Monogamy Is For Losers

Posted on February 20, 2014 by Kevin S. Willis

Christopher Ryan explains why sexual monogamy is unnatural and we shouldn’t judge the polyamorous:

Relatedly, the second installment of Freakonomics on “Why Get Married?” is online:

http://freakonomics.com/2014/02/20/why-marry-part-2-a-new-freakonomics-radio-podcast/

Filed under: fun stuff | 8 Comments »

Morning Report – Some housing affordability numbers 2/20/14

Posted on February 20, 2014 by Brent Nyitray

Vital Statistics:

Last Change Percent
S&P Futures 1828.6 3.1 0.17%
Eurostoxx Index 3095.7 -25.2 -0.81%
Oil (WTI) 103.3 0.0 -0.01%
LIBOR 0.236 0.002 0.86%
US Dollar Index (DXY) 80.22 0.080 0.10%
10 Year Govt Bond Yield 2.75% 0.01%
Current Coupon Ginnie Mae TBA 105.4 -0.1
Current Coupon Fannie Mae TBA 104.1 -0.1
RPX Composite Real Estate Index 200.7 -0.2
BankRate 30 Year Fixed Rate Mortgage 4.31
Markets are higher this morning on no real news. Inflation at the consumer level and initial Jobless Claims came in as expected. Bonds and MBS are down small.
The latest CoreLogic Market Pulse is out, and it has some really good stuff on the state of the first time homebuyer. The rise in real estate prices (especially on the coasts) has hit first time homebuyers harder than existing homebuyers (in other words, buyers who currently own a home). Existing homeowners aren’t as affected by increasing home prices because they have equity in their existing home. First time homebuyers do not. Of course, historically housing remains very affordable.

CoreLogic also has a piece on the new rental boom, and whether we are experiencing a new age in the single family rental market. We have seen a massive conversion of single family homes into rentals as professional investors have scooped up distressed properties and put them out for rent. Certainly the demand for rental housing has been somewhat driven by a lousy economy, and lousy economies don’t last forever. On the supply side, don’t forget that professional investors are driven by the economics of a trade going forward, and the potential returns from single family rentals may look a lot different today as the easy money in distressed properties has already been made and future home price appreciation may be harder to come by. For the first time homebuyer, the buy vs rent decision is still almost as skewed towards buying as it has ever been:

If professional investors begin to let some of their rental property go (and given the tight inventory, they would be wise to) we will begin to see some of this property absorbed by “real” buyers – in other words, buyers with a mortgage. This will be the next big change in the mortgage banking industry – the exit of cash-only buyers and the return of a more normal mix of cash buyers vs buyers with a mortgage.

Following on this, tomorrow we will get existing home sales, which is expected to come in around 4.7 million. In normal times, that number is over 5 million and during booms it will approach 7 million. The thing to keep in mind however is that cash sales represent 40% – 50% of all transactions right now, while historically, that number is closer to 20%. In terms of “gettable” business right now, 55% of 4.7 million homes is about 2.6 million purchase mortgages. If we get back to a normal cash / mortgage ratio of 20%, that number becomes 3.8 million, an increase of 46%. And if we get back to historical existing home sales numbers, it become goes above 4 million. As a purchase shop, we are in a good position to pick up that incremental business.

So LOs, this lousy environment too shall pass. Better days lie ahead, even if the refi boom doesn’t return.

Filed under: Morning Report | 41 Comments »

Morning Report – Housing Starts buried by snow 2/18/14

Posted on February 19, 2014 by Brent Nyitray

Vital Statistics:

