Morning Report: Fed Day

Vital Statistics:


  Last Change
S&P futures 3686 2.3
Oil (WTI) 47.57 0.24
10 year government bond yield   0.93%
30 year fixed rate mortgage   2.78%

Stocks are flat as we await the Fed decision. Bonds and MBS are down small.


The Fed announcement is expected to announce its decision at 2:00 pm this afternoon. The market will focus most closely on the economic forecasts and any changes in Treasury / MBS purchases.


Retail sales fell 1.1% in November, which was well below expectations. Ex vehicles and gasoline, they fell 0.8%.


Mortgage applications increased 1.1% last week as mortgage rates continued to fall. Purchases increased 2%, while refis rose 1%. “U.S. Treasury rates stayed low last week, in part due to uncertainty over the prospects of additional pandemic-related government stimulus, as well as concerns about the continued rise in COVID-19 cases across the country. Mortgage rates as a result fell to another survey low, with the 30-year fixed mortgage rate dropping five basis points to 2.85 percent,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Homeowners once again acted on the decline in rates, with refinance activity rising for the second straight week and up 105 percent from a year ago.”


14.5 million people will leave the cities for the suburbs, according to an analysis by RedFin. They also anticipate that many will move to cheaper cities as well, which will benefit places like Buffalo, Cleveland, and Pittsburgh. 2021 should see a massive relocation in general. Second, they anticipate the homeownership rate will hit 70% next year, which will be the highest number since 2005. They also see mortgage rates staying low, with the 30 year fixed rate mortgage finishing the year around 3%.


The NAHB Homebuilder Index slipped in December, with the index falling to 86 from recent record highs. If the Redfin study is correct, housing starts will be the highest since 2006 next year.

25 Responses

  1. From 2010, but as relevant as ever:

    Like an Amish community raising a barn, members of the progressive community got together to hammer out talking points. Amidst a discussion of Palin, Chris Hayes, a writer for The Nation, wrote: “Keep the ideas coming! Have to go on TV to talk about this in a few min and need all the help I can get.” Time’s Joe Klein admitted to his fellow JournoListers that he’d collected the listserv’s bric-a-brac and fashioned it into a brickbat aimed at Palin.

    Many conservatives think JournoList is the smoking gun that proves not just liberal media bias (already well-established) but something far more elusive as well: the Sasquatch known as the Liberal Media Conspiracy.

    I’m not so sure. In the 1930s, the New York Times deliberately whitewashed Stalin’s murders. In 1964, CBS reported that Barry Goldwater was tied up with German Nazis. In 1985, the Los Angeles Times polled 2,700 journalists at 621 newspapers and found that journalists identified themselves as liberal by a factor of 3 to 1. Their actual views on issues were far more liberal than even that would suggest. Just for the record, Ezra Klein was born in 1984.

    In other words, JournoList is a symptom, not the disease. And the disease is not a secret conspiracy but something more like the “open conspiracy” H. G. Wells fantasized about, where the smartest, best people at every institution make their progressive vision for the world their top priority.

    Some supercuts I was watching made me think of Journ-o-list. And my assumption that organic version of it still exist in Slacks and Discords around the industry.


  2. It’s kind of interesting to go back and read things from the last transition period in 2016/17.

    One notable thing I found was a yougov poll from Dec 27, 2016 that showed, among other things, that 50% of HRC voters believed that the Russians had hacked into vote tallies to aid Trump. I challenge anyone to find a single use of the now-ubiquitous phrase “without evidence” in any Russian hacking story from 2016/17 (or even any of more recent vintage, frankly.)

    Another one worth noting: jnc’s fave Matt Taibbi had a better read on the Russia Collusion Hoax in January 2017 than most of the left and the NeverTrump universe has even to this day:

    Three days into the “Russian dossier” scandal, which history will remember by a far more colorful name (great call! – SC), we still have no clue what we’re dealing with. We’re either learning the outlines of the most extraordinary compromise to date of an incoming American president by a foreign power, or we’re watching an unparalleled libel and media overreach.

    We know now, although I think the concept of “overreach” assumes more good faith than is deserved. I think a lot of the media either knew the story was bogus or was completely indifferent to the truth of it.


  3. Reminder that the NYT has been giving a tongue bath to Biden for a long time.



    Apparently a Windows networking system hack. Kevin, I thought the backbone was all on Unix/Linux based networks, as I write this on an Ubuntu laptop.

    Includes prediction of what will be in new PPP tax break package.


    • Downside of moving everything to the cloud.


      • The part where it was a sabotaged Solarwinds patch is very interesting. Going to be awful for them. The cloud vector seems to targeting these commercial applications—we recently got hit by a package that delivered via a commercial VPN product.

        I think it’s got to be these companies own contracting with cloud services that has made them vulnerable to being turned into tools for spreading ransomware and Trojan horses.


        • The tecchies in my Friday morning breakfast crew say that there is too much subcontracting, too many subcontractors, and too little oversight. Security becomes more difficult in the hands of many, working separately. Etc. And as you and Joe suggested, cloud.

          On another note, we talked about Musk’s new spaceship, the one that fell over in the silo. I did not know it was made from welded stainless steel plates! He used steel instead of aluminum essentially to handle re-entry heat. But that is a heavy mutha.

          On a third note, we all decided that no one from the tech or movie industries and no one from the NBA should be running our China policy. This is one of the big pictures Trump understood, although his detail execution sucked.

          Fourth, we took bets on JB’s first foreign visitor and had five votes for an EU rep and three for Canada.

          Finally, none of us have heard from Dan, a Friday regular, who is a USMC Reserve Captain of a military IT unit, since his surprise callup and deployment to somewhere in the middle east in late October. Dan sent one short email from an undisclosed location after a disappointing UT football loss, but has not answered any since. We assume he is directing some monitoring effort but don’t know what it might be. He probably will never be able to tell us, either.


    • Backbone stuff may be Unix but most of the IT infrastructure of day-to-day government—everything that was files and typewriters in the 1970s and everything that’s grown on top of it since—will be Windows.

      I suspect Russian organized crime, which could well be working in cooperation with the Kremlin or at least getting hands off treatment … but more to the point I expect a lot of the “penetration” is in fact ransomware. And that many of these agencies don’t have any kind of hardened backup so the ransomware has poisoned their backups, such as they were. Poisoning a Solarwinds patch would take something like serious infiltration (or finding remote contract workers doing the stuff for Solarwinds and leaning on them) but clearly was going to be found out. I’m guessing more modern ransomware and nobody wants to admit, because either the have permanently lost data or are paying Russian criminals for decryption codes.


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