Brent Nyitray

Morning Report: The MBA addresses LO comp

Vital Statistics:

	Last	Change
S&P futures	2730	-15
Eurostoxx index	356.25	0.66
Oil (WTI)	66.47	0.03
10 year government bond yield		3.15%
30 year fixed rate mortgage		4.93%

US stock index futures are lower despite a rally overnight in Asia and Europe. Bonds and MBS are up.

We have a lot of Fed-speak today, which could translate into some volatility in the bond market, but I suspect bonds are just going to be driven by stocks and the risk on / risk off trade.

The 10 year bond touched 3.11% yesterday around noon, and then sold off as stocks recouped some of their losses. One thing to keep in mind, especially during overseas-led sell offs: First, the European markets close around 11:30 EST. Often times, the best prices (ie lowest rates) can be found right around / after the European close. Second, TBAs (which determine mortgage rates) are slow to react to big moves in the 10 year. So even though the 10 year bond might be up a half a point, it doesn’t mean the scenario you just ran will be half a point better than yesterday.

Mortgage Applications rebounded 5% last week as purchases rose 2% and refis rose 10%. Rates increased by a basis point to 5.11% – the highest since Feb 2011.

The MBA sent a letter to the CFPB asking them to address LO comp, and in particular the inflexibility of it. During the crisis, loan officers were accused of steering consumers into the loans that paid LOs the most and weren’t often the best for the consumer. In response, Dodd Frank made LO comp insensitive to product – in other words the LO makes the same on every product. While this sounds great in theory, it ignores competitive realities, the fact that LOs sometimes screw up on an application, and that state housing programs can become unprofitable for the lender if the LO makes a full commission. The MBA is asking for clearer, bright line rules from the CFPB.

In the sea of red yesterday, the homebuilders were a bright spot after Pulte released earnings pre-open. Revenues were up 74%, but new orders and backlog were up only single digits. Gross margins increased to 24%. The homebuilder ETF (which hasn’t been able to get out of its own way lately) was up smartly.

Donald Trump escalated his attacks on Jerome Powell, the Fed Chairman yesterday in an interview with the Wall Street Journal. “Every time we do something great, he raises the interest rates,” Mr. Trump said, adding that Mr. Powell “almost looks like he’s happy raising interest rates.” While Trump acknowledged the independence of the Fed, he would prefer low rates (as would every politician on the planet). BTW, I think Powell is happy the economy is in a strong enough state that he can put some distance between the Fed Funds rate and the zero bound. Monetary policy can become completely ineffective when rates are around zero.

Morning Report: Asian sell-off spreads

Vital Statistics:

	Last	Change
S&P futures	2721.25	-35
Eurostoxx index	355.01	-4.73
Oil (WTI)	69.26	0.14
10 year government bond yield		3.15%
30 year fixed rate mortgage		4.93%

US stock index futures are down this morning as a sell-off that started in Asia has spread to Europe. Bonds and MBS are up on the risk-off trade.

Chinese markets are the catalyst behind the sell-off, and it appears that non state-owned firms are having financing difficulties. The Chinese government addressed the issue on Friday, and while it soothed fears for a couple of days, investors are still worried. Financing difficulties invariably accompany bursting real estate bubbles and China’s bubble has been going on for years.

If China’s real estate bubble is bursting, the effect on US interest rates could go a couple of ways. The most likely event will be a drop in inflationary pressures as China’s currency drops and they attempt to export their way out of the problem. They could sell Treasuries to repatriate cash (in crises, you sell what you can, not necessarily what you want to) which would temporarily put upward pressure on US rates. The most likely scenario would be a risk-off one, where Chinese money withdraws out of risky assets in favor of Treasuries. It might cause the Fed to take a break.

Speaking of the Fed, the December Fed Funds futures are handicapping a 82% chance of a hike at the December meeting.

Economic growth moderated a bit in September, according to the Chicago Fed National Activity Index.

Fair Issac, the creator of the FICO score is going to re-work their model in 2019, which may bump up the scores of the more marginal borrower. Borrowers with some dings on their scores could get a boost if they maintain a few hundred dollars in their checking accounts and don’t overdraw them.

