Morning Report: Mark Calabria out at FHFA

Vital Statistics:

 LastChange
S&P futures4,25423.8
Oil (WTI)72.66-0.44
10 year government bond yield 1.4%
30 year fixed rate mortgage 3.23%

Stocks are higher this morning on overseas strength. Bonds and MBS are up.

The Supreme Court ruled yesterday that the President could fire the Director of the FHFA without cause, and Joe Biden immediately let Mark Calabria go. He has named Sandra Thompson as interim director.

The immediate question revolves around the limits put in place during the waning days of the Trump Administration, especially the limits on investment properties and high LTV / low FICO products. The politics of removing the high LTV / low FICO limits are a no-brainer, however the optics of helping landlords are a touch more difficult. We could see some changes rolled back, while others stay.

Rescinding the limits will be relatively straightforward – the only other condition is that Treasury Secretary Janet Yellen agree, which is a formality. Suffice it to say that increasing the size of the credit box to the low income and first-time homebuyers is the biggest priority. Since NOO loans subsidize those products, we could see those go as well.

The Supreme Court also rejected the shareholder lawsuit regarding the net profit sweep. Fannie and Freddie stocks were down something like 40% on the news. It is critical to understand that the only reason why these stocks trade is because the government doesn’t want to consolidate Fannie and Freddie debt on its balance sheet. If that wasn’t an issue, then they would have been wiped out when Fannie and Freddie failed in 2008. These stocks always were a litigation lottery ticket, and it looks like it didn’t pay off.

New Home Sales fell 6% MOM to a seasonally-adjusted annual pace of 769,000. This was a YOY increase, however last year’s numbers were depressed by COVID. There were 330k homes for sale, which represents a 5.1 month supply at the current sales pace.

Durable Goods orders rose 2.3% last month, while core capital goods orders (kind of a proxy for business capital investment) fell 0.1%.

Initial Jobless Claims fell slightly to 411,000 last week, which was above expectations. It remains a mystery why we have elevated claims in the context of record job openings.

38 Responses

  1. Notice the silence from the loudest self styled progressives on Nicaragua’s utterly repressive regime. AOC likes to talk about Central America. Speak up about Ortega the dictator if you really give a crap.

    Biden has done what I suspected he would after living through Obama’s failures with an opposition Congress. He has started his bargaining on infrastructure from the pure left wing fantasy that Romney pointed out while always having been willing to accept a true bipartisan deal like the one being hammered out by Manchin and Romney. So the douchebag Warren says SHE WON’t ACCEPT THAT.

    McConnell and Warren should be trapped in a room together. Manchin and Romney should run the Senate.

    Rosanne and I just finished celebrating our Silver Anniversary on our first trip out of Austin since New Orleans in late January of 2020. Ahh, freedom.

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    • Congrats on the anniversary.

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    • Congrats

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    • Notice the silence from the loudest self styled progressives on Nicaragua’s utterly repressive regime

      I feel like there is silence generally. I’ll fault progressives for a lot but nothing seems more universal than unawareness or a general lack of concern for the world outside of the US, Israel, and Palestine. I feel the right had it correct for most of the Cold War but its not like the Soviet Union was the only bad actor.

      In the present era they may latch on to something if it seems condemnatory of their political opponents or “the other side” generally. But otherwise I don’t get the sense most of them give a crap about much of anything internationally.

      I will also say I don’t think too many politicians take the idea of “getting things done” seriously. Leaving aside if we really want the government to get that much done, both sides have a vested interest in not accepting anything but an ideologically pure bill (at least in public, about things getting public attention). I’ve argued that–like Communism–with entirely different people in DC, horse-trading could really work.

      Trump would have given the Democrats a ton if they had given him wins in public.

      A little ego massaging and they could have gotten lots of stuff passed–or even supported by Trump. But they didn’t want the result, they wanted the ideological cachet. Similar with Obama, I think the Republicans could have gotten a lot done with less hostility and more “if you want this we want this–and this–and this”. They could have gotten a flat tax for supporting Obamacare, IMO. If they had really wanted that. Similarly Obama could have gotten a lot from the Republicans with a reach-across-the-aisle strategy–and he could have gotten away with it in a way I don’t think Biden could ever hope to.

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    • Mark:

      Rosanne and I just finished celebrating our Silver Anniversary

      Congrats!

