Morning Report: Jerome Powell heads to the Hill

Posted on March 7, 2023 by Brent Nyitray

Vital Statistics:

 LastChange
S&P futures4,058 6.75
Oil (WTI)79.98-0.40
10 year government bond yield 3.94%
30 year fixed rate mortgage 6.73%

Stocks are marginally higher as we await Jerome Powell’s Humphrey-Hawkins testimony. Bonds and MBS are down.

Jerome Powell heads to the Hill this morning at 10:00 am. I don’t see the prepared remarks on the Fed’s website quite yet, so we don’t have a preview. The market’s focus will be on whether Powell still sees the “disinflationary process” continuing in the face of strong inflation numbers in January.

It will be interesting to see how much push-back Powell gets from Congress over rising rates. Republicans will probably beat him up for missing the turn in inflation while Democrats will hammer him for wanting a weaker labor market.

The Federal Trade Commission is set to sue to block the merger between Black Knight and Intercontinental Exchange. The two companies would need to divest either Encompass or Empower to get past the regulators. The problem is that the regulators probably won’t accept a spin-out into a separate company. They will have to find a strong buyer who will be able to compete with the newly merged company, and there probably aren’t many players in the industry who would be able to make it work. The merger spread is ginormous right now, so the market thinks this deal is deader than Elvis.

For-sale inventory declined in January, according to the Black Knight Mortgage Monitor. The company reported that home prices fell 0.13% MOM on a seasonally-adjusted basis, which is the smallest decline since it started about 7 months ago. Half of all mortgages are at rates of 3.5% or lower, while 2/3 are below 4%. We have a long way to go in rates before refinance activity returns, although cash-out refinances will come into play if rates fall further.

“The interplay between inventory, home prices and interest rates has been the defining characteristic of the housing market for the last two years, and this continues to be the case,” said Walden. “Today, we see buyer demand dampened under pressure from rising rates and their impact on affordability, with purchase rate-lock volumes cooling in late February. However, when rates ticked down closer to 6% early in the month, we saw a rebound of buyside demand. On the other side of the equation, we’ve seen a consistent theme of potential sellers – many with first-lien rates a full 3 percentage points below today’s offerings – pulling back from putting their homes on the market. In fact, January marked the fourth consecutive monthly decline in overall for-sale inventory according to our Collateral Analytics data, with the primary driver being a 25-month stretch of new listing volumes running below pre-pandemic averages. While demand remains weak, faltering supply has resulted in months of available inventory stagnating near 3.1 in recent months.

“Sharply rising 30-year rates in February have weakened home affordability, with nearly all major U.S. markets remaining unaffordable as compared to their own long-run averages. With 30-year rates at 6.5% in late February, it took 33.2% of the median household income to make the monthly principal and interest payments on the average home purchase. That’s up from January’s 32.4% and significantly above the 30-year average of ~24%, but still 3.5 percentage points below the 37% level reached in October 2022 when affordability hit a more than 35-year low. Between escalating inventory challenges and worsening affordability, we’re seeing some volatility in the market – just not in the form of widespread, steep price corrections.”

Congress is looking at a tax credit to incentivize builders to renovate homes in blighted areas. In many areas, the cost to renovate is more than the price the property could fetch on the market, so nothing happens. “We must continue to make it more attractive to invest in the communities that need it most,” Mr. Cardin said in a written statement. Mr. Young said the bill would help restore communities by directing private capital to low-income neighborhoods,” bridging the gap between the cost of renovation and neighborhood property values.” The bill hopes to see 500,000 new homes added to inventory.

Filed under: Economy |

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33 Responses

  1. jnc4p, on March 7, 2023 at 11:11 am said:

    You don’t say.

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  2. Let the mutherfuker burn!, on March 7, 2023 at 11:31 am said:

    Oh the humanity!

    https://citizenfreepress.com/breaking/chuck-schumer-suffers-j6-meltdown-on-senate-floor/

    The hyperbole around this footage is absolutely fascinating. I cannot think of a parrallel in history to this desire to suppress things. The same people that are convinced the government killed Kennedy, Malcom X and MLK also think the government is pure in it’s motives now? Really? No room at all for doubt?

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    • Brent Nyitray, on March 7, 2023 at 11:35 am said:

      That is the sound of a narrative collapsing.

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      • Let the mutherfuker burn!, on March 7, 2023 at 11:45 am said:

        The same government that used the FBI to defeat Hillary is pure as the wind driven snow on January 6th. I think what the left really fears isn’t the collapse of their narrative but the fact that their narrative was never recognized outside of their bubble. That the overwhelming majority of Americans see no nefarious actions by the 1/6’rs, just some justifiably disgruntled people staging a protest.

