Vital Statistics:
Last | Change | |
S&P futures | 3357 | -16.6 |
Oil (WTI) | 42.54 | -0.32 |
10 year government bond yield | 0.65% | |
30 year fixed rate mortgage | 2.89% |
Stocks are down this morning after the Fed minutes revealed pessimism about the economy. Bonds an MBS are up.
Initial Jobless Claims rose back above the 1 million market last week.
The Fed released its minutes from the July FOMC meeting yesterday. The big revelation was a moderating of economic expectations into the end of the year. The money quote: (note this is from the staff economists)
The projected rate of recovery in real GDP, and the pace of declines in the unemployment rate, over the second half of this year were expected to be somewhat less robust than in the previous forecast.
There was also discussion about the concept of yield caps, in other words the Fed targeting specific maturities in the Treasury market to keep the 10-year or 5-year bond yield below a certain target level.
A majority of participants commented on yield caps and targets—approaches that cap or target interest rates along the yield curve—as a monetary policy tool. Of those participants who discussed this option, most judged that yield caps and targets would likely provide only modest benefits in the current environment, as the Committee’s forward guidance regarding the path of the federal funds rate already appeared highly credible and longer-term interest rates were already low.
This is generally good news, at least for those that still cling to the idea that interest rates should be determined by a market. Still, the Fed and the US continues its “slouching towards Japan” strategy. Given the theory that increases in government debt as a percentage of GDP creates sluggish growth and low rates, not inflation (certainly borne out in Japan and Europe), low rates may be around for quite some time.
Mortgage Applications decreased 3.3% last week as rates rose. The purchase index rose by 1%, while refis fell by 5%. “Positive economic data reported last week on retail sales, as well as a large U.S. Treasury auction, drove mortgage rates to their highest level in two weeks,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “The rise in rates dampened refinance activity, but purchase applications continued their strong run and were 27 percent higher than a year ago – the third straight month of year-over-year increases.”
There were a lot of rumors going around that the GSEs are looking to delay the 50 basis point LLPA for mortgage refinances. The industry has been dead set against it, and we have seen bipartisan opposition to it. The industry’s main gripe is the short fuse: loans that were locked before the announcement but expected to close after would require the lender to eat the additional cost. A longer runway (say Jan 1) would prevent this. Another option is to apply the LLPA on locks after Sep 1. The word on the street is that the next shoe to drop will be investment properties, so we could see higher LLPAs there in the future.
Fannie CEO Hugh Frater and Freddie CEO David Brickman threw cold water on that idea in a blog post.
Contrary to much of the criticism we have received since making this announcement, this will generally not cause mortgage payments to “go up.” The fee applies only to refinancing borrowers, who almost always use a refinancing to lower their monthly rate…
Some have asserted that this price adjustment could impact borrowers by as much as $1,500—but this life of the loan estimate is a misrepresentation of how this cost would be applied. For an average refinanced mortgage, we estimate a reduction in savings of about $15 per month, meaning refinancing homeowners who were previously saving $133 on their monthly payments will now save $118 per month, on average.
This estimate also assumes lenders pass on the entire fee to borrowers. That is up to them. If they do not, the $15-per-month figure would go down, potentially to zero.
Does this sound like someone reconsidering the idea? It sounds more like “I am altering the deal. Pray I don’t alter it any further.”
Despite the economic gloom, renting households are making their rent payments, according to the National Multifamily Housing Council. Almost 87% of renters have paid August rent, which is down about 2% from a year ago. Note that NYC is bringing up the rear at a sub-80% rate. Writer James Altucher wrote an interesting essay about why this time is indeed different for NYC.
Filed under: Economy, Morning Report |
I don’t know if this is indicative of a larger credit crunch, but Capital One just reduced my credit lines on my existing credit cards even though they are paid in full every month and there’s been no material change to my employment status, income, etc.
I suspect this may happen across the board as the banks don’t want to get stuck with people’s COVID living expenses if they file bankruptcy later.
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I’ve had a number of Capital One CC’s and they waived their user fee’s every year. This year they’re not waiving them so I’ve cancelled them when they try. Probably 6 cards in all.
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I thought i recall credit card companies shutting down accounts like that the last time rates went to zero.
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Referring to credit, we recently found out that the only way to get a home loan or refinance as a self-employed individual is to qualify for an FHA loan which includes Mortgage Insurance and an Escrow account for taxes and home owners insurance as well as a slightly higher interest rate. Also because of the COVID economy.
Anyone watch Obama last night, here’s one of my favorite parts of his speech
a ‘Commander-in-Chief doesn’t use the men and women of our military, who are willing to risk everything to protect our nation, as political props to deploy against peaceful protesters on our own soil. They understand that political opponents aren’t “un-American” just because they disagree with you; that a free press isn’t the “enemy” but the way we hold officials accountable; that our ability to work together to solve big problems like a pandemic depends on a fidelity to facts and science and logic and not just making stuff up.’
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Curious as to why Obama called people he disagreed with unamerican when he ran for president. Also curious to know what ways Trump’s gone against the terrible Fauci and Brix advice. That’s why Trumps going to get slaughtered, listening to Fauci and Brix.
And you’re right about Trump using the military as props. Perfect example below.
https://hotair.com/archives/karen-townsend/2020/08/20/two-soldiers-appeared-american-samoas-dnc-roll-call-video-now-investigated/
Appalling.
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I watched his speech. He is an excellent orator. And I agreed with him, for the most part. I liked “not just making stuff up”.
On the whole I still think this is better TV than a live convention, but making Harris speak to an empty room of pennants was inhumane.
I am interested in how well the Rs can pull it off technically, having the benefit, I think, of going second.
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I bet it will be called a failure and a disaster by the media.
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Except for Fox news.
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mark:
I liked “not just making stuff up”.
Heh…most of that quote is just made up stuff!
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Also “just making stuff up” is pretty much how the MSM and social media and, well, almost everything under 40 in every interaction seems to work these days.
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Mark, I agree with you on the new format for the conventions. I prefer it I think. I always kind of dreaded all the commotion of the big convention center hoopla!
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Obama still has a great way with straw men.
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jnc:
Obama still has a great way with straw men.
One of the most prolific slayers of straw men of all time.
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…as political props to deploy against peaceful protesters on our own soil.
It amazes me that people still fall for this “peaceful protestor” schtick. Talk about a straw man!
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Yeah, they should have let them burn down DC like the Brits! Now that’s a sacred American tradition!
Well, tradition for whitey anyway.
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Of course, these protesters are whiter than me for the most part so…
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as long as the wind is blowing west to east. i don’t want the ashing landing on my house.
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I admit to a desire to see Melania saving things from the White House as she leaves town.
Damn Trump’s troops for stopping that!!
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I wonder if Hunter’s youngest son will be part of the tribute? If not, why not?
https://www.breitbart.com/2020-election/2020/08/20/hunter-biden-to-speak-at-final-night-of-dnc/
I’d also love to hear Hunter’s opinions regarding Ukraine and China.
Along with two of my favorite topics, hookers and blow.
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It’s intentional. To stoop to right-wing cliches, it is an Alinsky-ite tactic. It’s a shell game of combination and misdirection. There are peaceful protestors. Plenty of them. There are also violent rioters. The goal is to intentionally conflate the two.
Obama knows–they all know–force is being deployed against violent rioters (or those, generally reasonably, suspected of same). He knows that’s going on, but he ignores the violent rioters and looters and pretends that Trump is deploying troops against peaceful protestors to suppress speech.
Irony, much?
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lmsinca: I didn’t watch it, but I must admit on the surface level the speech is fine, but beneath it seems like so much newspeak:
a ‘Commander-in-Chief doesn’t use the men and women of our military, who are willing to risk everything to protect our nation, as political props to deploy against peaceful protesters on our own soil.
First, there are two different concepts here–completely different–using the military as a fascistic domestic police force, and using them for political props. It’s just trying to squeeze two insults into a container meant for one.
To what degree has the military been used to deploy against peaceful protesters? Very little, as far as I can tell. They’ve been deployed very little against even violent protestors. Also, Obama–who won a Nobel peace prize–managed to skill more people with military force in his first 4 years than Trump has. So his moral authority on the military is questionable in this regards.
They understand that political opponents aren’t “un-American” just because they disagree with you;
I see this very rarely exhibited on the left, or from Blue Checkmark Twitter, or Hollywood, or the mainstream press. There are entire (non-profit!) organization dedicated to make-over right-wing groups of sometimes questionable pedigree as “un-American”, primarily for their disagreement about progressive orthodoxy.
While not true of you personally at all, as far as I can tell, I would say I find the tendency to look at people who are not of the same ideologically strip as outright evil is far more common and pernicious on the progressive left, these days.
that a free press isn’t the “enemy” but the way we hold officials accountable;
I have so many problems with that statement
A: nobody has said that “a free press” is the enemy, at least not on the right. Trump has called mainstream media organizations such as CNN and MSNBC and WaPo and the NYT “enemies of the people”–specific new organizations with an increasingly obvious bias in their reporting, and with obvious opinion invading the kind of reporting that once would have been expected to be only about facts.
B: The MSM (such as the organizations listed above) are, if not enemies of the people, then unhealthy for people to consume in almost any quantity, like nicotine or sugar. They do not comport with the ideals of a free press, IMO. When we have reporters referring to riots as “mostly peaceful protesters” while buildings are burning down behind them . . . eh, at the very least, the press is not doing its job.
C: Like Trump or loathe him, it’s obvious to me that the press actively and intentionally misreports things he says, taking them out of context to pervert or invert his meaning. This isn’t news, it’s elective propaganda. I get why it pisses Trump off. There’s plenty of stuff that Trump says that it’s bad on it’s own, so why they feel the need to intentionally reshape the narrative so Trump is saying there are some fine Nazis or the Americans should drink bleach (or fish tank cleaner) is beyond me.
D: Most of the mainstream national press is full of entitled, spoiled, narcissists. The difference between them and Trump is that they are not the president (even though they think they are) . . . other wise they exhibit, generally, the same unaccountability, disinterest in facts, solipsistic focus on the world as “they see it” and speaking their truth as opposed to the truth.
that our ability to work together to solve big problems like a pandemic depends on a fidelity to facts and science and logic and not just making stuff up.’
While I agree with that, I don’t feel the progressive left has the high ground on fidelity to facts, science, or logic–at all. From Russiagate to what is now Postalgate, they seem to have surrendered that ground completely. Just utterly.
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I’m not going to argue with you Kevin on all of these points, the only thing I will say is that I, personally, have spent a lot of time actually watching Trump’s briefings, speeches at rallies or answering questions from the media, both Fox and CNN and he literally says crazy and untrue things all the time. I don’t need to hear the critiques from the “fake news” outlets to know what I hear and understand with my own ears and mind. He’s a sociopath and a crackpot of the highest order. The best thing Kamala Harris said last night was “I know a predator when I see one”……………..me too……………..
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and he literally says crazy and untrue things all the time
I don’t disagree, to be clear. In fact, my point was there is plenty of stuff to nail him on!
He’s a sociopath and a crackpot of the highest order.
I would tend to characterize him as a pathological narcissist rather than a sociopath, as I think that fits better. But potato, patahtoe!
Lots of predators in DC. 🙂
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As someone who is painfully aware that Biden is not as sharp as he was 12 years ago [we are the same age], I am thankful that Trump has lowered the bar for judging mental acuity, at least for this moment. It means that Biden is likely to look better, even occasionally stumbling through his prepared remarks, than Trump has painted him. That is the beauty of low expectations – you can’t fall out of bed if you sleep on the floor.
And of course, Trump himself can barely string together three coherent sentences.
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Lulu, if you haven’t read the transcript of his interview with Chris Wallace, or if you did not watch it, I present to you some made up stuff.
https://www.foxnews.com/politics/transcript-fox-news-sunday-interview-with-president-trump
I thought that when he said this he had completely lost the thread:
“We’re signing a health care plan within two weeks, a full and complete health care plan that the Supreme Court decision on DACA gave me the right to do.”
That was on July 19, and was just one more off the wall announcement that immediately vaporized. But the whole interview, including his test for dementia and his lack of grasp of the dimensions of the pandemic in America and so much else would be entertaining if it was the melt down of someone other than the President of the United States.
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Mark:
I present to you some made up stuff.
Trump is undoubtedly a unique politician in many ways, but that he “makes stuff up” and lies is most definitely not one. Anyone who finds it scandalous that Trump lies but then praises a speech by Obama must be motivated by something other than just an objection to made up stuff.
Perhaps you prefer political lies to be wrapped in a nice, smooth, appealing package rather than a loud, brash, obnoxious one. Frankly I think the former is even more nefarious, because they are easier to sell, and so more people are likely to fall for them. As we have seen.
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Well, then add Joe Biden to her predator list as she said that she believed his accusers. What, in your opinion, changed?
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Mark
Like you, I’m not happy about Biden’s age and as a 70 year old I totally understand the deterioration that age brings. He makes a lot more sense than Trump though probably on a “Bad Biden” day.
I actually did see the interview you linked. Like I said, I like to hear things from the horse’s mouth (or ass) rather than rely on opinions or snippets taken out of context from the media.
Watching Trump is a painful experience but I do it for my own good…………..LOL
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lms:
Watching Trump is a painful experience…
I agree. In fact I have found watching all post-Reagan presidents speak to be a painful experience.
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” It means that Biden is likely to look better, even occasionally stumbling through his prepared remarks, than Trump has painted him.”
I think that Trump will actually do better in a debate. Trump’s become more belligerent as he’s gotten older, Biden seems to be more easily confused.
This doesn’t mean that Trump’s accurate or coherent, merely that he can bluster his way through it in a debate format by doing the equivalent of “pounding the table”.
The only shot I see for him to win is by causing Biden to have some sort of disaster in the debates, or if the riots get worse and he can leverage that.
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jnc:
I think that Trump will actually do better in a debate.
You think there will be any? I’m betting on no debates. Can’t imagine Biden being allowed to be in that situation.
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Counterpoint to this assertion provided here:
https://www.washingtonpost.com/opinions/2020/08/21/just-image-answers-trump-will-give-debates/
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Mark:
Counterpoint to this assertion provided here:
I’ll be more than happy to place a wager on which candidate, if either, refuses to debate. Although I am not sure it would be fair of me to place such a bet with the likes of Jennifer Rubin, given how much her judgment as been clouded by Trump-hatred over the last 3 years.
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I agree. There will be no debates.
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That shouldn’t be the case. Our customer base is largely Hasidic Jews who are almost 100% self-employed and we do very little FHA. MI is a function of how much equity you have in the home. If it is over 20%, you don’t need it. And you can certainly request to waive escrows. Again, we do it all the time.
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Brent we were going to pay this house down to under 100K and it’s valued at over 700K and that’s what we were told by 2 different financial institutions. And no waiving of escrows. Maybe CA is a special case but all I know is what I was told.
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Could be a CA thing. FWIW, we do 20% LTV investment refis all the time. Below 70 LTV, you can pretty much waive escrows without any hit to your rate or points.
But, I am not up on CA regs at all. We are NY and NJ only.
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damn. i did not have “Steve Bannon arrested at sea by the post office” on my bingo card.
https://www.courant.com/breaking-news/hc-br-bannon-arrested-connecticut-20200820-aogsf64fr5axpheyas2xhsst7u-story.html
but, he should have known you need to go into international waters. that’s league of evil 101 stuff.
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Submarine. He needed a submarine.
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told you!
someone once asked helicopter or super yacht.
the correct answer is submarine and undersea lair
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I like the super yacht/submarine combo from X-Men: First Class
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https://www.propublica.org/article/he-built-a-privately-funded-border-wall-its-already-at-risk-of-falling-down-if-not-fixed
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the socialists are Gizmodo are shocked that actions have consequences
https://gizmodo.com/lyft-really-fucking-did-it-1844789970
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How dare you refuse to do business with me on my terms!
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This is just .. .oh, the circular firing squad.
https://www.theatlantic.com/ideas/archive/2020/08/meta-arguments-about-anti-racism/615424/
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“almost a caricature of how conservatives think identitarian leftists behave”
Actually, what the piece shows is that it’s not a caricature, it’s simply that conservatives have an accurate impression of how identitarian leftists behave.
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After you’re going the the hundredth iteration of “come on guys, we’re just giving them more fodder to attack us! This is what they lie and say we do!” . . . it’s clearly not a lie, it’s an accurate critique.
“It hurts people,” she said, “when they see a white man bouncing a brown baby on their lap and they don’t know the context!”
I think part of the problem is people who should know better don’t understand where the old, pernicious racism of the post-bellum south and the “it’s okay we’re virulent racists, we’re northerners” has made its home. There is real and growing racism–because it always goes hand-in-hand with identitarianism–here and elsewhere, but it’s not amongst evangelicals and country club Republicans.
Until recently, I would have expected that sort of retrograde attitude from the alt-right.
There you go, although in my experience they expect that retrograde attitude from anyone right of center or who attends a Christian church.
But the whole point is it’s not a caricature in terms of what’s going on in a big chunk of the over-educated, often wealthy, typically white “progressive” left.
and that all students benefit when schools are diverse
Diversity is just a data point in schooling, it has almost no actual benefit if the system itself is a meritocracy. Enforcing it at the expense of merit typically has a negative effect on all students. Poor performing students don’t get the attention they need and high-performing students don’t get the opportunity to excel.
Several members of the anti-screening faction took exception to three things that Wrocklage did during the June 11 meeting: (1) Using a whiteboard, he noted that the four members who want to end screening all send their own kids to screened schools.
Another data point often referred to as a caricature: screened schools for me but not for thee. The elitism of these folks is often tremendously impressive.
“You offered to collaborate with me on drafting resolutions. I have no interest collaborating with you on policy positions until you exhibit your commitment to anti-racism work … I am committed to anti-racism work and will not compromise to create a resolution that makes you comfortable and I must protect myself from harm caused by Non-racists.”
Uh-huh.
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And to think New Yorkers used to have a reputation for being tough.
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I hope the stock price drops to absolute zero and the company goes bankrupt.
https://thefederalist.com/2020/08/20/leaked-audio-shows-goodyear-lied-endorsed-blm-while-banning-blue-lives-matter/
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Until conservatives start acting like liberals and jawbone companies and conduct boycotts, companies will only cater to the left.
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You need to be of a certain entrenchment to take ideological sides with impunity. I feel like Amazon and Apple can pretty much go far left regularly without much impact. But I think smaller companies, mid-level retail, store products where there is another product just like it right beside it (see Gilette) . . . it’s a very bad idea.
Amazon can be pretty awful and I’m still going to shop on Amazon. Chick-Fil-A can go pretty far left and I will still go to Chick-fil-A (though not everybody). But Goodyear? I can get Firestone tires. Or Toyo. Perfectly happy with Toyo. It’s a pain-free decision to just avoid the leftist product in a lot of these cases.
