Morning Report: Shelter in place orders are being relaxed

Vital Statistics:


Last Change
S&P futures 2856 28.1
Oil (WTI) 12.71 -4.29
10 year government bond yield 0.63%
30 year fixed rate mortgage 3.43%


Stocks are higher this morning on optimism that we have turned the corner on the COVID-19 crisis. Bonds and MBS are down.


In terms of economic data, the big number will be the first pass at Q1 GDP will be released on Wednesday. The consensus is that GDP contracted 3.8% as consumer spending falls 1.5%. Trump Administration Advisor Kevin Hassett thinks the economy could contract 30% in Q2.


The Fed will have the April FOMC meeting this week, and with rates already at zero, it probably won’t have the impact it normally has. Speaking of the Fed, they are ratcheting back MBS purchases again this week, with only $8 billion a day.


It looks like some states are beginning to relax the shelter-in-place orders, and even New York is looking to ease things in mid-May. If these states end up seeing no big uptick in cases, I expect the rest of the country to follow pretty quickly. Especially if the number of deaths settles in under 100k. FWIW, I think if most of the country is back to normal by Memorial Day, we can take the Great Depression II economic forecasts off the table.


Ex MBA President wrote a scathing editorial in Housing Wire regarding Mark Calabria and how he is the worst person for the job right now. In Mark’s defense, his job is to protect the GSEs and (and therefore the taxpayer), however Dave is correct that taking a cavalier attitude with non-bank servicers is not the best look right now when (a) the government imposed this forbearance period on everyone and (a) the GSEs are part of the government. If the government goes forward and imposes all of these costs on the industry, the least it can do is help mitigate those as much as it can. Perhaps the aid doesn’t need to come from Fannie and Freddie, but the government should provide it from somewhere.


Home price appreciation is slowing, but not dropping yet, according to Inventory is tight, largely driven by sellers who are pulling their homes off the market. This could be due to fears of not getting the best price, or it could be due to people wanting to keep potentially sick strangers from entering their home.


Pulte noted on its Q1 conference call that pricing is holding up, and cancellations are unexpectedly small – about 2% and only due to job losses. Orders on the other hand are weak. In the first week of March, they got over 800 orders. By the last week of March it was 140.


Rent strikes are beginning to pop up in NYC. This one is not the usual tenant versus landlord situation where there is a dispute over fixing things. This is meant to be a political statement to goad lawmakers into doing something for renters. Bold strategy, Cotton…

6 Responses

  1. FWIW, I think if most of the country is back to normal by Memorial Day, we can take the Great Depression II economic forecasts off the table.

    I’ve always felt this was not a particularly rational comparison. We’re in far better shape overall than we were in the 1930s, aren’t likely (I hope) to have a New Deal to broaden and deepen any given depression/recession we might experience. Some things are less great, such as our lack of internal manufacturing capacity, but perhaps we will learn some lessons from this and improve on that, too. Fingers crossed.

    Still, all the pundits (including many I respect) predicting there will be a huge depression out of this–I have a hard time seeing that. I feel a lot of them are swept up in the panic. And past that are just guessing, as nothing like this has happened before so nobody really knows. But this isn’t really like the dot-com-bust or the real estate bubble which had a lot of structural problems that seemed more difficult to recover from. This is just pent up demand, delayed for a bit, to work and spend, sometimes in different ways. But that money is likely to go somewhere.

    Certain segments may experience their own great depression–movie theaters or sports arenas or whatever. But I don’t think the overall economy is going to crater.

    But I’m not an expert!


    • I think for the pundits, it is wishful thinking. They want Trump gone and so they are egging on a massive recession.

      But more to the point, the Fed did not tighten in response to this, they eased massively. We aren’t in the aftermath of an asset bubble.

      That said, if inflation does come back (and it will someday) it will burst the mother of all asset bubbles, which is the sovereign debt market.

      Liked by 1 person

      • Hopefully that does not happen simultaneously with a hysterical pandemic lockdown.


        • well, that is my fear… inflation is too much money chasing too few goods. Globalization allowed us to have too much money because we didn’t have shortages.

          I just paid 7 bucks for TP. I am pretty sure i didn’t pay that much a year ago…

          Liked by 1 person

  2. So there’s this:

    In the debate over freedom versus control of the global network, China was largely correct, and the U.S. was wrong.

    In the great debate of the past two decades about freedom versus control of the network, China was largely right and the United States was largely wrong. Significant monitoring and speech control are inevitable components of a mature and flourishing internet, and governments must play a large role in these practices to ensure that the internet is compatible with a society’s norms and values.

    Well, we know where the Left wants the Internet to go.

    The second wake-up call was Russia’s interference in the 2016 election. As Barack Obama noted, the most consequential misinformation campaign in modern history was “not particularly sophisticated—this was not some elaborate, complicated espionage scheme.” Russia used a simple phishing attack and a blunt and relatively limited social-media strategy to disrupt the legitimacy of the 2016 election and wreak still-ongoing havoc on the American political system.

    I notice they are advocating for the government to control and censor the press, even though the “disruption” of the legitimacy of the 2016 election was entirely on the American press (and also the DNC), not Russia. Also, how controlling speech on the Internet will prevent John Podesta from using the word “Password” as his password is not clear.

    Anyway, interesting. We need to be more like China!


    • “We need to be more like China!”

      But with Trump in charge of determining what’s legitimate on the Internet.

      Very disappointed to see Jack Goldsmith’s name attached to this.

      Liked by 1 person

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