Morning Report: Bank earnings better than expected

Vital Statistics:

  Last Change
S&P futures 3510 5.6
Oil (WTI) 40.82 0.79
10 year government bond yield   0.72%
30 year fixed rate mortgage   2.91%

Stocks are flattish this morning as stimulus talks fizzle. Bonds and MBS are up.

The big banks are all reporting this week and the takeaway is that loan loss provisioning is much lower than expected. The new CECL format which was instituted this year could be playing a part, but it looks like loan performance is stronger than people anticipated.

Mortgage Applications fell 0.7% last week as purchases fell 2% and refis fell 0.3%. “Mortgage applications for refinances and home purchases both decreased slightly last week, despite the 30-year fixed mortgage rate declining to a new MBA survey low of 3.00 percent,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Applications for government mortgages offset some of the overall decline by increasing 3 percent, driven by a solid gain in government purchase applications and an 11 percent jump in VA refinance applications.”

United Wholesale reported that it closed over $54 billion in loans in the third quarter, up 81% from a year ago. “This is our best quarter in the company’s 34 years, showing that borrowers are recognizing that independent mortgage brokers offer better rates, greater speed and deeper experience,” said Mat Ishbia, president and CEO of UWM. “I’m grateful to the over 6,800 team members whose commitment to superior service, together with our proprietary industry-leading technology, support the success of our broker clients by enabling them to offer a best-in-class borrower experience.”

Inflation at the wholesale level remains well below the Fed’s target. The Producer Price Index rose 0.4% MOM and 0.4% YOY.

Fed Vice Chairman Richard Clarida said that it may take a year for the economy to reach pre-COVID levels. “That said, the Covid-19 recession threw the economy into a very deep hole, and it will take some time, perhaps another year, for the level of GDP to fully recover to its previous 2019 peak,” the central bank official told the Institute of International Finance. “It will likely take even longer than that for the unemployment rate to return to a level consistent with our maximum-employment mandate.” That last statement means that rates are going nowhere for a while.

17 Responses

  1. NY Post story that all the other media outlets and Facebook are trying to suppress:


    • is he right that it is hard to prove a discrimination case? I was under the impression that it was like falling off a log


      • I won more than a dozen for employer defendants but settled one before it went anywhere near the courthouse.

        I took three plaintiffs on employment discrimination in my career. In the 70s, I repped a black civil service worker at IRS who was repeatedly passed over for promotion even though he had the highest scores and a 5 point veteran’s preference. Starting from that, and adding testimony from white co-workers that their supervisor from MS was an unreconstructed racist, I got a good settlement and promotion for my guy after the final pretrial conference the Thursday before trial. That was a Title VI and not a Title VII case. In late 1968, in my first fed case, I repped a master sergeant at Ft. Hood who was a nuke tech at Killeen Base. His daughter spread the true rumor in HS that the colonel’s daughter was a pothead. Col. shut the Sgt. down and ordered his transfer. I took the position in Fed Ct that Colonel could not make a summary adverse employment decision – even in the Army – without notice and hearing [statute on federal employment]. When we appeared in Court, the JAG lawyers announced they agreed with my position, which only guaranteed me my guy would likely be duly processed out of his nuke job. But the JAG guys did not want the bad publicity and we settled on a lateral transfer to Los Alamos and my guy, after his 22 years, became a supervisor at a nuke plant near Pittsburgh. Finally, in 1989 I repped a white R telephone operator who claimed she was fired by her black supervisor on the basis of race. I was referred the case by a labor lawyer I had recently beaten, because he was not comfortable repping her. We determined that she had been fired on a pretense and took the case. I won what was the largest CR verdict in Austin Division history. The Opinion praised my cross examination of the SWBell guys. The client, who was batshit crazy, fired me after the trial and would not take the relatively standard 10% discount the telco offered to forego the appeal. Her next lawyer ended up losing the case in the Supreme Court, as the law changed during the appellate process. She looked just like Tammy Faye Bakker and everyone in my building called her Tammy Faye.

        I was out $47K in expenses alone on that case.

        Representing employers, if they will listen to you and dot all their eyes and cross all their tees, and have a fair internal grievance and review procedure, I could win almost all the time. A very low % of cases that are tried are won by plaintiffs. A substantial number get nuisance value settlements pre-trial, of course. An employer without a plan is likely toast once, and then he will get a lawyer who will set up the HR and grievance internal plan that will pretty much close the door.

        One simple prophylactic is to have an internal tribunal for each complaint, composed of one employee picked by the complainant, one picked by the supervisor, and the third picked by the two. It will kill all frivolous claims and make the non-frivolous ones easy to settle, before an EEOC challenge is ever made, just as a matter of human nature.


        • I forgot – I lost an Austin Ordinance case in Municipal Court for Braniff Airlines. They owned the Driskill Hotel. When the pilots did not like seeing men dance with men in 1981 or so the Hotel bar forbade same sex dancing – in apparent violation of the city ordinance. I tried to get my client to settle – it was a sure loser- but the pilots were adamant. So I put on witnesses from the Arthur Murray Dance Studio to explain which world dances were all male, which were all female, and which were two gender. The hotel manager testified there was no house rule against any of the traditional all male or all female dances. DID NOT FLY with 6 person jury, but they were amused.


        • Write your autobiography! You’re stories ARE PURE GOLD!!


      • Thanks Mark.


  2. Bring the popcorn… Although the second Biden is elected, all of the sturm and drang and caution about COVID will magically disappear.


    • Brent:

      Although the second Biden is elected, all of the sturm and drang and caution about COVID will magically disappear.

      It will be interesting to see how all of the BEST science suddenly changes come November.


  3. Joe and NoVa, this is my quick and dirty idea on a compromise shield bill.

    1. Separate the employment issue from the customer issue and leave employee issues entirely within the workers comp system. Let the comp carriers in each state work out details with the state insurance boards. Don’t mess with that system.

    2. Shield any retailer from customers’ suits if that retailer has followed local health official guidelines. Impose a structure like many states have for medmal, in which each customer claim has to go first to a review panel that determines whether the employer substantially and materially followed local health official guidelines, but if not, second, whether there is credible evidence that the establishment was a hot spot, at or near the time of claimant’s infection. First hurdle is a bar to litigation. Second hurdle is advisory to the attorneys about their chances if they proceed.


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

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