Thoughts on Brexit.

One issue is that the Brexit has not actually happened. The process should take at least 2 years and politicians could conceivable ask for a "Do you really, really want to do this?" referendum. This could have the effect of prolonging the recovery time for markets because now we have a black swan event which may or may not happen some time 2 or more years from now.

This could have the effect of prolonging the period of uncertainty and preventing the recovery of the markets.

In addition macroeconomic fundamentals are still weak or, at best, show modest growth. That is not an environment conducive to rapid recovery of equity prices.

Contrast this to a black swan event such as the earthquake and nuclear disaster in Japan. There the Nikkei lost 16% but fully recovered in 4 months. Recoveries by markets from Brexit may well take much longer.

Friday Funk: Hi Tension

British funk pioneers help get your cool back after Brexit chaos.


Year/year Durable Goods Orders down 17 Consecutive Months.

Durable Goods Orders (May 2016) – New Orders month/month -2.2%. Previous was +3.3% – New Orders year/year +3.2%. Previous was +1.9% – Ex-transportation month/month -0.3%. Previous was +0.5% – Ex-transportation year/year -0.4%. Previous was -1.2% – Core capital goods month/month -0.7%. Previous was -0.4% – Core capital goods year/year -3.6%. Previous was -4.2%. This indicates […]


Mixed Fundamentals

Jobless Claims (week ended 6/18/2016) – New Claims seasonally adjusted 259,000. Previous was 277,000 – New Claims unadjusted, totaled 249,160 a decrease of 17,760 from previous – 4-week Moving Average seasonally adjusted 267,000. Previous was 269,250 Although Initial Jobless Claims are a small part of the total movement in and out of jobs each month […]


It’s Housing Data Day.

MBA Mortgage Applications (week ended 6/17/2016) – Purchase Index Week/Week -2.0%. Previous weeks were -5.0%, +12.0%, -5.0%, +5.0%, -6.0%, +0.4%, +1.0%, -2.0%, -1.0%, +8.0%, -2.0%, +2.0%, and -1.0%. – Refinance Index Week/Week +7.0%. Previous weeks were -1.0%, +7.0%, -4.0%, +0.4%, +1.0%, +0.5%, -6.0%, -5.0%, +3.0%. +11.0%, +7.0%, -3.0%, and -5.0%. – Composite Index Week/Week +2.9%. […]


Friday Funk: ode to ledengary funk guitarist Will Bernard

Get your cool back for the weekend with this funk guitar lineage story, and two accompanying tracks.


Housing Starts Remain Weak.

Housing Starts (May 2016) – Starts seasonally adjusted, annualized 1,164,000. Previous was 1,167,000 – Permits seasonally adjusted, annualized 1,138,000. Previous was 1,130,000. Not only are Housing Starts below the needed level of 1,500,000 but the gains are concentrated in 5+ unit apartment buildings. Homeownership is becoming more difficult and depriving middle-class people of the advantages […]


Is Trended Credit Data a Trojan Horse?

On June 25 we will see significant changes to how credit scores are calculated and how the FNMA underwriting system will make decisions on loans based on credit.  The underlying concept is called “trended credit.” The way credit reports have been done is to take a snapshot of what a borrower’s credit looks like at […]


Inflation on Target. Is the Jobs Market Softening?

Consumer Price Index (May 2016) – CPI month/month +0.2%. Previous was +0.4% – CPI year/year +1.0%. Previous was +1.1% – CPI core (less food & energy) month/month 0 +0.2%. Previous was +0.2% – CPI core (less food & energy) year/year +2.2%. Previous was +2.1% Nothing to see here.   Initial Jobless Claims (week ended 6/11/2016) […]


State of the mortgage industry – dispatch from Mastermind 2016

What does a huge sales conference tell us about the state of the industry. A lot as it turns out.

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