Morning Report: Jobs day

Vital Statistics:

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S&P futures 3311 -53.6
Oil (WTI) 37.05 -1.19
10 year government bond yield   0.66%
30 year fixed rate mortgage   2.91%

Stocks are lower this morning after Trump tests positive for COVID. Bonds and MBS are up.

President Trump and Melania have tested positive for Coronavirus. Vice President Pence has tested negative. Trump will be in quarantine for the next several weeks. I guess this means the next debate (if we even get one) will be via Zoom.

The economy created 661,000 jobs in September, according to the jobs report. The unemployment rate fell 0.5% to 7.9% while the labor force participation rate fell 0.3%. The job gains were primarily in leisure and hospitality, which means restaurants. Retail was next in job gains. The labor economy is still improving, but the elevated initial jobless claims as well as the declining labor force participation rate are worrisome. About 23% or workers telecommuted.

Wells put 1,600 lenders in forbearance without the borrower’s consent, according to a report from NBC. About 900 of the borrowers were going through personal bankruptcy at the time. Wells has changed its practices, although the last thing the bank needs is another regulatory or political headache.

Caliber is planning to go public, according to a report by the Wall Street Journal. That would make 4 actual or rumored mortgage banking IPOs this year: Quicken, United Wholesale, Loan Depot and Caliber.

The interesting thing about the mortgage banking IPOs is that the multiples are downright lousy. Rocket is trading at 21.87 expected to earn $3.36 this year, which means it is trading with a P/E ratio of 6.5. PennyMac is expected to earn $15.87 this year and is trading at $57. That is a P/E under 4. The winner of the low multiple derby has to go to Mr. Cooper, who is expected to earn $8.12 and is trading at $22.64, which means it has a P/E of 2.8. I understand mortgage banking is highly cyclical and all, but the Street is treating these stocks as if prepayment burnout will begin in January. Given the Black Knight estimate of the refinanceable universe, it will take years to work through that backlog.

Construction spending rose 2.5% YOY in August, according to the Census Bureau. Residential construction was up 7%.

67 Responses

  1. Good read:

    “I Can Tolerate Anything Except The Outgroup”

    https://slatestarcodex.com/2014/09/30/i-can-tolerate-anything-except-the-outgroup/

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  2. I find it interesting that no one has commented on Trump’s diagnosis of Covid…………my comment…………..KARMA

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    • It was literally my first sentence…. just sayin’

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    • lms:

      I find it interesting that no one has commented on Trump’s diagnosis of Covid

      Why? What do you find interesting about it?

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      • Scott

        Why? What do you find interesting about it?

        It seems like pretty dramatic news to me and maybe you’re all too busy to think about Potus having Covid at his age, but if it was Walter or even Mark here, I would be concerned.

        Maybe I’m wrong but I kind of get the impression here that Trump is the lesser of two evils for most of you (please correct me) and I would think some of you would be concerned at the turn of events and what it might mean for a very important election.

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        • ” kind of get the impression here that Trump is the lesser of two evils for most of you ”

          I think that is fair…

          Liked by 1 person

        • I’m pretty sure no one on the site voted for him. What kind of commentary were you expecting?

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        • While no one voted for him here (and I’d vote for Tulsi Gabbard over Trump easy) you don’t get credit for that unless you go full Orange Man Bad, typically.

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        • lms:

          Maybe I’m wrong but I kind of get the impression here that Trump is the lesser of two evils for most of you…

          Most definitely.

          And I would think some of you would be concerned at the turn of events and what it might mean for a very important election.

          To me the only notable thing about this with regard to the election would be if he dies, and whether or not such an eventuality would be a good or bad thing politically. And talking about whether the death of a president – any president – would be a positive political development looks a bit too much like wishing for someone’s death for my taste.

          But I will say this. Given that masks are supposed to provide protection from the wearer, not to the wearer, I don’t understand people who seem to delight in the alleged irony of Trump getting Covid after supposedly mocking Biden for wearing a mask.