      31 for me and Mrs. ScottC. And speaking of anniversaries made me realize…did you know we are about to hit 10 years of ATiM? It all started with Kevin’s post on Sep 13, 2011!

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      • It’s been a while, hasn’t it? My main memories now of those early years is Shrink immediately hating the idea (I’m assuming that memory is accurate) and storming out and Yellowjacket starting with the trolling straight away.

        Then at some point QB left. Which was sad. But it is what it is. Hard to keep a discussion group going.

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        • I’m pretty sure most of our progressive members would blame me for blowing it up. One of the WaPo people said that 25% of Republicans are inveterate racists and that just set me off and I tore into him.

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        • I remember some real antipathy towards Scott, as he was just relentless at making his point. And could pull up encyclopedic-levels of reference to prove his point. That apparently makes some people sure he’s the re-incarnation of Hitler, because he can remorselessly and inexhaustibly argue for his point without losing his shit and the logic and foundations of his arguments are always rock-solid.

          I recall someone suggesting he was basically the devil in response to one of his footnoted polemics. My memory may not be all that trustworthy. QB would also be more combative, like you, and he may have chased away one person or another.

          The problem with a mixed group of folks–some relatively far from center in either direction–is that much of the time, to maintain civility, somebody has to take it on the chin. Someone is going to think they are being treated unfairly, and that their clear aggressiveness is just them “making their point” or “being heard” while somebody else’s presentation of their opinion is “hostile and personal”. More than a few times we’ve gone through a serious disagreement where someone feels someone else is being personal and personally attacking them–while the person being accused to the attacking has no honest sense that that’s what they are doing.

          Eventually, these mixed groups will filter down to folks who are right-to-center-right or left-to-center-left. Or far-left to really-far-left and far-right to right-wing-nutjob. Because the same issues come up every time.

          Which is why I know I’ve said before and will say again now: the only way to hope to make a mixed group of partisans and ideologues sit down and talk reasonably is to pay them, and pay them well, to do that specifically. Then you will get self-selected individuals applying who are incentivized by the attached paycheck to do what they are being paid to do.

          Ideally, universities would constitute just this sort of environment when it comes to politics and the sciences and the humanities, but clearly they don’t do that now, if they ever did. I went to an art school so I really don’t know.

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        • KW:

          I remember some real antipathy towards Scott

          I had no idea! /s

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        • The original PL group is gone now I think due to the commenting changes at the Post.

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        • Porbably. I really haven’t spent much of any time there in the past few years, and when I’ve been there I haven’t recognized anybody. A couple of writing styles seemed familiar, but other than that, no.

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  2. The last thing this story makes me want to do is support gun control.

    The first thing it makes me want to do is to donate to the NRA.

    https://www.washingtonpost.com/nation/2021/06/24/david-keene-nra-fake-graduation-speech/

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    • Not a huge fan of the NRA but that sort of stunt leaves me highly unimpressed. The inability of these activists to just make a straight-on data-based argument for their positions suggests to me they are mostly just LARPing. They were doing their own version of PUNK’d. They’ve essentially given up on changing minds or have never cared–they want to go viral and get in the WaPo and be their own kind of Crank Yankers so they can say to their fellow travelers: “man, we pranked them but GOOD!”

      The edited videos from the Olivers’ group, Change the Ref, show Keene and John Lott, a gun-rights activist and author, as they address the empty seats, mixed with audio of 911 calls made during mass shootings at schools.

      Yeah. That’s super-gross. There’s a level of negativity that goes into negative campaigning for a candidate or a cause that is effective, like a good horror movie that’s scary while being very parsimonious with the gore and keeping the monster off screen. Then there are the people that just wallow in the gore like it’s a fetish in a way that appeals ONLY to fellow fetishists.

      Which is what people tend to want to do now: appeal to their fellow fetishists. There is a lot of that on the right but it’s pandemic-levels on the left.

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  3. This is crazy:

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    • If they truly believed their own Gaia bullshit they’d encourage excessive smoking, eating and drinking. As Glenn Reynolds always say, “I’ll believe it’s an emergency when the people telling me it’s an emergency start acting like it’s an emergency.”

      Congratulations Mark! My wife and I hit our Silver last September!

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      • Yeah, but the idea that you are going to genetically engineer humans to be allergic to meat to fight climate change and that people are going to buy into this is crazy.

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        • I didn’t see that dude even voluntarily give up meat, so even he doesn’t believe it’s an emergency. And none of them believe it they’re just saying it for the clickbait/ donations.

