Morning Report: Good jobs report

Vital Statistics:

 

  Last Change
S&P futures 3499 -5.6
Oil (WTI) 38.07 -0.71
10 year government bond yield   0.81%
30 year fixed rate mortgage   2.87%

Stocks are flattish this morning as it looks more and more like Biden will win. Bonds and MBS are down.

 

The Fed maintained rates yesterday and made little changes to the FOMC statement. Rates will remain low, and the Fed will continue to purchase Treasuries and MBS at a minimum of current levels to maintain stability and to support the economy. With divided government looking more and more certain, the chance of fiscal stimulus is probably off the table. This will push more of the burden of stimulus onto the Fed’s plate, which means lower rates for longer. Good news for the mortgage banking industry.

 

The economy added 638,000 jobs in October, according to BLS. The unemployment rate fell to 6.9% and the labor force participation rate increased to 61.7%. 21.2% of the US workforce is telecommuting due to COVID. Average hourly earnings rose 0.8% MOM and 4.5% YOY. The overall numbers were well above Street expectations.

 

The increase in wages is a good sign for the economy, and compensation is certainly rising in the mortgage banking space. The bond market has yet to start fearing inflation data, so the recovery should continue to gain momentum. Remember the Fed will let the labor economy run hot, so increasing wage growth shouldn’t trigger any response from the Fed.

 

PennyMac reported blowout earnings last night of $7.03 per share. Volumes were up 44% QOQ to a total of $54 billion. This is an increase of 55% from a year ago. The company has earned over $15 a share through the first 9 months of the year, and the full-year estimates are way too low. It is not out of the question for PFSI to earn $20 this year, which is wild with a stock trading at $58 per share. For those keeping score at home, it works out to be a P/E of 2.9. The next question will be what will they do with all that cash? The quarterly dividend is 15 cents and the company earned 7 bucks a share. A special dividend and massive buyback should be on the table.

 

I will be on a panel today at the MCT Exchange 2020. Rob Chrisman will be running the panel, where we will discuss the election and what it means for the mortgage banking sector. The panel starts at 11:00 am PST / 2:00 PM EST.

103 Responses

  1. Saw a great quip today about Trump’s threatened lawsuits:

    ““A lawsuit without provable facts showing a statutory or constitutional violation is just a tweet with a filing fee,” said Justin Levitt, a professor at Loyola Law School in Los Angeles.”

    https://www.propublica.org/article/if-trump-tries-to-sue-his-way-to-election-victory-heres-what-happens

    Like

    • If the mail-in Biden% is different than the walk-in Biden% at a statistically signficant level, then yes that is evidence.

      Substitute “auto loans” for “votes” and substitute “loans to minorities” for “trump votes” and the government would win a fair lending suit automatically.

      Like

      • Not really. I think Democrats are much more likely to vote by mail in this time given the messaging from both parties about it.

        “Substitute “auto loans” for “votes” and substitute “loans to minorities” for “trump votes” and the government would win a fair lending suit automatically.”

        Yes, but aren’t you the one usually arguing that the disparate outcome methodology is bullshit?

        Like

        • Oh it is, but what is good for the goose is good for the gander.

          I just think we should investigate whether these mail-in votes are legitimate, and ensure we aren’t counting dead people, fictitious people, or illegals.

          Like

        • I think if you are going to commit vote fraud, mail in voting has too much of a paper trail.

          Like

        • jnc:

          I think if you are going to commit vote fraud, mail in voting has too much of a paper trail.

          If I mail in a bunch of votes in the name of dead people, how is that paper trail ever going to lead to me? (Assuming anyone is interested in following that trail, which is a whole ‘nother question!)

          Like

        • Here is the problem, the good ship faith sailed a long time ago. People assume the other side is acting in bad faith.

          No matter who wins, 40% of the country is going to consider the result illegitimate.

          Like

        • Sure. Doesn’t mean that they are right.

          I also think that if Democrats were going to fake it, it would be more in line with the polling. They aren’t creative enough to make it close and their pundits are already having a hard enough time with it as is.