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        • I think it’s less Trump (or Biden) but the overall administration that comes with, and any congressional coattails. Also the election can serve as a bellwether for the culture, in terms of how people feel about extra-constitutional lockdowns, critical race theory becoming established dogma, etc. as a practical matter I think a Biden win produces a Republican sweep of congress in 2022 so … not the worst thing that could happen, honestly.

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    • The only thing I find noteworthy about Trump getting COVID is the arguments being put forth by pundits that he should resign/drop out now and that this somehow means that the Senate can’t consider the SCOTUS nomination (given that Mike Lee has also tested positive).

      That seems to be completely detached from reality. None of that is going to happen.

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    • With two more days of hindsight I am now willing to make comments aside from wishing him a thorough recovery, which I do.

      The number and timing of cases casts suspicion on the Rose Garden event for ACB as where the virus was spread within that specific subgroup. I believe that group of generally older adults was largely unmasked because of their willingness to follow the example of Trump rather than the advice of medical persons. I believe that odds were against that group coming out clean if even one close at hand infected participant spent minutes within three feet of each of several others, especially if chatting. Odds, as opposed to karma. Odds would have been more favorable for a masked crowd, as infected persons masked would not have cast as wide a spray of spittle, especially outside where it would not have been easily aerosolized.

      I worry that the debate, in which Trump spoke at high volume for a long time, exposed Chris Wallace and Joe Biden. I hope they continue to test negative. It was a large room, but inside, over time, aerosolizing becomes a real issue. What I would shorthand as the “restaurant” issue.

      The best thing that could come out of this for both American health and the American economy is a President changing his tune and tone on mask wearing and social distancing, so that his supporters would finally take those matters seriously. Other industrialized nations have re-opened thanks to common sense masking and distancing and testing and tracing.

      Lulu, I wish him well but at the same time think his behavior, mimicked by those around him and his supporters, made this event far more likely than not, eventually. Those are two separate thoughts that I can hold in my head at the same time.

      Policy wise, I hope that Mnuchin and Pelosi get a broad economic stimulus bill done soon and that this event spurs that rather than impedes it.

      Politics wise, nothing seems to move the needle for very long so I imagine this will not either.

      National security wise, there are some troubling issues here but I suspect that they can be handled, if not smoothly, at least without the disasters some pundits predict.

      I may devote another comment to the single matter of openness.

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      • I will add a national security comment that may seem snide in some respects. The National Security Council was created after FDR died because he had left HST and everyone else in a vacuum while he, Eisenhower, Nimitz, and MacArthur conducted the war and he alone in America knew what he had said to Churchill and Stalin. The idea was that NSC would provide continuity in a crisis by its ability to fully brief an incoming CIC on what the previous CIC had been doing.

        Snide part: I think Trump has not regularly met with or shared info with the NSC, according to his schedule and media reports.

        So I do not think his illness causes more darkness than already existed. We relatively quickly got HST up to speed from other sources – the military, the OSS, etc. That could easily be replicated for Pence if necessary, or Biden in January. The cyber counter warfare unit at Joint Command San Antonio will be one source. The Joint Chiefs will be a source. The NSA and CIA and FBI will be sources. I suspect they are all on top of various potential threats. I think the pundits under value the sources that would replace NSC for this stuff.

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      • Mark, I also hope his diagnosis changes things regarding his attitude and the science of mask wearing but I have my doubts. Even now, Republicans in some circles, are saying that masks don’t help or make a difference and may cause more harm than good. And I do believe Karma is at play in Trump’s contraction of the virus. He’s pooooh poooohed and contradicted his own health professionals and even his own knowledge early on in the virus. I don’t wish him ill health but I do think he’s paying a price for his recklessness and he’s now endangered others, many of them innocent victims. Most of his followers are certainly responsible for their own decisions but the climate around Trump is such that his “people” have become defiant against the best health advice and he should be blamed for some of that as well.

        Those of us who are protecting ourselves and our loved ones have suffered because the duration and lack of leadership has caused this thing to remain out of control for too long now.

