Today - Thursday, March 5, 2015
- February payroll growth should come in at 220K, according to Goldman economist David Mericle. That's below the consensus estimate of 235K as Mericle expects the effect of four major snowstorms last month to weigh on the result.
- The unemployment rate, however, should reverse its tick higher in January, and move back down to 5.6%. Average hourly earnings are expected to rise 0.2%, but there's some upside risk due to statistical distortions caused by the snowstorms.
- First-time homebuyer budgets (how much they're willing to spend) are up 24% vs. 2014, according to Bank of Montreal's (U.S.) homebuying report, and the expected down payment slips to 13% from 16% a year ago. 77% of those surveyed have made "lifestyle cutbacks" to save for a home vs. 72% in 2014.
- Turning to Texas and the effect of the energy crash, Susquehanna checks show the spring selling season is shaping up to be stronger than last year. The team visited entry-level offerings from D.R. Horton (NYSE:DHI), Pulte Group (NYSE:PHM), Lennar (NYSE:LEN), and Beazer (NYSE:BZH), and found things "surprisingly strong."
- The news supports management views of higher sales and margins, says Susquehanna, and many builders indicate price hikes of 3-5% in recent months given the strong demand. The team also notes getting a mortgage seems like less of an issue, labor is still tight, and rental costs are, in part, behind the boosted entry-level interest.
- ETFs: XHB, ITB
- The FRBNY used to be the banking industry's big daddy, but that power has shifted to Washington, writes Jon Hilsenrath, where a little-known committee run by Fed governor Daniel Tarullo wields the big regulatory stick.
- Behind the move is a previously undisclosed 2010 paper known as the Triangle Document which put D.C. at the center of bank supervision, and the Fed there is making its presence felt.
- During internal debates on a number of issues - including Ciit's CCAR failure and JPMorgan's London Whale loss - New York Fed examiners have been challenged by those in D.C., and at times have been shut out of policy meetings, and subject to public criticism by Tarullo, reports Hilsenrath.
- The changes put FRBNY chief Bill Dudley in something of a vise - still open to criticism as it relates to bank oversight by Congressional gadflies like Elizabeth Warren, but maybe not really able to do anything about it. Publicly supportive of the new system, Dudley behind the scenes is working to restore his bank's reputation.
- ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, SEF, IYG, FXO, FNCL, FINU, RWW, RYF, FINZ
- Mortgage rates fell for the first time in four weeks, according to Freddie Mac's latest weekly survey.
- The 30-year fixed rate mortgage averaged 3.75%, down from 3.80% last week, while the 15-year fixed-rate mortgage fell to 3.03% from 3.07% in the prior week.
- A year ago, the respective 30-year and 15-year rates averaged 4.28% and 3.32%.
- U.S. investors have pulled $16.8B from equity-based ETFs in 2015 and sent $16.9B to bonds. That’s the biggest divergence in quarterly data going back to 2000.
- With nine straight quarters of stock-market gains, equity valuations at a five-year high, and the Fed bracing to raise interest rates, investors may be rethinking the $240B they've pumped into U.S. stocks over the past two years.
- Bearish options contracts on the SP 500 are 9.25 points more than bullish ones. “There seems to be more apprehension and hesitation than we normally have at this stage of bull markets,” one analyst says.
Wednesday, March 4, 2015
- Manufacturers in a number of districts as well as agricultural firms in others were seeing weaker demand for exports due to the strong dollar, according to the just-released Fed Beige Book, and energy exploration in Texas, North Dakota, and the Gulf was hit by low oil prices.
- In total, the survey found moderate growth in six of the Fed's twelve districts, but just slight or no increases in most of the others, Richmond reported slowing growth.
- The FOMC hawks have had their say of late, and they're ready to get busy tightening monetary policy, but the Chicago Fed's Charles Evans remains in no hurry, seeing few benefits, but plenty of risks from a premature rate hike.
- He expects inflation as continuing to remain below the 2% target until 2018, and has "serious concerns" the price gauge could run even lower than his soft forecast.
- His comments suggest a decent probability of Evans dissenting when the FOMC - as is widely expected - drops "patient" from its policy statement later this month.
- ETFs: SHY, BIL, STPP, VGSH, SHV, FLAT, SCHO, DTUS, SST, DTUL, TUZ
- Fed Chair Janet Yellen lashed out at the culture in the nation's biggest banks yesterday, echoing similar comments from other regulatory officials to increase pressure on large U.S. financial institutions to improve.
- "It is unfortunate that I need to underscore this, but we expect the firms we oversee to follow the law and to operate in an ethical manner," said Yellen. "Too often in recent years, bankers at large institutions have not done so, sometimes brazenly."
- Her remarks come just days before the Fed's annual bank stress tests.
Tuesday, March 3, 2015
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