        I also love the Never Trumpers and the left pointing to a low attended CPAC as an indication of the waning enthusiasm for Republican’s. Why would any Republican get within a hundred miles of D.C. considering what the DOJ is doing to any Republican that was with a couple of miles of the Capital on 1/6? Message was sent and received. The good news for the left? There will never be a mass gathering of Republicans for the foreseeable future. Nobody is dumb enough to think that attending a Desantis or Haley or Pompeo rally will be treated differently than those who attended the 1/6 events.

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    • ScottC, on March 7, 2023 at 12:14 pm said:

      The real question: In the midst of accusing Carlson of lying, how many lies did Schumer propagate? It’s amazing that, at this late date and after what we all already know, Schumer is still pushing the lie that Sitnik was killed by protestors.

      Schumer truly is shameless. And he confirms that old adage that politics is just acting for ugly people.

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    • jnc4p, on March 7, 2023 at 12:54 pm said:

      The attempt at keeping certain things from the public eye has long been a hallmark of all levels of government (and corporations).

      “Loudoun school board will not release report on sexual assaults

      By Lauren Lumpkin
      Updated February 15, 2023 at 6:57 p.m. EST”

      https://www.washingtonpost.com/education/2023/02/14/loudoun-sexual-assaults-internal-report/

      What’s changed is that now the MSM is complicit in helping to keep the secrets and calling for censorship.

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    • jnc4p, on March 7, 2023 at 1:06 pm said:

      Chris Rock’s “Selective Outrage” was perfectly timed to the cultural moment.

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  3. jnc4p, on March 7, 2023 at 1:57 pm said:

    George you’ll love this:

    “But I don’t think Trump is going to get the nomination. The ace in the hole reason is that he’s unelectable. Even most of MAGA knows this.”

    Says the guy who lost to the guy who won once.

    Liked by 1 person

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  4. jnc4p, on March 7, 2023 at 2:05 pm said:

    Oh the irony:

    “Eric Adams Wants to Fight Shoplifting With Mask-Lifting
    By Clio Chang

    Eric Adams wants businesses to require people to remove their masks when they enter, ostensibly to fight shoplifting. “We are putting out a clear call to all of our shops: Do not allow people to enter the store without taking off their face mask,” Adams said Monday on 1010 Wins. Once people are inside the store, they can put their mask back on, Adams said, “if they so desire to do so.””

    https://www.curbed.com/2023/03/eric-adams-stores-masks-shoplifting.html

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  5. jnc4p, on March 7, 2023 at 3:00 pm said:

    Every so often I think George might be being a little too paranoid. Then I read this:

    “Albert Watkins, Chansley’s attorney through sentencing, said he had been provided many hours of video by prosecutors, but not the footage which Carlson aired Monday night. He said he had not seen video of Chansley walking through Capitol hallways with multiple Capitol Police officers.

    “What’s deeply troubling,” Watkins said Tuesday, “is the fact that I have to watch Tucker Carlson to find video footage which the government has, but chose not to disclose, despite the absolute duty to do so. Despite being requested in writing to do so, multiple times.””

    https://www.washingtonpost.com/dc-md-va/2023/03/07/capitol-police-tucker-carlson-footage/

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  6. Let the mutherfuker burn!, on March 7, 2023 at 4:27 pm said:

    Republican Senators crying like little bitches about Tucker Carlson is everything you need to know. The party has been broken for a while and aside from their rather half-hearted attempts to slow down Democrats, what reason do they give for supporting them?

    https://www.dailykos.com/stories/2023/3/7/2156778/-Tucker-Carlson-s-lies-about-Jan-6-draw-some-Republican-pushback-but-plenty-of-cheerleading

    Do they think their Republicans base fetishizes them even half as much as they fetishize themselves? It’s so fucking nauseating.

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  7. Let the mutherfuker burn!, on March 7, 2023 at 6:54 pm said:

    Yeah, them Nazi’s were Potemkin Village constructors from way back.

    In fact, the word “Nazi” is a contraction of the two words “Potemkin Village”.

    What a ‘tard.

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  8. Let the mutherfuker burn!, on March 7, 2023 at 9:13 pm said:

    GOP pollster, y’all.

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  10. Let the mutherfuker burn!, on March 8, 2023 at 9:11 pm said:

    Once again, men are better at being women than women are.

    https://redstate.com/bonchie/2023/03/08/clown-world-white-house-awards-a-man-the-women-of-courage-award-n713541

    It’s really not a contest anymore.

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