Morning Report: Mortgage Credit Eases

Vital Statistics:

 

  Last Change
S&P futures 3555 22.6
Oil (WTI) 40.83 0.41
10 year government bond yield   0.88%
30 year fixed rate mortgage   2.9%

Stocks are higher this morning despite a rise in COVID cases. Bonds and MBS are up.

 

Inflation remains muted at the wholesale level, with the producer price index up 0.3% MOM and 0.5% YOY. Even if you strip out the commodity and trade-related components it only rose 0.2% MOM and 0.8% YOY.

 

The bond market is starting to claw back some of its vaccine-related losses. The trader in me doesn’t sense that the path of least resistance has changed from lower rates to higher rates, at least not yet. The last time the Fed had rates at 0%, the 10 year was trading at 1.5% – 2%, so it won’t necessarily take a rate hike to get them back up to those levels. If the 10-year bond yield has indeed bottomed out, that would mark the end of the Great 40-year bond bull market in the US, which began in the early 80s as Paul Volcker broke the back of 1970s inflation. The last bond bear market lasted from sometime in the 1930s until 1980. Interest rate cycles are long. The first rule of bubbles is that they go on further and longer than you would ever expect.

 

Mortgage Credit eased in October, according to the MBA’s Mortgage Credit Availability Index. “Credit availability increased in October for the first time since July,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “The ongoing economic recovery and improving labor market led to a rise in credit supply for various loan types. There was an overall increase in credit availability for low credit score and higher LTV loans, with conventional credit supply increasing 5.1 percent and government credit staying essentially flat.” That said, we still have a long way to go to get back to pre-COVID-19 levels.

65 Responses

    • If I read the logic correctly, it means that because WFH-ers are creating fewer externalities, they should pay more in taxes in order to compensate society for the loss of tax revenues from the externalities they are no longer creating.

      Liked by 1 person

  1. Why would anyone think the left has anything to hide? People on the right side of history generally don’t call in the brownshirts

    https://www.zerohedge.com/political/trump-law-firm-quits-pennsylvania-case-after-project-lincoln-cancel-campaign

    Liked by 1 person

  2. Do leftist politicians hold the intelligence of their supporters in complete contempt, or do they just have the self-awareness of a moon rock?

    Chicago Mayor Padfoot Lightworker (whatever) parties in the streets before telling everyone else to cancel Thanksgiving with the family.

    And they think Trump is grotesque.

    Liked by 1 person

  3. I’ve got just two words for Dr. Fauci:

    “I was talking with my UK colleagues who are saying the UK is similar to where we are now, because each of our countries have that independent spirit,” Fauci said during a panel with other experts in Washington, DC.

    “I can understand that, but now is the time to do what you’re told,” he said, as first reported by CNBC.

    Fuck you.

    Liked by 1 person

    • Jesus, what a fucking paternalistic asshole. FOAD.

      Like

    • I suspect we will get the worst of both worlds with a new lock down.

      Like

    • I’m of two minds about this.

      1. I think he’s right on the merits given the resurgence of the virus that’s started. I also have sympathy that it’s people like Mark and lmsinca who are bearing the brunt of the impact for this given the increased health risks to their demographic, even though the risk is being created by everyone’s actions or lack thereof.

      2. Fauci’s phrasing is counter productive and provides grist to the media to stir the pot as part of their Hate, Inc. business model. Even in a pandemic, there’s still money to be made by highlighting the most divisive commentary on the issue.

      3. Institutions and especially politicians have squandered their credibility when they need it most by giving a pass to BLM protests earlier and other politically favored activities.

      Recent example:

      https://www.politico.com/states/california/story/2020/11/13/newsom-faces-backlash-after-attending-french-laundry-dinner-party-1336419

      Everyone is very inclined to respond as Scott did above when it comes to being told not to gather for Thanksgiving and Christmas.

      But in the end, the virus doesn’t care.

      Liked by 1 person

      • jnc:

        I also have sympathy that it’s people like Mark and lmsinca who are bearing the brunt of the impact for this given the increased health risks to their demographic, even though the risk is being created by everyone’s actions or lack thereof.

        I disagree that the risk is being created by everyone else’s actions. The risk exists because the disease exists. Anyone who wants to avoid the risks is perfectly free to lock themselves up and avoid contact with anyone they don’t want to have contact with, for as long as they want to lock themselves up. The ability to protect oneself exists entirely independently of what anyone else does. Me going to a restaurant or a religious service or a Thanksgiving dinner with extended family, whether masked up or not, has exactly zero impact on the risks faced by lms and Mark unless they themselves choose – important word there – to do the same thing.