Jim Cramer warned that a 5% mortgage rate is a “line in the sand” for the economy. “We’re going to see more and more bad earnings because [a] 5 percent mortgage is the end, that is the line in the sand,” Cramer said Monday on “Squawk on the Street. ” “The mortgage rate is very high in this country.” Cramer has become critical of the Fed’s tightening regime, saying that the Fed is ignoring signals of a slowdown in the economy (particularly in housing). The thing to keep in mind is that rate changes act with a lag of about a year. This year’s moves have yet to be felt in the economy.

Note we will get the first estimate of third quarter GDP this Friday. The consensus estimate is for 3.3% growth, a slowdown from the second quarter pace of 4.2%.

Donald Trump proposed 10% middle class tax cut, which will be voted on after the election. This is an attempt to rally Republicans to the polls in order to maintain Congress. As of now, it looks like the GOP will probably increase their seats in the Senate, while Democrats are looking to possibly take over the House.

Morning Report: Existing home sales disappoint again

Vital Statistics:

	Last	Change
S&P futures	2777.25	9.25
Eurostoxx index	362.75	1.51
Oil (WTI)	69.26	0.14
10 year government bond yield		3.20%
30 year fixed rate mortgage		4.93%

Stocks are higher this morning after Chinese and Italian markets rallied on benign political comments. Bonds and MBS are flat.

Existing home sales fell 3.4% in September, according to NAR. Pretty much every part of the country saw a decline. Rising rates are affecting affordability and this is dampening sales. That said, the median home price did still rise 4.2% to 258k. Inventory improved a hair, increasing to 4.4 months’ worth from 4.2 months worth in August. Lawrence Yun, NAR chief economist, says rising interest rates have led to a decline in sales across all regions of the country. “This is the lowest existing home sales level since November 2015,” he said. “A decade’s high mortgage rates are preventing consumers from making quick decisions on home purchases. All the while, affordable home listings remain low, continuing to spur underperforming sales activity across the country.” Days on market rose to 32 days, and the first time homebuyer accounted for 32% of sales. Historically that number has been closer to 40%.

Refis dipped to 29% of all originations in September, according to the Ellie Mae Origination Insight report. As rates rise, you are seeing an increase in ARM origination, which rose to 7.2%. Credit quality also ticked up, with the average FICO rising to 727.

Bank of America is teaming up with the Neighborhood Assistance Corporation of America (NACA) to offer no-downpayment, no MI, below market rate mortgage loans to people with bad credit. BOA has promised to allocate $10 billion in mortgage credit to the program. The only requirements are the home has to be owner-occupied, and the borrower has to go through a counseling process where they learn about budgeting and getting the required documents in. The company is betting that borrowers will act like they have skin in the game, even if they don’t have any equity in the home. So far, no foreclosures in the past 6 years (which corresponds to the bottom of the real estate market. Not sure why Bank of America is hot to lend money at below market rates to uninsured low FICO borrowers without a down payment, but I suspect they are doing it for the PR or to keep the fair lending types off their back.

With the bankruptcy of Sears, and the latest housing starts data, it is interesting to look back on the company’s involvement in homebuilding. Yes, you could order a house via the Sears catalog. The heyday of the movement was the early 20th century – between 1908 and 1940, Sears sold about 75,000 kit homes. Prices were anywhere from $1,200 to $5,000 for 10 room quasi-mansions.

Morning Report: Conference Board sees strength ahead

Vital Statistics:

	Last	Change
S&P futures	2778.5	6.25
Eurostoxx index	360.61	-0.25
Oil (WTI)	69.1	0.5
10 year government bond yield		3.17%
30 year fixed rate mortgage		4.89%

Stocks are flattish on no real news. Bonds and MBS are flat.

Initial Jobless Claims fell to 210k last week, which means there is little (if any) evidence of the hurricanes affecting the employment numbers.

The index of leading economic indicators rose 0.5% in September, which is a strong reading. It points to economic strength through the end of the year and into 2019. The report noted capacity constraints, which is surprising given the capacity utilization numbers, which are still historically average at best. Note the high capacity utilization numbers in the 1970s – this was a big driver of inflation. Production generally goes from most efficient to least efficient (you use the best equipment first, and then go to more and more marginal equipment as you continue to expand). The less efficient equipment means higher costs and those get passed on to the consumer. The current capacity utilization levels are nowhere near what they were in the 70s.

capacity utilization

The Conference Board sees growth coming in at 3.5% for the second half of 2018, however we will need more help from housing to put up those types of numbers in 2019.

