patrick.net

bgamall4 says

. So raising near rates won't push long rates up

I talked about that in the article, that we might not even see 3% - 3.5% 10's next year

Ironman says

I know many that have done exactly that, 4+ years mortgage and tax free!!

It was a plus if you lived in a Judicial state for that reason, paying no shelter cost for year frees up a lot $

As we can see with the housing start data, rental demand curve still has legs, but slow, slow steady rise

Logan Mohtashami says

Amir Sufi who wrote the book "House of Debt" we have spoken at 2 housing

IS it a good reading. What are the highlights?

ja says

IS it a good reading. What are the highlights?

Amir talks about how the risk to the economy in the last economic cycle was on those who took out the debt and a functioning debt relief system would have been useful.

Here is a video starts at 4:39 on his view

https://www.youtube.com/embed/M5JfpqxWDwU

He is a big fan of my work

Amir Sufi ‏@profsufi
Check out housing forecast by @LoganMohtashami -- he's been spot on in past, really understands housing market: http://loganmohtashami.com/2014/12/22/2015-housing-predictions-the-bar-is-so-low-we-might-trip-on-it/ …

I for one am totally upset for the Fed not hiking rates

http://nationalmortgageprofessional.com/news/55772/fed%E2%80%99s-refusal-raise-rates-greeted-mixed-emotions

Logan Mohtashami says

I for one am totally upset for the Fed not hiking rates

i think a lot of folks wish they actually could raise them, and a lot folks who miss the days of decades past - because there's no going back. i wonder how long it will take people to realize that the economy is like "wile-y coyote" after over-shooting a turn and running off a cliff, when he's just suspended in mid air about to realize the plunge he's about to take.

Logan Mohtashami says

I for one am totally upset for the Fed not hiking rates

Logan I really find your comments invaluable to this site and I always look forward to your insights. Why are you upset about the Fed's decision to not raise rates when none of your indicators have been met?

Logan Mohtashami says

I for one am totally upset for the Fed not hiking rates

I wish they had. The bond markets have already factored them in, but in the equities there continues to be uncertainties.
Will they...Wont they. Will they...Wont they. Will they...Wont they.
If they raised the rates by a token, the stock market would have rallied, and bond rates would have actually dropped.

No other typeepitaph says

Fed's decision to not raise rates when none of your indicators have been met?

1. Claims are at a cycle high,
2. LEI is at the cycle high,
3. JOLTS data, Yellen favorite blew open to a cycle high at 5.8 Million

The Only thing that isn't on their metric is CPI Inflation which is 0.20% from the Fed Target

But YTD inflation rates look better than 2% even with the importing of deflation from the world weak economies

Running over 2.5% PPI & CPI mix

The average of 2Q's GDP deflator, median CPI and core CPI: 2.43%. https://research.stlouisfed.org/fred2/graph/?g=1LU7 …

Strategist says

I wish they had. The bond markets have already factored them in,

When I saw the 2's at 80 I thought that's it

landtof says

i think a lot of folks wish they actually could raise them, and a lot folks who miss the days of decades past - because there's no going back. i wonder how long it will take people to realize that the economy is like "wile-y coyote" after over-shooting a turn and running off a cliff, when he's just suspended in mid air about to realize the plunge he's about to take.

Logan Mohtashami says

lan

Interesting. Even if growth is North of potential, it can still be weak. More growth would be needed to have a positive impact on employment.
No matter what, this recovery is the weakest recovery ever. Very disappointing.
As I said before....there is no strong recovery, without a strong recovery in housing.

Strategist says

Interesting. Even if growth is North of potential, it can still be weak

Logan Mohtashami ‏@LoganMohtashami
Something I agree with the ChickenHawk
#FED

http://www.wsj.com/articles/why-a-stronger-housing-sector-isnt-boosting-the-u-s-economy-that-much-1441646534
Why a Stronger Housing Sector Isn’t Boosting the U.S. Economy That Much

It took me 3 years with my charts but I finally got the WSJ to call uncle last year when they wrote this has been the worst Recovery post 1980

Logan Mohtashami says

It took me 3 years with my charts but I finally got the WSJ to call uncle last year when they wrote this has been the worst Recovery post 1980

The recovery is pathetic at best. I expected a much better economy by now.
I squarely put the blame on ultra tight mortgage lending. Housing is one of the largest sector of the economy, and we must get it moving. The longer it takes housing to recover, the greater will be the housing boom, and more chances of a bubble. OC median prices could easily jump 50% by 2020, to $1 million.

Strategist says

It took me 3 years with my charts but I finally got the WSJ to call uncle last year when they wrote this has been the worst Recovery post 1980

The recovery is pathetic at best. I expected a much better economy by now.

I squarely put the blame on ultra tight mortgage lending. Housing is one of the largest sector of the economy, and we must get it moving. The longer it takes housing to recover, the greater will be the housing boom, and more chances of a bubble. OC median prices could easily jump 50% by 2020, to $1 million.

As always, I have been posting these chart for 6 year

The mathematical demand curve for these price homes is little, even working off a 230K low base, 7 years into the economic cycle you're fighting to get 500K total K sales

Why would mortgage buyers over pay for a new home when there is a 80 - 100K gap in median prices

The people who were saying the demand curve would be strong are missing 8 million home buyers in this cycle now... where are they?

Renting

Diana Olick ‏@DianaOlick
#Mortgage lending standards easing according to new @FannieMae survey http://www.fanniemae.com/portal/research-and-analysis/mortgage-lender-survey.html …

They weren't tight in the first place and I am reading its' not tight anymore

Lord have mercy on their souls

Logan Mohtashami says

They weren't tight in the first place and I am reading its' not tight anymore

That is where we disagree.