        And certainly there is an argument to be made that, the faster all of the people with less risk of serious health consequences come into contact with this disease, the safer those who are at risk of serious consequences can feel about socializing.

        Everyone is very inclined to respond as Scott did above when it comes to being told not to gather for Thanksgiving and Christmas.

        But in the end, the virus doesn’t care.

        Color me surprised to find a self-declared libertarian supporting the notion of government telling people what to do for their own good.

        Like

        • Actual pandemics are the exception that proves the rule.

          Which is why I get annoyed when progressives try to argue that every other social “ill” that they want to address is analogous to a pandemic. Or war, the other go to.

          And I don’t think that the reported spikes are “fake news”.

          Behavior is a contributor to this. Hence my irritation at making exceptions for protests, etc when trying to argue that people need to take a collective action to address it.

          But the person who really needs to weigh in here is NoVA.

          Like

        • I have no problem seeing libertarian principles as including government advice as opposed to government compulsion.

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        • Mark:

          I have no problem seeing libertarian principles as including government advice as opposed to government compulsion.

          Nor do I. Compulsion is precisely the problem.

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        • jnc:

          Behavior is a contributor to this.

          What is “this”? Again, if by “this” you mean the ability of at-risk demographics to protect themselves, I think you are absolutely wrong. They have the ability to protect themselves by regulating their own behavior, regardless of how anyone else behaves.

          Like

        • jnc:

          And I don’t think that the reported spikes are “fake news”.

          I continue to think that the most informative measure of where we are is not “cases” (which itself is an ambiguous term), but is instead excess deaths. Despite the reported spike in “cases”, weekly excess deaths are not spiking, and many states have no excess deaths at all. Across the nation as a whole there was a very large spike in April, then a smaller one in August, and since then it has returned to just barely above the threshold for expected number of deaths.

          https://www.cdc.gov/nchs/nvss/vsrr/covid19/excess_deaths.htm

          Like

        • The increased spread of the virus. Number of new cases and increased deaths, etc.

          Like

        • jnc:

          The increased spread of the virus. Number of new cases and increased deaths, etc.

          OK, but what I was taking issue with was your original claim that the risk for some people is being created by the behavior of others, and the implication that this justifies Fauci’s desire that people just do what they are told to do. Your claim about risks is wrong, and therefore cannot justify Fauci’s desire.

          Like

        • Me going to a restaurant or a religious service or a Thanksgiving dinner with extended family, whether masked up or not, has exactly zero impact on the risks faced by lms and Mark unless they themselves choose – important word there – to do the same thing.

          Unless someone else there gets sick and takes it back to Texas and they pick it up getting groceries, etc.

          Given the rapid spread of the virus, I don’t think you can say that the risk is limited to just the people who you have direct contact with since their interactions aren’t just limited to you.

          that the risk for some people is being created by the behavior of others

          I probably should have said increased, not created, originally.

          Like

        • jnc:

          I don’t think you can say that the risk is limited to just the people who you have direct contact with since their interactions aren’t just limited to you.

          But that is not what I said. I said that people who want to avoid the risk of infection can do so by regulating their own behavior. The whole world does not need to avoid social interaction with each other in order to protect one at-risk person. That one person can avoid social interaction with everyone else, if he wants to avoid any risk at all.

          Like

        • I’m willing to take my chances but try to remember to carry around a mask for courtesy, and also always social distance.

          Like

  4. Election Post Mortum from the Democratic data analyst who got canceled for telling people what they didn’t want to hear before the election, namely that riots don’t help Democrats.

    https://nymag.com/intelligencer/2020/11/david-shor-analysis-2020-election-autopsy-democrats-polls.html

    Cancel story:

    https://nymag.com/intelligencer/2020/07/david-shor-cancel-culture-2020-election-theory-polls.html

    Like

  5. Interesting interview with David Shor, a Democratic pollster:

    https://www.politico.com/news/magazine/2020/11/12/2020-election-analysis-democrats-future-david-shor-interview-436334

    The joke is that the GOP is really assembling the multiracial working-class coalition that the left has always dreamed of. But I think it’s worth remembering that both Black and Hispanic voters are still an overwhelmingly Democratic group, though Hispanic voters by a lot less than they were four or eight years ago.