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        • If the mail-in is 55% versus 48% for day of voting, probably explainable. If it is 90% versus 48%, people are gonna think fraud.

          The left will of course wave it away with the “Trump told people not to mail-in” but i don’t think that is gonna sell.

          Like

        • jnc:

          Yes, but aren’t you the one usually arguing that the disparate outcome methodology is bullshit?

          It’s not the methodology that is bullshit, but rather the conclusion drawn from it. An outcome for one racial group that is 2 or 3 standard deviations away from the outcome for another racial group certainly tells us something is going on that begs for an explanation, but it doesn’t tell us what that explanation is. And assuming that it tells us racial discrimination is taking place simply on the basis of the disparate outcome itself is bullshit because there are lots of other plausible – indeed more plausible – reasons that could explain the disparate outcome.

          So if, for example, the % of Biden mail-in votes relative to walk-in votes in Philly is 2 or 3 standard deviations above what it is in the rest of the state, or in other similar urban centers in “safe” states, then that too would beg for an explanation. If there are lots of other perfectly plausible explanations besides some kind of manipulation of the mail-in vote, then sure, concluding that manipulation probably took place would also be bullshit. What are those other perfectly plausible explanations, though?

          To be clear, I am not saying those percentages are likely to be standard deviations out. But as Brent suggested, if they are it tells us something odd is going on.

          Like

  2. I don’t see this stopping just because Biden gets elected:

    “Protesters in Portland target a city commissioner’s home, set fire to city hall
    Police are still looking for the suspect who lit city hall on fire.

    By William Mansell
    November 6, 2020, 6:13 AM”

    https://abcnews.go.com/US/protesters-portland-target-city-commissioners-home-set-fire/story?id=74054924

    Edit: This is a perfect parallel story showing the decline of America in conjunction with the riot one.

    “After 101 years, the Kiwanis Club of Portland votes to disband
    Updated Nov 03, 2020”

    https://www.oregonlive.com/living/2020/11/after-101-years-the-kiwanis-club-of-portland-votes-to-disband.html

    Like

  3. Someone got a reality check:

    “Dem leaders warn liberal rhetoric could blow Georgia races

    If “we are going to run on Medicare for All, defund the police, socialized medicine, we’re not going to win,” says Jim Clyburn.

    By HEATHER CAYGLE and SARAH FERRIS

    11/05/2020 03:57 PM EST

    Speaker Nancy Pelosi and her top lieutenants had a stark warning for Democrats on Thursday: Swing too far left and they’re all but certain to blow their chances in the Georgia runoff that will determine which party controls the Senate. ”

    https://www.politico.com/news/2020/11/05/house-democrats-warn-caucus-left-434428

    The piece is great. They are all acting like they are the losing party.

    Like

    • The Republicans are going to be SO motivated to vote given the perception that the left stole this election that Democrats have zero chance of winning any of these runoffs.

      Like

  4. Republicans already talking down any further stimulus programs.

    The Resistance is about to learn that payback is a Mitch.

    Like

  5. That’s what this election is, an episode of Veep:

    Brent:

    “President Selena Meyer (Julia Louis-Dreyfus) is attempting to win a presidential election for the first time; she became president after her predecessor’s resignation. But in the season four finale, which aired in 2015, the 2016 presidential election ends in an Electoral College tie: 269-269. (A candidate, as we know well, must reach 270 electoral votes to be elected president.)

    A tie in the Electoral College — in Veep as well as in reality — means the election is decided by the House of Representatives in early January. Each state’s delegation to the House gets one vote. Whoever is selected by at least 26 of the states wins.

    So as season five begins, President Meyer is courting members of Congress (no easy task, with the holidays occurring between the November election and the January decision date). However, Meyer lost the swing state of Nevada by less than half a percentage point, which in that state triggers a recount of the vote. As the recount is occurring, it becomes clear that an anti-Meyer postal worker hoarded 10,000 absentee ballots, which the team believes to be from a pro-Meyer district, so the count must include those new absentee ballots.”

    https://www.vox.com/culture/21551121/veep-recount-nevada-mother-trump

    Like

    • one of my favorite moments in that show was when they were on some junket it an African nation and there’s a kid wearing a Jonah for Congress t-shirt

      Like

      • Vox is sooo close to getting it:

        “The episode’s events now feel eerily prescient — as do a frightening number of things on Veep. But the comparison also helps clarify the absurdity of calling for an end to counting ballots in one location while simultaneously urging the count to continue elsewhere. It’s not a position based on the principles of democracy or the law (or, seemingly, even logic). It’s just a power play, and everyone involved likely knows this.

        In the end, Meyer loses the election. (And so, hilariously, does O’Brien, when the House picks his running mate, Laura Montez, instead of him.) But the episode is just one more piece of evidence that Meyer’s commitment is not to good governance or fair and free elections. Her only true constituent is herself.”

        Like

  6. This is almost a worse meltdown than 2016:

    Like

    • Regarding the head-scratching about Black and LGBT men leaving he Democrats, it is astonishing that the modern feminism doesn’t even occur to him.

      Like

  7. Plum Line has gone from Trump Derangement Syndrome straight to McConnell Derangement Syndrome.

    Like

  8. On polling – I noticed only two polls that were consistent with actual results, one in Texas and one in Iowa. The DesMoines Register sponsored poll [Selzer?] is always accurate in IA and when every other poll was predicting even IA races for POTUS and Senator it was predicting 5% R wins.

    I suspect local polling by respected local polls is still viable, but nationwide polling is not. I hang up on pollsters but I might not hang up on one from The University of Texas. I wonder if my reaction is somewhat typical.

    Like

  9. Interesting read:

    Like

  10. I’ve pretty much just been enjoying the fact that we may hear less and less weird shit coming out of Trump’s mouth once the election is certified. He can’t keep it up after that and Biden will take the reins. I celebrated with all the folks in the streets yesterday and today I just relaxed for the first time in months……………LOL

    Lots of battles ahead and maybe some hope for a bit of help for all the folks who have lost jobs and income due to Covid. Not sure how that’s going to happen but I guess we’ll see.

    I’m hoping he goes to his resort in Florida for Christmas and just stays there. Also, hoping he gets tied up in legal issues for the immediate future after Jan and that takes his focus and money so we won’t have to listen to his conspiracy theories anymore.

    I have that bet with Scott so we’ll have to see how that works out! 🙂

    Like

    • Why would he be involved in legal issues after the House certifies the election in January? I’m told only banana republics prosecute former elected chief executives?

      Although I have to admit it would be awesome!

      Like

      • It takes a heart of stone not to laugh.

        Like

      • Not legal issues regarding the campaign but other legal issues that seem to be facing him after he is no longer in office.

        Like

        • As far as I know, this is the only one.

          https://www.washingtonpost.com/

          I don’t know why it would effect him, he’s no longer in charge there and is unlikely to take charge again as he’s obviously the front runner in the Republican party for 2024.

          Hope springs eternal I guess though. Fingers crossed?

          Like

        • These are the ones I’ve read about. Not a lawyer and not interested in studying them so not sure if any of them are actually valid or not. I just kind of like the idea that he might be pre-occupied for awhile and not spewing some of his outrageous conspiracy theories.

          https://www.reuters.com/article/uk-usa-election-trump-probes-explainer/explainer-citizen-trump-will-face-legal-woes-idUKKBN27N0SY

          Like

        • spewing outrageous conspiracy theories

          Which ones?

          Like

        • lms:

          I just kind of like the idea that he might be pre-occupied for awhile and not spewing some of his outrageous conspiracy theories.

          The single most outrageous conspiracy theory of the last 4 years was the Russian collusion hoax. And the most effective way of avoiding anything Trump spews is to get off Twitter, something I highly recommend in any event.

          Like

        • I have neither a twitter account nor a facebook account. I don’t even do Instagram. I belong to a neighborhood group and 2 fitness groups. I do occasionally watch Trump when he speaks to the media or his famous rallies though, and even watch Fox news sometimes to see what they’re cooking up.

          I tend to do a lot of reading…………try to read from both left and right leaning publications. Best I can do.

          He’s never been very circumspect in sharing crazy ideas or outright lies. He’s not the only one of course, and I agree there are some on the left who leave a lot to be desired, but they’re not the President of the USA.

          Like

        • But what crazy conspiracy theories has he promoted?

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        • lms:

          I have neither a twitter account nor a facebook account.

          Glad to hear it.

          He’s never been very circumspect in sharing crazy ideas or outright lies.

          Name me a politician who is. (Remember “if you like you insurance plan, you can keep it”? That was as obvious an outright lie as they come. And ideas don’t get more batshit crazy than the notion that by passing laws the government can make more and better healthcare available to an increased number of people while also lowering the cost.)

          I agree there are some on the left who leave a lot to be desired, but they’re not the President of the USA.

          They have been in the past, and it appears will be again pretty soon.

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    • 70+ DAYS OF WEIRD SHIT coming. This was a very close election – JB outperformed HRC in rural areas and suburbs, Trump outperformed himself with many blacks and hispanics, and several states are close enough to justify actual recounts. It is at least as close as I thought it would be, and when the JB campaign sort of ignored Chicanos in TX I figured it would be closer than I first thought. George thought it would be a landslide for JB for most of the campaign and now seems surprised it was close for JB, seemingly because he now thinks DJT was screwed. I think George was right on about one thing: most of the nation dreads a business shut down. He thought they would blame DJT, but I think millions did not, and they thought he would do a better job keeping the place open.

      Historically recounts statewide move hundreds of votes, not thousands. But recounts here are certainly in order. Lawsuits? Well, let us see if any are in order, and frankly, I don’t think that can be determined until the recounts, as there is no current litigation claiming any evidence of systematic errors or fraud, and all state election officials, R and D, say they have clean results. Apparently there are no or exceeding few ballots that are indeterminant, unlike as there were in FL in 2000[hanging chads?].

      But that is not enough for DJT, who apparently is going to campaign as if he is still running, hopefully on R Party money and not the taxpayers’.

      Weird shit, all right.

      Like

      • George thought it would be a landslide for JB for most of the campaign and now seems surprised it was close for JB, seemingly because he now thinks DJT was screwed.

        Not sure what this means Mark. I did a mea culpa several days ago. I am surprised at the weirdness of the results, particularly in 5 states that seem outliers. Do I think Trump lost votes to fraud and illegal ballot harvesting? Yes. Did I think Biden was going to win in a landslide? Yes.

        Again, not sure what the problem here is.

        Like

        • I missed your mea culpa.

          So I can’t say “I told you so” on closeness.

          From NYT:

          Nationwide, Biden is faring about 2.4 percentage points better than the average Democratic nominee for House seats, according to an estimate by Sean Trende of RealClearPolitics.

          In several swing states — including Georgia, Michigan and North Carolina — Biden also did better than the Democratic nominees for Senate. (Arizona is an exception.)

          In Nebraska’s Second Congressional District, the Democrats nominated a Bernie Sanders-style candidate — Kara Eastman, who backs “Medicare for all” and was endorsed by progressive groups like the Justice Democrats — for a House seat. She lost her race by almost five percentage points, while Biden won the district by almost seven points.

          These election results are consistent with polls from over the past year that showed Biden faring better against Trump than other Democrats in hypothetical matchups.
          ———————
          I don’t think any left D has a freaking clue and I know what would have happened if Sanders or Warren had been the nominee. My next door neighbor, Chris, is a VN vet and retired IBM engineer. He lets his younger daughter, a sous chef in a place that virtually shut down for COVID, and the non-working boyfriend live in his house for free until daughter can work full time again. The 30 somethings are Bernie Bros. Idle boyfriend ripped out Chris’ “JOE” sign from his front yard.

          Like

        • I just nutted!

          Love it!

          Like

      • Mark:

        Lawsuits? Well, let us see if any are in order, and frankly, I don’t think that can be determined until the recounts, as there is no current litigation claiming any evidence of systematic errors or fraud

        But there is the lawsuit in PA claiming that the judicial extension of the deadline for accepting ballots was unconstitutional. Not sure that matters, as I have been unable to find an actual accounting of how many ballots that is, but the suit is out there and it is legitimate.

        Like

        • Scott, Orange Man Bad. C’mon man!

          Like

        • McWing:

          Scott, Orange Man Bad. C’mon man!

          What I am expecting is that when Trump wins this suit, as he obviously should, it is going to turn out that, although mail-in ballots in PA overwhelmingly went for Biden, it will turn out that most of the ballots identified as having come in after election day will miraculously end up favoring Trump, and Biden’s lead will simply continue to grow!

          Like

        • Nah, it will turn out that Alito’s order to segregate the ballots was ignored and there is no way to do so after the fact. The race is over for all practical purposes. The question is, does further investigation further destabilize the electoral process? You already have 1/2 the country believing in an obviously ridiculous from the get go hoax. Do we want to convince the other half (if they don’t already believe it) that there is massive fraud? Then what happens? The only time the Democrats are interested in making the election process more transparant is when they lose, like Florida in 2000. That resulted in a pretty good clean-up and their ability to call an election in one night.

          It’s like the Kennedy assassination, what if LBJ received definitive proof that the Russians were behind the assassination? There really would only be one remedy if the population found out.

          Like

        • That suit matters not for the election, but for positing novel theories of federalism, judicial review, and the equity power of common law courts.

          Like

        • Mark:

          That suit matters not for the election..

          I don’t understand. Are you saying that if SCOTUS rules that the courts have no authority to change election law and that ballots received after the statutory deadline are not valid, they will still be included in the count anyway?

          Like

        • Every County Clerk in PA segregated the late ballots and counted them. In the two big counties, Philly counted but did not include in the total published, Pittsburgh counted but did include in the total published. The number of ballots and who they favor is known to the PA SecState. There were about 500 in each of the two big counties and a total of fewer than 10,000 in the state. If the ballots are 100% for DJT they will not change the outcome.

          But if the Supremes adopt the argument upon which the challenge is based and which was first mentioned in Rehnquist’s concurring opinion in Bush v Gore it will turn a lot of history upside down with ramifications beyond election law.

          Liked by 1 person

        • Mark:

          There were about 500 in each of the two big counties and a total of fewer than 10,000 in the state.

          Where did you get the numbers? I looked over the last couple of days and couldn’t find them.

          If the ballots are 100% for DJT they will not change the outcome.

          It may not change the outcome either way, but the issue is how many late ballots (net) were counted for Biden, not how many late ballots were not counted for Trump.

          But if the Supremes adopt the argument upon which the challenge is based and which was first mentioned in Rehnquist’s concurring opinion in Bush v Gore it will turn a lot of history upside down with ramifications beyond election law.

          Maybe it should. Law created by judicial fiat is an abomination.

          Like

        • That came from a Friday evening press conference from the SecState of PA. All unofficial at that point. Results are not yet up at the SecState election website. So I could be wrong on the numbers. We shall see.

          Why is it more important to know the count for only JB?

          Like

        • Mark:

          Why is it more important to know the count for only JB?

          I said it is important to know the number of late ballots that have been counted for JB on a net basis, because if late ballots get invalidated, which is the goal of the lawsuit, then his lead will shrink by that net amount.

          Like

      • Mark

        70+ DAYS OF WEIRD SHIT coming.

        No Shit Sherlock…………hahaha

        Like

    • “I’ve pretty much just been enjoying the fact that we may hear less and less weird shit coming out of Trump’s mouth once the election is certified”

      He just fired the Secretary of Defense.

      https://www.washingtonpost.com/national-security/defense-secretary-mark-esper-fired-trump/2020/11/09/9b7cbcbc-a5b9-11ea-8681-7d471bf20207_story.html

      Like

      • Yeah I saw that, probably not the last to be axed. I happen to think R Senators and leaders are primarily towing the election fraud line because they’re afraid of Trump and his followers (which are numerous). They’re not doing any favors to a smooth transition but maybe things will change by the middle of December?????

