Morning Report: New home sales flat

Vital Statistics:

 

Last Change
S&P futures 3005 0.25
Oil (WTI) 56.21 0.04
10 year government bond yield 1.77%
30 year fixed rate mortgage 4.03%

 

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

 

New Home Sales came in at 701,000, a hair above consensus and in line with the previous few months. The number was up 15.5% on an annual basis. There was 321,000 homes for sale at the end of September, which represents a 5.5 month supply. The inventory of homes for sale has been consistently declining, however the median sales price was down 8% MOM and 9% YOY. This appears to have been driven by a fall in the number of homes sold at the higher price points, but could be a sign of builders discounting as well. Note that the homebuilders have been on a tear this year, with the homebuilder ETF right at all time highs.

 

XHB

 

The new mortgage backed securities containing high LTV VA cashouts made their trading debut yesterday, and as expected they traded well back of normal Ginnies. Remember that GNMA made 90 LTV cashout VAs ineligible for regular delivery into Ginnie I and Ginnie II mortgage backed securities in response to investor complaints about fast prepayment speeds. These loans had to go into custom pools and the bid for these securities in the market reflected the higher risk. They traded anywhere from 2 to 4 points below commensurate Ginnie MBS. For example, the 4% coupon traded 120 ticks (or 3.75 points) behind. In other words, the 4% custom pools traded at 100, versus the 4% December Ginnies which traded at 103.75, which means that giving a borrower par pricing is going to be almost impossible.

 

Amazon.com disappointed the street with its holiday forecast. They anticipate $80 – $86 billion in revenue, which lagged the street estimate of $87 billion plus. This may just be Amazon-specific, but the economy has been held up by consumer spending and wage growth. If the spending aspect is declining, it means a weak Q4. The stock is down 7% pre-open.

 

 

36 Responses

  1. What is the lure of the new MBSs?
    ——
    On another note, it strikes me that WJC was able to go on being President of Other Stuff while being Impeached and Tried. Compared to DJT that now looks like an achievement.

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    • they were supposed to be a “penalty box” for loans that are likely to prepay fast, which would make the MBS they were booted from more attractive.

      Although if you can get government guaranteed 4% paper at par, which might last 5 – 7 years that probably isn’t too bad…

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    • Isn’t Trump still repealing regulations? Building the wall? Nominating Judges? Finalizing trade deals with China?

      Or is it legislative accomplishment your referring to? If so, isn’t that a function of Congress? Which part ran the House during the impeachment?

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      • I don’t know what he’s getting done. Might be plenty. I feel this is in part an intuitive choice to focus on the Deepstate Democrats and impeachment to turn it against them. Might be getting other stuff done but his foreground branding messages is on making the Democrats look crazy/deceitful/traitorous/incompetent.

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      • George, I will give you nominating judges.

        Otherwise, nada, but stumbling around tweeting, campaigning, changing stories on a dime, writing a dumb letter to Erdogan, acting as if he did the Kurds a favor, pretending that NK is no longer a threat because Kim likes him.

        Scott, I count the WJC impeachment hoorah from the beginning of THAT investigation, as well. You certainly have become quite the champion of DJT recently.

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        • Mark:

          You certainly have become quite the champion of DJT recently.

          Not really. I think there is a difference between recognizing that Trump isn’t The Worst Thing Ever In Every Conceivable Way, and “championing” him. I also don’t think that not liking him or his style justifies the double standards routinely employed against him by his critics, which I also wouldn’t call “championing” him.

          Frankly, one of the most irritating things to me about the widespread proliferation of Trump Derangement Syndrome is that it forces me into the position of defending him.

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        • You didn’t address anything I wrote. Interesting.

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        • Thought this was an interesting interview with Coulter about Trump.

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        • Another really interesting interview about Trump and, specifically, Trump Haters with Kimberly Strassel.

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        • “Frankly, one of the most irritating things to me about the widespread proliferation of Trump Derangement Syndrome is that it forces me into the position of defending him.”

          Ditto, but I wouldn’t concede that reality checking the worst delusions of TDS is in fact defending Trump as opposed to caring about getting the facts right and maintaining perspective.

