Morning Report: March rate cut comes into view

Vital Statistics:


Last Change
S&P futures 3143 11.25
Oil (WTI) 49.46 0.19
10 year government bond yield 1.36%
30 year fixed rate mortgage 3.54%


Stocks have stabilized this morning and rates are up a touch from their intra-day all time lows yesterday. At one point, the 10 year Treasury was trading at 1.31%. This morning, Treasuries are down a touch and MBS are flat. For the most part, MBS underperformed Treasuries yesterday.


Mortgage applications rose 1.5% last week as purchases increased 6% and refis fell by 1%. “Last week appears to have been the calm before the storm,” said MBA Chief Economist Mike Fratantoni. “Weaker readings on economic growth caused a slight drop in mortgage rates, bringing them back to their level two weeks ago, but applications overall moved 1.5 percent higher. Refinance applications for conventional loans dropped a bit, but FHA refinances increased more than 22 percent. Purchase volume remained strong, supported both by low rates and the increased pace of construction over the past few months. With housing supply at low levels, new inventory is a positive development for prospective homebuyers.”


The Coronavirus issue has spooked the Fed funds futures market. The futures are now predicting a 1 in 3 chance of a rate cut at the March meeting. Just one  month ago, the March futures were handicapping a 4% chance. Take a look at the December futures, which are now forecasting 2 or 3 cuts this year.


fed funds futures


Note that Dallas Fed President said yesterday: “It is still too soon to make a judgment about how it might relate to monetary policy. I still think we are a number of weeks away from being able to make the judgment” whether a rate change is required.” The April futures are already pricing it in.


Coronavirus fears didn’t do much to dampen US consumer confidence, which rose again. Historically consumer confidence has been an inverse of gasoline prices, in other words, when gasoline rises, consumers get salty and vice versa. Oil is now trading below $50 a barrel, and the refineries are beginning to switch from heating oil to gasoline refining. Good news for the summer driving season.


Luxury homebuilder Toll Brothers reported lower than expected earnings this morning and the stock is getting hammered pre-open (down about 9%). Earnings were down big and revenues missed guidance.

39 Responses

  1. Good piece:

    “Calm down, establishment Democrats. Bernie Sanders might be the safest choice.

    “Moderate” candidates won’t be electable if they can’t speak to middle- and working-class frustrations.

    By Robert B. Reich

    Right after Sen. Bernie Sanders’s big win in last week’s Nevada caucuses, Joe Lockhart, President Bill Clinton’s former press secretary, expressed the fear gripping the Democratic establishment in an op-ed for CNN: “I don’t believe the country is prepared to support a Democratic socialist, and I agree with the theory that Sanders would lose in a matchup against Trump.”

    Like much of the party establishment, he is viewing American politics through outmoded lenses of left versus right, with Sanders (I-Vt.) on the far left and President Trump on the far right. So-called moderates such as former New York mayor Mike Bloomberg and former South Bend, Ind., mayor Pete Buttigieg supposedly occupy the political center, appealing to a broader swath of the electorate.

    This may have been the correct frame for politics decades ago, when America still had a growing middle class, but it’s obsolete today. As wealth and power have moved to the top and the middle class has shrunk, more Americans feel politically disempowered and economically insecure. Today’s main divide isn’t left versus right. It’s establishment versus anti-establishment.”


    • I’ve been doing a lot of reading lately, especially into Trump’s “War on Immigration” and I’ve decided if Bernie is the candidate I will vote for him. I think he might be able to beat Trump. I don’t particularly want Sanders to be President but I want Trump to get another term even less.

      Liked by 1 person

      • Well Bernie would likely solve the immigration issue. Socialists generally end up with the problem of how to keep people in the country, not out of it.


        • I figure I might as well embrace the “crazy”. Hopefully he won’t be able to get much done in 4 years.


        • lms:

          Hopefully he won’t be able to get much done in 4 years.

          I find it interesting that you refused to vote for Hillary vs Trump, but you would vote for Bernie vs Trump.


      • I guess if Joe Walsh can vote for him I can too. I’m not excited about it though.

        Walsh, author of “F*ck Silence: Calling Trump Out for the Cultish, Moronic, Authoritarian Con Man He Is,” says Trump is a bigger threat to America than any of Sanders’s policy proposals.

        “If he’s the nominee, I won’t just vote for him,” he wrote. “I’ll campaign for him.”


        • No there is the True Conservative spirit! Don’t just vote for the self avowed socialist, but campaign for him too! Lol!

          Liked by 1 person

        • He’s a character McWing, all over the place politically but I kind of figure if a crackpot like him can vote for Sanders, this crackpot can too….. 😉


        • BTW, I’m still sending money to Buttiegieg’s campaign even though I know it’s a lost cause!


        • What policy differences does Mayor Pete have with Senator Sanders? I honestly haven’t heard any, are there a lot?


        • I’d find that more compelling if it were Joe Walsh of the Eagles.

          Liked by 1 person

        • McWing, if you’re interested, which I kind of doubt, here are his positions. I don’t agree with all of them but he’s definitely to the right of Bernie!


