Morning Report: Second round of stimulus passes

Vital Statistics:


Last Change
S&P futures 2806 14.1
Oil (WTI) 17.21 0.69
10 year government bond yield 0.61%
30 year fixed rate mortgage 3.43%


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


The second round of stimulus passed the House yesterday and is scheduled to be signed by the President at noon today.


Durable goods orders fell 14% in March, driven by lower transportation orders. Ex-transports, they were down 0.2%. Core Capital Goods (a proxy for capital expenditures) rose 0.1%.


New Home Sales fell to 627k in March from an annualized pace of 741k in February.


Homebuilder Pulte reported good earnings yesterday, however this was mainly before the COVID-19 pandemic hit.  “The U.S. housing industry carried tremendous momentum into 2020, until the devastating effects of the COVID-19 pandemic began impacting the country,” said Ryan Marshall, PulteGroup President and CEO. “As the coronavirus spread and state and local governments implemented various restrictions and stay-in-place orders, we experienced a material slowdown in consumer traffic and sales activity beginning in mid-March.” Despite the COVID issues, closings and orders were up 16% and gross margins increased. Before COVID, 2020 was expected to be the year when homebuilding finally broke out of the post-bubble vortex. It looks like it will have to wait another year. As an aside, Redfin reported that 1 in 7 offers were signed by buyers who saw the home virtually.


About 3.4 million homeowners have requested mortgage forbearance, according to Black Knight Financial Services. This is 6.4% of all mortgages. With 26 million new unemployment claims since the shelter-in-place orders, that number is probably going up. At this level, servicers in aggregate are on the hook to advance $2.8 billion per month for Ginnie securities. So far, Treasury is refusing to create an advance facility for non-bank servicers.


Some states are relaxing shelter-in-place restrictions and allowing non-essential businesses to re-open. Needless to say, public health types are aghast, however it will be interesting to see how well it works, especially Texas. Speaking of Texas, the amount of newly unemployed in the US, about 26 million, is just shy of the population of the US’s second most populous state at 29 million. That puts the economic carnage of this shelter-in-place order in perspective. Even New York is beginning to look at relaxing restrictions, at least upstate.





18 Responses

  1. Apparently 1 drive-in theater in Florida has accounted for about half of all box office receipts over the past month.

    We had a few weeks where box office receipts were about $5,300. Strange to see.


  2. This would be perfect for SNL:

    Liked by 1 person

  3. I don’t know who made up the poll, whether it’s all people, registered voters or likely voters, but it’s interesting.


  4. Good article from McCarthy on the use of science as an argument from authority.

    The politicization of science has ingrained in our political life something about which we ought to be highly skeptical: The argument from authority. It is doing extraordinary damage to the republic, through governmental responses — federal, state and municipal — to the coronavirus.

    And it will keep doing damage unless and until we restore the burden of proof.

    There is no doubt that governments have a compelling interest in public safety, which includes preventing the spread of a potentially deadly infectious disease. It is nevertheless the foundational conceit of the American republic that governments are created to secure the fundamental rights of a nation’s citizens — our rights to life, liberty and the pursuit of happiness. Moreover, the legitimacy of government is dependent on the consent of the governed.

    In the United States, authority is subordinate to liberty. Government is the servant, not the master.

    In our society, the argument from authority should never be the final word, notwithstanding the progressive vision of government by bureaucracies of purportedly agenda-free experts.

    Liked by 1 person

  5. Holy shit! Andrew Cuomo wants to repeal the 16th Amendment!


    • Typical liberal. “Just give me my money back Senator.” His money.

      Liked by 1 person

    • How is that calculated? Are the calculating all income tax as money “from the state”? What about payouts? Are they prepared to give up the national parks in order to cut that out of red state bills? It’s a single number without a lot of real meaning.


    • I’m sure he can convince McConnell to cut taxes, as it’s the individual taxpayers money in the first place, not New York’s.

      New York’s state government doesn’t pay taxes to the federal government.

      Liked by 1 person

    • Did not skip the article.

      Additionally, there is no science that says it is safer to go to Costco than it is to go to the small local restaurant for lunch. In the opinion of both doctors, the current guidelines are not based on rational thinking.

      This seems to be to be obvious. Not even “common sense” obvious but 2+2=4 obvious.

      Or any individual with a minor medical problem that will have a bigger impact because care is delayed.

      I’ve been trying to get my wife to do to the doctor for a month because of a recurring weird rash/red patches on skin accompanied by a low-grade fever. But because of the coronavirus panic stuff she hasn’t wanted to go. Finally going this Wednesday.

      their colleagues in emergency medicine around the country report they are being pressured to add a diagnosis of COVID-19. They did not speculate as to why this was happening, but indicated they found it odd.

      Panic provides too much incentive to do this–another reason numbers have always been suspect. There may be money attached for one thing. Some may be concerned about liability if they report the wrong thing. Some may think families may be able to get financial help if a loved one died from COVID-19, but won’t receive anything if they didn’t. They also may be worried that too few COVID-19 deaths will lull the public into a false state of calm that will increase contagion. So they are “massaging the numbers” so the narrative gets people appropriately cautious.

      There’s also no rigorous protocol for handling the data or making the diagnosis at the moment, and no oversight I’m aware of. So incentives in these cases make a big difference in terms of accuracy.


      • KW:

        Did not skip the article.

        Hopefully you still watched the vid. It’s very interesting. Thought it was notable that one of the reporters asking them questions challenged their conclusions by asking “Why do you think you are smarter than Dr. Fauci?” He should have responded “Why do you think I’m not?”


        • Probably, but I think his response was probably the more accurate one: we’re not referring to that, we are trying to share what we are seeing on the front lines and what we are concluding after years of experience, etc.

          They are obviously less likely to biased than Fauci, who will be in a position to benefit financially from commercial coronavirus treatments and potential vaccines. Not that that is motivating, only that biases are often subconscious. Academic distance from the front lines also obvious biases such folks. Then your responsibility as a top doc and direct association with Trump . . .

          Although if I were him I would have probably said, “This is not a dick measuring contest.”

          Not sure who was asking the question but I’m assuming it’s a media “journalist”–so of course unaware, I guess, as to how appeals to status-based authority (top doctor, president of Harvard, respect senator, whatever) are generally a persuasion tactic to create credibility where facts are insufficient or lacking.

          In the data-based context of the video, it seems entirely irrelevant to me. But then, that’s the press!

          I’m still working through the video and have sent it on to a few people. It’s good stuff.


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