Morning Report: Small Business Optimism Remains Under Pressure

Vital Statistics:

S&P futures4,04760.25
Oil (WTI)102.81-0.69
10 year government bond yield 2.98%
30 year fixed rate mortgage 5.58%

Stocks are rebounding this morning after yesterday’s bloodbath. Bonds and MBS are up.

The 10 year yield touched 3.2% yesterday and has been falling pretty dramatically ever since. Not sure what is driving it, but it is a welcome respite from march higher in rates. One thing to keep in mind is that as rates rise, more foreign money will be attracted to Treasuries. The US dollar has been moving steadily higher, which is good news for inflation as it make imports less expensive. We have a lot of Fed-speak today, and bonds are bracing for the consumer price index report tomorrow.

Small Business Optimism remained flat at 93.2 according to the National Federation of Independent Businesses.

While inflation remains uppermost in the minds at the Federal
Reserve, the “R” word (recession) has increasingly appeared in the
prognostications of economists. Predictions have a recession starting
as early as the third quarter of this year, although most guesses have
2023 for the start. The Fed announced a rate hike of half a point this
month with more hikes to come in future meetings. Interesting side
note, in the “old days” the Fed would raise rates between meeting if
thought necessary, not something they’re likely to do this go around
though. Under Paul Volcker, the Fed’s rate hit 20 percent, a long way
from where we are today. If, historically, the Fed’s rate needs to be
above inflation to be effective, we have a long way to go and the

Fed is way behind the curve.

The point about the Fed Funds rate and inflation is important. Economists distinguish between two interest rates: nominal and real. Nominal rates are what you read on the screen or see posted on CNBC. Real interest rates take into account inflation, since inflation works counter to interest rates. In other words, interest rates make your future money bigger, while inflation makes your future money smaller.

With inflation running at 6% or so, and the Fed Funds rate below 1%, real interest rates are still highly negative – in fact they are more negative than they were a year ago, even with the recent rate hikes. The prospect of the Fed’s necessary rate hikes has small businesses highly pessimistic about the second half of 2022.

United Wholesale reported first quarter earnings, with volume falling 21% YOY to $38.8 billion. Gain on sale margins improved to 0.99% from 0.8% in the fourth quarter of 2021. Guidance for Q2 is for volumes to contract to $26 – $33 billion and for gain on sale margins to fall to a range of 75 to 90 basis points. The company also announced a $300 million stock buyback and maintained its $0.10 dividend. The stock is up about 12% this morning.

Loan Depot also announced earnings this morning, which disappointed the street. Volumes fell 48% YOY to $21.6 billion, and gain on sale margin fell to 1.96% compared to 2.23% in the fourth quarter of 2021. Loan Depot is guiding for Q2 volume to fall to between $13 and $18 billion and for gain on sale margins to come in between 160 and 210 basis points. The stock is down about 22% this morning.

Rocket will announce its numbers after the close.

32 Responses

  1. Love this “Fact Check”

    But that’s based on faulty assumptions, anonymous accounts and improper analysis of cellphone location data, which is not precise enough to confirm that somebody deposited a ballot into a drop box, according to experts.

    Yeah, totally debunked that shit.

    The whole fact check is hilarious.


    • The fact check was clearly partisan, but if the descriptions of the film that I have seen are correct, it is probably true that he hasn’t actually proven anything beyond a doubt.

      I wish DiSouza had named the “non-profits” around which this analysis was done. I also suspect that a lot of the anonymized phone data can be matched up with camera footage, and the people identified. Especially for those people who were stuffing the drop boxes at 1am in the morning. They shoudl do that and find out who those people were dropping ballots for.


      • Agreed but I suspect Rumble, the platform it is broadcast from, required not naming orgs or people due to liability concerns. The problem with the AP fact check is it does not debunk the claims, in fact, it makes them more intriguing.


      • I haven’t watched it, so I don’t know how much time is spent on the last minute and often illegal changes in election rules but I feel like that should be the focus. It’s the one thing where the evidence is rock-solid and publicly available.


    • These are better than most fact checks. The fact check “industry” has long ago hopelessly beclowned itself. They fact check the Babylon Bee, for goodness sake. And so many fact checks mark a story mostly false and then confirm all the details of the story but say that some other thing—that the story doesn’t say—isn’t true.


  2. And it’s on:

    “Elon Musk says he would reverse Twitter ban on Donald Trump

    Musk spoke virtually at a Future of the Car event hosted by the Financial Times.

    By Faiz Siddiqui
    Today at 1:35 p.m. EDT|Updated today at 1:44 p.m. EDT”


    • He needs to kill Truth Social and Gab so of course he’ll reverse it. The wager is how long can Trump stay off?

      My thoughts, he posts on Twitter 48 hrs after he posts on Truth Social.

      Also, Musk should invest in Rumble to counter YouTube / Alphabet.


      • Rumble is not the only video provider Musk could just simply buy and make a part of Twitter or a cousin to Twitter.

        My thought is Trump uses Twitter for a lot of “read more at Truth Social” posts.


    • Everybody knew this. Also it’s just common fucking sense that Twitter shouldn’t be banning presidents no matter how “outrageous” they are.


      • Like

        • Yeah. But I’m getting very tired of calling these people “liberals”. My conception of liberal is the 80s–anti-war, less military, more social spending, yada yada. Less “words mean what we say they do at this moment, now prepare for your struggle session”. That’s more, you know, communism.


  3. Good read:

    “The ACLU Has Lost Its Way

    The organization now seems largely unable or unwilling to uphold its core values.
    By Lara Bazelon”


  4. I think that this isn’t parody:

    “George Washington University needs a new name
    By Caleb Francois
    Yesterday at 11:00 a.m. EDT”


  5. Interesting write up on the accuracy of Washington Post reporting when conservatives & Republicans aren’t even involved at all.