        I resent the fact that I can barely leave my home other than the occasional trip to a Dr’s office, a pharmacy and a weekly grocery run. I have a new grandchild arriving in late January and I don’t know when I’ll be able to get to CO to help my daughter and meet the new little bundle of joy. I resent the fact that our company has suffered a 75% loss of revenue this year and there is no help for us, but thankfully I’m in a much better financial position than many Americans. Unfortunately at our age we have very few years left to recoup those losses.

        I begin working this coming week at a Riverside food bank specifically because I do know how fortunate I am, but still understand the need that so many have. It was a tough decision because I don’t want to bring Covid home to Walter, his health is very precarious right now, but I can’t just sit here and not do something. I’m trusting the science and best recommendations to remain safe and Covid free.

        The sooner this President is out of the WH the better it will be for me. He creates chaos and divisiveness and can’t be trusted in my opinion.

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        • If Trump’s contraction of the virus is karma, how do you explain Ralph Northam’s contraction of the virus? He’s a mask fetishist.

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        • Trump or anybody could come out as the biggest masks fans in the world, I would still consider the wearing of them more a courtesy (and I show courtesy) than something of real medical benefit (one primary reason being that the quality of masks is highly variable, people fiddle with them all the time, and they don’t stop people from say licking their fingers to open one of those plastic vegetable bags at the grocery). But also because I don’t think the actual data actually points to either the lockdown or mask wearing as the best long-term strategy. Herd immunity and working on a vaccine seem like the best strategy to me (for those under 65 anyway). Next: social distancing.

          Eh, it is what it is but I don’t see Trump changing his tune, and if he did it’s unlikely skeptics would change their minds.

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        • I feel your pain about new grandbaby. We have one as well. Agree about the need to move on and move away from this chaos and divisiveness and this WH. When you get home from the food bank you really might consider changing clothes and showering before you are close to Walter. I know that sounds extreme to anyone under 70.

          Liked by 1 person

        • lms:

          He creates chaos and divisiveness…

          That Trump is responsible for “divisiveness” is a classic example of gaslighting by the left. There is nothing in this country…nothing…that sows more divisiveness than the identity politics of the left.

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        • I view mask wearing that’s not an actual N95 mask as performance art/virtue signaling.

          I may have shared this before but I went out for a birthday dinner with friends and they picked the restaurant because it had converted to outdoor seating in compliance with the current COVID recommendations/requirements.

          However, in order to accommodate the weather they had erected a tarp tent over the parking lot dining facilities. Then to help with temperature control they had put up clear vinyl wall siding on the tent (think outdoor wedding tent adjusting to rain). Then to deal with the stuffiness inside caused by the vinyl siding, they put in regular fans to circulate the air.

          The upshot being that the COVID regulation compliant “outdoor” dining area was turned into a perfect petri dish to spread the germs and was in my opinion actually worse than just eating in the restaurant to begin with. We were against one of the walls and made them roll up the clear vinyl wall so outside air could get in, but I suspect this sort of thing is pretty common and will become more so as the weather gets colder.

          The original scientific basis for the various restrictions is getting lost the further down the implementation chain one goes and it becomes just mindless rule following for those trying to stay in business.

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        • I didn’t see this, I don’t generally watch cable news, but this is exactly what I was trying to say earlier about Trump and his attitude about the advice of health experts. I certainly didn’t expect him to hide out in the WH, he’s the President after all and has duties to perform (the most important essential worker). I have essential workers in my family too but to deride wearing masks and social distancing in front of his supporters was the height of irresponsibility and no I don’t believe it’s a freedom issue. That’s absurd.

          Anyway, this is apparently part of what Jake Tapper said today and even though he’s probably a political hack of the left and fake news, maybe even gaslighting for all I know, but I agree with him on this.

          “Many Americans are likely feeling both sympathy and anger today, emotions that don’t necessarily mix well,” the news anchor began. “Sympathy for all those suffering, including President Trump, who remains at Walter Reed Medical Center. But also, anger. Because so much, so much of this pain could have been avoided.