The CFPB is taking a closer look at the disparate impact theory of fair lending, presumably with an eye to limiting the more expansive use of the theory under the previous administration. The CFPB is looking to possibly codify this in a rule, which would be much more permanent than a more informal statement. The Obama Administration took an aggressive stance towards the use of disparate impact, which is a controversial idea – it basically means that intent is irrelevant. If your numbers don’t match the population, you are guilty of discrimination, no questions asked. Since discriminatory intent is notoriously hard to prove, this rule amounts to a waiver for the government from having to prove it. It is a plaintiff’s dream.

The MBA sees mortgage rates topping out soon. Their latest forecast has mortgage rates leveling out at 5.1% over the long term. In other word, regardless of what the Fed intends to do going forward, the Great Post Crisis Mortgage Rate Hike is largely done. Note the MBA sees even less volume in 2019 than 2018, although at a much shallower drop than 2017-2018.

Morning Report: Markets fret over the FOMC minutes

Vital Statistics:

	Last	Change
S&P futures	2806	-9.75
Eurostoxx index	364.08	0.54
Oil (WTI)	68.98	-0.77
10 year government bond yield		3.22%
30 year fixed rate mortgage		4.89%

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

The minutes from the September FOMC meeting were released yesterday, and may have caused a delayed sell-off in stocks and bonds. Nothing was all that surprising in the document, although some in the business press attributed the sell-off to a surprising consensus that more tightening is needed. There was talk that rates might have to go into restrictive territory as opposed to just neutral territory. That apparently freaked out the bond market, although it didn’t really make a move until closer to the closing bell. FWIW, the dot plot envisions perhaps 2 or 3 hikes in 2019, which probably wouldn’t be characterized as “restrictive” given they just took out the term “accomodative” to characterize current policy. There was also talk about becoming more opaque, and spoon-feeding the markets a little less about what they are going to do. The economic textbooks talk about managing inflationary expectations, and part of that management means keeping markets on their toes. If the markets correctly anticipate what the Fed is going to do, their moves have less of an effect. Sort of like a monetary Heisenberg principle.

Regardless, the Fed was surprised to see how much economic strength there was in the economy (interestingly, they always overshot in their growth forecasts in 2008-2016, but now they are undershooting). Regardless, they are worried about the global economy, and the growth difference between the US and the Eurozone. The strength in the labor market is starting to bring out some cost-push inflation as well. Overall the minutes didn’t tell us anything we didn’t already know – growth is strong, inflationary pressures are building, trade wars are bad, and the Fed is going to keep raising rates.

Housing starts disappointed in September, falling 5.3% MOM to a seasonally-adjusted annual rate of 1.2 million. This number is up on a YOY basis however. Weather-related issues probably played a part in the disappointing number, however building permits were anemic as well. Most of the decline was in the volatile multi-family segment, while single family was generally up small.

Over 3/4 of Americans view renting as cheaper than owning, according to a survey from Freddie Mac. Blame higher home prices and mortgage rates. Note that 58% of renters don’t intend to buy a home, which is an increase from 54% earlier in the year. Rental supply is also a factor – it recently hit a 3 decade high. In the aftermath of the housing crisis, builders focused on urban rental properties targeted towards 20-something Millennials – which has created a glut, particularly at the higher price points. In addition, we have a shortage of starter homes, as builders concentrated on the only sector that was working at the time – luxury.

China’s stock market is down 30% this year, in stark contrast to the rest of the world. China has always marched to its own drummer, but they have a serious real estate bubble. If that is unwinding, it will reverberate in the high end West Coast markets.

Morning Report: The CFPB wants to define the term “abusive.”

Vital Statistics:

	Last	Change
S&P futures	2810	2.75
Eurostoxx index	364.61	-0.6
Oil (WTI)	71.52	-0.5
10 year government bond yield		3.18%
30 year fixed rate mortgage		4.95%

Stocks are flattish this morning after yesterday’s huge rally. Bonds and MBS are down.

We will get the minutes of the September FOMC meeting today at 2:00 pm. Be careful locking around that period. They usually aren’t market-moving, but you never know.

Lots of people are returning from the MBA conference in Washington, DC, so let’s catch up on the economic data from the past couple of days.

