this was a case of Trump saying fire the prosecutor or you don’t get $1 billion and any of the Trump kids were involved in a company that had been a target of an investigation in that country, no one would buy the excuses and MSNBC would run pieces on it 24/7.

          It’s all a matter of who gets the presumed good faith and benefit of the doubt.

          Liked by 1 person

        • My theory is that Trump assumes that most everyone else in politics is just as corrupt as he is

          Most likely of all scenarios, I agree.


      • Even if you don’t think it’s exactly backwards, I don’t see how anybody can seriously think it’s not germane to the discussion. Regulations got midnight revisions to allow the whistelblower to submit a hearsay complaint that should feel to anyone like it has some kind of political motivation, and the people pimping the complaint hardest in public (as opposed to, you know, actually investigating it) are also lying about their involvement.

        The actual substance of the complaint seems very debatable to me–but, sure, look into it (even though any similar complaint wouldn’t have ever gotten looked into before, because the rules, which is why they had to change them just as the complaint was submitted).

        Amazing that “journalists” can think that stuff can just be dismissed with handwaving.


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