Latest interview covering the debt ceiling, sequestration cuts, the fiscal cliff, QM rules, Jack Lew, Fexit, and 2013 economic forecasts.
Showing posts with label Jack Lew. Show all posts
Showing posts with label Jack Lew. Show all posts
Friday, January 18, 2013
Thursday, January 10, 2013
Morning Report - QM Day
Vital Statistics:
Markets are higher this morning after positive news out of Ford and Nokia. Initial Jobless Claims increased 4k to 371k, higher than the 365k estimate. The ECB left rates steady and predicted a gradual recovery for the Eurozone this year. Bonds and MBS are down.
WaPo has a write-up of the new QM rules expected to be released today by Richard Cordray in Baltimore. You can watch the speech here. Expected changes: Upfront fees will be capped at 3%, though exceptions will be made for loans under 100k, and IO mortgages will be banned. Ability to repay will be based not on the teaser rate, but on the expected rate later on. DTI ratios must be below 43%. The rules will be phased in over the next 7 years. The CFPB estimates that 75% of the mortgages issued in 2011 would have met the standards. If the banks follow these rules, they will be protected from many homeowner lawsuits, but not necessarily buy-back risk. Jumbos will probably the area most affected by the new rules. MND has the gory details here.
What does the appointment of Jack Lew as Treasury Secretary mean? That the Administration will be focusing its energy on budget battles going forward. He is not considered (at least by the Left) to be the sort of guy that will be addressing unemployment, or pushing for Keynsian stimulus. As such, he probably isn't going to be tremendously dollar-negative, although in an era of competitive devaluations, it is hard to be a dollar bear anyway. The tight relationship between the Fed and Treasury will end. He is probably going to be a tough negotiator for the WH's budget priorities - higher taxes on the rich no no non-defense spending cuts. He also has an unusual signature, (OoooooO) which will be gracing your dollar bills soon enough.
Acccording to NAR, 2012 will go down as a record year for housing affordability. The index came in at 198.2, which means the median borrower had 198% of the minimum income required to purchase the median price existing family home, assuming 20% down and 25% of income going to P&I payments. Tight credit standards remain the sticking point.
Thinking outside the box: Instead of paying the unemployed, pay their employers to keep them on. Through the work-sharing plan, employees get a shortened work week, with unemployment benefits partially compensating them for lost wages.
The hits keep coming: Morgan Stanley is laying off 1,600 workers.
Battle Royale: Ackman vs Loeb in Herbalife.
| Last | Change | Percent | |
| S&P Futures | 1464.7 | 8.9 | 0.61% |
| Eurostoxx Index | 2712.4 | 6.0 | 0.22% |
| Oil (WTI) | 94.4 | 1.3 | 1.40% |
| LIBOR | 0.305 | 0.000 | 0.00% |
| US Dollar Index (DXY) | 80.35 | -0.206 | -0.26% |
| 10 Year Govt Bond Yield | 1.90% | 0.04% | |
| RPX Composite Real Estate Index | 191.7 | -0.3 |
Markets are higher this morning after positive news out of Ford and Nokia. Initial Jobless Claims increased 4k to 371k, higher than the 365k estimate. The ECB left rates steady and predicted a gradual recovery for the Eurozone this year. Bonds and MBS are down.
WaPo has a write-up of the new QM rules expected to be released today by Richard Cordray in Baltimore. You can watch the speech here. Expected changes: Upfront fees will be capped at 3%, though exceptions will be made for loans under 100k, and IO mortgages will be banned. Ability to repay will be based not on the teaser rate, but on the expected rate later on. DTI ratios must be below 43%. The rules will be phased in over the next 7 years. The CFPB estimates that 75% of the mortgages issued in 2011 would have met the standards. If the banks follow these rules, they will be protected from many homeowner lawsuits, but not necessarily buy-back risk. Jumbos will probably the area most affected by the new rules. MND has the gory details here.
What does the appointment of Jack Lew as Treasury Secretary mean? That the Administration will be focusing its energy on budget battles going forward. He is not considered (at least by the Left) to be the sort of guy that will be addressing unemployment, or pushing for Keynsian stimulus. As such, he probably isn't going to be tremendously dollar-negative, although in an era of competitive devaluations, it is hard to be a dollar bear anyway. The tight relationship between the Fed and Treasury will end. He is probably going to be a tough negotiator for the WH's budget priorities - higher taxes on the rich no no non-defense spending cuts. He also has an unusual signature, (OoooooO) which will be gracing your dollar bills soon enough.
Acccording to NAR, 2012 will go down as a record year for housing affordability. The index came in at 198.2, which means the median borrower had 198% of the minimum income required to purchase the median price existing family home, assuming 20% down and 25% of income going to P&I payments. Tight credit standards remain the sticking point.
Thinking outside the box: Instead of paying the unemployed, pay their employers to keep them on. Through the work-sharing plan, employees get a shortened work week, with unemployment benefits partially compensating them for lost wages.
The hits keep coming: Morgan Stanley is laying off 1,600 workers.
Battle Royale: Ackman vs Loeb in Herbalife.
Monday, November 12, 2012
Morning Report: Cliff Diving Forecasts
Vital Statistics
Stock markets are higher this morning after last week's post-election sell-off. Bonds are closed for Veteran's Day. The government also has the day off, so there are is no major economic news.
Post election, all eyes turn to the fiscal cliff. There appears to be a growing consensus that we can leave rates unchanged for the top and limit deductions. Partisan posturing and political jockeying will make the markets a miserable place for the next couple of months. Capital gains and dividends remain a wild card. The obamacare surtax will happen regardless, so financial income is taking a hit right off the bat.
The Basel III requirements scheduled to take effect on Jan 1 have been pushed back to some time in the future. SIFMA and the MBA agree with the decision.
So how will the election affect the markets and real estate? I suspect FHFA Chairman DeMarco will be out of a job, which will pave the way for principal reductions on F&F/Ginnie loans. If they don't think this through, they could face a deluge of homeowners suddenly finding themselves "unable" to make their mortgage payment.
Geithner is out for obama II, and the favorite for replacement seems to be Jack Lew. Lew is a "middle of the road" candidate that has already been unanimously confirmed by the Senate in 2010 for the OMB job.
If we go over the fiscal cliff, we will undoubtedly have a 1H recession, which could result in a 1.25% 10-year. Which means the refi boom will continue to have legs. If FHFA starts modding underwater loans to LTVs of 1.0, we should see some refi activity, especially in the FHA space. That said, if CFPB doesn't come out with a bright line definition of a QM, refinancing these folks may prove to be difficult.
Regarding a 1H recession, earnings this quarter were not great, and Sandy will probably lop 1% to 1.5% of of 4Q GDP. Taxes are going up, so we should start handicapping a 1H recession. Will it affect housing? My sense is no, the bottom is in, and the recession will be felt more in cap goods / the energy patch than in housing. JP Morgan downgraded CAT this morning based on the expected negative impact the election will have on energy and mining.
| Last | Change | Percent | |
| S&P Futures | 1380.2 | 4.5 | 0.33% |
| Eurostoxx Index | 2477.4 | -2.4 | -0.10% |
| Oil (WTI) | 85.55 | -0.5 | -0.60% |
| LIBOR | 0.31 | 0.000 | 0.00% |
| US Dollar Index (DXY) | 80.97 | -0.055 | -0.07% |
| 10 Year Govt Bond Yield | 1.61% | 0.00% | |
| RPX Composite Real Estate Index | 192.8 | 0.3 |
Stock markets are higher this morning after last week's post-election sell-off. Bonds are closed for Veteran's Day. The government also has the day off, so there are is no major economic news.
Post election, all eyes turn to the fiscal cliff. There appears to be a growing consensus that we can leave rates unchanged for the top and limit deductions. Partisan posturing and political jockeying will make the markets a miserable place for the next couple of months. Capital gains and dividends remain a wild card. The obamacare surtax will happen regardless, so financial income is taking a hit right off the bat.
The Basel III requirements scheduled to take effect on Jan 1 have been pushed back to some time in the future. SIFMA and the MBA agree with the decision.
So how will the election affect the markets and real estate? I suspect FHFA Chairman DeMarco will be out of a job, which will pave the way for principal reductions on F&F/Ginnie loans. If they don't think this through, they could face a deluge of homeowners suddenly finding themselves "unable" to make their mortgage payment.
Geithner is out for obama II, and the favorite for replacement seems to be Jack Lew. Lew is a "middle of the road" candidate that has already been unanimously confirmed by the Senate in 2010 for the OMB job.
If we go over the fiscal cliff, we will undoubtedly have a 1H recession, which could result in a 1.25% 10-year. Which means the refi boom will continue to have legs. If FHFA starts modding underwater loans to LTVs of 1.0, we should see some refi activity, especially in the FHA space. That said, if CFPB doesn't come out with a bright line definition of a QM, refinancing these folks may prove to be difficult.
Regarding a 1H recession, earnings this quarter were not great, and Sandy will probably lop 1% to 1.5% of of 4Q GDP. Taxes are going up, so we should start handicapping a 1H recession. Will it affect housing? My sense is no, the bottom is in, and the recession will be felt more in cap goods / the energy patch than in housing. JP Morgan downgraded CAT this morning based on the expected negative impact the election will have on energy and mining.
Subscribe to:
Posts (Atom)