Job openings hit a record (going back to 2000) last month as 7.1 million positions went unfilled. The quits rate was unchanged at 2.4%. The quits rate has been steadily inching upward and we are back to early 2001 levels. The quits rate is generally considered to be a predictor of wage inflation.

Retail sales for September disappointed at the headline level, rising only 0.1%. The control group, which strips out autos, gas stations, and building materials rose 0.5%, which was towards the higher end of expectations. Department Stores were especially weak, which isn’t surprising given that Sears just filed for bankruptcy. Overall, consumption for the third quarter looks to have been strong, which will support a good GDP number.

Industrial production rose 0.3% last month, and manufacturing production rose 0.2%. Capacity Utilization was steady at 78.1%. Manufacturing was up about 3.5% YOY, which is an inflation-adjusted number. If you add back 2.5% inflation, we are looking at 6% nominal growth, which is a very respectable number. Suffice it to say that whatever trade wars seem to be occurring have yet to show up in the numbers. Also, with capacity utilization stuck below 80%, we don’t have inflationary pressure from more marginal (and costly) production being used.

Mortgage applications fell 7% last week as purchases fell 6% and refis fell 9%. Seasonal adjustments are primarily responsible; unadjusted applications were more or less flat, which is kind of impressive given that rates rose about 16 basis points in the previous two weeks.

CFPB Chairman Mick Mulvaney told the MBA conference that regulation by enforcement is dead. Regulation by enforcement was a prime tactic of the Cordray regime, which was characterized by intentionally vague rules. Dodd-Frank inserted the term “abusive” into the vernacular, and while words like “fair” and “unfair” have been litigated over the past century such that we all have a pretty good legal idea of what they mean, “abusive” is still pretty much a blank canvas. The CFPB is working on a definition of what the term actually means.

“We know what ‘unfair’ is,” Mulvaney said. “We know what ‘deceptive is; I’m not sure we know how to define ‘abusive.’ This is an example of how we are looking at issues….”We are still Elizabeth Warren’s child, for better or worse. We’re not the FDIC; we’re not the SEC…I want the Bureau to get there, to where we are associated with other regulators and not controversial because of its partisan circumstances, which colors what half of Americans think of it.”

“Partisan” is a good description of how the agency was initially staffed. Here is one lawyer’s description of how things went. The agency ensured that only Democrats who were inherently hostile to the financial industry were hired to staff out the agency. Mulvaney may have different goals than Richard Cordray, but the rank-and-file of the agency do not.

Trulia noted that price reductions at the high end of the market accelerated in July and August. Over 17% of US listings had a price cut during August. Between tax reform, higher rates, and higher prices it was only a matter of time before we started seeing an impact at the higher price points. Don’t forget that in the aftermath of the crisis, luxury real estate was about the only sector that was working for homebuilders. While the West Coast has been able to absorb that inventory, the East Coast definitely has not. Indeed, tony NYC suburbs are swollen with $1 million + properties for sale, and some have gone as far as to ban “for sale” signs.

Trump continued to jawbone the Fed, calling it his “biggest threat.” FWIW, there isn’t a politician on the planet that actually likes tightening cycles, but most have the common sense not to say anything about.

Morning Report: Global sell-off continues

Vital Statistics:

	Last	Change
S&P futures	2758.75	-22
Eurostoxx index	359.68	-7.24
Oil (WTI)	71.9	-1.3
10 year government bond yield		3.18%
30 year fixed rate mortgage		4.95%

Stocks are heavy yet again as the global sell-off continues. Bonds and MBS are up.

The stock market sold off heavily yesterday on no real news. There wasn’t any one particular catalyst – some in the business press are blaming Powell’s comments last week, others are pointing to a lack of stock buybacks ahead of earnings, and others are talking about the FAANG stocks giving up their leadership position. Whatever the reason, it is important to keep in mind that the stock market is less than 5% from its all time high, and the VIX is hanging around in the low 20s. Stocks don’t go up in a straight line, and they don’t go down in one either.

The global sell-off is creating a flight to quality. The 10 year bond yield is back below 3.2%. Mortgage backed securities will lag that move, generally wanting to make sure that it is “real.”

Notwithstanding the recent moves, investors have generally been pulling money out of bond ETFs. Note that shorter-duration funds did receive inflows, more evidence that money market instruments are beginning to attract assets after a long slumber.