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        • jnc:

          Yeah, but the idea that you are going to genetically engineer humans to be allergic to meat to fight climate change and that people are going to buy into this is crazy.

          Just give it time. It seems to me that the threshold for craziness that people will buy into has been lowered dramatically in recent years. Even just 10 years ago, I would have said that believing people would buy into the idea that males should be allowed to compete in female sports by simply declaring themselves females was equally crazy. And yet here we are. We even have a President who thinks exactly that, and roughly half the country voted for him.

          Unfortunately I’m beginning to think that there is no idea so crazy that there won’t be some meaningful number of people who buy into it eventually.

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        • Maybe. I blame social media. It’s allowed a very powerful bubble of people to form, and so the online universe has an outsized influence on Hollywood, the media, and politicians. Even though they don’t represent that many people, they seem much larger because of the nature of social media.

          So it has provided encouragement and incentives for pushing things most people don’t like but would not and have not taken serious action against. I think expectations about what the general public would put up with used to be different, but social media has allowed certain people to realize the general public will put up with much more garbage than they thought.

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      • Apparently your 30th is green? Your “green” anniversary? WTF is that? Or the pearl anniversary. I guess that’s better.

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    • It is but crazy is how people get attention. And also there have always been crazy people–they just get too much face time with the public now because of social media and YouTube and such. Although is he that much crazier that Paul Erlich?

      Anyway, they want to get people to stop eating meat they need to figure out how to synthesize a steak that tastes like a really great steak and doesn’t cost $100 and then they are done. Otherwise people will keep eating meat. But, yeah, genetically engineering humans to be allergic to anything is fucking insane. It’s just asking for people to die from being allergic to themselves or all protein or eggs and milkfat or milkfat entirely . . .

      And allergies are likely a combination of genes and environmental factors–like region and diet and not just your diet now but maybe when you were a baby or a toddler or a teen, not to mention your mother’s diets and perhaps medication . . . and also the medication you are on. Even how often you’ve been exposed to toxins like anesthesia. Etc. Etc. They idea you’re just going to “genetically engineer” an allergy is retarded. It would literally be easier to turn off aging and create human beings that didn’t age.

      It’s not just a bad idea it’s pure fantasy that you could do that and, that if you could, it wouldn’t bring a shit ton of complications with it.

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    • fertility rates are falling like a stone. We probably top out at 10B people, and that means the left will have to find some other justification for taking over everything.

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  4. Great new Twitter feed:

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  5. Liked by 1 person

    • Universal human phenomenon. Exactly right. As is the “but it’s different when we do it” mental orientation that makes them feel while all previous religions are probably pretty horrible and caused all of humanity’s problems up to this point, THEIR religion is different and will be purely a force for good.

      Another way to look at wokeism is that social media and the internet has made possible the largest (if casually affiliated) cult in human history.

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    • Jeet is being intentionally obtuse

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      • “”Wokeism is a religion” rubs me the wrong way because I don’t share the New Atheist assumption that religions is inherently poisonous or discreditable.” — I don’t see what one was to do with the other. Whether you see religions being all bad, all good, or something inbetween has absolutely no bearing on whether or not wokeism is a religion. Which it clearly is.

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    • I think it might be. While obviously not 100% a lot of the people moving to red states are not doing it for the kinds of reasons (entirely) that such exoduses have happened before. Typically it has been just the shifting economy, the location of businesses–a broad mix of factors that included blue states having policies that were awful as part of a mix. I think a lot of the migration now is explicitly “this blue state policy is shit” kind of stuff. By a non-trivial ratio.

      And we don’t always think about the fact that most states are pretty purple–it wouldn’t take much for migration to be half-and-half, and I expect right-wingers stuck in blue states are more motivated to relocate to a red state these days. So it’s entirely credible that a majority of migrants are not voting blue whenever they get to Texas or Alabama or Florida.

      And I would imagine some of them are “transitioners”–traditional blue-state voters that are now thinking harder about switching sides. They wouldn’t ever vote for a Trump, but they will vote for the guy who isn’t going to defund the police in their neighborhood and promises to keep the homeless encampments out of the park.

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    • The incredulity with which progressives viewed Trump’s gains with black & Hispanic voters from 2016 to 2020 makes me believe it could well be.

      The point that it’s also the more conservative people from California choosing to self select when moving to a red state makes sense to me too.

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