Last Change Percent
S&P Futures 1832.3 -5.1 -0.28%
Eurostoxx Index 3111.5 -6.0 -0.19%
Oil (WTI) 102.7 0.3 0.24%
LIBOR 0.234 -0.001 -0.41%
US Dollar Index (DXY) 80.08 0.067 0.08%
10 Year Govt Bond Yield 2.68% -0.03%
Current Coupon Ginnie Mae TBA 105.7 0.1
Current Coupon Fannie Mae TBA 104.5 0.3
RPX Composite Real Estate Index 200.7 -0.2
BankRate 30 Year Fixed Rate Mortgage 4.32
Stocks are lower this morning after a weak housing starts number. Bonds and MBS are benefiting from the riots in Ukraine. Mortgage applications fell 4% last week. Inflation at the wholesale level remains under control.
January housing starts came in at 880k, well below the 950k forecast. December was revised upward by 50k. Bad weather certainly played a part, and the low number would be consistent with the weak homebuilder sentiment number yesterday.
Bad weather doesn’t account for the entire drop in homebuilder sentiment – a shortage of lots, rising materials prices, and a dearth of skilled labor contribute to the problem. Many skilled construction workers left the industry after the collapse and went to work in the energy patch. Interesting fact: The average age of a mason in Texas is over 60. Apparently wages have increased 50%.
Later on today we will get the FOMC minutes. Don’t expect anything market moving in there, but you never know. While the dovish tilt of the Chair remains in place, we picked up some more hawkish members. New voting member Charles Plosser is in favor of ending QE ASAP.
Servicers are coming under closer scrutiny. We saw NY State block a MSR deal between Wells and Ocwen. Consumer Advocates are criticizing servicers for not modding enough loans (as if more mods are more better).

Filed under: Morning Report | 152 Comments »

Morning Report – Economists are taking up their numbers for 2014 GDP 2/18/14

Posted on February 18, 2014 by Brent Nyitray

Vital Statistics:

Last Change Percent
S&P Futures 1835.2 0.2 0.01%
Eurostoxx Index 3115.1 -3.8 -0.12%
Oil (WTI) 101.4 1.1 1.09%
LIBOR 0.235 -0.001 -0.23%
US Dollar Index (DXY) 80.08 -0.053 -0.07%
10 Year Govt Bond Yield 2.73% -0.01%
Current Coupon Ginnie Mae TBA 105.8 0.0
Current Coupon Fannie Mae TBA 104.2 0.1
RPX Composite Real Estate Index 200.7 -0.2
BankRate 30 Year Fixed Rate Mortgage 4.33
Markets are flat coming off a 3 day weekend. Bonds and MBS are up small. The Empire Manufacturing Survey came in lower than expected. We also have a big merger in the pharma space with Forest Labs buying UK-based Actavis.
We should get the FOMC minutes this week, but judging by the way the market behaved after the FOMC decision, it should be a yawner. Plus, we just had Janet Yellen in front of Congress last week so I can’t really imagine much coming out of the minutes that wasn’t already addressed there.
This week will have some interesting housing-related data, but nothing much that should move markets or create rate volatility. We have inflation numbers this week, but the Fed isn’t really concerned about inflation these days. On Thursday, we get housing starts and building permits, and on Friday existing home sales and leading economic indicators.
The Philly Fed has put out a projection of economic forecasts based on a survey of professional economists. 2014 GDP forecasts have been taken up from 2.6% to 2.8% and unemployment has been taken down from 7% to 6.5%. They are forecasting a 5.5% to 6% increase in home prices for 2014.

Filed under: Morning Report | 60 Comments »

President’s Day Post

Posted on February 17, 2014 by Let the mutherfuker burn!

Filed under: Bits and Pieces | 280 Comments »

Morning Report – blame the weather 2/14/14

Posted on February 14, 2014 by Brent Nyitray

Vital Statistics:

Last Change Percent
S&P Futures 1828.2 3.9 0.21%
Eurostoxx Index 3114.2 16.3 0.53%
Oil (WTI) 99.73 -0.6 -0.62%
LIBOR 0.236 0.000 0.00%
US Dollar Index (DXY) 80.2 -0.124 -0.15%
10 Year Govt Bond Yield 2.74% 0.01%
Current Coupon Ginnie Mae TBA 106 -0.2
Current Coupon Fannie Mae TBA 104.3 -0.1
RPX Composite Real Estate Index 200.7 -0.2
BankRate 30 Year Fixed Rate Mortgage 4.27
Markets are higher in spite of some disappointing manufacturing data this morning. Bonds and MBS are flat. We are headed into a 3 day weekend, so volumes should be somewhat light.
Industrial Production and Manufacturing Production came in well below estimates, and capacity utilization dropped by 80 bps, a huge amount. Weather seems to have been the culprit so that is why the market is shrugging off the numbers.
Consumer confidence came in unch’d for February.
The spring selling season is off to a slow start, according to Redfin. FWIW, the homebuilders are reporting exactly the opposite.

