Tumble! Mortgage Purchase Applications Drop 33% YoY As Economic Shutdown Continues

According to the latest survey from the Mortgage Bankers Association (MBA), the Refinance Index decreased 19 percent from the previous week and was 144 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 12 percent from one week earlier. The unadjusted Purchase Index decreased 12 percent compared with the previous week and was 33 percent lower than the same week one year ago.

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Yes, 33% lower than the same week a year ago.

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And this was in spite of the historic drenching of the market by The Fed with liquidity and trillions in economic something by Congress.

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And nearly a third of U.S. apartment renters didn’t pay April rent.

This was a tumble!

LOIS (LIBOR-Overnight Indexed Swap) Spread Spikes As Fed Adds $4.5 Trillion To Its Balance Sheet

Historically, when the spread between LIBOR and the safer OIS (overnight indexed swap)  widened, it meant that banks were having trouble borrowing and was a warning of danger for the economy. And the LOIS spread is widening!

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The Federal Reserve has reversed course on its balance sheet unwind, but the reversal  started in September of 2019, well ahead of the known corona-virus outbreak in Wuhan China. In fact, The Fed has added $4.5 trillion in recent weeks.

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Apparently at the December 11, 2019, the Fed’s Open Market Committee (FOMC) only saw Fed Funds target rate increases coming.

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Treasury Repo collateral has spiked recently.

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And we are seeing both short and long rates crashing (but the short rates are crashing faster than long rates,

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leading to a steepening of the Treasury yield curve.

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Treasury volatility is on the rise again.

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The coronavirus is NOT a good thing.

Yes, coronavirus fears are sweeping the globe.

But The Fed drives me crazy!

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Another Trading Day, Another Trading Halt (NASDAQ Opens Down 7%, Europe Down 9%, Brazil Down 11.65%)

Another trading day, another trading halt as NASDSAQ opens down 7%.

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Europe is a sea of red as is Brazil.

Here are the circuit breakers thresholds and time durations:

Level 1 halt (7% decline in S&P 500 index)

  • Trading will halt for 15 minutes if drop occurs before 3:25 p.m.
    At or after 3:25 p.m.—trading will continue, unless there is a Level 3 halt.

Level 2 halt (13% decline in S&P 500 index)

  • Trading will halt for 15 minutes if drop occurs before 3:25 p.m.
    At or after 3:25 p.m.—trading will continue, unless there is a Level 3 halt.

Level 3 halt (20% decline in S&P 500 index)

  • At any time during the trading day—trading will halt for the remainder of the trading day.

Trading has resumed in America. As of 10am EST, Europe keeps crashing (down 10%).

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High yield CDX gets crushed!

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Gold is down 3.82%, silver is down 5.40% and Brent crude is down 6.43%.

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UPDATE:

Dow down >2,000. Eurozone stocks crushed like an oversteamed bratwurst!

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Get to the choppa!

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10Y Treasury Yield Hits Lowest Level In Modern History (Kocherlakota Calls For 25-50 Basis Point Cut)

Mac! Mac! Mac! 

While the US Treasury 10-year has just hit modern history lows, the Freddie Mac 30-year survey rate is CLOSE to its all-time low rate!!

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Meanwhile, former Minneapolis Fed President Narayana Kocherlakota is calling for The Fed to cut rates immediately!

The Fed’s rate-setting Federal Open Market Committee holds its next meeting on March 17-18. I don’t think that the FOMC should wait that long to deal with this clear and pressing danger. I would urge an immediate cut of at least 25 basis points and arguably 50 basis points. That’s a cheap insurance policy for the economy that the Fed shouldn’t pass up.

Fear! Dow Down >800 Pts, Oil Down 4.5%, Gold Up 2%

Fear is roiling the markets on Monday.

Thus far, the Dow is down over 800 points.

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Global equity indices are seeing red.

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The 10-year Treasury yield is down over 10 basis points.

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WTI Crude is down 4.36%. Gold is up 1.88%.

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Fear is dominating the market!

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But one can do well on the corona fear with Proshares S&P500 short ETF!

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