          I’m not pro-Trump, but I will concede to being anti-anti-Trump. These days that lumps me in with Matt Taibbi & Glenn Greenwald.

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        • jnc:

          I’m not pro-Trump, but I will concede to being anti-anti-Trump.

          That is a good way of putting it.

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        • I’m okay with Trump. But I was also okay with Obama. And quasi-okay with Dubya but the whole Iraq war thing will probably always leave a bad taste in my mouth.

          And I could go one with style critiques of Trump all day, from management style to speaking style–I don’t think there has ever been a president that makes me want to cringe as much when he speaks as Trump does.

          That all being said, he seems to have pushed “president-I-don’t-like” derangement to a new level. Which tends to be what I’m on about when I talk about Trump. Just because Trump makes a lot of not great decisions and has a limited vocabulary (and lots of repetition) doesn’t mean that facts aren’t facts and that the media’s continued slide into pure opinion “journalism” isn’t interesting.

          And frankly–revealing my ideological and personal biases–I find the crop of folks the Democrats and the progressives generally are coming up with to go against Trump even more fascinating. I feel like the idea is to turn the volume up on what actually causes them to lose against Trump in 2016 to 11. I suspect 2020 will reveal if I’m correct.

          I’m much more the Taibbi camp of Trump critics. Yes, Trump is hugely flawed and–at the very least–a very bad image for America as president. But his opponents have played a huge role in making him president, and seem to presently be playing a huge role and getting him re-elected as president.

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        • Ditto, but I wouldn’t concede that reality checking the worst delusions of TDS is in fact defending Trump as opposed to caring about getting the facts right and maintaining perspective.

          I think this is it (and anyone who does this–including Taibbi who includes how much he despises Trump in almost every article on the topic–gets painted as a Trump booster on the Trump payroll or something).

          But facts are facts–and so is the absence of actual facts. The Russian collusion narrative was one I never fount compelling because there seemed both a lack of hard data, and the media proved itself repeatedly incompetent at interpreting what hard data there was (all the stories of “hacking” the DNC–a very incorrect term in that case–or hacking of “election” machines or servers or whatever, and the fantasy that could accurately be attributed to the Russian government or more specifically to Putin when, even if the Russian government was involved . . . they’ve got a Deep State, too, like any large bureaucracy . . . ugh, I could go on, but it was so deeply flawed from the outset. And I’m amazed that smart people (David French seems smart) can go on about how crazy Trump’s Ukraine conspiracy theories are (and some of them push the bound of credulity, surely) and then just accept that Russia “hacked” the elections and influenced the outcome is some measurable way, a theory with so many logical and structural problems (and with such a clear emotional need on the part of so many of its proponents to be true) that it boggles my mind.

          But anyway, I agree. It’s more about wanting to get facts straight (and clarity that we don’t know what we don’t know) than mounting a defense of Trump, who is far from an ideal avatar of conservatism, republicanism, or any other -ism other than Trumpism.

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    • Mark:

      Compared to DJT that now looks like an achievement.

      Trump hasn’t yet been actually impeached, so I’m not sure there is any comparison to make. But if/when he has been, which achievement do you think will be more impressive, President of Other Stuff Clinton, or re-elected President Trump?

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      • I think Trump is clearly far more impeachable than Clinton was. If the Democrats fail to impeach Trump (which seems very likely), it will speak pretty clearly to how weakened the Democrats have become as a party. And how much their balkanization is hurting them, in the face of having President Trump to unify them.

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  2. These comments are a scream. To wit:

    That’s it. He belongs to the cadre of conservatives who believe Trump is their last chance to destroy America and create a nuclear-armed fascist theocracy that can take over the world.
    I wonder if Putin even realizes that once the Barrs and the rest (not the Trump toadies) actually get the power he is creating for them, they will turn around and use America’s nuclear power to destroy Russia first?
    Once America is a fully fascist state, whatever Kompromat Putin has is irrelevant. His ”assets” will turn on him in a heartbeat.
    As China sits back and watches as Putin and the Americans play Russian roulette with a fully loaded gun.

