Morning Report: Housing Starts surge

Posted on December 19, 2023 by Brent Nyitray

Vital Statistics:

Stocks are higher this morning on no real news. Bonds and MBS are flat.

Housing starts rose 15% MOM and 9% YOY to a seasonally-adjusted annual rate of 1.56 million units. Building Permits rose 2.5% MOM to 1.46 million. This was below last year.

Multi-unit (5+) under construction remains near record levels. This should help put downward pressure on rents and ultimately inflation. I am not sure where these multi-family units are being built, but there will be a deluge of units hitting the markets.

Mortgage Capital Trading (MCT) announced that lock volume fell 10.7% in November, as MBS rallied early in the month. Volume tailed off around the end of the month due to the Thanksgiving Day holiday.  Andrew Rhodes, Senior Director and Head of Trading at MCT, commented on the current scenario, saying, “While we’ve seen a decrease in mortgage rates from the highs which would alleviate the seasonal dip, we are still struggling with low supply and see that as a continued trend through the beginning of 2024.”

Morgan Stanley has put out its 10 surprises for 2024. Here are the highlights (I omitted the ones which are about overseas markets)

Surprise 1: The elusive US hard landing arrives in style. Looking forward to 2024, the potential major surprise could be the arrival of the elusive hard landing, catching most investors off guard just after they concluded that “this time was indeed different.” While it took the better part of the previous year for the consensus to fully embrace the soft landing narrative, the reversal to a hard landing may happen more swiftly, leading investors to regret being misled once again

Surprise 2: Fed cuts 8 times, amid soft landing: Looking forward to 2024, the potential major surprise could be the arrival of the elusive hard landing, catching most investors off guard just after they concluded that “this time was indeed different.” While it took the better part of the previous year for the consensus to fully embrace the soft landing narrative, the reversal to a hard landing may happen more swiftly, leading investors to regret being misled once again

Surprise 3: QT ends before the first cut: Looking forward to 2024, the potential major surprise could be the arrival of the elusive hard landing, catching most investors off guard just after they concluded that “this time was indeed different.” While it took the better part of the previous year for the consensus to fully embrace the soft landing narrative, the reversal to a hard landing may happen more swiftly, leading investors to regret being misled once again

Surprise 10: Breakevens revert to 2019 levels: Looking forward to 2024, the potential major surprise could be the arrival of the elusive hard landing, catching most investors off guard just after they concluded that “this time was indeed different.” While it took the better part of the previous year for the consensus to fully embrace the soft landing narrative, the reversal to a hard landing may happen more swiftly, leading investors to regret being misled once again.

Student loan payments resumed in October, and only 60% of them were made, according to the government. That is a pretty hefty percentage of delinquencies, and suggests that some of the spending that has been going on is unsustainable.

Filed under: Economy |

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21 Responses

  1. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on December 19, 2023 at 11:41 am said:

    This piece by Michelle Goldberg is truly a scream.

    https://archive.is/qMl1n

    I guess, according to her, the left can be bitchy and drives people away who then engage in crazy conspiracy theories and desire, get this, to be left alone. The left are good people and those that leave are crazy apostates.

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  2. Brent Nyitray's avatar
    Brent Nyitray, on December 19, 2023 at 2:57 pm said:

    No matter how much you hate the media it isn’t enough. CNN did a “study” claiming discrimination at Navy Federal Credit Union.

    https://www.mpamag.com/us/news/general/navy-federal-credit-union-denies-more-than-half-of-its-black-mortgage-applicants-report/470562?utm_campaign=Editorial-MPAm-NS&utm_content=275966636&utm_medium=social&utm_source=linkedin&hss_channel=lcp-13686101

    They ignored credit scores. Average white score: 740. Average black 680

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  4. jnc4p's avatar
    jnc4p, on December 19, 2023 at 8:53 pm said:

    Opps:

    “Vivek Ramaswamy, who is running against Trump for the Republican nomination, said in a statement to The Washington Post: “I pledge to withdraw from the Colorado GOP primary ballot until Trump is also allowed to be on the ballot, and I demand that Ron DeSantis, Chris Christie, and Nikki Haley to do the same immediately — or else they are tacitly endorsing this illegal maneuver which will have disastrous consequences for our country.”

    “I do not believe Donald Trump should be prevented from being president of the United States by any court,” Christie told a crowd on Tuesday at a New Hampshire town hall. “I think it’s bad for the country,” if that happens, and “I think it would cause a lot of anger” if that choice was taken away, he said.

    Christie said he had not read the decision, but said it was inappropriate to punish Trump for inciting an insurrection on Jan. 6 without having a criminal trial on that matter.”

    https://www.washingtonpost.com/politics/2023/12/19/trump-off-colorado-ballot/

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  5. jnc4p's avatar
    jnc4p, on December 20, 2023 at 12:38 pm said:

    Can of worms opened:

    “But even if one assumes that Section 3 was meant to be prospective, there is an obvious reason why the only two nationally elected officers would be excluded from its reach. It took mere moments after the Colorado Supreme Court’s ruling to see why, as Texas Lt. Gov. Dan Patrick threatened to remove President Joe Biden from the Texas ballot as retribution. ”

    https://slate.com/news-and-politics/2023/12/supreme-court-trump-ballot-removal-colorado-wrong.html

    https://www.thedailybeast.com/texas-lt-guv-threatens-to-take-biden-off-states-ballot-after-colorado-ruling

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