Vital Statistics:
| Last | Change | |
| S&P futures | 3929 | 20.3 |
| Oil (WTI) | 59.61 | -0.84 |
| 10 year government bond yield | 1.33% | |
| 30 year fixed rate mortgage | 2.98% |
Stocks are higher this morning as bonds continue to sell off. Bonds and MBS are down a few ticks.
Loan Depot reported earnings yesterday. Origination volume increased in the fourth quarter to $37 billion, however gain on sale margins came in hard, falling form 4.98% to 3.38%. Granted the third quarter of 2020 was probably an industry-wide high water mark for margins and there is some seasonality playing out. But as rates rise, I suspect we will see more competitive behavior from originators which will compress margins going forward. Granted, the fourth and first quarters are always the seasonally slow period.
You can see how much the average 30 year fixed rate conforming loan fell during the fourth quarter:
Mortgage rates fell dramatically in December so we are really just back where we were last fall, when Black Knight estimated that 32.4 million borrowers could save 75 basis points on their mortgage rate by refinancing. Assuming an average mortgage amount of $300k, that works out to $10 trillion of potential refi volume. The MBA’s origination numbers often include some double-counting (both the lender and the aggregator count the same loan in their volume numbers), so the MBA’s estimated volume numbers are really a bit high. In October, the MBA was forecasting that 2020 would come in around $3.2 trillion. It will take years to chew through $10 trillion of potential loans Punch line: despite the recent increase in mortgage rates, there is still plenty of business to be done. The sky is not falling, at least not yet.
I am somewhat skeptical of the big inflation scare that seems to be gripping markets. The Fed was unable to get inflation up in 2019, when the economy was picture-perfect and unemployment was sitting around 3.5%. I have a hard time imagining they will be able to do it with a higher unemployment rate and a lower labor force participation rate.
Existing Home Sales rose 0.6% to a seasonally-adjusted annual rate of 6.7 million in January, according to NAR. This is up 23.7% compared to a year ago. The median home price rose 14% compared to a year ago to $303,900. “Home sales continue to ascend in the first month of the year, as buyers quickly snatched up virtually every new listing coming on the market,” said Lawrence Yun, NAR’s chief economist. “Sales easily could have been even 20% higher if there had been more inventory and more choices.”
Housing inventory fell to 1.04 million units, which works out to be 1.9 month’s worth of supply at the current sales pace. This is the lowest number since NAR started tracking that stat in 1982. Properties remained on market for 21 days.
Filed under: Economy, Morning Report |
All Things in Moderation 
Bloomberg says VW wants to spin off Porsche while retaining majority ownership.
https://tinyurl.com/5hay96o9
Apparently the prospective valuation of spunoff Porsche is higher than the total valuation of the mothership. This must be like money for nothing and chicks for free.
In America I do not think that would be a tax free transaction. I wonder if it is in Germany.
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This is called a stub trade, and they are bread-and-butter trades for market-neutral hedge funds. You would buy VW and short Porsche. When Porsche was publicly traded, a lot of hedge funds would do that trade.
That said, it doesn’t mean that investors will buy VW in order to get the access to Porsche. They will just buy Porsche instead, which means Porsche will rise while VW languishes. At least that was my experience.
Note that the government of Bavaria (I think) has a golden share in Volkswagen, which basically gives it veto power over any corporate transaction. And they don’t care about VW shareholders, they care about the workers.
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Why would a hedge fund short Porsche, in the hypothetical? Is it because the issue price would likely be too enthusiastic?
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Because they are isolating out Volkswagen. Volkswagen would be the cheap one.
Also, market-neutral hedge funds need to have short exposure, and this is a natural way to buy a stock without adding long exposure.