        • lms:

          …but he’s definitely to the right of Bernie!

          In what way?


        • lms:

          Walsh, author of “F*ck Silence: Calling Trump Out for the Cultish, Moronic, Authoritarian Con Man He Is,” says Trump is a bigger threat to America than any of Sanders’s policy proposals.

          If Trump was such a big threat to America, I would think that the threat would have been realized at some point in the last 3 years. Has it been?


        • Scott

          In what way?

          Joe Walsh is, or was, a conservative Legislator from Illinois, was part of the Tea Party movement and briefly ran a challenge to Trump’s run for President this year. He’s kind of a goofy guy but was a big Trump supporter originally and has now apologized for some of his racially motivated rhetoric and has pledged to vote for anyone but Trump. He probably didn’t expect Bernie to be the Dem candidate, neither did I, but he’s sticking to it.

          Edit: I thought you were asking about Joe Walsh not Buttigieg. He’s a more moderate Dem and criticizes the amount of money it would take to enact Bernie’s agenda.

          I still don’t know if I can pull the lever for Bernie but I might.

          It is ironic I think that I didn’t vote for Hillary, you’re right. One of the reasons I rarely vote for a Dem is because my vote doesn’t really count here in CA. If I thought she would lose in CA I would have voted for her. I generally vote 3rd party to keep the hope for a third party alive.

          Walsh said Trump is a threat to America, not me, I was just quoting him. I hope to see someone else sitting in the Oval Office though.

          Regarding Bloomberg, while I don’t necessarily believe everything I’ve heard about Bloomberg’s treatment of women, I’m generally of the opinion that where there’s smoke there’s fire and the NDA’s seem to support that to some extent. I’m keeping an open mind regarding all the other candidates though.

          I’ve been hearing rumors that the Dem establishment won’t let Bernie be the candidate even if he goes into the convention with a majority of delegates so we’ll see how that all plays out.


        • lms:

          Sorry…by “in what way” I meant in what way is Mayor Pete right of Bernie. I read his policies and didn’t see anything that Bernie would object to, and I haven’t heard anything of Bernie’s that Pete objects to. But I admit that I am not paying close attention.

          I’m generally of the opinion that where there’s smoke there’s fire and the NDA’s seem to support that to some extent.

          Perhaps, but even if there is fire, it doesn’t mean that he ever thought of women as “just sexual tools”. In this day and age a mere off-color joke can be enough to instigate a sexual harassment charge, and if you think disgruntled women employees don’t regularly wield that threat as a negotiating tactic when it comes to negotiating severance packages (which generally come with an NDA regardless), you should think again. I would think the chances that Bloomberg ever thought of women as nothing more than “sexual tools” to be pretty remote, even if he was in fact having sex with some of them.

          But I have to admit that I won’t be sad to see Bloomberg savaged on such grounds. You join the woke left, you deserve what you get, I suppose.

          Liked by 1 person

    • I think there’s a lot of truth to that, but if you have two anti-establishment candidates then presumably left versus right would become important again.


    • As both I and Scott noted from the official figures, the middle class has shrunk because more people have moved up and out than down and out. I swear that’s what the numbers used to float this meme actually reflect.

      Trump won on 1] depressed turnout because HRC is barely likable, and 2] because HRC stupidly ignored using facebook, and social media, while Trump mastered it, and 3] because HRC did not campaign live in key places, and 4]because of Stein. These were all more direct issues than any Russian propaganda, but the point I am making is that I don’t think there is any evidence Trump turned out “new voters”.

      I don’t believe any campaign based on new voters is likely to thrive.

      Liked by 1 person

  2. Interestingly enough, I watched a CNN Town Hall tonight and up first (I think) was Bloomberg…………..He spoke to a lot of my issues and I agreed with him………..maybe he’s learned that women aren’t just sexual tools……….who knows? Either way if he was the candidate I would prefer him over Bernie!

    Liked by 1 person

    • lms:

      maybe he’s learned that women aren’t just sexual tools

      What makes you think he ever thought differently?

      Liked by 1 person

      • Answered above.


      • I think Bloomberg–like many narcissists, and politicians–especially the kind that seek the presidency–and big-time CEOs are typically high on the narcissistic spectrum–tend to view everybody else as appendages of their own ego (or more than one normally might).

        As such they tend to see other people as tools to their own personal ends, rather than individual human beings who are ultimately just as valid and real as they are.

        I doubt Bloomberg is especially sexist, but more likely tends to see others generally as tools to reach his own goals, and whose feelings ultimately don’t matter.

        That being said: he’s likely smart enough to stop engaging in the behaviors that illustrate how he feels about other folks when running for the presidency. You don’t get too far if you can’t at least seem to care about what other people want!


    • Lulu, I think for those of us who are voting in D primaries and aren’t into free stuff and statism or the notion that Presidents rule the country there must be a strategy or several strategies for stopping Sanders [or Warren]. because Ds award delegates based on proportional representation but limited to candidates who polled 15% or more in a CD or statewide, one should vote for D who has a good shot at the 15% threshold, to mass votes against the two outliers.

