If the Financial Times report is to be believed, and there is no indication contrary, then FRBNY took warnings earlier this year to heart and began investigating. FT links a February speech by Fed Governor Jeremy Stein about “overheating credit markets” to what looks like an ongoing probe of bank exposure to mortgage REITs. “The worry is that MReits could [...]
Retail flows, in my analysis, having absorbed any minor trepidation from the debt ceiling and shut down, are seemingly positioned as if taper and monetary policy are back to last year’s unlimited promises. That may very well be the case, though it does not appear as if institutional positioning agrees. In my mind, the MBS and UST portions of the [...]
If the government shutdown ends in the near future, there will be a data dump unlike anything we have seen before. The September jobs report at the end of October the same time as retail sales and US imports/exports, etc. The backup in data crunching to fit survey results into seasonally adjusted output may delay the timing of the more [...]
Bank of America announced its corporate earnings and the results were similar to what we have seen from Wells Fargo, Citigroup and JP Morgan. Trading revenues took a hit on fixed income, but mortgage originations are way down. Throughout the conglomerate, total originations were $22.6 billion in Q3, down 11% from Q2. Revenue from mortgages dropped from $2.4 billion in [...]
In March, Wells Fargo CFO Timothy Sloan previewed the bank’s first quarter earnings. Noting that Wells had originated $524 billion worth of mortgages in 2012, he expected, as the industry did, volumes and profitability to come down a bit in 2013. He also added, “We love the mortgage business.” I don’t think he had the third quarter of 2013 in [...]
With the federal government shut down, the seasonal adjustment calculations are on holiday with the rest of the statistical agencies. Perhaps that is a positive aspect to the unfolding drama. However, in their absence we are left overanalyzing other major economic parameters. Given the monetary relevance in the weeks after the taper “surprise” and the incoming (potentially) change in Fed [...]
The September FOMC meeting minutes continually refer to “tightening” as the primary concern, matching what I assumed when the decision was first announced in September. “For example, questions were raised about the effects on the housing sector and on the broader economy of tightening in financial conditions in recent months, as well as about the considerable risks surrounding fiscal policy. [...]
The economic pattern we have seen since early 2012 is quite unique. Historically speaking, recessions involve a rather short preparatory phase where the slowdown is first noticeable. Then, there is a sharp drop in income, output and any other indication. Typically, that recession pattern was followed by an equally sharp rise in income, output and nearly every other indication; that [...]
I’ve gotten a few emails asking for more detail on why the market structure seems to have changed or evolved since about 1990, particularly that relation to the Federal Reserve’s full implementation of interest rate targeting. Coincidence and correlation is not always causation, so it is useful to unpack the full chain of circumstances between them to get a better [...]
Market risk in whatever asset class is usually estimated by volatility, and conceptually thought out in that way. Higher volatility is typically associated with “riskier” markets, particularly stocks. Let’s assume that you have two market choices for investment. The first features a standard deviation (1-year period of weekly market returns) of 1.48% where the VIX is 12.83. The second market [...]
Stay In Touch