Morning Report: Huge drop in consumer sentiment

Vital Statistics:

  Last Change
S&P futures 4,459 4.2
Oil (WTI) 69.14 -0.05
10 year government bond yield   1.35%
30 year fixed rate mortgage   3.09%


Stocks are flattish as we end up the week on this Friday the 13th. Bonds and MBS are up small.


Rocket reported earnings after the close yesterday. Volume in the second quarter fell from $105B in Q1 to $84B in Q2. Gain on sale margins were slammed hard sequentially, falling from 3.74% to 2.78%. The company is guiding for Q3 volume to resemble Q2, and gain on sale margins are expected to be in the 2.7% – 3% range. It looks like perhaps the margin compression is over, or at least taking a breather. FWIW, Matt Ishbia said on United Wholesale’s Q1 call that he expected Q2 to be the bottom for margins and for them to rebound into the end of the year. So perhaps some of the pressure will ease up. Rocket is up a buck and change in early trading.


Import prices are up 0.3% MOM and 12% YOY. Export prices are up 1.3% MOM and 17% YOY. China just partially shut down the world’s third largest port after an employee had a positive Delta COVID test. Shipping prices are already up 220% this year, so the inflation story will get another temporary boost.


It looks like the red-hot housing market is beginning to cool off, according to Redfin. “For the first time in over a year, homebuyers don’t need to feel rushed,” said Redfin Chief Economist Daryl Fairweather. “Although the market still feels tight and competitive, the number of homes for sale keeps creeping up as more homes are listed. Those home sellers are adjusting their price expectations or seeing their homes sit on the market. There could be even more listings coming on the market as mortgage forbearance ends and homeowners with missed payments decide to sell. And mortgage rates remain near all-time lows with no signs of an increase on the horizon.”


Consumer sentiment got whacked this month, according to the University of Michigan’s Consumer Sentiment Survey. The index fell from 81.2 in July to 70.2. This is the sixth largest drop in the index’s history, and is actually below the April 2020 low of 71.8.

As a general rule, consumer sentiment surveys often turn out to be nothing more than a reflection of gasoline prices, however this reading is probably due more to renewed COVID fears.

The drop was broad across all demographics and included both drops in consumers’ current situation and their expectations.

The 10 year yield fell about 4 basis points on the news. I suspect the expected rip-roaring 2H recovery that the Street and the media has been cheerleading for is not going to be in the cards.

36 Responses

  1. judge refuses to stop the eviction ban. your results-based leftist legal system in action


    • Her reasoning is legit, and she’s a Trump appointee. The argument is you can’t somehow just assume that Kavanaugh is going to vote the other way this time based on his statements since he actually voted to uphold the eviction ban the last time it came before him.

      Really, this is Kavanaugh’s fault for voting to uphold an order that he himself claimed was outside the scope of the CDC’s statutory powers. The Biden administration is just successfully gaming the litigation process with bad faith filings.


      • I assume that any R-nominated justice is politically just a middle-of-the road Democrat, and any D-nominated justice is a hardcore leftist


        • No, she ruled with the land lords on the merits originally, but was overruled by the DC Circuit and then that was incorrectly upheld by the Supreme Court. She can’t just ignore the rulings given that her original decision was appealed and overturned.

          “When the Biden administration on Aug. 3 acted on its own — without Congress — to renew the lapsed eviction freeze, the landlord group cited the opposition expressed by Kavanaugh and the four other conservatives and urged Friedrich to invalidate the latest version of the eviction moratorium.

          But in her Friday ruling rejecting the landlords’ request, Friedrich said she was bound by the D.C. Circuit Court, the intermediate appellate court between Friedrich and the Supreme Court.

          “Because the D.C. Circuit’s judgment affirming the stay binds this Court and the Supreme Court did not overrule that judgment, the Court will deny the plaintiffs’ motion,” she wrote.

          “It is true that the Supreme Court’s recent decision in this case strongly suggests that the CDC is unlikely to succeed on the merits,” Friedrich wrote later in her opinion. “But the (District) Court’s hands are tied. The Supreme Court did not issue a controlling opinion in this case, and circuit precedent provides that the votes of dissenting Justices may not be combined with that of a concurring Justice to create binding law.””

          She’s not the problem. It was Kavanaugh not voting to overturn the stay the first time. She can’t just decide that he’s going to vote the other way this time.

          Edit: My mistake, you said Justice, not judge. Yeah Kavanaugh should have known better than to expect good faith from the Biden administration.


      • jnc:

        Really, this is Kavanaugh’s fault

        Yes, it is. His previous ruling was completely nutty.


    • Also worth noting:


  2. Great piece:

    “The Arc of History Bends Toward Emotional Support Peacocks
    An Easy Case Illustrative of the Harder Ones — Part of a Series: Some Aspects of the Successor Ideology

    Wesley Yang

    That we allowed the proliferation of emotional support animals in the first place tells us a lot about the evolving nature of the civil rights industry. A network of activists, judges, and legal academics created the conceptual basis for identifying new categories of injury, all deriving their ultimate power from the landmark legislation required to dismantle legalized segregation in America. A network of trial lawyers and medical entrepreneurs found a profitable niche in colluding with a growing number of Americans regarding themselves through the prism of victimhood that happens to confer legally protected status onto them. In the process, these networks constituted themselves as an interest group.

    Over time, they grew powerful enough to cannibalize the very people for whose benefit the system was inaugurated in the first place: thus, Black Man Kicked Off Plane So That Dog Gets to Fly First Class.

