Morning Report: Quicken IPO prices below expectations

Vital Statistics:

 

Last Change
S&P futures 3315 -3.6
Oil (WTI) 42.53 -0.52
10 year government bond yield 0.52%
30 year fixed rate mortgage 2.85%

 

Stocks are lower this morning on no real news. Bonds and MBS are up.

 

Initial Jobless Claims fell to 1.1 million last week from 1.4 million the week before. Claims are going in the right direction, but claims over 1 million are still super high.

 

Congress is still negotiating a second relief package. Supposedly the two sides are “trillions of dollars off.” The sticking point is size and the target. Democrats want something along the lines of the initial $3.4 trillion plan, including $1 trillion for state and local governments (read deep blue states and cities). Republicans want something much smaller, and have little interest in bailing out places like Portland, Seattle, and New York City.

 

Goldman is out with a call this morning that a COVID vaccine could upend the bond markets and cause a rotation out of stocks. FWIW, I don’t see how the bond market can fall off without the Fed ending purchases and a resurgence of inflation. We are certainly seeing anecdotal evidence of inflation, but nothing yet that shows up in the numbers.

 

Quicken’s IPO Rocket Mortgage (RKT) priced yesterday at $18 per share. The company will sell 100 million shares at that price This was below the initial price talk of 150 MM shares at $20 – $22 a share. I am not sure when it will open for trading. After the IPO CEO Dan Gilbert will control 79% of the vote.

 

Zillow is back to Zillow Offers in 24 markets. This is where Zillow will buy your house, fix it up for sale and then sell it. The company recently teamed up with homebuilder D.R. Horton to buy the existing homes of people who buy a new one.

 

Mortgage credit increased in July according to the MBA. “Credit availability rose slightly in July – the first increase in eight months – as the supply of certain types of adjustable rate mortgages (ARMs) and jumbo loans increased. The improvement was more of a leveling off from the precipitous drop earlier this spring. Credit availability is still over 30 percent lower than a year ago and near its lowest level since 2014,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “The July data signals that lenders saw conditions improve this summer, as forbearance requests flattened, and record-low mortgage rates spurred strong levels of purchase and refinance activity.”

Author: Brent Nyitray

In the physical sciences, knowledge is cumulative. In the financial markets, it is cyclical

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