Market Snapshot November 12, 2020


Good Thursday AM,


I hope everyone took a moment to thank our Veterans who have continued to keep us all safe.


Covid cases are surging across the US and are again the biggest news item being discussed. Many states are either imposing new restrictions, as they have in New York, or are threatening to do so. The vaccine is great but the timing is certainly not now and with the surge in cases, and restrictions on businesses being re-imposed, there will be economic fallout. Equities are seeing it and both the Dow and S&P are down. Bonds are finally up a bit (but nothing yet to get excited about). The 10-yr at .91 is 20bps higher than a week ago. Mortgage bonds are also improving a bit. Both the Treasury Yield and Mortgage Rates do have an opportunity to improve from here. The economic news today was mixed but the BIG item, which is CPI, was very bond friendly, coming it at ZERO, when the market was looking for a .2% handle. This is extremely good for bonds, as the FED has tied their rate targets around inflation with a strong goal of getting well above 2% and staying there. On the not friendly side, Jobless claims beat expectations. However, they are still WAY too high, at over 700,000 new people filing for unemployment. This is 7 times what we should be seeing! Also, the belief is growing stronger that this will get much worse, given the rise in COVID and the new administration which will likely move closer to an economic shutdown. I do see lower rates ahead but be careful if you float, it is volatile.


A few pieces from around the news…


Landlords are facing increased vacancies and decreased rent collections. The October survey, which collected responses from 1,381 landlords who own a rental property, found that 35.2 percent did not receive 100 percent of rent payments for September, and 38.1 percent do not expect to receive full rent payments in October. This percentage reflects a combination of three factors: vacancies, tenants who did not pay their full rent, and tenants who were offered a discount or rent deferment. Among landlords who said they did not receive full rental payment in September, more than three-quarters said it was because their tenant did not or could not pay full rent. What do you think this will mean for commercial/investment properties?


Georgia is going to recount every vote by hand. In a rare move, Georgia officials said they would be recounting all of the state’s nearly 5 million votes by hand. The recount will only apply to the presidential race, where Biden leads Trump by about 14,000 votes in the state, a margin that Georgia Secretary of State Brad Raffensperger has said is unlikely to be made up, even if some votes are thrown out. The Trump campaign’s recount efforts are being led by Rep. Doug Collins, who has repeatedly alleged instances of illegal voting in Georgia without providing specifics or evidence. Only two states have held recounts for presidential races in the past 20 years, and in both instances, the margins changed by less than a few thousand votes.


New York has set a curfew for bars, restaurants and gyms. The state, which had more than 4,800 new confirmed Covid-19 cases on Tuesday and saw hospitalizations rise to a level not seen since mid-June, will force most restaurants, bars and gyms to close by 10 p.m., starting Friday night. Gov. Andrew Cuomo also announced a new limit of 10 people at gatherings at private residences. New York, which was an early epicenter of Covid-19 in the U.S., has managed to largely keep its case count under control, even as the country has seen coronavirus cases rise throughout the fall. But the most recent spike threatens to roll back some reopening measures. In New York City, the seven-day average test positivity rate of 2.31% on Tuesday was just below the 3% threshold that could force schools to close again.


And how about this:


$500,000 — The minimum price that nearly one in four home buyers paid for their houses between April and June. That’s up from 14% of buyers in the nine months prior to April, as white-collar workers, who largely avoided the worst of the economic downturn, sought larger homes amid pandemic lockdowns.


Please remain safe and healthy, make today great!