        Like

        • lms:

          I happen to think R Senators and leaders are primarily towing the election fraud line because they’re afraid of Trump and his followers (which are numerous).

          Afraid Trump will do what?

          Like

        • Scott, I think they’re afraid to assert some common sense regarding the transfer of power in case Trump turns on them. Perhaps I’m wrong but I think Trump “And Followers” have taken over the Republican party for better or worse. He has a lot of followers which is undeniable and R future prospects politically rest with them and him.

          You reap what you sow.

          Like

        • lms:

          Scott, I think they’re afraid to assert some common sense regarding the transfer of power in case Trump turns on them.

          What common sense? And turns on them by….doing what?

          Like

        • Common sense would have the transition teams hard at work even as DJT presses for recounts and looks for evidence of vote errors, manipulations, and fraud. Common sense would not have him firing his Cabinet members right now.

          Clinton’s people were assholes during the transition and the 911 Report claimed part of the failure of recognition was due to the late start on transition. GWB and Laura, btw, never forgot it, and were very quick to help out the transition team for BHO – who carried Geithner and Gates into his Admin. That was smooth. BHO was very open in transition to DJT, as well.

          DJT’s Admin should be able to walk and chew gum at the same time. They could set up for the transition and shut it down if by some quirk of fate DJT actually won the election. No harm no foul, but no ridiculous delay if DJT loses as it currently appears that he has.

          Like

        • Trump’s followers are not united by their love of trump, but by their hatred of the left.

          Like

        • They’re not doing any favors to a smooth transition but maybe things will change by the middle of December?????

          I guess they could help by spying on Biden’s transition and withholding info on intelligence briefings.

          Like

        • McWing:

          I guess they could help by spying on Biden’s transition and withholding info on intelligence briefings.

          lol!

          Like

        • oh snap

          Like

        • Brent, I really can’t agree with you. I think Trump has painted a caricature of the Left (the deep state/socialism/spying on campaigns/voter fraud/etc. etc) and so IMO it’s basically a cult of personality.

          I think several of you here believe, possibly, in the more salacious theories Trump et all espouse but as a liberal…………..I really don’t see it.

          I’ve been involved in politics for over 50 years and have seen the pendulum swing back and forth with lots of vitriol. I’m actually more of a moderate, and even agree with some conservative ideals, but I think the R party has abandoned their own principles recently.

          In some ways I believe that while Trump is trying to establish an authoritarian type of government, what we really have is an Oligarchy.

          I know none of you agree with me on a regular, or even partial basis, but I won’t give up on having a better government that serves the people.

          I think the voters spoke in this election……..they rejected Trump (at least the majority did) but upheld conservative views in several states…………you guys should call that a win and accept the positive,
          but let the rest of us have our chance with a moderate Dem in the WH.

          Like

        • lms:

          I think Trump has painted a caricature of the Left

          How so?

          …and even agree with some conservative ideals

          Which ones?

          In some ways I believe that while Trump is trying to establish an authoritarian type of government…

          What has he done that indicates this to you? Has he, for example, passed laws forcing people to engage in economic transactions that they don’t want to engage in?

          I won’t give up on having a better government that serves the people.

          That sounds like something Trump would say!

          but let the rest of us have our chance with a moderate Dem in the WH.

          It was you, not me, who didn’t want Romney in the White House.

          Like

        • It was you, not me, who didn’t want Romney in the White House.

          Lol

          Like

        • The “caricature” of the left is not a caricature, and it predates Trump’s existence in politics.

          And the way the left controls culture is a perfect blueprint of how they govern when they have no guardrails.

          The left hasn’t changed since Stalin

          Like

  11. Bernie Sanders didn’t win but Biden did.

    Like

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