Morning Report: Lennar reports big turnaround in May

Vital Statistics:


Last Change
S&P futures 3126 4.1
Oil (WTI) 37.94 -0.39
10 year government bond yield 0.75%
30 year fixed rate mortgage 3.16%


Stocks are flattish this morning on no real news. Bonds and MBS are up.


Initial Jobless Claims came in a little higher than expected – 1.5 million versus 1.3 million expected. Meanwhile, the Philly Fed survey was way stronger than expected.


The Conference Board Index of Leading Economic Indicators improved 2.8% in May versus the Street expectation of 2.3%. “In May, the US LEI showed a partial recovery from its sharp decline over the previous three months, as economic activity began to pick up again,” said Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board. “The relative improvement in unemployment insurance claims is responsible for about two-thirds of the gain in the index. The improvements in labor markets, housing permits, and stock prices also buoyed the LEI, but new orders in manufacturing, consumers’ outlook on the economy, and the Leading Credit Index™ still point to weak economic conditions. The breadth and depth of the decline in the LEI between February and April suggest the economy at large will remain in recession territory in the near term.”


Homebuyer mortgage demand spiked to an 11-year high. “The housing market continues to experience the release of unrealized pent-up demand from earlier this spring, as well as a gradual improvement in consumer confidence,” said MBA economist Joel Kan.


Homebuilder Lennar reported better than expected earnings and re-introduced its guidance for the year. On the conference call, the company talked about how the markets turned around in May:

In May, our new orders increased each week sequentially and were up 7% over the prior year. Our cancellation rate in May also dropped from 18% — dropped to 18% from the 23% high in April. More importantly, our increase in sales was generally achieved while raising prices and reducing incentives throughout the month of May. We rarely comment on sales activity outside of the quarter we are reporting. However, given these fluid market dynamics, I will give you some insight on June. For the first two weeks of June, our new orders were up 20% over the same period last year. 

Now some of that might be catch-up from the March and April weakness, but it does point to a robust homebuilding market, certainly better than yesterday’s housing starts number would suggest.


The FHFA extended the eviction moratorium until August 31.



20 Responses


    On Wednesday evening, after the Fulton County District Attorney announced criminal charges for two Atlanta police officers involved in the death of Rayshard Brooks, a “higher than usual” number of Atlanta police officers called in sick for their shifts. The officers’ protest, in one of America’s biggest cities, begs the question:

    Will America’s next pandemic be a wave of “Blue Flu” protests by the nation’s police?


    • Atlanta’s immediate reaction was to call in the Georgia State Police and bring in county police from neighboring areas.

      A drive around Zone 6 indicated there was not the usual APD presence. A Georgia State Patrol unit was handling a two-car accident at Boulevard and Edgewood Avenue around 9 p.m. The APD’s precinct at Wellstar Atlanta Medical Center appeared empty. Down in Grant Park, the Zone 3 precinct was populated by Fulton County Sheriff units.

      I think this is going to get worse. The folks in charge still don’t have an actual sense of the problem:

      Bottoms said her main concern was repairing the morale of the APD. “We have a lot of men and women who work for our police department who care about this city and work every day with integrity and with honest interactions with our communities. Those are the people who I expect will show up for work. If we have officers who don’t want bad officers weeded out of the force, then that’s a conversation we need to have.”

      This is about officers getting fired and then criminally charged for doing their jobs, with no public conversation or defense from the top cops or politicians when there’s a lot of extenuating circumstances. If they won’t acknowledge that I don’t see these sick-outs and straight up walk-outs ending.

      Also, the desperation to make up the shortfall last night makes me wonder what is going to happen in cities talking about abolishing or defunding their police departments?


  2. Mark, Leon Cooperman shares your opinion that the day traders in the market are just gamblers with nowhere else to go:


    • I just thought it was plausible!

      But I suspect sports bettors will do almost as well in the day trading business as they do betting sports, which is to say they will, on the whole, lose big bucks.

      Who gains on the other side of the transactions? People legitimately cashing out and brokers as opposed to day traders. Better them than Vegas, if you ask me. Or am I wrong about that?


      • I think the bookie’s vig in Vegas is bigger than the stock market’s. But the stock exchanges get a fee for every trade, as does the SEC.


  3. a nation of schoolmarms, if you can keep it


    • We don’t have Big Brother. We have Big Karen


    • Perfect:

      “check out my new podcast, Blocked and Reported”


    • he kind of gets it though


      • “How the hell are we supposed to say with a straight face we are about fairness and justice and redemption”

        oh, don’t fall for your own bullshit.
        that’s rule 1.


      • How the hell are we supposed to say with a straight face we are about fairness and justice and redemption, and then do this? We are making it so easy for the right… This fits into every one of their narratives.

        I guess it hasn’t yet occurred to this guy that perhaps it fits into every one of their narratives because their “narratives” are reality.


        • Certainly many of the right’s narratives are far closer to reality and more consistently reflect observable phenomenon than the left’s narratives.

          It’s basically saying: “We’re acting exactly like how conservatives always predicted we’d act if we got any kind of power! Don’t do it because it makes it look like they are right.

          They are still in the wrong place. It should be: this stuff is just wrong. Don’t care what right-wingers think about it. Don’t do it because this is creating an awful world nobody will really want to live in.


  4. Like

  5. “A Tidal Wave of Bankruptcies Is Coming
    Experts foresee so many filings in the coming months that the courts could struggle to salvage the businesses that are worth saving.

    By Mary Williams Walsh
    June 18, 2020, 1:29 p.m. ET

    Robert J. Keach, a director of the American College of Bankruptcy, said many companies had so far managed to put off bankruptcy by amassing cash and conserving it as best they can: drawing down existing credit lines, furloughing workers, delaying projects and taking advantage of federal and state pandemic-relief programs.

    But when those programs expire, the companies will start burning through their cash. That’s when bankruptcy filings are likely to soar and stay elevated, Mr. Keach said.

    Expect “a Covid-19 cliff” in the next 30 to 60 days, he said.”

    If they are right, I suspect this will doom Trump’s reelection.

    Liked by 1 person

    • Why wouldn’t Trump just advocate for more pandemic relief for said businesses? And if the Democrats don’t sign off on it, then it’s–see this is what you get with Democrats. Obstruction or killing bills with poison pills!


  6. And the police stand up to protesters in of all places Portland:

    “An attempt at an ‘autonomous zone’ in Portland is cleared away by the police within hours.

    The police in Portland, Ore., said on Thursday morning that they had successfully cleared out a small area of the city that protesters had occupied overnight in the hope of carving out an “autonomous zone” under their control, similar to the one in Seattle.

    Several hundred protesters had gathered Wednesday evening outside Mayor Ted Wheeler’s condominium in the Pearl District, an affluent neighborhood known for art galleries and restaurants. They barricaded several streets with dumpsters, wooden pallets, trash cans and other material, and declared the area the “Patrick Kimmons Autonomous Zone,” after a black man who was killed by police officers in 2018.

    A group called the Pacific Northwest Youth Liberation Front said it was demanding that the case surrounding Mr. Kimmons’s death be reopened, as well as the abolition of the Portland police. They referred to the city as “the stolen land we call Portland.”

    By morning, though, the group had dwindled to about 50 people, according to the police. At 5:30 a.m., the police declared the occupation an unlawful assembly and instructed anyone who did not live in the area to leave or face arrest. The remaining protesters, who by that time were outnumbered by the authorities, left peacefully, the police said.”


  7. Like

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

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: