Morning Report: No W-shaped recovery

Vital Statistics:

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S&P futures 3463 2.6
Oil (WTI) 40.94 -0.47
10 year government bond yield   0.71%
30 year fixed rate mortgage   2.90%

Stocks are higher this morning after a positive jobs report. Bonds and MBS are down.

Jobs report data dump:

Nonfarm payrolls up 1.4 million

Unemployment rate 8.4%

24.3% of people teleworked due to COVID

Labor force participation rate 61.7%

Overall, this is a strong report that pours cold water on the idea that we could be experiencing a W-shaped recovery (aka a double-dip recession). The labor force participation rate last year was 63.2%. It bottomed out just above 60% in April, which means we have retraced about half the COVID-related decrease.

I took a look at Quicken’s numbers and found some truly astounding things. First, their gain on sale margins are 519 basis points. I think the average according to the MBA is something like 429 bps. The more impressive number is the net profitability. Quicken made $3.5 billion on $72.3 billion in origination, or a whopping 484 basis points in net income. The MBA average for bankers was 167. Of course comparing Quicken to Pennymac or Mr. Cooper isn’t really the right model – those guys are largely aggregators while Quicken doesn’t really have much of a correspondent footprint (non-del only).

Another thing I found interesting from the conference call is that Quicken looks at its MSR book as a source of future business. In other words, they aren’t looking at the book solely as a return on assets game or even a hedge for the origination business – they are actively soliciting their borrowers for a refi. I wonder if people who are buying their spec pools are aware of this – prepay speeds are probably going to be quite higher than the rest of the industry.

Quicken is trying to build the infrastructure to get to $40 billion a month in origination and has a goal of achieving 25% market share by 2030. Finally, Quicken guided for $82 – $85 billion in origination in Q3, however margins are going to drop from 4.05% – 4.3%.


Finally, IMO the new WordPress editor is awful and klugey

46 Responses

  1. I’ll give John Bolton this, whatever else he is, he appears to be honest and willing to go on the record.


  2. Taibbi’s latest:

    “The Trump Era Sucks and Needs to Be Over
    The race is tightening. Is America sure it’s ready to give up its addiction to crazy?

    Matt Taibbi”

    Liked by 1 person

    • Taibbi captures why I have not jumped at every Trump cat laser [although I was ensnared early on]. I always thought of him as a con artist and still do and that is that for me.

      Liked by 1 person

      • I think of most politicians as con artists. Because I think most of them are. To some extent or another, but most of them in my lifetime . . . for sure. He just exhibits more of the cliched behaviors one would associate with the image of a con artists.


      • Mark:

        I always thought of him as a con artist…

        All politicians are. The ones that you think aren’t are just better at it.


      • This:

        “The elite misread of Trump is egregious because he’s an easily familiar type to the rest of America. We’re a sales culture and Trump is a salesman. Moreover he’s not just any salesman; he might be the greatest salesman ever, considering the quality of the product, i.e. himself. He’s up to his eyes in balls, and the parts of the brain that hold most people back from selling schlock online degrees or tchotchkes door-to-door are absent. He has no shame, will say anything, and experiences morality the way the rest of us deal with indigestion.

        The question, “What is Trump thinking?” is the wrong one. He’s not thinking, he’s selling. What’s he selling? Whatever pops into his head. The beauty of politics from his point of view, compared to every other damn thing he’s sold in his life — steaks, ties, pillows, college degrees, chandeliers, hotels, condominiums, wine, eyeglasses, deodorant, perfume (SUCCESS by Trump!), mattresses, etc. — is that there’s no product. The pitch is the product, and you can give different pitches to different people and they all buy.”


  3. The latest on why the Pence Rule is the only way to go…

    Liked by 1 person

  4. After normalizing relations between Israel and the UAE, Trump admin oversees normalization of economic relations between Serbia and Kosovo?

    News Headlines? Trump says Americans who died in war are “losers” and suckers!

    Oops. Slate does have the Serbia-Kosova deal, but complains that it’s mostly about the (((jews))). Because the left *totally* isn’t going full-antisemitic.


  5. Good ad. They should do a whole series of these.


  6. Taibbi on the crazy “looting is good” book.

    The contrast with Abbie Hoffman is amusing.


  7. This seems to ba a rip-off:

    Worse than USAF toilet seats, IIRC.


    • lms:

      Wonder if there’s any chance Kelly will confirm or deny any of the quotes in the Atlantic story?