When your product is informational or entertainment–see the movie industry, the comics industry, the video game industry–going full-woke can be problematic as well, when your woke ideology requires you to subvert or crap on everything that made the entertainment product popular in the first place, and often replace the sort of character arcs and plots that used to fill the entertainment product with woke archetypes and lectures, making every comic and movie into a woke Goofus and Gallant parable.
While the companies themselves might not learn any lessons until the right acts like lunatics and boycotts them every time someone in the company says something they disagree with–they will lose business when there is no or very little cost to the consumer to switch.
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The latest reason why I hate NYS
https://www.newyorkupstate.com/entertainment/2020/08/new-ny-state-rule-bans-ticketed-music-events-at-bars-this-is-devastating.html?fbclid=IwAR19p5xKStfXrQ7-Nu668fYDQAGXf_YGSr3xY40yf3ZNCYrAiZXkfUeEKoo
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“Music should be incidental to the dining experience and not the draw itself.”
said John Lithgow in footloose.
https://images.app.goo.gl/REekMgx52dNEZQaa8
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you can’t even advertise the gig, even if no cover.
i can’t imagine any thought went into this edict.
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Sure it did. They just didn’t care about the impact to the businesses.
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Someone here might find this useful:
https://evergreensmallbusiness.com/sole-proprietor-and-partnership-ppp-tax-rules/
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Finally, I have heard almost nothing about relief for small biz in this Convention. maybe I missed it. Maybe it will be addressed tonight. Massive failure of small business is every bit as big a concern as any other on any real person’s agenda.
This failing would be enough to make me a loud critic and hopefully part of the chorus urging extended relief for small biz, but not something that would lead me to consider voting for Trump. Nothing could do that.
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Weird that they’re not talking about it. Why is that do you think?
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George – too much time pandering to identity politics is my guess.
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Luckily that will change when Biden’s in office.
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McWing:
Luckily that will change when Biden’s in office.
Lol.
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I’m only halfway through it, but pretty interesting article on Hydroxychloroquine:
https://www.tabletmag.com/sections/science/articles/hydroxychloroquine-morality-tale
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Just finished the article on the hydroxycholorquine saga. A must read, really. Very interesting.
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Mr. Bannon was arrested on a yacht owned by a fugitive Chinese billionaire.
Buddying with a Chinese fugitive billionaire is a better look than buddying with a Red Army insider, probably. Enemy of my enemy, and all that.
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That’s pretty awesome, tbh. The yacht looks spectacular.
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My wife designed the brochure for the marina, and the yacht was in a bunch of pictures. She is memory-holing the boat as we speak..
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I didn’t watch any of the DNC convention but based upon reading the news accounts, I thought Michelle Obama’s approach of resigned disappointment – ” Donald Trump is the wrong president for our country. He has had more than enough time to prove that he can do the job, but he is clearly in over his head. He cannot meet this moment. He simply cannot be who we need him to be for us. It is what it is.” was much more effective than Biden’s acceptance speech holier than thou self righteousness:
,
There’s not going to be unity if Biden is elected. Just a different side wielding government power over it’s opponents.
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At least with a Biden victory the schools will open the next day and Democratic mayors will start busting heads and end the left-wing violence. Yeah, any economic rays will be strangled by new taxes and regulations but they’ll be a couple of good months.
Also good news is that Republican’s don’t riot.
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“Kids in Cages” will cease to be an issue too.
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McWing:
Democratic mayors will start busting heads and end the left-wing violence.
Chicago’s mayor Lightfoot is already starting to crack down on the protests. Oh, wait…that is only for protests on her own block. Nevermind.
https://www.chicagotribune.com/politics/ct-chicago-police-lightfoot-protests-20200820-57vxhaa57jhijo3xllrflztcse-story.html
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“Republican’s don’t riot”
well, my dad is going to refuse to have the Maserati detailed.
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Jesus, that’s worse!
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