The Producer Price Index rose 0.2% last month, in line with expectations. Transportation services (i.e trucking, rail and air freight charges) were the source of inflationary pressure. Energy prices are probably driving that, although labor shortages are an issue as well, especially in trucking. The PPI was the first of 3 inflation readings this week. We will get CPI today and Import / Export prices on Friday.

Wholesale inventories rose by 1% in September, which follows a strong increase in July. This should provide a boost for third quarter GDP numbers.

Hurricane Michael made landfall last night as a Category 4 storm. Initial damage estimates from Wells Fargo top $10 billion. Expect to see an uptick in delinquencies towards the end of the year. Gulf Oil production will be affected as well, although oil prices are generally correlating with every other asset as the global sell-off gathers momentum.

Morning Report: Getting ready for earnings season

Vital Statistics:

	Last	Change
S&P futures	2887.25	-1
Eurostoxx index	372.16	-0.77
Oil (WTI)	74.82	-0.14
10 year government bond yield		3.23%
30 year fixed rate mortgage		4.95%

Stocks are flat this morning on no real news. Bonds and MBS are flat as well.

Mortgage Applications fell 1.7% last week as purchases fell 1% and refis fell 3%. The average contract interest rate for conforming loans increased to 5.05% from 4.96% last week. This is the first print over 5% since 2011.

Donald Trump jawboned the Fed a little yesterday, saying “I think we don’t have to go as fast” referring to the Fed’s pace of tightening. Politicians universally love loose central banks and loathe hawkish ones. Ronald Reagan tolerated Paul Volcker’s tightening campaign, which caused the worst recession since the Great Depression only because the inflation of the 1970s was so bad that a recession was preferable. Inflation isn’t bad right now, and if we weren’t retreating from the zero bound, the Fed probably wouldn’t need to be as aggressive as it is being. Jerome Powell said we were “a long way from neutral” last week, but what “long way” means is anyone’s guess. The market thinks another 75 bps in the Fed Funds rate and then a pause.

Fannie Mae reported that serious delinquencies (90+) fell to 0.82% in August, down .06% from July and down from 0.99% a year ago. DQs are back to 2007 levels, and more or less are sitting at historical pre-crisis averages. DQs will probably increase due to Hurricane Florence (those loans won’t go down 90 days until the holiday period), but for now the strong labor market has DQs back to normal.

Venerable retailer Sears is expected to file for bankruptcy this week. Fun fact: in the late 1960s, the 5 biggest retailers in the US were the 5 geographic divisions of Sears. The company has been kept on life support by hedge fund manager Eddie Lampert, but he wants to see a bigger reorganization of the company.

Earnings season starts in a couple of weeks, and the banks are the first to report. Generally speaking, analysts expect the third quarter to be the strongest for the sector since the crisis, largely driven by volatility and tax effects. The bigger question is what will drive growth going forward, especially if rising rates lowers borrowing demand. We certainly see it in mortgage banking, but it could be an issue for corporate borrowers as well. Corporate borrowers took advantage of the ZIRP years to refinance existing high coupon debt and borrow at cheap rates for general corporate purposes. That may crimp borrower demand going forward. Note that the banking sector has been underperforming the market over the past 6 months or so:

Speaking of banks, HSBC reached a settlement with the Justice Department for $756 million relating to MBS issued during the bubble years. HSBC (a UK bank) bought Household Financial in the early 00s to enter the US residential real estate lending market.

The mortgage industry is a boom and bust business, and we are seeing layoffs at places like Movement, Wells, and JP Morgan. Fannie Mae’s Chief Economist thinks this is still in the early innings. “I do believe you will see more layoffs…We are at the beginning of that I would say,” he said. “It is a cyclical business and it is driven by the cyclical behavior of interest rates. So, none of that should be a surprise to anyone. The only thing different in this cycle was that it was policy that drove rates, so they were so low for so long.” We are headed into the lean Q4 and Q1 time of year – I wouldn’t be surprised to see more announcements, especially at the banks during earnings calls.

Morning Report: Small Business Optimism still at record levels

Vital Statistics:

	Last	Change
S&P futures	2881	-13
Eurostoxx index	370.66	-1.75
Oil (WTI)	74.94	..67
10 year government bond yield		3.25%
30 year fixed rate mortgage		4.97%

Stocks are down this morning as the global sell-off continues. Bonds and MBS are down after taking yesterday off.