      Personally I find the Russian Collusion hoax to be more likely than the Atlantic story. And this wouldn’t be the first time that The Atlantic had published porky pies.


    • I doubt that Kelly will comment.


    • Kelly should confirm or deny it. Charles Pierce is right that failing to comment on it at this point is cowardice.

      I personally don’t buy the story because it doesn’t fit Trump’s MO. He’ll always go after someone like McCain who attacks him but that’s due to his personal narcissism. Had McCain been a Trump supporter, Trump would have gone on and on about McCain’s bravery as a POW.

      Trump philosophically musing about why people would want to serve actually gives him too much credit for thinking about the issue at all. The tipping point for me is Bolton denying it and he was there. He has no reason to cover for Trump at this point. There’s a list of people denying it on the record who were there and about four or so anonymous sources “with knowledge of the event” who are being quoted by the various MSM outlets.

      It’s one of those “too good to be true” stories like Trump supposedly raping a 13 year old on Jeffrey Epstein’s island while Epstein watched. There was a piece in the local Miami paper when that first came out that interviewed the lead detective on the original case noting it didn’t mach up with any of the other Epstein victim’s stories.

      It all reminds me of the Jackie story in Rolling Stone where people want it to be true so badly that they suspend all critical thinking. This story and it’s timing are just too convenient for the anti-Trump agenda to not approach it with a degree of skepticism.


      • jnc:

        It all reminds me of the Jackie story in Rolling Stone where people want it to be true so badly that they suspend all critical thinking.



      • This feels a little like the blue dress/gold dress picture to me. Avoiding how this story reads like the result of an amateur propagandist’s essay on “how I would drive a wedge between Trump and his base”, it immediately struck me as about as credible as a story that Trump sprouted fairy wings and started flying. Not that he is too moral or patriotic to say such a thing but that he is too focused on himself and other contemporary issues to say such things. And it just immediately sounds wrong.

        Jonah Goldberg thinks it’s an entirely credible story. I think it’s an absurdly obvious fiction. Blue dress/good dress.


        • I take Greenwald’s point that “It could be true” shouldn’t be a sufficient basis for publication. But has been for years. The NYT McCain/lobbyist hit piece was another prime example.

          It’s also telling that it didn’t come out earlier.


  8. Good piece on what it means today when one MSM outlet claims that it has “confirmed” the reporting of another:

    “But journalism is not supposed to be grounded in whether something is “believable” or “seems like it could be true.” Its core purpose, the only thing that really makes it matter or have worth, is reporting what is true, or at least what evidence reveals. And that function is completely subverted when news outlets claim that they “confirmed” a previous report when they did nothing more than just talked to the same people who anonymously whispered the same things to them as were whispered to the original outlet.

    Quite aside from this specific story about whether Trump loves The Troops, conflating the crucial journalistic concept of “confirmation” with “hearing the same idle gossip” or “unproven assertions” is a huge disservice. It is an instrument of propaganda, not reporting. And its use has repeatedly deceived rather than informed the public.”


  9. This is the kind of thing that gets people to vote for Trump. He fights back.


    • Even Taibbi notes it:

      “These and countless other details make In Defense of Looting more cringe-worthy in its own way than a Sean Hannity flag-and-mugshot insta-book could ever hope to be, but what makes it a perfect manifesto for the woke era is its pathos. Adherents to this theology are characterized by a boundless, almost Trumpian capacity for self-pity, even as they’re advocating setting you on fire. They can make wrapping fishwiches sound like digging coal in Matewan, being deprived of a smartphone like being whipped by Centurions, and they matter because everyone, including especially Democratic Party politicians, is afraid of the fallout that comes with telling them to shut the fuck up. So their “ideas” spread like cancer.”

      Whatever else he is, Trump isn’t afraid of the woke crowd.


  10. Good article from Andrew McCarthy.

    The problem, of course, is that Obama got those two terms because of his charisma. His personal attractiveness was always leaps and bounds more popular than his progressive “Hope and Change!” agenda. His historical significance as the nation’s first black president tapped into the longing of Americans to transcend our racial divide — even as his manner of governance exacerbated tensions.

    With Biden, you’d get none of that mystique. You’d get an Obama administration without Obama. You’d get the policy without the pizzazz.