Filed under: Morning Report | 125 Comments »

Morning Report – Snowmageddon issue 2/13/14

Posted on February 13, 2014 by Brent Nyitray

Vital Statistics:

Last Change Percent
S&P Futures 1812.7 -4.4 -0.24%
Eurostoxx Index 3074.2 -20.7 -0.67%
Oil (WTI) 100.2 -0.1 -0.14%
LIBOR 0.236 0.000 -0.11%
US Dollar Index (DXY) 80.33 -0.347 -0.43%
10 Year Govt Bond Yield 2.74% -0.02%
Current Coupon Ginnie Mae TBA 106 0.3
Current Coupon Fannie Mae TBA 104.5 0.3
RPX Composite Real Estate Index 200.7 -0.2
BankRate 30 Year Fixed Rate Mortgage 4.28
Markets are lower this morning after a lousy retail sales number. Bonds and MBS are up small. Initial Jobless Claims came in at 339k.
Another major snowstorm has hit the New York area today, so expect volumes to be on the light side and rates to be a little more volatile than normal.
The low retail sales number was based on bad weather, so it might be tough to read too much into it.
Big merger in the cable TV space – Comcast is buying Time Warner cor $45 billion. Gives the arbs something to chew on for a while. And brings the NFL network to the New York area.
Delinquencies continue to drop. According to TransUnion, only 3.85% of mortgages were 60 days down, the lowest in 6 years.
In a true “man bites dog” situation, Ralph Nader is contesting the effective nationalization of Fannie and Freddie. Just before the companies started generating cash, the WH changed the rules and decreed that all funds must flow to Treasury and that they would not count as “debt repayment.” In other words, they nationalized the company without taking the existing shareholders out. The fate now resides in the courts.

Filed under: Morning Report | 14 Comments »

Morning Report – “Viligant” Janet data dump 2/12/14

Posted on February 12, 2014 by Brent Nyitray

Vital Statistics:

Last Change Percent
S&P Futures 1818.5 4.9 0.27%
Eurostoxx Index 3098.2 21.1 0.69%
Oil (WTI) 101.1 1.2 1.19%
LIBOR 0.236 -0.001 -0.21%
US Dollar Index (DXY) 80.8 0.166 0.21%
10 Year Govt Bond Yield 2.75% 0.03%
Current Coupon Ginnie Mae TBA 105.9 0.0
Current Coupon Fannie Mae TBA 104.3 -0.1
RPX Composite Real Estate Index 200.7 -0.2
BankRate 30 Year Fixed Rate Mortgage 4.25
Markets are stronger this morning on no real news. Bonds and MBS are down. Stocks loved the Yellen testimony yesterday, bonds not so much..
Janet Yellen’s testimony was pretty much as expected. She is a primary architect of the Fed’s current course of action, so it makes sense she will pretty much continue with doing what they have been doing. Her Congressional testimony had few interesting tidbits, although she is pretty unconcerned about the debt. According to her, it should become an issue in about 30 years. She also sees no bubbles right now (of course when has the Fed ever seen bubbles until after it is too late?). She also made a comment regarding the decline in the labor force participation rate – saying that some of it is structural. So, once unemployment hits their target, the Fed may not wait for the labor force participation rate to return to pre-recession levels because in their minds, it won’t.
Maxine Waters praised Janet for her “viligance.”
Mortgage applications fell 2% last week, which is disappointing given that rates fell a couple basis points. Both purchases and refis fell, but purchases fell the most.
The House passed a clean debt limit bill, so that takes the risk of another debt ceiling hike off the table. Separately, the House is working on a bill to clip CFPB’s wings a little, and subject it to some sort of Congressional oversight.