          “So many of us since March have been doing everything we can to preserve the health not only of ourselves and our families, but our communities, our neighbors, you. Social distancing, wearing masks, holding events remotely. Weddings have been canceled; jobs lost. Children are missing out on in-person education and their ability to see friends. It’s a real crisis. It’s going to leave scars. 208,000 Americans have died. Thousands of Americans have lost loved ones without being able to properly mourn, or even say goodbye.

          “But we’re in the middle of a once-in-a-century pandemic,” he continued. “Health experts say this is what we need to do in order to get to the other side. Regardless of any sympathy we may feel, we also know: the president has been undermining these efforts, expressing disdain for health regulations and those who abide by them.”

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        • lms:

          no I don’t believe it’s a freedom issue.

          I do.

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        • JNC, yes I agree that the restaurant situation you describe is probably worse than just being indoors eating. It’s just another indication that businesses are struggling implementing measures that they don’t understand. We’ve been out to eat twice since the pandemic began, once on a patio and once indoors when the restrictions were briefly lifted here. I didn’t feel exposed in either situation as the tables were far apart and the staff adhered to the health standards.

          Twice in 7 months is challenging for us though…..:(

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        • POTUS tells public he now understands the disease. [NOW]

          POTUS, presumably understanding the disease, makes his SS agents drive him around in a sealed car [they are wearing PPE, so maybe they will be OK; many health care pros are still OK thanks to PPE, although some are not].

          POTUS does this for a gratuitous vanity appearance, not because it is medically required, or necessary for any conceivable reason.

          POTUS learned SS would take a bullet for him and decided that meant they should be able to take a bullet from him.

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        • Mark:

          POTUS, presumably understanding the disease, makes his SS agents drive him around in a sealed car [they are wearing PPE, so maybe they will be OK].

          He was wearing a mask, too. Isn’t that what he is supposed to do?

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        • Weak tea, Scott.

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        • Mark:

          I’m just pointing out that wearing a mask either protects other people or it doesn’t. If you don’t think it protects people from someone known to have covid, why would you think it would protect people from someone who has it but doesn’t know it?

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        • If you think that, as you have stated it, your understanding of the matter is quite limited.

          What do masks do? They slow the acceleration of particulates in your breath and speech as they leave your mouth. Thus they inhibit, but do not prevent, viral spray. The spray from a masked person will not travel as far as the spray from an unmasked person. This is the same reason masks are recommended in all modern aerosol viral epidemics, even the Spanish flu of 1918. Distancing is even better for avoiding spray.

          The virus lives for several minutes in air, but for most people, it takes some load of virus to become infected, not just a few particles. Outdoors, or in large well ventilated spaces, the viral load dissipates fairly rapidly. Spray is, by its nature, of a concentrated load more dangerous than dissipated particles.

          Indoors, in close spaces, the load from an infected person will build up over several minutes, and inhibition of spray by masking eventually becomes less effective as the dissipated particles build in the close space. There have now been studies of in-vehicle closed window particle travel and build up, btw. Masking still helps, at first, so the time until the second person receives a viral load is statistically lengthened. The terms they use for transmission are aerosol and fomite and droplet for initial spray and airborne for dissipated flying particles. Masking reduces the spread area of aerosols, but not the number of virus particles.

          So Trump’s mask reduced aerosol spread, for better initial results. If he was behind a bulletproof window that reduced his aerosol spread greatly. But over the time they were in a closed system there was viral build up in the vehicle, thus creating a substantial risk of airborne particles in enough abundance to cause infection in others within the enclosure.

          During the ACB Rose Garden event, the outdoor portion should have provided some safety margin if distancing [even 4′, outdoors, according to the South Koreans] had been practiced. But folks were up against each other and hugging and kissing and gabbing at length. And then they continued inside.

          The airlines claim they turn over the air with outside air very quickly, reducing the likelihood of airborne infection. Only aerosol and touch contact are likely sources of virus in volume, so masking and distancing would be effective, along with hand hygeine.

          If that is not clear or does not make sense to you let me know and I will try again.