    • The completely improper use of pronouns in the story made it very difficult to follow.

      For example, this:

      “They also communicated by text about the same idea.”

      Does this mean there was a back and forth communication between the two of them? Or does it mean the clown who uses “they/them” pronouns was sending texts to the other person?

      This altering English grammar rules in order to virtue signal to the irrational thoughts of someone, especially in an article about rather than to the person, is utterly moronic.


      • “In insisting on a “pattern,” Sam, quoted in the Post, accuses Brandy of a pattern of behavior toward them, not a pattern toward multiple people”

        It’s hugely destructive to clear communication. As clearly is everything else they were doing around “mediation” based on “restorative justice”.

        Haven’t quite reached the end but everything about that place sounds like a hostile work environment to everybody. Forcing everybody to sit through extended accountability statements because one person felt uncomfortable about something said (and that clearly did not solve that problem or satisfy the aggrieved) … god, you’d have to pay me a million bucks a year to work on an environment like that.

        The problem with the far left, deconstruct-everything progressives is they are constantly sawing off the limb they are sitting on, using their superior social tools and abandoning the archaic traditions of dead white men to repeat old mistakes solved a thousand years ago and create brand new ones trying to accomplish impossible or pointless goals. Christ that campaign sounds awful.


    • The press has always peddled narratives over facts. In this increasingly lazy age they do little to no legwork and don’t want to clutter their narratives with comparing perspectives.

      That said, Brandy Brooks is experiencing what that approach will generate—especially with the millenial generation. Offering them nothing but respect and even deference will end poorly. Engaging in tribalism is fine as long as everybody feels like they are on the same side fighting Nazis, but the minute there is a division that urged towards tribalism will produce two internal groups at war. In this case, the WaPo (as it usually does) picked a favored tribe. To imagine merely being progressive and always signaling your virtue and participating in struggle sessions will protect you from inter-tribal attacks is pure fantasy.

      You have to enforce boundaries, have standards, have hierarchy, and you can’t give in to every redefinition of language and meaninging or treat every person’s emotional reaction as a reason to stop everything and focus solely on that person’s feelz.

      If you do—this is what you get.


      • i take it that they is? / are? trans, so this is a clear cut oppression olympics story.


        • I guess? Gender-fluid anyway. Anyway, nobody who wants to use weird-ass pronouns is mentally healthy enough to have a relationship. That desire to be special and that entitlement that everyone around them should start speaking a new language solely for their benefit is a red flag of extreme narcissism. That person is going to be horrible to be in any kind of relationship with over the long term.

          Also Brooks is clearly soft-pedaling her effort to get the they to sleep with her. “Oops I just accidentally said how much better our friendship would be if we had sex. Whoopsie!”


        • Brent:

          i take it that they is? / are? trans, so this is a clear cut oppression olympics story.

          I think it is clearly that, although I doubt the person is actually trans. I think actual trans people, ie people with true gender dysphoria, want to be referred to as the sex that they see themselves as/imagine themselves to be. People who insist on the whole “they/them” nonsense are just attention seekers, and probably would call themselves gender queer or non-binary or some other such made-up absurdity.


    • That piece hurt my head.


      • The left is amazingly self-destructive.

        What makes my head hurt is they are so horribly inefficient and self-sabotaging but still manage to capture the institutions. How the frack do the stop navel-gazing and micro-obsessing long enough to accomplish anything?


        • They bitch, and that is what they do best.

          The left is the vegan at the barbecue who demands everyone eat tofu. And the zeitgeist of the left is that everyone must be accommodated.

          This ends when people stop giving a shit if they are offended.


        • I’ve been saying for years that the Right needs to ignore at a minimum or better yet, embrace in an ironic way, the accusation of racism.


        • I don’t know if they need to embrace it so much as respond with: “You don’t know what the word means. You don’t know what you’re talking about.” Or just roll their eyes and get on to things that matter. Or move the discussion to class: start talking about the working class. What it takes to feed your family. Pay the bills. And know something about those topics.

          Obsessing over race and sexuality are luxury concerns. Identity politics is a boutique ideology. Point that out or don’t, but stay on target. Don’t let them set the topics of conversation.


        • Or point out there are plenty of options for the offended, starting with: leave. Bring your own food. Expose yourself to meat-eating culture to broaden your horizons. Make new friends who are also insane. Stop thinking that the only acceptable option is that everybody conform to your desires. That’s not how things work.


    • I draw two lessons from this:

      1. The Washington Post lies when facts go against the predetermined narrative, even if no Republicans or conservatives are involved.

      2. I don’t want the DSA types anywhere near power at any level. Leaving aside their policies and ideology, this piece shows that they are too self destructive organizationally to be trusted with running a bake sale, let alone anything else.


      • I think the first one is generally known (except, perhaps, to low-information cult members–everybody else either doesn’t like it or knows WaPo sits upon a throne of lies and fully supports it, for The Mission).

        The 2nd one I think is true, considerably more dangerous, and there’s a lot more ignorance about just how bad it is and can be–especially on the left. But certainly in the middle, amongst independents, and low-information voters and non-voters–I don’t think there is much awareness of how destructive this particular mode of thinking and being is when it gains power. And for the most part it used to be confined to communes, so it wasn’t that big a deal.

        Now it’s running entire government bureaucracies and corporations. Just pure luck this particular campaign self-destructed before all of them found themselves in cabinet positions in some future Whitehouse. Which they still might.


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