    …So, the long-term trend probably is toward racial depolarization. And I think that’s really interesting and surprising. Racial [political] polarization had been steadily increasing from 1992 up until 2016; 2016 is when it reversed course, and a lot of people thought that was an aberration. But 2018 and 2020 show it’s not. It is very strange, in some ways, that Donald Trump kicked off an era of racial depolarization.

    Personally, I don’t find it strange at all.

    Liked by 1 person

  6. Also worth listening to is this interview with Michael Malice:

    https://thefederalist.com/2020/11/12/podcast-getting-white-pilled-with-michael-malice/

    Especially this, near the end:

    Whatever you think of the lockdowns, whatever you think of covid, it is indisputable that this past year has given some very evil people some very useful information about what Americans will put up with. This was the problem with World War I, because World War I gave people an excuse to see what it would be like to have an American totalitarian proto-fascist government system, so that when the Great Depression came and FDR tried to do it again, it was like “Well, we just did this 15 years ago, you guys know what it’s like, we had the dress rehearsal.” So I am shocked, and very disappointed to see how much people are willing to put up with it.

    Liked by 1 person

  7. If PL is representative, the left will resist any vaccine that’s released by Big Pharma.

    The country is fucked.

    Liked by 1 person

    • jnc:

      The country is fucked.

      I agree that the country is fucked, and I think it is because of the left. But it isn’t because of the left’s attitude towards a covid vaccine. The future of the nation does not hinge on whether or not we get a vaccine that is widely embraced. The country is in far more danger from the widespread and casual acceptance of, if not demand for, authoritarian measures as a political response to covid than from a lack of acceptance of a vaccine for covid.

      Like

      • And the longer the pandemic persists due to attitudes like resistance to a vaccine, the more people will acclimate to those authoritarian measures. Although in the case of the left, it’s perfectly consistent for them to condemn Big Pharma and call for Big Government to replace it. They are getting what they want in that scenario.

        The best way to prevent it is to reduce the size outbreak and thus the conditions that are being used to justify the lockdown, etc.

        Like

        • I guess all that virtue signaling hasn’t bought Corporate America much with the Progressive Left

          Like

        • Who could have predicted such an outcome?

          Like

        • Maybe the Constitution should be viewed as a suicide pact?

          Like

        • jnc:

          And the longer the pandemic persists due to attitudes like resistance to a vaccine, the more people will acclimate to those authoritarian measures.

          In which case the government can and will simply mandate that everyone get vaccinated. In fact, given the left’s authoritarian impulse as a general rule (that which is not prohibited will be required!), I fully expect that if/when the PL-left changes its mind on the vaccine, compelled vaccinations is precisely what they will want.

          If you are on board with government compelled lockdowns and mask mandates, why wouldn’t you also be on board with government compelled vaccinations?

          Like

        • “I fully expect that if/when the PL-left changes its mind on the vaccine, compelled vaccinations is precisely what they will want.”

          Oh they will, provided that it doesn’t come from an actual company.

          “If you are on board with government compelled lockdowns and mask mandates, why wouldn’t you also be on board with government compelled vaccinations?”

          That’s not what I said in the first place. This all started over whether or not “Fuck you” was the appropriate response to Fauci saying (in not the most diplomatic manner) that people should stop second guessing the health authorities and do what’s being asked of them.

          My own take is that actual enforced mandates tend to backfire.

          Like

        • What would be the farthest you’d be willing to go to enforce compliance?

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        • jnc:

          That’s not what I said in the first place.

          Apologies…I misunderstood.

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        • For violating COVID-19 mandatory measures? Probably a fine.

          Like

        • Would you mandate vaccinations?

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        • That would be an awful idea. Better just to let everyone who doesn’t want a vaccination get COVID. And mandate a entirely “new” kind of vaccine (and mRNA vaccine for which there is as yet no success record)? That would be nuts. You think the anti-vaxxers are bad now . . .

          Like

        • No.

          Among other reasons, you politicize it that way and it’s counterproductive. I suspect you’ll end up with even fewer people getting it if it’s mandated.

          The demographic and political makeup of the people who don’t get vaccinated will be interesting to see.

          Like

        • I’m not getting the COVID vaccine until I have to. It’s an entirely new form of vaccine and I’m not much of a cutting edge person when it comes to that kind of stuff.

          So I’m suspecting people who like lots of other people to go first won’t be getting the vaccine in a hurry.

          Like

  8. Scott, Joe has explained why Lulu and Walter and Rosanne and I are more socially isolated and how we are really forced to live in semi-seclusion. Fortunately we are both families of means and can afford to do so, but with painful consequences at a personal level.