Filed under: Morning Report | 17 Comments »

Morning Report – Here’s Janet 2/11/14

Posted on February 11, 2014 by Brent Nyitray

Vital Statistics:

Last Change Percent
S&P Futures 1797.6 2.9 0.16%
Eurostoxx Index 3055.4 22.8 0.75%
Oil (WTI) 100.2 0.1 0.15%
LIBOR 0.237 0.003 1.18%
US Dollar Index (DXY) 80.58 -0.067 -0.08%
10 Year Govt Bond Yield 2.70% 0.03%
Current Coupon Ginnie Mae TBA 106.1 -0.2
Current Coupon Fannie Mae TBA 105 -0.2
RPX Composite Real Estate Index 200.7 -0.2
BankRate 30 Year Fixed Rate Mortgage 4.24

Markets are flat on no real news. Bonds and MBS are down.

Janet Yellen will have her first sit-down with Congress today in her new role as Federal Reserve Chairman. The prepared remarks are here. Regarding monetary policy, she will more or less continue on the path that the Bernanke Fed started:

“Turning to monetary policy, let me emphasize that I expect a great deal of continuity in the FOMC’s approach to monetary policy. I served on the Committee as we formulated our current policy strategy and I strongly support that strategy, which is designed to fulfill the Federal Reserve’s statutory mandate of maximum employment and price stability.”

Other than that, the Fed expects the economy to improve moderately. Testimony begins at 10:00 am EST.
Separately, hawkish voting member Charles Plosser is speaking today as well.
The NFIB Small Business Optimism Report is out, and it shows sentiment increased slightly in January, although they note that inventories are too high – remember that the 4.1% Q4 GDP number was driven by inventory build. It looks like the demand for that inventory has yet to materialize. That said, optimism about future sales and hiring jumped, so perhaps businesses are seeing something (foot traffic, inquiries, etc) that has yet to percolate into the data. That said, 94.1 is still a depressed number (100 is more or less average), and government is driving a big part of that, with taxes as the #1 problem and government regulation as #2. Poor sales comes in at a distant third. Bill Dunkelberg is a limited government guy, so take his interpretation of the data with that in mind, but still it does speak to a bifurcation in the market, where the big S&P 500 names are doing fantastic and small businesses are struggling.

Filed under: Morning Report | 76 Comments »

Morning Report – Takeaways from Friday’s jobs report 2/10/14

Posted on February 10, 2014 by Brent Nyitray

Vital Statistics:

Last Change Percent
S&P Futures 1789.8 -3.7 -0.21%
Eurostoxx Index 3036.5 -2.0 -0.07%
Oil (WTI) 99.6 -0.3 -0.28%
LIBOR 0.234 0.000 0.00%
US Dollar Index (DXY) 80.67 -0.019 -0.02%
10 Year Govt Bond Yield 2.69% 0.01%
Current Coupon Ginnie Mae TBA 106 0.1
Current Coupon Fannie Mae TBA 105 0.0
RPX Composite Real Estate Index 200.7 -0.2
BankRate 30 Year Fixed Rate Mortgage 4.24
Markets are flat without a lot of news out there. Bonds and MBS are flat. The market seems to have been unsurprised by the jobs report on Friday.
The Wall Street Journal did a nice piece on the takeaways from Friday’s jobs report. Punch line: January’s report was almost as disappointing as December, but you can’t blame the weather this time around.
Sometime today, the MBA will release delinquency and foreclosure data.
The CFPB is making data from the Home Mortgage Disclosure Act available on line. It is a way to compare fees and points charged to borrowers. It will also be used by regulators to determine which branches they want to hit. For lenders, it is a good way to gain insight into how you stack up in your geographic area.
Consumer Credit jumped in December, a potentially positive sign for the economy.

Filed under: Morning Report | 51 Comments »

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