    It’s like they’re reading my mind!

    https://m.dailykos.com/stories/1895052

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    • Another good one,

      recommend 4
      That wouldn’t surprise me in the least: I have yet to meet a single republican who wouldn’t rape a woman or a child if they knew they’d get away with it.

      I know that’s all I want to do.

      Again, it’s like they’re reading my mind!

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      • What fascinates me is the implication that this person literally believes they can read people’s minds and inner hearts. No thought that they might just be imagining this stuff.

        That’s like saying I never met a progressive who didn’t want to brutally murder tens-of-millions of people. Maybe they all do. But I don’t actually know that because I can’t read their fucking minds.

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    • the funny thing is that the biggest companies in the country (media, social media) are firmly in one-party control. More and more companies are being forced to pay fealty to the mob, either by donation or action.

      Google is today what Daimler was in the 30s. Probably more important, all things considered…

      That is more fascist than anything the Republicans have. And they are pushing for veto power of content. And a summonable army of SJWs to rattle your cage on Twitter, doxxing, etc…. I mean, it walks like a duck….

      But they have zero awareness. They think they are the good guys….

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      • I don’t see how a progressive would disagree with this,

        Everything within the state, nothing outside the state, nothing against the state.

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      • And the Democrats in Congress grilling Zuckerberg because he’s not immediately censoring all of the content they want him too, and essentially AOC accused Mark Zuckerberg of being a white supremacist. Which just makes me think these folks are lunatics in addition to their fascism fetish.

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      • Brent:

        Google is today what Daimler was in the 30s. Probably more important, all things considered…

        That is more fascist than anything the Republicans have.

        I couldn’t agree more. And it shouldn’t be that surprising since, although it is widely forgotten/denied today, the fascists were leftists.

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        • I recall over at the PL a long argument with Shrink about this. His response was that it’s a myth, common knowledge says fascist were right wing. That was it, repeated over and over.

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        • McWing:

          His response was that it’s a myth, common knowledge says fascist were right wing. That was it, repeated over and over.

          I can’t say it better than Reagan did:

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        • Dismissed with handwaving.

          And the shift of leftism/progressivism from nationalism to globalism. They pretend that conversion magically makes all the other statist pretensions of early 20th century progressive authoritarians into products of the right.

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    • Not only can they read people’s minds—apparently Trump’s, Putin’s, and everybody else’s—they can see into the future. I bet they’ve made a killing in the stock market.

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  3. Interesting observations on RBG.

    https://www.lawliberty.org/2019/10/24/conversations-with-the-notorious-rbg/

    Justice Ruth Bader Ginsburg has become a great rock star for the left, even packing thousands of fans into a stadium in Arkansas. Some have compared this phenomenon to the enthusiasm in some quarters for the late Justice Antonin Scalia. But there is a world of difference between the two justices. Scalia revived a theory of jurisprudence—originalism—that had been dormant for over a half century. He wrote a book defending it. He was one of the great Supreme Court stylists. And he sometimes took positions in contested cases that political scientists coded as opposed to the conservative wing of the Republican party from which he came, showing that he was a judge and not a politician in robes.

    In contrast, Ginsburg has become an icon without any of these distinctions. She is not a particularly gifted writer and has not previously articulated a comprehensive theory of constitutional interpretation. Unlike Justice Scalia and, for that matter, Justice Stephen Breyer, she has never written book defending her jurisprudential approach. And it is hard to think of any major case that substantially divided the justices where her vote failed to take the position political scientists would code as liberal. Of course, given the intellectual orthodoxy that dominates our universities today, it is not surprising this performance has nevertheless netted her an honorary degree from every Ivy League University except Cornell (and Cornell does not award honorary degrees) while Scalia was never once so honored. Just yesterday, after this review was initially drafted, she won the one million dollar Berggruen Prize for Philosophy, joining three previous winners who have combined to write scores of books.

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  4. WaPo can’t quite figure out whether al-Baghdadi is a bad guy, a good guy, or somewhere in between.

    https://thefederalist.com/2019/10/27/washington-post-writes-glowing-obituary-for-worlds-most-dangerous-terrorist/

    Like

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