    I want to add some further information here. This virus has a very short life in the air. It requires hosts or at least accommodating surfaces to last more than an hour. Further, the effects of the virus are directly related to the load inhaled. This is the effect of viral load generally – the body can quickly mount a response to a few cells, but can be overwhelmed by load.

    The body has three big infection fighters. White blood cells, antibodies, and killer T cells. HIV was so deadly because it ate T-cells. COVID does not and killer T-cells are the best of our innate responses to this virus. T-cell production is highest pre-puberty. It drops off after that, slowly, until immunosenescense, beginning around age 60 in humans, when the thymus shrivels and T-cell production drops off a cliff. The dependence of the elderly on antibodies without sufficient killer-Ts puts even the healthiest of us at risk for a storm of antibody production and death from our reaction to the virus. This is why Trump had to be immediately treated with steroids after treatment with antibodies. The antibody response had to be controlled.
    Even healthy old folks like Lulu and me and Rosanne are endangered because the production of T-cells rapidly diminishes after age 60. T-cell production pretty much explains the curve of age resistance to COVID. The detailed history of the spread of COVID on the Abraham Lincoln was very instructive on many levels, as well.

    Physical distancing in an open environment is the best way to actually kill the spread. If we must be in closed environments, masking reduces the distance that the virus travels in air before dropping to the floor. However, in a closed environment, constant replenishment of the virus from carriers eventually makes the air unsafe, absent extraordinary filtration and rapid turnover of the air in the space. So when the health officials beg for masking they are only following up on what has proven to work in Seoul and Taipei: eventually the little fuckers die if they cannot make it from one host to another.

    Finally, your emphasis on deaths is misplaced. As Joe has written many times it is hospital load that is critical to the society. Hospital loads are rapidly climbing in many places. Look at hospital load and the curve in your locality to get an idea if masking will help where you are.

    It is not only the sick who pay. When hospitals are overloaded with emergency 24 hour care either your premiums or your taxes will rise because the costs of that care will be spread, I guarantee.

    Like

    • Finally, your emphasis on deaths is misplaced. As Joe has written many times it is hospital load that is critical to the society. Hospital loads are rapidly climbing in many places. Look at hospital load and the curve in your locality to get an idea if masking will help where you are.

      The problem with this is that hospitals are incentivized to exaggerate hospitalizations due to Covid, they get paid more. Hospitals know which types of tests get a higher positive rate and which labs are known for higher positive rates. Finally, ICU beds is an exceedingly flexible number at hospitals and are certainly not fixed. It gets back to that argument surrounding Herman Cain, what is Covid or cancer?

      Like

      • hospitals are incentivized to exaggerate hospitalizations due to Covid

        George, isn’t that only true for Medicare, under CARES, a 20% add on? Insurance payments do not distinguish for COVID, right? There is no code for it, AFAIK. I think insurance claims are based on stays and procedures – so 96 hours on a ventilator will get more than 96 hours without.

        Like

      • That’s not the only problem—-hospital load is often exaggerated by a press that had its own incentives, so bed capacity is reported as an absolute and not a fungible number, though if a hospital only allots ten beds to Covid patients and 9 of them are filled, it’s reported as the hospital being at 90% capacity—-even if they could triple their COVID bed allotment if they saw the need.

        Like

        • KW:

          …hospital load is often exaggerated by a press that had its own incentives

          The inability to take media reports at face value is a real problem when trying to figure things out for yourself.

          Liked by 1 person

        • Amen.

          Like

        • @scottc1:

          The inability to take media reports at face value is a real problem when trying to figure things out for yourself.

          It really is. It doesn’t help that it is generally understood that Fox is (or was) right-leaning (though it is now as populated as holier-than-though 4-th estate entitled revolutionaries in the newsroom as CNN or MSNBC) and that NewsMax is conservative and that OANN is also very conservative/right-leaning, but ABC, MSNBC, CNN, etc., are considered more neutral and balanced. Rather than progressive/Democrat house organs.

          But either way, it’s hard to find anything that reports facts and data and events without censorship or narrative-shaping of some kind. Which does indeed make it almost impossible to figure things out.

          Like

    • Mark:

      Joe has explained why Lulu and Walter and Rosanne and I are more socially isolated and how we are really forced to live in semi-seclusion.

      The discussion between he and I, at least from my end, was not about why you and others are socially isolating yourselves. It was about whether or not individuals have the ability to limit their own risk by regulating their own behavior even in the absence of compelling others to join them.

