Brent Nyitray
Fairlington Blade
Let the mutherfuker burn!
jnc4p
Kevin S. Willis
Michigoose
lmsinca
markinaustin
Arcanaut
novahockey
quarterback
ScottC
yellojktVital Statistics:
Stocks are lower this morning after Chinese developer Evergrande called off talks with creditors and looks set for bankruptcy. Bonds and MBS are down.
The upcoming week has quite a bit of data, with house prices / new home sales on Tuesday, GDP on Thursday, and PCE inflation data on Friday. We will also get some Fed-Speak.
There was an interesting interview in Housing Wire with Doug Duncan, chief economist at Fannie Mae. MBS spreads are a huge topic these days, and he was discussing who will be the marginal buyer to step up and replace the Fed’s buying.
Kim: Spreads in the mortgage space are wide. What are the reasons for that?
Duncan: There are several reasons for that. If that business flow for a time period helps them cover the variable costs, then it can be effective.
For one thing, no fixed-income investor thinks that mortgage-backed securities with 7% mortgage rates will be there when the Fed finishes the inflation fight. They’re going to cut rates and that will prepay. So you’re having to encourage investors with wider spreads to accept that.
It’s also the case that the Fed is running its portfolio off because they don’t talk about it much. But somebody has to replace the Fed, and the Fed is not an economic buyer. That is they weren’t buying for risk-return metrics; they were buying to affect the structure of markets. So they are a policy buyer.
They were withdrawing volatility from the market, and they were lowering rates to benefit consumers. When [the Fed] is replaced, it’s likely to be by a private investor who’s going to have yield expectations. They may require wider spreads than the Fed because the Fed is not an economic buyer.
While I believe he is correct in that the new buyer of MBS will require a higher spread than the Fed, which had no such requirements, I think he overstates the effect the Fed’s buying had on MBS spreads in the first place. Take a look at the chart below, which is the 30 year fixed rate mortgage rate minus the 10 year.
This is not exactly MBS spreads, but it is a close enough approximation. The thing that sticks out to me is that MBS spreads in the era of QE are not that much different than they were before the real estate bubble. If the Fed’s massive buying of MBS didn’t make that dramatic of a difference, how is slowly letting the portfolio run off going to do it?
Once the Fed is out of the way with rate hikes, we should see a dramatic drop in bond market volatility as the uncertainty over monetary policy disappears. Since fixed income investors are looking at option-adjusted spreads (OAS), as volatility dries up in the bond market, we should see MBS become more attractive to other credit-risk free assets. Yes, prepays might increase, but rates have to fall a lot to trigger any sort of refi boom.
From 12/31/99 – 12/31/06, the difference between the 10 year and the average 30 year fixed rate mortgage was 1.79%. This was pre-Fed intervention. If spreads return to that level, we would be looking at a 30 year fixed rate mortgage around 6.3%, or 100 basis points lower than here.
Filed under: Economy |
All Things in Moderation 
The ACA approach of mandating the paying for coverage that is irrelevant to you spreads:
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Frankly, I hope he wins as a fuck you to the DOJ.
https://redstate.com/jeffc/2023/09/25/bob-menendez-isnt-backing-down-in-the-face-of-bribery-charges-indicates-he-will-seek-re-election-n2164266
What’s hilarious to me though is I guarantee he voted for Biden, voted to confirm Merrick and the NJ AG!
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Meanwhile we get the hot L on L identity politics action:
“What he’s saying: “It is not lost on me how quickly some are rushing to judge a Latino and push him out of his seat,” Menendez said in a statement. “I am not going anywhere.”
…
Ocasio-Cortez also responded to Menendez’s statement that the indictment had to do with him being Latino, saying that while there is systemic bias, “I think what is here in this indictment is quite clear.” ”
https://www.axios.com/2023/09/22/menendez-committee-resign-bribery-indictment
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“These are cartoonish corruption charges. This isn’t 2017 by a mile,” a senior New Jersey Democratic congressional aide told Axios. “If Donald Trump or a powerful republican did one-tenth of this nonsense we’d be howling to the hills for them to go to the big house.”
That is what this is about. The left needs to get out from under the two-tiered system of justice perception.
