Morning Report: Bank earnings coming in

Vital Statistics:


Last Change
S&P futures 3287 -2.25
Oil (WTI) 58.63 0.54
10 year government bond yield 1.84%
30 year fixed rate mortgage 3.88%


Stocks are flattish as we await the China trade deal and earnings season begins in earnest. Bonds and MBS are flat.


Inflation remains under control, and more or less where the Fed would like it. The Consumer Price Index rose 0.2% MOM and 2.3% YOY. Ex-food and energy it rose 0.1% MOM and 2.3% YOY.


JP Morgan reported better than expected earnings this morning driven by higher bond trading revenue. Origination volume increased to $33 billion, up 3% on a sequential basis, which is impressive given the seasonality of the mortgage business. On a YOY basis, it almost doubled. Full year origination volume increased 32% to $105 billion. Servicing took a bite however as prepayment speeds increased. Overall, home lending revenue was down 5% compared to the 4th quarter a year ago as negative servicing valuations offset increased production income. JPM stock is up about a buck pre-open.


Wells reported earnings that missed expectations driven largely by litigation expenses. Mortgage origination volume rose sequentially to $60 billion in the quarter, and servicing was revalued upward from the 3rd quarter. Production income was flat at 1.21%. The stock is down about 3.5% pre-open.


Small business optimism dipped a touch in December, according to the NFIB. “Owners are aggressively moving forward with their business plans, proving that when they’re given relief from the government, they put their money where their mouth is, and they invest, hire, and increase wages,“ said NFIB Chief Economist William Dunkelberg. “What really matters to small business owners are issues directly impacting their bottom lines. Currently, their biggest problem is finding qualified labor, surpassing taxes or regulations.” A net 29% of small businesses reported increasing compensation, an a net 24% plan on increasing comp in the next two months. That said, any sort of profit pressures are coming from weak sales, not increased costs.


Delinquenices hit a 20 year low in October, according to CoreLogic. 30 day DQs fell from 4.1% to 3.7% YOY. The foreclosure rate fell from 0.5% to 0.4%. Separately, CoreLogic reported home prices grew 3.3% in October. “Home price growth builds homeowner equity and reduces the likelihood of a loan entering foreclosure,” said Frank Nothaft, chief economist with CoreLogic. “The national CoreLogic Home Price Index recorded a 3.3% annual rise in values through October 2019, and price growth was the primary driver of the $5,300 average gain in equity reported in the latest CoreLogic Home Equity Report.”



11 Responses


    The WaPo’s poll of which D agrees with me.

    I took it.

    Bloomberg agrees with me 65% [the most] and Warren agrees with me 10% [the least].

    I could not answer every question because some of the choice answers were not choices I would countenance.


    • i ended up agreeing mainly with Bloomberg and bowled a perfect 0% with Warren.

      Liked by 1 person

    • Biden, Bloomberg, and Yang all agreed with me 9 times. On different things often. Gabbard was an 8, although I expect if different questions were asked she’d get a higher score. She remains my favorite. Bizarrely, Warren is a 5 and Sanders is a 4 for me.

      But some of that is the “should consider” language. Almost anything, I think, should be “considered”.

      Sanders is with me on not considering a carbon tax. Sanders is also with me on the “should consider” a jobs guarantee. And that the president shouldn’t add any more justices to the supreme court. And also that we shouldn’t consider joining the CPTPP. Although I supposed we should consider it, before rejecting it.

      Biden, Bloomber and Yang agree with me on not enacting a wealth tax and lettong people keep private insurance. Bloomberg and Biden are with me on reducing the national debt. Bloomberg and Yang are with me on keeping the electoral college.

      Yet only Yang is with me on expanding nuclear power.


  2. This email showed up from indeed

    New York City POLICE DEPARTMENT is hiring for Fingerprint Technician Trainee. 32 more jobs in Wall Street, NY.

    Is it my imagination or is the AI that employment sites use completely and utterly awful? When Amazon can tell you might be interested in 3/4 length medium weight denim jacket, why is it that indeed cannot understand that a doctor might not be suited for a receptionist or dog walker job?

    It is really interesting how bad it is.

    Liked by 1 person

    • It’s not AI. Not only that, it’s not even close.

      Amazon mines products for your purchasing history, viewing history, looks at products often purchased or viewed together, and may be building profiles that people that buy these sorts of things also like these other things. Which isn’t really AI, but at least has some marginal benefit.

      Stuff like Indeed makes a very simple search of your resume and skills list and then looks for word matches in job postings. Which gets you a lot of bad job postings, it’s because it’s matching too many irrelevant words or making too many bad choices as to meaning (or no choice as to meaning or context).

      Which is basically 1960s level computer “intelligence” programming.


      • LInkedIn is almost as bad. And i get that it is just a keyword search. The question I have is why has it not progressed from punch-card technology?

        I have always wondered if the results for job seekers are so bad, then are they just as bad for employers who use systems like Taleo? And if so, is part of the “labor shortage” due to crappy software that doesn’t do what it claims to do?


        • I get why it hasn’t progressed—it’s hard work and I don’t know that the value proposition is there. A little gets done and management says that’s good enough.

          There’s almost no real AI at use. Real AI has to be able to “learn new information with context” and “synthesize new knowledge, understanding or conclusions” with that knowledge. It needs to “think” structurally as opposed to be a very complicated series of if-thens.

          It will likely happen sometime, but almost nothing that I know that pretends to be AI actually is. It’s all just complicated decisions trees—and if they use the right variables, it can work reasonably well.

          There is real AI stuff going on but that’s not what these companies are doing. Some simulate it (Pandora) by using fuzzy logic to determine what sort of song sounds like another song). But it’s still pretty primitive.

          One day they will roll out some actual AI that is actually smart. But today is not that day!


  3. For you Brent:

    There’s a yacht rock band in Charlotte North Carolina called the Thurston Howell Band.

    Liked by 1 person

  4. Good article on the D primary and kowtowing to Brooklyn Twitter


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