      For example, in TX, Biden is sure to top 15% and so is Sanders, and then Bloomberg is likely to top 15% as of today. Easy vote for Bloomberg here, as opposed to the low scoring Klobuchar and Pete. This strategy consolidates voting delegate strength against Sanders [or Warren].

      I have no confidence that any D can beat Trump, but I am certain that Sanders loses like McGovern or Mondale, and brings down the House with him. I think JB or Bloomberg would lose, too, but without sacrificing the House of Representatives as a brake on Trump.

      From Scott’s perspective all Ds are the same or quite similar, but from ours they are not, any more than we think all Rs are the same.

      I don’t know where you got the “sexual tools” notion. I don’t think there are any allegations of sexual predation against Bloomberg, just allegations of what we used to call bad taste in the days of our youth.

      Liked by 1 person

      • “but I am certain that Sanders loses like McGovern or Mondale”

        Maybe. Sanders will lose if the electorate looks like it traditionally does. But like Trump, he can actually bring previous non-voters out to vote. There are a lot people who would never vote for a regular Democrat who will vote for Sanders.

        The question is do they make up for the loss of regular voters, and are they capable of getting themselves registered to vote.

        Liked by 1 person

        • I don’t think Sanders loses like Mondale or McGovern.

          I think it will be surprising if he loses much by much more than Clinton did.

          I think he loses, but primarily because of the strong economy, the power of incumbency, the fact the Republicans are back in the Whitehouse only one term since the Democrats.

          Still a Sanders nomination is not a sure loser–I tend to think he will be a wildcard. So it would be interesting.

          I feel like he engages and excites people that neither Warren or Biden possibly could, honestly. Although Biden is so off his game now . . .

          Ultimately I think Sanders takes the nomination (right now, that’s what I think) and loses to Trump, but not at Mondale levels. I think it’s possible the Democrats might flip a state while the Republicans flip a different state.

          It will be an interesting election night, anyway.

          Liked by 1 person

      • Mark:

        From Scott’s perspective all Ds are the same or quite similar

        No, that’s not really true. For example, I think there is a big difference between Bloomberg and Sanders (or Warren or Buttigeig) in many importance respects. But I don’t see a big difference between Mayor Pete and Bernie. Perhaps there is one, which is why I asked. Is there?

        Liked by 1 person

  3. I don’t think you guys quite understand the significance of some of the comments allegedly used, and overheard by many people, that Bloomberg says in regard to women. You’re all gentlemen here, or I wouldn’t be here, but a lot of his language in the past shows a definite disregard for women as anything other than a sexual tool. Sorry if that sounds harsh…………………I’d still vote for him over Sanders and especially over Trump. Lots of men speak of women without regard to what their words actually mean.

    And Scott, I’m well aware that there are women who make false allegations to improve their own position. It’s a cutthroat world out there.

    Getting at the truth of this isn’t that important to me, it’s his problem, not mine.

    I continue to be amazed at how this race is shaking out but I will still vote for any Dem who takes the nomination whether I personally like them or not. It’s something I haven’t ever done before. I wonder if there are others out there like me?


    • but a lot of his language in the past shows a definite disregard for women as anything other than a sexual tool

      If I was unclear, I wasn’t saying I doubted that, only that that was probably true because he views everybody as a tool. I’m sure he could view a woman he wasn’t sexually attracted to as a tool (for non-sexual purposes) and of course men.

      Also, when it comes to rude, crude or beyond-the-pale comments from a powerful man to a woman, it’s often an expression of narcissism that’s universal rather than specifically anti-woman–it’s a statement that “I get to say this to you, because I’m more important than you” or “I get to treat you this way, because you don’t matter” or “you are here because I allow it, and you’ll never get a better job/relationship/whatever than me, so you’re going to take it” and so on. Some of it could be crazy-making behavior–saying something awful or offensive and then dismissing or denying it.

      It may be sexual, because it’s an attractive woman. Or sexist, because it’s any woman. But in most likelihood, he does something to establish his power and the fact that he’s the only important one in his relationships with others all the time.

      I’m just saying, just don’t limit it to the sexist stuff. Likely he’s pretty much awful to everybody except people he really needs help from in the moment.

      And it’s also just that he wants to say these things or do these things, and since he wants to he does. And how it might negatively affect the other person doesn’t matter because they don’t matter, because in any given interaction he’s the only one that matters–or, at the very least, the one who matters most.


      • Kevin, you weren’t unclear and I agree with your points. We’ve had a lot of narcissists in public office and I’m sure I wouldn’t personally like or want to work for most of them. As a woman and a mother of daughters, both in the corporate world rising through the ranks, I hear a lot from them and their friends of things that get said to them and about them. I know there are also power plays over men as well but they don’t generally have sexist undertones.

        But like I said, I can’t get too worked up over it, we’ve had worse guys in office I’m sure. He seems to have toned things down and at least partially responded by way of apology.

        Clinton and Trump were both elected with allegations that left a lot to be desired in a President.

        According to Bloomberg he has a good record on female employment so that counts for something.

        Liked by 1 person

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