Small business optimism hit its third highest reading in September. This survey goes back 45 years, so that is an impressive data point. “This is the longest streak of small business optimism in history, evidence that tax cuts and regulatory rollbacks are paying off for the economy as a whole,” said NFIB President and CEO Juanita D. Duggan. “Our members say that business is booming and prospects continue to look bright.” We are also seeing plans translate into actual spending, especially in capital expenditures. For a long time, businesses were saying they planned to increase investment in their businesses, but they weren’t actually doing it at the moment. That has changed.

While the sell-off in US stocks is gaining some attention, Asian markets are at 17 month lows, driven by emerging markets and trade fears. The IMF just downgraded global growth for the first time in two years, based on the same issues. Chinese market weakness is encouraging more selling. This weakness is putting additional pressure on the Chinese currency, which only adds to the trade tensions between the US and China.

The higher interest rate bet (short Treasuries) is the biggest trade on the Street right now, and many hedge funds rang the register last week when rates spiked. The net speculative short position fell to 740k from 756k the week before. Implied volatility in bond options also increased, which means the market is expecting further big moves. Volatility tends to beget volatility, so we could have a bumpy road ahead. Be careful floating.

Fun fact: There have only been 4 years where bonds had a negative yearly return in the past 50 years: 1994, 1999, 2009 and 2013. This year is looking like it could be another. That said, the bond bear market was already well underway in the late 60s, having begun about 10 years earlier, when the ultra – low interest rate environment from the Great Depression and WWII ended. In other words, the most relevant comparison to the current economic climate is the the 1950s and 1960, which this data range ignored.

The Conference Board’s Employment Trends Index declined in September. “The US economy is very strong now. Demand for workers is likely to continue growing rapidly in the coming quarters, but with the unemployment rate now at 3.7 percent, recruiters have their work cut out for them. They will have to bring more people off the sidelines faster. In the meantime, businesses will have to squeeze more out of their current workers, either by increasing working hours or raising labor productivity. Labor market tightness varies across occupations and geographies. However, for the nation we expect the unemployment rate to go down to 3.5 percent or even lower in 2019. We also expect labor force participation and productivity to gradually increase, and wages to further accelerate” said Gad Levanon, Chief Economist, North America, at The Conference Board.

Hurricane Michael is threatening the Florida Panhandle and Georgia, and will probably dump a lot of rain on the Eastern Seaboard this week.

Morning Report: Surprisingly low payroll gain in September

Vital Statistics:

	Last	Change
S&P futures	2908.5	0
Eurostoxx index	377.44	-2.24
Oil (WTI)	74.56	0.25
10 year government bond yield		3.23%
30 year fixed rate mortgage		4.93%

Stocks are flat after the jobs report. Bonds and MBS are down

Jobs report data dump:

Payrolls up 134,000 (way below expectations)
Unemployment rate 3.7%
Labor force participation rate 62.7%
Average hourly earnings up 0.3% MOM / 2.8% YOY

Definitely a bond-bullish jobs report, with payrolls and average hourly earnings below expectations. The global sell-off in bonds continues, which appears to be dominating. Yet another jobs report where ADP and the BLS get completely different readings. The unemployment rate is the lowest since 1969.

While the business press is focusing on the unemployment rate, which is hitting the lowest since the late 60s, the labor force participation rate seems to be stuck at just under 63%. That ratio (and the employment-population ratio) should be moving higher. Yes demographics (the retiring baby boom) explain some of it, but as people live longer, people should be working longer as well. It probably should go higher, but in the meantime highly paid baby boomers are being replaced by lower earning Millennials, which helps explain why average hourly earnings are moving up at an unsatisfying pace.

Beware of narrative changes. Good news is now bad news. Good economic news now is a negative for stocks because it means rates are going higher. FWIW, higher rates will be negative for some sectors and benign for others. But yes, REITs and utilities which were prized for their dividend yields during the ZIRP years are now going to be under pressure. The homebuilders will be sensitive to this as well, however they shouldn’t be. There is enough pent-up demand for housing that they should be able to pump out volume for years to come. As long as rate are rising for the right reasons (stronger growth encourages investors to take more risk) and not the wrong reasons (inflation on the horizon) then it should be a non-event for stocks. That said, money market instruments, which were eschewed by investors during the ZIRP years, are going to re-take their share of the investment dollar.