Morning Report: Stocks jump on promising COVID-19 treatment.

Posted on April 17, 2020 by Brent Nyitray

Vital Statistics:

 

Last Change
S&P futures 2858 70.1
Oil (WTI) 17.83 -2.29
10 year government bond yield 0.63%
30 year fixed rate mortgage 3.38%

 

Stocks are higher this morning after positive news out of Gilead regarding a treatment for COVID-19. Bonds and MBS are down small.

 

Investors are bullish after the government released its plan to re-start the economy. It will involve a staggered, 3 stage process which will be left up largely to state governors. Under the first phase, movie theaters, restaurants, sports venues, places of worship, gyms and other venues could re-open with some restrictions. Schools would remain closed, and workplaces could re-open although companies will be encouraged to telecommute. Under the second phase, non-essential travel could resume, bars and schools could re-open. Under the final phase, visits to hospitals and nursing homes could resume. The Trump Administration believes some states could be ready to open quickly, by May 1. Others will take some time. Separately, NY extended the lockdown to May 15.

 

Politicians are beginning to become more vocal regarding the need to help servicers. Senators Maxine Waters and Sherrod Brown both called on the Fed and Treasury to provide liquidity to servicers struggling with advances. “Mortgage servicers are expected to face increased strain as millions of homeowners and renters lose jobs, are furloughed, or see reduced hours, all of which will keep them from making mortgage and rent payments, as a result of this public health crisis. We must not allow the pandemic to destabilize critical markets, including our housing market,” the lawmakers wrote in their letter.

 

China’s first quarter GDP dropped for the first time on record. China went into this crisis with a real estate bubble and a shaky banking system to begin with. Their economy will bear watching going forward, especially if the real estate bubble bursts and China begins exporting deflation. If it does, plan on 0% rates in the US for longer.

 

Chase has stopped accepting HELOC applications for the time being. This is just after instituting a 700 FICO floor and 20% down on loans. Chase wasn’t really in the FHA space after getting socked with a deluge of false claims act penalties in the aftermath of the 2008 crisis.  I have to wonder if the COVID-19 Crisis restricts the FHA market even further overall going forward. This is the last thing the left wants to see, and is perhaps why we are seeing Democrats like Maxine Waters and Sherrod Brown suddenly care about servicers.

 

Last week, I participated on Louis Amaya’s Capital Markets Today podcast and discussed the issues affecting the origination market. You can get the replay here.

Filed under: Economy, Morning Report |

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25 Responses

  2. Kevin S. Willis, on April 17, 2020 at 12:32 pm said:

    Did I link this before? Probably. But I still love it.

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  3. jnc4p, on April 17, 2020 at 1:11 pm said:

    Amusing:

    “Democrats and Mainstream Media Were the Real Kremlin Assets

    By Branko Marcetic

    Go ahead and laugh: newly declassified sections of a Justice Department report suggest that the Russiagate conspiracy theory may itself have been part of a Kremlin disinformation campaign.”

    https://www.jacobinmag.com/2020/04/russiagate-christopher-steele-dossier-trump-election

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    • ScottC, on April 17, 2020 at 2:09 pm said:

      Go ahead and laugh: newly declassified sections of a Justice Department report suggest that the Russiagate conspiracy theory may itself have been part of a Kremlin disinformation campaign.

      Isn’t it strange that over the course of a 3yr investigation ostensibly into Russian interference into US elections, this never came up. Perhaps the investigation wasn’t actually about Russian activity at all.

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    • Brent Nyitray, on April 17, 2020 at 2:34 pm said:

      I always suspected Russiagate was just a smokescreen to cover for Saint Barack’s spying on the Trump Campaign.

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  4. Brent Nyitray, on April 18, 2020 at 10:26 am said:

    Politico worries about the libertarian backlash from social distancing

    https://www.politico.com/news/magazine/2020/04/16/the-shutdown-backlash-is-coming-soonwith-a-vengeance-189809?fbclid=IwAR0OTb_J-kAx-3gPGNnLvbwQCCLh2FxZANiD6w9WhbdmuygUL2-t-YT-ySk

    The pandemic response arguably could represent a caricature of what critics disdain about liberalism. Government, responding in a panicky way to headlines and hysteria, ran roughshod over individual freedom and the private sector, a problem whose only remedy was even more remorseless expansion of government.

    These protesters surely would cite the widespread shaming of people who go to the beach instead of sheltering at home or refuse to wear masks as evidence of the scolding, sanctimonious character of the supposedly progressive mind.

    That isn’t a caricature. It is an accurate description of liberalism. And the scolding sanctimonious character is not “supposedly” progressive. It is an accurate description.

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  5. Let the mutherfuker burn!, on April 18, 2020 at 2:34 pm said:

    Totally normal, I’m sure.

    Priestap was asked during an interview with the IG why the negative Steele information was not included in his file, or disclosed to the FISA Court.

    He said that he “may have made a commitment” to Steele’s former employer, “not to document the former employer’s views on Steele as a condition for obtaining the information” on the retired spy.

    https://dailycaller.com/2020/04/17/christopher-steele-bill-priestap-dossier-mi6/

    All crazy conspiracy theories and can be completely disregarded.

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  6. Let the mutherfuker burn!, on April 18, 2020 at 5:30 pm said:

    Helluva “what if?”.

    As unemployment approaches 20%, each 1% rise can result in 3.3% spike in drug OD/ 1% increase in suicides (National Bureau of Economic Research.) If unemployment hits 32%, ~77,000 Americans may die as a result. Will economic fallout mortality be greater than the virus itself?

    Liked by 1 person

    Reply
  7. Let the mutherfuker burn!, on April 19, 2020 at 9:19 am said:

    “The dark night of fascism is always descending in the United States and yet lands only in Europe.”

    ― Tom Wolfe

    In fairness, Democrats are always saying we should be more like Europe.

    https://pjmedia.com/trending/new-jersey-woman-charged-with-plotting-to-violate-governors-stay-at-home-order/

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  9. jnc4p, on April 19, 2020 at 3:03 pm said:

    I agree with Maher:

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Be kind, show respect, and all will be right with the world.