    And getting the policy means getting the Left’s radical revision of the First Amendment, codified in the Obama-Biden administration-backed U.N. Human Rights Council Resolution 16/18. In a nutshell, it is the “heckler’s veto” — though would that the Left’s shock troops contented themselves with heckling.

    I tried to warn about this eight years ago (and I’m grateful to my friend Dave Reaboi for noticing this week on Twitter). Resolution 16/18 is a blatantly unconstitutional provision the Obama-Biden government pushed to support Islamist regimes. Ostensibly, it is about religious liberty. In reality, it is the Left’s template for speech suppression.

    The trick is to turn the once simple concept of incitement on its head.


    • One thing to note was that for his first term, Obama managed to run as all things to all people. One of the reasons I voted for him was he promised to go through the budget and eliminate wasteful and outdated programs, and I figured as a Democrat he could actually get more of that done with less resistance than a Republican.

      I was of course completely wrong, but I don’t think I was the only one who bought into that.

      Liked by 1 person

    • “In a nutshell, it is the “heckler’s veto” — though would that the Left’s shock troops contented themselves with heckling.”

      They don’t need the UN, they’ve already got Facebook and Twitter doing it for them.

      Having said that, I don’t mind that “Platforms are not distinguishing between journalists and participants.” Journalists don’t have special free speech rights.

      Liked by 1 person

      • I appreciate all Ford Fischer is doing to get actual information out, but this goes why journalists should be treated just like everybody else–folks talking about news, and some (like Ford) with actual information because he’s at a location being talked about. But without omniscience.

        Specifically, it seems trivial, but Facebook has technically not deleted his account and he can get it re-enabled, potentially. Facebook “disabled” his account–and there is an important difference.

        It’s like the difference between saying a common-as-water portscan came from a Russian IP and saying Putin was trying to hack local election offices or something. But journalists are often no better informed on the context of what they are reporting on (and often much worse) than any random average person. So, A: they should not get special rights. B: they should not be treated as truth-bringers, but as anybody you meet anywhere, talking about things and sometimes relaying their experiences of events. And possibly lying–just like normal people sometimes do.

        But I’d have more sympathy if he said: “I’m just reporting on events. People posting about actual events should not be censored unless there’s hard evidence they are lying or trying to incite something.”

        Or even more: “Facebook is not a forum for honest communication, it’s just a tool for them to gather and sell data about you. They do not care about you and would happily watch you die if it got them another .01¢ in click or data-sharing revenue. Do not use Facebook. Leave.”

        Google is removing all apps that connect to Mastadon (a federated server system that’s basically allows people to create their own 4chans or Facebooks) because Mastadon is difficult to censor or monitor and become uncontrolled methods of disseminating information or assembling online. Googles logic for removing to apps that can connect to free-and-open social media environments is that “such environments can have hatespeech”.


  11. Epic montage of Biden clips.

    My personal favorite:

    “We cannot win this re-election….excuse me…we can only re-elect Donald Trump.”


  12. Can’t make this up. If a novel had included this episode I would have thought “that can’t really happen, so it is sardonic humor”.

    Well, it really happened.


    • But here I want to suggest that the “Black MBA Candidates c/o 2022” letter demanding the action, and in particular this passage, actually risks harming the employment prospects of black students:

      Our mental health has been affected. It is an uneasy feeling allowing him to have the power over our grades. We would rather not take his course than to endure the emotional exhaustion of carrying on with an instructor that disregards cultural diversity and sensitivities and by extension creates an unwelcome environment for us Black students. His careless comment has impacted our ability to focus adequately on our studies.

      People can discriminate without doing anything to announce it. Yes, if you’re not meeting diversity mandates it can be a problem–but there are ways around that (hire Asians and immigrant Africans and Indians, etc).

      But more to the point, it will cause discrimination against young black applicants. You want to be diverse and not hire sociopathic narcissists who will destroy your company from the inside? Hire African Americans with a long and reviewable work history. Might cost a little more but way cheaper than having a 5th column inside your company literally trying to ruin you.


    • As with reasonable outreach done to the black community (and there are now dozens upon dozens of great people to do it, many of them on youtube and at least some more politic than Candace Owen), the Republicans should be making overtures to labor all the time, focusing on getting jobs, reducing off-shoring, pushing back globalism, maintaining a manufacturing base, etc., etc. I understand why they would just ignore public sector unions, but private-sector unions? I feel they would happily align with Republicans (especially where membership has sway) if the Republicans made serious overtures. There’s an argument for tax cuts for the working man!


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