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        • Mark:

          If you think that, as you have stated it, your understanding of the matter is quite limited.

          It is undoubtedly quite limited. I happily proclaim my ignorance!

          But still I think my point remains. For example, here in the UK (and I assume much of the US) masks are required for both drivers and riders in any cab or limo service. To whatever extent this is effective at preventing the spread of covid from driver to passenger and vice versa (and I assume it is thought by policy makers to be pretty effective, hence the mandate) surely the effectiveness doesn’t change when the passenger is Trump. Does it?

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        • Pretty sure there is a glass partition between the front and back of The Beast. Also, I believe the passenger section of The Beast has its own, filtered, ventilation system to protect from chemical agents.

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        • McWing:

          Pretty sure there is a glass partition between the front and back of The Beast. Also, I believe the passenger section of The Beast has its own, filtered, ventilation system to protect from chemical agents.

          Probably….but Trump.

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        • The protocol is also to crack open two windows on opposite sides of the vehicle.

          George, if there is a separate filtration system for the passenger compartment that would be ideal, in this instance, but what makes you think there is? Is it not every bit as important to protect the driver of the President’s getaway vehicle and the President’s armed escort to remain conscious?

          I suppose there could be two separate filtered vent systems. I wonder if that info is available?

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        • I’ve read it about The Beast but I honestly don’t have a linkable source. The point is that both compartments would be able to go though a chemical agent attack.

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        • I recall reading stuff like that with the caveat that it’s detective work and theorizing, as they don’t provide specifics to the general public.

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        • If so then the photos didn’t reflect that. It didn’t look like the regular presidential limo.

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      • If I’m in a situation where I don’t have to wear a mask, I don’t (although I’d I’m with someone who wants to, I will, though for courtesy rather than anything else). I social distance though. That seems more likely to actually make a difference. If I was immune compromised I’d wear regularly sanitized masks fitted to me, I guess. But most mask wearing is not that rigorous.

        Also, if it turns out every one of these folks come through with flying colors—which it might—-I’m expecting the story to basically vanish mysteriously.

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        • McWing, I seriously doubt any health professionals have suggested that wearing a mask while around others protects us 100% from contracting COVID. I know several health professionals who have contracted it by virtue of the amount of time spent with COVID patients even while wearing masks and other forms of PPE. My PT office where I went for therapy after surgery shut down 3 times, twice for 3 days while the staff was tested and once for 2 weeks while we were all tested. Everyone wore masks. Luckily there was no spread to patients or the rest of the staff, presumably because the rest of us were wearing masks.

          Scott, the divisiveness I’m referring to is the fact that he made wearing masks and following the best advice of health professionals a political matter. Mask wearing in my county and the county west of me is very non-conformist (both very conservative areas of So Cal). It’s become a form of defiance here.

          The mere fact that the Trump family and friends at the debate removed their masks after sitting down tells me all I need to know.

          Also, I don’t even know what gaslighting means if you want to know. I care about health, fitness, my family and friends and folks less fortunate then me and the country…………..that’s it.

          Please don’t explain it to me………….I’m not a leftist operative and I don’t care what it means.

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        • lms:

          Scott, the divisiveness I’m referring to is the fact that he made wearing masks and following the best advice of health professionals a political matter.

          There are “health professionals” providing lots of conflicting advice. Just because you happen to prefer certain advice over other advice doesn’t make that advice objectively “the best”.

          In any event, I stand by what I said. The political left is far more “divisive” than Trump is. In fact, I think President Trump is a product of the divisiveness of the left.

          Also, I don’t even know what gaslighting means….and I don’t care what it means.

          Good to see such an interest in learning new things!

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        • This is when it all fell apart.

          https://www.cnn.com/2020/06/05/health/health-care-open-letter-protests-coronavirus-trnd/index.html

          It wasn’t all Trump:

          “Some public health scientists publicly waved off the conflicted feelings of their colleagues, saying the country now confronts a stark moral choice. The letter signed by more than 1,300 epidemiologists and health workers urged Americans to adopt a “consciously anti-racist” stance and framed the difference between the anti-lockdown demonstrators and the protesters in moral, ideological and racial terms.

