Morning Report: Housing affordability improves

Vital Statistics:

 

Last Change
S&P futures 2919 -16.25
Oil (WTI) 52.07 -0.64
10 year government bond yield 1.53%
30 year fixed rate mortgage 3.83%

 

Stocks are lower this morning on trade concerns and lower than expected inflation readings. Bonds and MBS are flat.

 

Inflation at the wholesale level came in well below expectations, with the headline producer price index falling 0.3%. Ex-food and energy, it fell by the same amount. On a year-over-year basis, the headline rose 1.4% and ex-food and energy it rose 2%. While the Fed doesn’t pay too much attention to the CPI and PPI, it will certainly fuel fears that they are losing the battle against deflation.

 

Small business optimism fell in September, according to the NFIB.  “As small business owners continue to invest, expand, and try to hire, they’re doing so with less gusto than they did earlier in the year, thanks to the mixed signals they’re receiving from policymakers and politicians,” saidNFIB President and CEO Juanita D. Duggan. “All indications are that owners are eager to do more, but they’re uncertain about what the future holds and can’t find workers to fill the jobs they have open.” The point about jobs is crucial to understanding the current economic environment. While there are fears that we may enter a recession, they are rare when the labor market is this tight, and we are more likely to see increasing wage growth and consumer spending. Not a recipe for a recession.

 

NFIB

 

Home prices rose 0.4% MOM and 3.6% YOY, according to CoreLogic. They anticipate that home price appreciation will approach 6% in the next year, driven by lower rates. Of the top 100 metro areas, 37% are overvalued, while 23% were undervalued. The Rust Belt, interior California, and parts of the Northeast are the most undervalued.

 

Corelogic overvalued

 

Speaking of home price appreciation. California has enacted statewide rent control, which limits rent increases to 5%, and makes it harder to evict non-payers. Of course when you have a dearth of housing, artificially depressing the rate of return on that investment is a strange way of encouraging it. But this law is all about messaging, not substance. Notwithstanding the state of CA, housing affordability is at a 3 year high right now, according to Black Knight, driven by lower interest rates. This is quite the reversal from November last year when affordability was at a 9 year low.

14 Responses

  1. It’s interesting that people are acting shocked that US withdraw from the middle east will lead to some groups killing other groups.

    What did they think was going to happen? I don’t remember these objections when Obama “withdrew” US troops from Iraq.

    And Afghanistan will be worse.

    Interesting comparison with Reagan & Beruit.

    https://www.washingtonexaminer.com/washington-secrets/rand-paul-compares-trump-syria-withdrawal-to-reagans-beirut-pullout

    Liked by 1 person

  2. Progressives are losing it over the fact that Facebook won’t be their censor.

    https://www.vox.com/policy-and-politics/2019/10/9/20906612/trump-campaign-ad-joe-biden-ukraine-facebook

    Like

    • this is gonna be 1 long year coming up…

      Also, it looks like CNN won the Official Voice of the Democratic Party award… That’s gotta feel good.

      Liked by 1 person

    • I know Vox is ultimately a partisan newsletter for the DNC, but prefacing every description of the add with “totally disproven” and “super ultra lie-filled falsehoods” … even in an editorial, the editorial application of adverbs and adjectives should be judicious.

      That being said, have political ads always been filed with lies? And isn’t the correct response to release an ad lying about them even worse?

      Also, do I want a president who whines about how unfair things are and how people are lying about them?

      We have one of those and no, I do not. 😂

      Like

  3. Good read:

    “Ronan Farrow Strikes Again: A New Book Targets NBC News and How Harvey Weinstein May Have Leveraged Matt Lauer

    5:00 AM PDT 10/9/2019 by Marisa Guthrie”

    https://www.hollywoodreporter.com/amp/features/ronan-farrow-book-how-harvey-weinstein-may-have-leveraged-matt-lauer-1246149

    Note this:

    “Weinstein also attempted to leverage his long-term relationship with Hillary Clinton to pressure Farrow, he writes. In summer 2017, while Farrow was trying to lock down an interview with Clinton for his foreign policy book — while also still working on the Weinstein story — he received a call from Clinton’s publicist, Nick Merrill, who told him that the “big story” Farrow was working on was a “concern for us.” “

    Liked by 1 person

  4. Trump is going to clip the wings of the Federal Bureaucracy a little. Of course it will be silently reversed on Day of a Warren administration, but still….

    https://www.wsj.com/articles/trump-to-curb-use-of-federal-guidance-in-issuing-regulations-11570576340

    Liked by 1 person

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