      Physical distancing in an open environment is the best way to actually kill the spread.

      In the very short term that may be true. In the long term, the best way may very well be to have it spread as quickly as possible among the vast majority of people who are not at risk of dire consequences.

      Finally, your emphasis on deaths is misplaced.

      I don’t think so. Excess deaths is the one statistic the accuracy of which we can be pretty certain is reliable, and which will ultimately reflect how the risks of covid are being managed. If hospitals are so full that they cannot properly manage covid patients, or that covid patients are taking up so much of its time and space that it can no longer efficiently manage, say, cancer patients, that will be reflected in excess deaths.

      Like

      • The problem with excess deaths would be the deaths caused by lockdown protocols in addition to actual COVID deaths and separating them.

        Could be the case that failure to seek treatment due to lockdown procedures also increases excess deaths compared to deaths in our previously non-locked-down society.

        Like

        • KW:

          The problem with excess deaths would be the deaths caused by lockdown protocols in addition to actual COVID deaths and separating them.

          For sure, looking at excess deaths alone doesn’t tell us the precise cause of any excess deaths, and as you say it could be the case that policies put in place to lower covid deaths are at the same time increasing other deaths, which of course would itself add to the excess death toll. My only point is that looking at excess deaths gives us a fairly good, and I would say the most reasonable, overall picture of how all of the moving parts are fitting together. If “cases” are skyrocketing, but excess deaths are holding steady or even dropping, that is not an indication to me that a drastic change in policy or behavior is necessitated. And it could actually be a harbinger of good news, suggesting that we are moving in the direction of herd immunity while avoiding the worst of the possible downsides in achieving it.

          Liked by 1 person

    • “As Joe has written many times it is hospital load that is critical to the society.”

      That was NoVA technically.

      Liked by 1 person

  9. A couple of points on COVID and lockdowns.

    The CDC and public health officials botched this from the start. Some of that was undoubtedly Trump and his talking points. And yes, i do not assume any good faith on the part of the opposition. they would have pushed for the exact opposite of whatever he said. it got political, and that’s not all on Trump. either way:

    The mask debacle, even if intended to prevent a panic, was so obviously a lie that it torched their credibility. You can’t tell people they don’t need a mask with health care workers are posting “get me PPE” on social media. We’ve never gotten out of that credibility hole.

    This winter is going to suck. They have made a lot of advances in the therapeutic treatment of COVID, but the exponential increase has the potential to overwhelm the system. I think there are a lot of people who are getting sick today that would have died had they contracted it 6 months ago. so that’s a positive and a good sign. but the growth is just off the charts. i think we’re probably past the point of no return, but that’s just speculation.

    Systems are starting to cancel electives, etc. Not just to keep people home, but to free up the staff, space, and PPE. we’re an older and sicker society and shit is going to roll downhill and fast. personally, my wife needed surgery and I absolutely called in favors to make sure she got scheduled in Sept.

    Regarding capacity, it’s both a staffing and a space issue, not a number of beds issue (although that is important). longer story too, but the push for outpatient has changed hospital design too. so it’s harder to ramp up. that’s why you’re seeing field hospitals and tents.

    Also, regarding that Medicare 20% bump, you have to be an inpatient for that. and they are not going to admit you unless it’s clinically necessary. And if there’s WAF (waste, abuse, or fraud) they’ll find it. the OIG will be looking. https://oig.hhs.gov/reports-and-publications/workplan/summary/wp-summary-0000515.asp

    Are lockdowns the way to go? Way outside of my area of expertise. But I think the idea of having restaurants and bars open is a bad idea. instead of making sure we can get takeout, we should be working to keep schools open. but that’s politics for you.
    personally, my son is on campus. but it’s a small private school and they are all wearing masks, etc. so they can make it work. and no doubt the social isolation was getting to him. But Fauci’s comments are not helpful at all.

    i see this as akin to a nuclear strike. and the feds should respond accordingly.

    Liked by 1 person

    • NOVA, thanks for posting this. Finally a reality check of the situation on the ground. I certainly agree that lots of mistakes were made early making the best practices a political football, but I really appreciate you letting us know what you see going on now.

      Both of my grandsons are in school, one in a very small pre school and the other a freshman in HS in CO. The older one only goes twice a week to school (and he’s thankful for that) and the rest is virtual. I think the schools and children are showing the rest of us the way to handle this better is by wearing masks and other measures the schools are taking. Just my opinion.

      Hope everyone here stays safe this winter and I’ll check back in someday! 😉

      Like

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