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Lol
https://x.com/curtishouck/status/1706368982012375145?s=46&t=vSGsUlnc4rLxcUf7zfUiHg
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Black, Hispanic, whatever…you know, one of those oppressed minorities. They all look the same to him.
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He also called LL Cool J, “boy” the next day at the CBC event.
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It’s hard not to admire this.
https://x.com/rncresearch/status/1706471106809405535?s=46&t=vSGsUlnc4rLxcUf7zfUiHg
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Eh, it’s run-of-the-mill gaslighting.
They asserted the election would be stolen by evil Trump through 2020. Hinted that for justice to be done, Trump winning might have to be protested with violence. Biden wins and immediately it is the most secure election ever, and everything about how it was about to be stolen disappeared. Then the Republicans were sure it was stolen and they were crazy!
4 years later, with Democrats and the left pretty much all-powerful in the government, when head-to-head poles show Trump beating Biden, suddenly we start getting warnings that the election will be stolen coming from the left. Again. Unironically.
Typical narcissistic “why do you make me hit you” gaslighting from the left. Predictable.
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Everything that is wrong with establishment RINOs in one editorial: They don’t realize the democrats are different.
https://www.wsj.com/articles/the-gop-cant-abide-populism-hawley-pence-republican-conservative-disney-cad705f2?mod=opinion_lead_pos5
The traditionally conservative and Trumpian populist wings of the GOP have arrived at the same conclusion: They can no longer coexist in the same party.
Mike Pence, a traditionalist, recently said Republican voters must choose between being “the party of conservatism” and following “the siren song of populism unmoored to conservative principles.” “The future of this party,” Mr. Pence said, “belongs to one or the other, not both.”
Missouri Sen. Josh Hawley, a populist, said much the same last year in the Washington Post: “The old Republican Party is dead,” which is “no reason to mourn.” In Mr. Hawley’s view, Republicans should embrace economic policies that would transform the party into one that represents “America’s working people.” For Mr. Pence, “the GOP must be the party of limited government, free enterprise, fiscal responsibility and traditional values.”
Normally politics is about addition, not subtraction. Voters can disagree on issues while sharing general principles. Messrs. Pence and Hawley contend that the differences in principle between conservatism and populism make them incompatible.
I agree. The Republican Party is and should remain conservative, the opposite of populist.
To understand this incompatibility, let’s compare a key tactic of populism, appeals to “us vs. them” division, with the original purpose of the Republican Party, the preservation of the Union. Populist politicians promote themselves as fighters. They aggressively wage culture wars and stoke grievance. They don’t belong in the party of Abraham Lincoln, who tried desperately to hold the fracturing nation together. A month before the outbreak of the Civil War, he pleaded with his countrymen: “We are not enemies but friends, we must not be enemies.”
For Lincoln, America’s hope was in its people, and the leadership’s responsibility was to evoke the people’s most noble instincts, “the better angels of our nature.” True conservatism places more emphasis on the soul of the nation than on the policies that emanate from Washington. Populist leaders like Donald Trump—who openly flouts the standards of basic human decency and appeals to rage (“I am your retribution”)—evoke our basest instincts.
Committed to Lincoln’s purpose, traditionalists uphold the Constitution, the structure that allows us to address and resolve our political differences in an orderly way. We are in the tradition of Edmund Burke, often called the father of conservatism. Shocked by the terror of the French Revolution, Burke warned Britain that chaos would ensue should the structure of society be overthrown in the name of the people. On Jan. 6, 2021, we saw how an attack on the Constitution could lead to the chaos Burke foretold.
Populists have relentlessly undermined our Constitution. They have falsely asserted that elections are rigged, that President Biden is illegitimate, and that we should ignore our courts. They have opposed the peaceful transfer of power and encouraged a mob to attack the U.S. Capitol. To this day, they turn Americans against the government, claiming that it is no longer our servant but has been “weaponized” to attack us.
None of this is conservative. All of it is radical.