    Courts and bureaucracies depend on the integrity of clinicians to define illness, who in turn derive their authority from the credentialing bodies that certify what counts as knowledge in our society. What happens if the knowledge-forming institutions themselves become captured by sectarian conceptions of rights and expansive notions of subjective injury whose existence can only be ascertained through self-reporting that it then becomes a dogma that none may dispute and all must affirm? ”


  3. The propping up of a corrupt foreign government that took our money and did not pay its troops but lined its own pockets didn’t work.


    Echoes of ‘Nam.


    • We are energy independent. Middle East Oil is much more important to China, India and Russia than it is to us.

      Tag, you’re it. One of you can deal with the place.


    • I’d say it’s more than echoes. No one learned anything.


      • I don’t really give two shits about Afghanistan, I just hope the military put some sort of software in the equipment (that has software) that can receive a signal that renders said equipment inoperable. If we don’t have that, the DoD is even dumber than I think.


        • I’m going to bet on that last one based on what we are seeing.

          Left the equipment. But burned the American flags. Priorities.

          I am not amazed the Democrats didn’t consider the long term consequences and forecast outcomes wrong (or when any politician or party does that, to be evenhanded)—-but I am amazed they keep getting the optics wrong, especially here. Defector surrender to the Taliban on September 11th? Demanding release of what are effectively Taliban terrorists? Leaving expensive military equipment but orders to burn any American flags at the embassy.

          Would seem to me they are losing the thread when they can’t even do basic optics right—or even close. But what makes bad optics may be different now and I’m just too old to grasp it.


        • You don’t have to worry about optics when you control the media, the social media companies and the search engines.


        • Americans, rightfully, want out and I honestly don’t think this will stick to Biden. Any POTUS was going to pay the price, the military and NatSec establishment are/were going to ensure that.


        • Weren’t we mostly out, as it was? Small footprint, no troop engagement. No combat casualties in a year?

          Would have preferred we hadn’t gone in, at least not like we did, but maintaining the “tiny hands” on, small footprint approach established in the last year of the Trump administration was (relatively) low-cost and would have prevented this outcome (had Trump maintained that himself, which may not have happened).


        • I hope so, George. Media frenzy for foreign war is always easily aroused.

          This is not new with the press. In 5th grade, my oldest daughter Hannah was in a class assigned to read the NYT every morning. After two weeks of NYT begging RWR to send marines to Beirut, he did. 240 or so of them were killed. The NYT immediately crucified RWR.

          Hannah said “Boy, I’m never going to run for President.”


        • Another good example of media stampeding and politicians unwilling to resist it. The brass that wouldn’t let the sentries have ammunition to avoid an “incident” and the mindset that comes with a belief in a mission for the military beyond the scope of General T. Sherman are absolutely to blame, up to and including Reagan.


        • Mark:

          Hannah said “Boy, I’m never going to run for President.”

          She learned the wrong lesson. What she should have concluded was that she should never pay any attention what to the NYT has to say.


        • Fair enough. But even so–in sufficient severity and quantity, there’s always a risk stuff makes it to the general populace by osmosis. They should be at least a little more concerned about the optics, I would think.


  4. What’s sad is that there are millions our there that will believe this.

    They want to keep this up through 2022.


  5. Hi guys, just checking in to say hi and let you know I’m paying for the domain name for another year. I planned to turn it over to Scott but I keep losing his email or deleting it……….LOL

    Still kicking here although Walter is struggling a bit. I’m working out, taking trips to CO to help with the little ones, hiking with my new hip which is awesome, and in general doing great!

    Hope you’re all doing well!

    BTW, I know quite a few babies born during the pandemic and none of them appear to have lower IQ’s, quite the opposite really, but they do seem to have a bit of hesitance around strangers. Not sure whether that’s a bad thing or not these days??????

    Afghanistan is a Shit Show going back 20 years, and gosh………….who could have predicted our failure there?????


    • Hi Lms! Great to hear from you and sorry to hear about Walter, I hope he’s able to improve soon!


      • Thanks McWing……….he’s okay, just getting old…………LOL Luckily he has me to remind him which freeway exit to get off on and make sure he gets to his Dr appointments. Hoping to force him into retirement in a couple of years after the next pacemaker surgery and head to CO, but we’ll see!

        We’ve been really busy this summer getting together with family and old friends so that’s been great after last year’s scary times and isolation.

        I went back to the gym in May but gave it up again last month because of all the new infections and the family and friends visiting us………I worry about them. Planning to go back the middle of September, come Hell or Highwater!

        What’s up with you?


    • Or anywhere? Nation building is not our strength.

      Liked by 1 person

      • Germany and South Korea seemed to come out better, but that was a different generation. There also wasn’t as much concern for “democracy” in the initial years there either.

        Ironically, Iraq seems to have done better than Afghanistan.


    • lms:

      I planned to turn it over to Scott but I keep losing his email or deleting it

      Liked by 1 person

      • BTW, lms….if you lose it again, you can always come here and just look at my avatar. My email address is right underneath my name. See above.


        • Yes I do know that but for some reason it never goes through! No worries I’ve already paid for another year……….LOL


        • I have sent an email to your address above. Let me know if you don’t get it, or can’t respond.

          BTW, a common mistake that people make when trying to send me an email is to send it to .com instead of


    • Sorry to hear about Walter, but glad you guys are doing OK otherwise. Did you resolve all of your tenant and real estate issues?


      • We did JNC……..sold the house last year and ponied up the cap gains………….not fun though. I’m trying to unwind some things so if something happens to Walter……….I’ll be organized!


    • Hi LMS — thanks for checking in! glad that new hip is treating you well!

      Liked by 1 person

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