Morning Report: Another good inflation report

Vital Statistics:

Stocks are lower this morning on no real news. Bonds and MBS are up on the PPI data. The Bank of England hiked by 25 bp this morning.

Inflation at the wholesale level came in at 0.2% month-over-month and increased 2.3% on a year-over-year basis. Ex-food and energy, prices rose 0.2% MOM and 3.4% YOY. These numbers were below expectations, and bonds are rallying on the news.

Initial Jobless Claims rose to 264k last week. You can see in the chart below that the claims are on the way up, after a long period at 50 year lows.

The Fed Funds futures have taken further rate hikes off the table, and are handicapping a roughly 50% chance of a 25 basis point cut at the July meeting.

The FHFA has announced it will rescind the upfront fees based on borrowers’ DTI. “I appreciate the feedback FHFA has received from the mortgage industry and other market participants about the challenges of implementing the DTI ratio-based fee,” said Director Sandra L. Thompson. “To continue this valuable dialogue, FHFA will provide additional transparency on the process for setting the Enterprises’ single-family guarantee fees and will request public input on this issue.”

United Wholesale reported first quarter volume of $22.3 billion, which was a 11% decline from the fourth quarter and 43% decline from a year ago. Gain on sale rebounded to 92 bps from 51 in the fourth quarter. They were still down from 99 bp a year ago. The company forecasts Q2 volume between $23 and $30 billion, with gain on sale margins from 75 to 100 bps.

Western Alliance gave an update on its deposit situation. Total deposits were 49.4 billion, up $1.8 billion from the end of last quarter and up $600 million from last week. Insured deposits are 79% and liquidity covers uninsured deposits by 2x.

PacWest said that deposits fell by 9.5% in the week ended May 5. Available liquidity is about 3x the level of uninsured deposits. The regional banks continue to be under pressure overall, as the S&P SPDR regional bank ETF is down 38% YTD.

19 Responses

  1. Based on the CNN town hall, if they let Trump on TV and into the debates, I suspect he will win again.


    • Right wing pundits lamenting Trump’s town hall is fascinating to me. I’ve said it before but I don’t understand the thinking that Desantis is somehow more electable. I’m open to arguments but I’m not understanding it.


      • I think he is. Not that the left will treat DeSantis any differently than Trump, but DeSantis will appeal to normies who couldn’t stomach Trump and voted for Biden hoping for normalcy. I think a lot of those folks have found that Biden is a ALZ-ridden empty vessel for the batshit crazy left.

        Also DeSantis has at least a chance of being able to get good people to staff his agencies. Nobody good wanted to risk their careers working for Trump.


        • I don’t see Desantis attracting the white working class in MI, western PA or WI and without their support, let alone enthusiastic support, R’s cannot win those states. As for suburban wine mom’s, they’re anti-Desantis to begin with re the tranny stuff.

          Ultimately, I just don’t think Desantis generate the enthusiasm needed. As for the anti-chaos voter, if Biden’s admin isn’t seen as infinitely more chaotic than Trump’s those voters are lost to Republican forever

          Finally, I don’t see Desantis blunting the black vote nor do I see him trying to appeal to the black male or Hispanic male voter, Trump goes after them.

          One final “final” Trump’s success at CNN last night is his ability to say what he wants and be entertaining. Media bashing is a passion on the right and Trump’s u canny ability to go on any network and prison rape them generates the base enthusiasm that he needs to win.


      • Yeah, like this:

        “With Title 42 migrant restrictions ending the next day, one would think Trump might have opened with an attack on Biden’s disastrous border policies. But no, he was more than happy to spend the first half of the night talking about himself and his grievances. Granted, this is what Collins asked him about.”

        Crazy talk, actually answering the question that was asked.

        I think Shapiro was closer to the mark:

        “CNN pitched the event as a kickoff to primary season. In that spirit, they invited Republican primary voters from New Hampshire to fill the auditorium. Moderator Kaitlan Collins, presumably, would ask questions that Republican voters cared about. They would then be able to use Trump’s answers to gauge whether to vote for him.

        That’s not what happened.

        Instead, Collins asked a series of questions only Democrats care about. She asked about January 6. She asked about Trump’s election denial. She asked about classified documents. She asked about E. Jean Carroll. In short, Collins provided Trump with precisely what he wanted: an adversarial CNN foe he could absolutely pummel, to the delight of the friendly crowd. The entire event played to Trump’s strengths: he was aggressive; he was funny, and transgressively funny at that (of E. Jean Carroll, he noted disbelievingly, “her cat was named vagina!”); and he refused to give an inch on any of his positions.

        Trump under fire from the Left draws nothing but admiration from most Republicans, who constantly feel that they are scurrilously attacked but rarely see a defender willing to go dirty to defend them. Trump defending himself deploys the methodologies they wish Republican politicians would use to defend them. And so CNN boosted Trump.”


      • “but I don’t understand the thinking that Desantis is somehow more electable.”

        He did win reelection by 19% and the demographics of his vote would be a landslide if replicated nationally.


        • Well, it’s not a news flash that a Republican won a red state, see Abbott, G in Texas. I like Desantis, but I don’t think he’d excite the white working class voters in PA, WI and MI. If R’s don’t carry those states, they don’t win. To the best of my knowledge, Trump is the only R to carry all those states since either Reagan or Nixon. Also, his Strong Horse positioning is appealing to many lower economic males and gets them to vote when they otherwise would not.


        • McWing:

          If the election is at all close, it will not be decided by which candidate can get white working class voters. It will be decided by which party can harvest enough votes in states with mass mail-in voting laws.


        • Fair enough. That’s where enthusiasm among the Republican base is crucial.


        • Trump is the only Republican candidate who can bring typical non-voters out to vote for him.


        • And I do not think Desantis will.


    • Except he lost in 2020.


  2. Popehat is pretty funny on the speculation about the George Santos indictment before it was unsealed:

    “And I’ll be honest, Josh, this was stressing me out because we didn’t have the indictment. I felt, more than any other indictment we’ve talked about, it was difficult to speculate what might be in it. I mean, did he use the federally-protected Woodsy Owl character to sell arms to Syria? Did he attempt to extort protected manatees? I don’t know, it could be literally anything.”

    and then afterwards:

    “Josh Barro:
    Yes. All right. Okay. Actually, I have a question about the stuff that wasn’t indicted in here, which is, this the sort of case where we’re likely to see superseding indictments, where they’re going to keep coming up with new crimes that George Santos did and adding them to the indictment?

    Ken White:
    Depending on what his stance is. If he negotiates some sort of disposition fairly promptly and saves him the work, then no. If he fights it and annoys them, then yes. Santos in terms of federal criminal law is what is known as a target rich environment. So you may be seeing all sorts of additional things about the other stuff he did, alleged fraud and connection with homeless dogs and all sorts of weird stuff like that. They just may just start bouncing his rubble.”


  3. Homie’s got the pulse of the party.

    The R who says we need to send the 101st to Ukraine will obviously be the nominee and the enduring devotion of the Republican base!



  4. Anderson Cooper and CNN having a normal one.


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