          Those who protested stay-at-home orders were “rooted in white nationalism and run contrary to respect for Black lives,” the letter stated.

          By contrast, it said, those protesting systemic racism “must be supported.”

          “As public health advocates,” they stated, “we do not condemn these gatherings as risky for Covid-19 transmission. We support them as vital to the national public health.””

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  3. But as coronavirus victims go, Donald Trump is as far from innocent as you can get. He and his supporters may wish to treat his positive test as a national tragedy for which we can express no thought other than a prayer for his recovery, a kind of mini-9/11. The truth is that Trump is deeply culpable not only for the national response to the pandemic but his own condition.

    Any adolescent bully knows that the easiest taunt is against the nerd who is taking precautions against danger, especially in some way that makes them look different. Trump has made mockery of his rival’s fastidious precautions one of his central campaign themes. In May he shared a tweet ridiculing Biden’s appearance in a face mask, and the next day, explained, “I thought it was very unusual he had one on.” One of his favorite riffs is to insinuate Biden’s mask usage suggests some deeper defect. “Did you ever see a man who likes a mask as much as him?,” he laughed last month. “He has it hanging down. Because it gives him a feeling of security. If I were a psychiatrist, right, you know I’d say: ‘This guy’s got some big issues.’”

    https://nymag.com/intelligencer/2020/10/trump-coronavirus-positive-test-rallies-biden-masks-circles-social-distancing.html?utm_source=Sailthru&utm_medium=email&utm_campaign=Intelligencer%20-%20October%202%2C%202020&utm_term=Subscription%20List%20-%20Daily%20Intelligencer%20%281%20Year%29

    Like

  4. Obvious, but still worth noting:

    “Why the right wing has a massive advantage on Facebook”

    https://www.politico.com/news/2020/09/26/facebook-conservatives-2020-421146

    Edit: Also good:

    “Facebook May Be Democracy’s Best Hope
    By Chris Ladd October 5, 2020

    Social media, particularly Facebook, is taking its turn as America’s moral panic du jour. It’s tough to explain how Facebook can possibly ruin a culture which has already been laid waste, in turn, by movies, radio, television, “Negro” music, porn, the VCR, credit cards, teen pregnancy, feminism, gay marriage, the pill, heavy metal, drugs, single parent homes, the Internet, sexting, vaping, explicit rap lyrics, video games, and Windows 95, but that didn’t stop the makers of Netflix’s masterpiece of doom porn, The Social Dilemma. The documentary lays the decline of liberal democracy at the feet of social media innovators, as explained by the architects of the platforms themselves. Chances are, if you’ve seen it, you were inspired by breathless Facebook posts from your friends.

    Are there issues with social media? Of course. Is social media to blame for the crisis enveloping many of the world’s major democracies? Yes, and no. Blaming social media platforms like Facebook for this wave of instability we’re experiencing is a bit like blaming the printing press for the violence of Europe’s Reformation Era. It’s not wrong, but it misses the point.”

    https://www.politicalorphans.com/facebook-may-be-democracys-best-hope/

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    • “If you’re a far-left partisan then why can’t you fight fire with fire?” the executive said. “That debate among progressives — [and] I count myself as a center-left progressive — is as old as the hills. All center-left campaigners and politicians always ask themselves, ‘Why can’t [we] seem to rile their supporters as much as right-wing populists have?’”

      Their supporters have been rioting for months.

      It still amazes me how self-unaware the left is.

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      • In this case, there’s a split between the left as in the antifa and progressives/liberals as evidenced by the Biden campaign and presumably the Facebook executive.

        The actual left is using social media to good effect to organize the riots, but they have nothing but contempt for the progressives/liberals.

        Like

        • The left has Corporate America, the mass media, culture, Hollywood, academia, the news papers and all of the news networks except one.

          The right has Facebook and AM radio.

          Like

        • And doesn’t really have Facebook. They just haven’t been completely eliminated from Facebook yet.

          Like

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