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We’re back in the house. We had a burst pipe above the master bath and it flowed for about 2 hours (we’d left to get some warm food – and to warm up) and saw water raining from the ceilings when we returned. cleaned out the water the next day and the day after that the power came back on. Had a friend come and help and we capped off the bad pipes and either we missed one or all that insulation above the ceiling retained water so that the ceiling in the bathroom collapsed at about 5:00 AM this morning. There was water dripping from the ceiling so I went and shut off the water again. Now waiting on a contractor that’s working in the neighborhood(he’s doing three houses in my 50 house little section) to come and give me an estimate and hopefully start clean-up and demolition. I can’t get the leaks addressed until I get the demo and clean-up going so we may have to live in a hotel for a bit. That is if we can find one as the scale of this is hard to imagine. It’s like Hurricane Harvey again but with burst pipes!
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That is so crappy. Back in the ice storm in 1983 we had an overhead pipe burst – over the garage, so far less “remodeling” than what you face. My dad and I did the pipe fix and a friend and I put up new sheetrock. We did not insulate over the garage and we just taped and floated the sheetrock – no texture, no paint. My dad and I did wrap the pipe, however. I also took advantage of the occasion to install a 2′ exhaust fan between the joists so when summer came I could crack the garage door open a foot and have a gale in the garage making it cool enough to work in it. Sold the house the next year.
The bright side? Can’t think of one unless you needed to scrape popcorn from your ceiling sheetrock. Good luck. Hope they get to your “remodel” soon. Can you get a hotel like an Embassy or Marriott suite by going out toward Hempstead or Katy or Conroe but being on 10, 45, or 290?
I show two Staybridges with space – one in Willowbrook and one in Tomball.
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Thanks Mark! We were going to do a bathroom remodel anyway. Just need to get the leaks capped and there will be no need to leave. If we have to have a hotel, so be it. Problem is that they’re all full with people in situations just like us. Plus, plumbers are in HIGH demand though pipe and other supplies have dried up. Most just offering to cap leaks at this point.
I’ll repeat, the scale here is hard to wrap your head around.
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Sorry to hear that. Glad you guys are OK.
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Thanks J, it happens.
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White Suburban Women happiest.
https://justthenews.com/nation/economy/biden-covid-bill-would-give-new-tax-breaks-millionaires-ripping-cap-property-tax
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Lol
https://www.nationaldefensemagazine.org/articles/2021/2/19/just-in-austin-calls-for-more-nato-help-in-countering-china
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What a fucking bigot
Course trannies have no advantage, what we need is trannie equity.
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If your going to have biological men and women on the same “women’s” team you need to have weight divisions, or weight/height/muscle mass divisions. So your heavyweight divisions in whatever sport would be made up primarily of trans athletes.
But they have to go the crazy absurd route. Of course.
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Jesus, I knew DeSantis was evil but I didn’t know he was this fucking evil!
We all agree prioritizing the most vulnerable is bad, right?
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These people are insane. And they are arguing Florida’s vaccine distribution has been more chaotic than New York or California? Good golly.
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These people are insane.
Guess the era of fake news is going to outlast Trump
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Guess the era of fake news is going to outlast Trump
“Fake news” seems too non-specific. Propaganda for the corporate-media-Hollywood Uniparty, maybe.
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They aren’t insane. They are pursing an agenda and the truth, fairness, and objectivity are secondary to it.
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The strategy seems crazy to me. Choosing that lifestyle of constant in ironic fiction seems nutty. But I guess.
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jnc:
They are pursing an agenda and the truth, fairness, and objectivity are secondary to it.
I had been reliably told that it was Trump that was the con man.
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Lol
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Sure, why not?
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Lol!
https://m.dailykos.com/stories/2021/2/23/2017646/–It-s-a-huge-step-backward-Biden-admin-reopens-Trump-era-prison-camp-for-migrant-kids
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It is a cult, it just doesn’t have a Supreme Leader. But it is a cult nonetheless, and has its own twisted logic.
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ugh. sorry about all this.
glad to hear that you seem to be doing okay, despite the circumstances.
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FYI, got the Pfizer vaccine today in the UK. Amazingly, in my area, they are already down to doing everyone 50+.
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my parents got the pfizer in the 65+ category.
pretty simple process in Fairfax.
trying to get my wife’s 75+ grandparents in Maryland. total clusterfuck.
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