Morning Report: Residential Construction jumps

Vital Statistics:

S&P futures4,19419.8
Oil (WTI)63.730.17
10 year government bond yield 1.62%
30 year fixed rate mortgage 3.17%

Stocks are up this morning on no real news. Bonds and MBS are up small.

The big even this week is the jobs report on Friday. The Street is looking for 938,000 jobs to have been created in April. The unemployment rate is expected to fall to 5.8% from 6% and average hourly earnings are expected to rise 4.2% on a year-over-year basis.

We are starting to see early estimates for second quarter GDP growth, with Goldman and the Atlanta Fed predicting 10%+ growth. While the Fed has repeatedly said it will go slow in backing off stimulus, the June Fed Funds futures see an 11% chance of a rate hike.

The ISM Manufacturing Index came in well below expectations at 60.7. New Orders and Production drove the decrease. “The manufacturing economy continued expansion in April. Survey Committee Members reported that their companies and suppliers continue to struggle to meet increasing rates of demand due to coronavirus (COVID-19) impacts limiting availability of parts and materials. Recent record-long lead times, wide-scale shortages of critical basic materials, rising commodities prices and difficulties in transporting products are continuing to affect all segments of the manufacturing economy. Worker absenteeism, short-term shutdowns due to part shortages, and difficulties in filling open positions continue to be issues that limit manufacturing-growth potential.”

Construction spending rose 0.2% MOM and 5.3% YOY, according to the Census Bureau. Residential construction rose 1.7% MOM and 23% YOY. Again, we will see unusually high year-over-year rates for the next several months as we compare against the lockdown days.

There was a rumor going around on Friday that Freddie is going to announce a 5% cap on non-owner occupied loans sometime this week. Freddie is thinking it might not be able to get under the 7% cap by the end of the year.

Mortgage REIT Annaly Capital announced first quarter earnings last week and mentioned on the earnings call that it is moving into the agency NOO space: “We continue to see opportunities in the non-QM market and have started to capitalize on opportunities in the agency investor market given recent changes to the GSE’s preferred stock purchase agreements.” As more and more players enter this market, we should see pricing improve on these loans. Annaly also made a prescient sale of its commercial real estate business, just as the Biden tax plan takes aim at 1031 sales.

New York State is legendary for its long foreclosure timelines. That said, we have found the champion for working the system: A guy on Long Island bought his house in 1998, made one payment, and has managed to still live there.

13 Responses

    • … how is it possible that these same outlets keep “confirming” one another’s false stories?….

      And the answer is obvious: they all serve as mouthpieces for the same propagandists and disinformation agents of the CIA, FBI and other security state agencies. In this capacity, they dutifully write down and vouch for what they are told by those agencies to publish without any investigative scrutiny or confirmation.

      Oh bullshit. The errors only go in one partisan direction. They aren’t duped by anyone. They are just partisan actors, and their readers / viewers are cool with being told comforting lies about people they hate.


      • Yeah, this is more about anti-Trump than the CIA per se. Greenwald and Taibbi like to compare the situation to WMD’s during George W. Bush, but I believe there was actually more skepticism of that in the media than there is of Russiagate.

        He makes the point at the end:

        “And when a journalist spreads a false story and knows they have done so, but still refuses to correct it or remove it — as is the case for many of the above examples — then they are just tawdry liars who should be driven out of journalism. But they are not driven out and will not be because the reality is that their job is to spread disinformation as long as it is in servitude to the right factions (the CIA, FBI and DNC) and against those who are ideologically disfavored.”


        • the media and the democrats were motivated by the fear of being tarred as soft on terror.

          That is the only reason why they went along.


        • That and there was so much video of them saying the exact same thing during the Clinton administration.


  1. “Vegetarians, and their Hezbollah-like splinter faction, the vegans … are the enemy of everything good and decent in the human spirit.”
    ― Anthony Bourdain, Kitchen Confidential


  2. Biden admin getting sued for its blatant attempt to violate both the 14th amendment and the 1964 CRA.

    Click to access 20210425-Complaint.pdf


    • One would hope that the current SCOTUS would find this easy to rule on. I look forward to Thomas’ opinion.

      It looks like this predates the Biden administration though. Blame also needs to be apportioned to Congress for writing the legislation in the first place.


      • jnc:

        Blame also needs to be apportioned to Congress for writing the legislation in the first place.

        Agreed, although as is typical, it appears that Congress wrote deliberately vague and undefined laws referencing “socially disadvantaged farmers and ranchers”, and left it to the executive to define it as desired. And Biden has decided that means anyone who is not white.


        • My impression from reading the complaint is that it predated him, but the American Rescue Plan Act of 2021 provided the best set of facts to litigate it with.

          Should be interesting to see how it develops.


        • jnc:

          My impression from reading the complaint is that it predated him, but the American Rescue Plan Act of 2021 provided the best set of facts to litigate it with.

          I got the impression that there have been several laws over the years that have referred to “socially disadvantaged groups”, but that Biden’s Department of Agriculture is, for the first time, explicitly defining white people out of that description for purposes of the American Rescue Plan.


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