Populists are now attempting to uproot policies deeply planted in Republican conservatism. We are the party of fiscal discipline, but the national debt rose nearly 40% during Mr. Trump’s presidency. We are the party of limited government, yet in the name of helping working people, populists support massive intervention in the marketplace through federal controls on prices and interest rates and, as in Disney’s case, using government to punish a corporation for expressing “woke” opinions. In their big-government activism, populists more resemble progressive Democrats than traditional Republicans.
Since the end of World War II, Republicans have stood firm against Russian designs in Europe. Now, populists have injected an isolationist element into the party.
In only seven years populism has become dominant in our party. Why? Because most of us haven’t seen the differences with the clarity of Messrs. Pence and Hawley. We have become used to seeing people describe populist politicians and policies as conservative, as if the two were synonymous. Populists have been able to dismiss anti-Trump Republicans as malcontents or “RINOs”—Republicans in name only—when conservatives in fact represent the best of the Republican tradition.
We can’t risk losing that heritage. America has long benefited from a principled conservative party that, when balanced against a responsible progressive party, has created the stability that has held our country together.
Mr. Danforth, a Republican, served as a U.S. senator from Missouri, 1976-95.
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When did the Republicans ever govern via conservative principles? Was there some golden era of Coolidge revisited that I’m unaware of?
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He pines for the days when the republican party was the tax collector for the welfare state.
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He thinks Republican governance under Nixon and Bush are the ideal.
Jesus…
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Brent:
They don’t realize the democrats are different.
Bingo.
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Now that the Left has completed its Gramscian March Through The Institutions, “conservatism” means nothing more than preserving the status quo.
I think the correct term now is “anti-leftist”
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Also it’s kind of a distinction with a much smaller difference than they want there to be. Conservatism often isn’t that conservative, populism is often more conservative than typical GOP conservatism. And often they are moving in the same direction, only perhaps one has more mean tweets.
Not sure about the public at large but I see the arguments on both sides and think they are both better than the arguments of the left. As such, I’m content that any mix of conservatism or populism beat the Democrats for any office.
But the ultimate point is that the left is not like the right, and the Democrats are different from the Republicans in terms of their will to power and their belief that any means are justified by their utopian ends.
As such, the left and the Democrats have become so opposed to classical liberalism and so comfortable with the idea of good totalitarianism, that Trump, Haley, DeSantis, perhaps even Vivek would be preferable and better for the country than Biden or Harris.
Point is I agree: the right generally doesn’t get that the left is a different animal altogether and is playing by different rules.
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Lol!
https://x.com/rpsagainsttrump/status/1706689751401529496?s=46&t=vSGsUlnc4rLxcUf7zfUiHg
I wish!
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And let’s say Trump gets elected, nothing like this happens, and they will immediately move to new “sure to happen” bullshit narratives and never mention where all the bad things the promised Trump would do that he didn’t again.
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Still blows my mind.
https://redstate.com/bonchie/2023/09/26/nazi-scandal-blows-up-in-canada-parliament-speaker-resigns-as-trudeau-passes-the-buck-n2164338
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For f***s sake, Canada is starting to resemble Nazi Germany more than America these days. What’s the big deal? Sure they are applauding an actual Nazi. Culturally consistent with electing Trudeau.
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So, is the judge saying that those that insured and lent money to his organization just took his word for it? They didn’t verify it independently?
had gone far beyond mere puffery and used fake values to get lower loan and insurance rates.
https://redstate.com/streiff/2023/09/26/judge-finds-former-president-trump-engage-in-fraudulent-business-practices-n2164343
Isn’t there some responsibility on the part of the lenders to confirm the truthfulness of Trump’s valuations? Also, isn’t there quite a range of value that multiple assessors of value make?
I don’t know, seems kind of bullshit to me.
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IMO it’s complete and obvious bullshit and clearly a standard nobody else in NY real estate is being held to.
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The lenders were on Trump’s side. Apparently the didn’t claim that they were defauded.
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I don’t think any lost money either.
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How is there a state interest then? We’re they the backstop?
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It is NY.
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See, it’s different.
https://redstate.com/nick-arama/2023/09/26/we-finally-find-out-whats-happening-with-the-biden-classified-doc-investigation-media-spin-is-underway-n2164344
Also, the dead guy did it.
Michelle Smith, a former executive assistant to Biden who is now deceased, has been brought up in some interviews.
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