Logan Mohtashami says

Lord have mercy on their souls

:)
That is where we disagree again. Atheists have no souls.

Strategist says

That is where we disagree again. Atheists have no souls.

You know my degree was in history and senior thesis on the crusades :-)

On another note, we are doing bank statement loans now for high net worth and high cash flow buyers

Logan Mohtashami says

On another note, we are doing bank statement loans now for high net worth and high cash flow buyers

Tell me more.

Strategist says

Logan Mohtashami says

On another note, we are doing bank statement loans now for high net worth and high cash flow buyers

Tell me more.

Tradersl@aol.com

epitaph says

Why are you upset about the Fed's decision to not raise rates when none of your indicators have been met?

LEI I was talking about

JOLTS

Claims

No time in American economic history post WWII we had these numbers on these 3 key reports and have rates at Zero when core inflation YTD is over 2% and the massive importing of deflation comes from one trick pony economies and those we a debasing currency

The best part is that the world is begging us not to raise rates, like a dog... pathetic
World economies have a demographic issue we don't have that problem here with our young work force coming on line in a few years

So I AM PISSED, their language was even worst

This is Yellen to me now

bgamall4 says

Bethany McLean

bgamall4 says

She is, IMO, an evil woman.

I was only talking about her looks

The entire FannieGate thing is a giant fraud I always get into twitter fights with that group

Newbie123 says

Strategist, I believed the stock market would rally if they DONT raise rates.....I was surprised to see that the stock market did not rally.

Do you mind explaining why the stock market would have rallied if they had raised rates?

Guidance and wording of global concern is new now and it's another reason why I hated that Fed meeting, one of the worst Fed meeting I have seen since I have been in finance dating back to 1996

Market should sell out because if you raise a freaking quarter when ECI wage inflation was back where it was in 2004 when the F.F. was at 1% then the Fed is saying the economy isn't strong enough to handle a .25%

Newbie123 says

Strategist says

If they raised the rates by a token, the stock market would have rallied, and bond rates would have actually dropped.

Strategist, I believed the stock market would rally if they DONT raise rates.....I was surprised to see that the stock market did not rally.

Do you mind explaining why the stock market would have rallied if they had raised rates?

1. Not raising the rates indicates a weak economy still in need of help. Especially after months of claims by the Feds of an improving economy.
2. Uncertainties are now sky high. Wall Street hates uncertainties.
3. The stocks rallied right up to the Fed announcement, on expectations of interest rates being raised.
Nevertheless, this is wall street. Some major signs of an improving economy, and the stocks will start rallying again.

bgamall4 says

He said banks cannot pay the interest

Ehhh, what about all the variable rate business loans? A fed hike would allow banks to increase their interest take on these loans. Also, cash deposits are at a record high, so banks have no incentive to pay higher rates to depositors even if there is a modest rate hike.

Here was my case for why America can take a rate hike

1. LEI is at cycle high
2. Claims are at a historic low
3. JOLTS data line shows 5.8 Million Job openings
4. Prime working age is at 81% with a missing of 2.8 million Americans from that group at the peak of 2007 and with JOLTS
at a opening of 5.8 million it's a Skill gap mismatch as college grads are at a 2.5% Unemployment
5. ECI wage inflation is basically where it's at when the Fed raised rates back in 2004 and back then we had 1% Fed Funds

See YTD wage inflation pressure

Average weekly earnings in the private sector in San Francisco are up 9.6% YoY: https://research.stlouisfed.org/fred2/graph/?g=1SD4 …

Average weekly earnings in Detroit up 5.7% YoY: https://research.stlouisfed.org/fred2/graph/?g=1SDa …

Portland? Up 9%: https://research.stlouisfed.org/fred2/graph/?g=1SDb …

Seattle up 7.6%: https://research.stlouisfed.org/fred2/graph/?g=1SDf …

Boston up 7.3%: https://research.stlouisfed.org/fred2/graph/?g=1SDg …

One of the few times I agree big time with a Fed Member

Bullard: The case for policy normalization is quite strong since FOMC objectives have essentially been met http://bit.ly/1Mj7jdA

This slight cool down in MI2MP is actually bullish for new home sales, either due to make up shift is different or discount on top

Obviously we don't have the same back drop in terms of demand and fake demand like we had in the housing bubble, but bigger homes are great for profits bad for affordable crop

Unlike existing homes, new homes market is a 90% mortgage market place running at 500K Sales, so the market place to effective rate inflation impact would be seen there.

This is a reason we have seen a cool down in new home sales this from the start and running on 5 months of negative revisions and 2015 will be the 3rd miss new home sales year in a room unless we get a 574K print in every report until the end of the year

"bumps out the back" a surfing term used for a set of waves coming in. we're almost done the second bubble, but the builders in my location are still doing the estate homes in the gated communities into at least next year. 4000 to 5000+ sqft i doubt they will be discounted but we'll see.

landtof says

"bumps out the back" a surfing term used for a set of waves coming in. we're almost done the second bubble, but the builders in my location are still doing the estate homes in the gated communities into at least next year. 4000 to 5000+ sqft i doubt they will be discounted but we'll see.

That ratio chart above I believe it's used for existing homes which is much cheaper than new homes,
CA has been heavy this cycle for Luxury apartments. However, CA does have some major dual income factor model home buyers meaning people making over 190K combined income.

My client base is between 128K -343K with a bulk in to 179K- 257K, so those people can afford homes and this is taking out a lot of the foreign buyers out of the equation.

I know my parents home that we have been trying to sell at 1,945,000, we had no luck this season, even though our next door neighbors sold their homes for 2.5 and 2.45 million... both foreign buyers and both cash

In the past 20 years the Fed's favorite inflation metric, the PCE price index, has been below 2% half the time.