And a good Thursday A.M.,

A little catch up first… yesterday the Fed held rates steady, shared the recovery would not be V-shaped, unemployment is and will continue to be a problem for the recovery (20mm people out of work and we only hire 2mm/yr, you can do the math on the job recovery), pledged to keep rates at close to zero through 2022, and buy bonds of any type (specifically more mortgage bonds) in the amount needed to provide stability to the markets and economy. Other than saying it’s too tough, I quit. I can’t imagine a more bond-friendly risk-off position. Shortly after those little kernels of wisdom were shared, equities tried to make a run up, even turning positive for a brief moment. The reality set in and the no V-shaped recovery made equities a bit overbought (maybe by 25%). Equities faded into the close and the Dow woke up today down 800. The selling has continued and the Dow is now down 1500 points. If I had to bet, I think there is a lot more pain coming in equities. As expected, bonds are en fuego. The 10-yr back to .66, mortgage bonds +20.  In truth, it was not too difficult to expect this first crack in the armor when bankrupted companies like Hertz had their stock run up higher after the bankruptcy filing than where it was prior to.  The market became so consumed that they were buying everything in sight and inflating the bubble too far.  As Dan Rawitch reminded this a.m., “A tweet from twitter thumbs Trump could change everything in a moment.” I was amused that on both Tuesday and Wednesday he felt the need to remind everyone that the NASDAQ broke records.

Today is a good day to lock. I am going to take my own advice. Bond prices can absolutely, and probably will run higher, but pigs get fat and hogs get slaughtered. “There are thousands of Robin Hood stock traders getting slaughtered at the moment as they gamble their stimulus checks.”

Important and excellent news from FHA. In a change of a long standing policy on denying home ownership to DACA recipients, Ben Carson, secretary of the Department of Housing and Urban Development, told Congress on Tuesday that he supported Deferred Action for Childhood Arrival recipients being eligible for mortgages backed by the Federal Housing Administration. This is an exciting and long overdue opportunity for our community.

 
Please remain safe and stay healthy, make today great!