Month: November 2020

American homebuyers have to pony up even greater amounts of money for a down payment due to tightening credit standards and skyrocketing home prices. 

According to Bloomberg, citing a new report from Attom Data Solutions, the median down payment for a single-family home is $20,775 for the third quarter, the most in at least two decades and up more than 69% from $12,325 a year earlier. Over the last year, the jump in the down payment cost outlines how lenders have become more cautious in these uncertain economic times. 

It was also noted borrowers paid 6.6% of the median sale price of homes financed over the quarter, up from 4.7% a year earlier and the highest level since 2018. On average, borrowers were loaned around $275,000, the highest since 2000, up 24% from last year’s third quarter.

Todd Teta, chief product officer at ATTOM Data Solutions, said, “down payments are rising at a time when lenders are tightening their guidelines.” 

Teta continued: “Lenders have grown more cautious to protect themselves from more delinquencies.” 

A combination of outbound migration flows from cities and a record low 30-year mortgage rate below 3% ignited home prices in rural communities. 

Bloomberg noted, “mortgage companies are raking in cash amid the pandemic, earning hefty margins. At the same time, consumers flood in to buy homes or refinance existing loans to take advantage of record-low mortgage rates.” 

A senior loan officer at Freedom Mortgage, Lewis Sogge, said, “2020 has been a record-breaking year for the volume of new loans and refinances as consumers take advantage of record-low mortgage rates.”

Lenders are becoming increasingly worried about borrowers as the virus pandemic’s reemergence has resulted in states and cities reimposing strict social distancing measures. What this means is that economic growth will likely slump in the fourth quarter and into early 2021.

Worried about delinquencies and a possible double-dip recession that would result in job loss, lenders at JPMorgan Chase & Co. have tightened terms for borrowers. Loan officers at the bank were recently put on notice to limit jumbo loans to 70% of the sale price for co-ops and condos in Manhattan. 

Besides real estate, a similar picture was seen for tightening credit standards of consumer loans. 

And while lending standards have eased somewhat, down from levels over the summer that made it nearly impossible to get a bank loan –  the ability for average folks to buy a home is becoming harder and harder. 

Authored by Zachary Stieber via The Epoch Times,

Rioters in Oregon’s largest city on Thanksgiving caused thousands of dollars in damage, authorities said.

A group of people dressed in black clothing were witnessed smashing windows along Hawthorne Street in the early hours of Nov. 26, according to the Portland Police Bureau.

Officers canvassed the area and found that damage had been inflicted upon at least 10 businesses in the area.

“Some of the damage was sufficient to provide access to the interior of retail stores so officers contacted responsible parties and stood by while contractors or employees boarded up windows. Grocery stores, banks, an auto service center, a package distribution and mailing center, and local business storefronts were damaged,” the bureau said in an incident summary.

A New Seasons Market, a Chase Bank, and Portland Cider House were among the businesses that were damaged, photographs and video footage showed. Multiple Antifa logos were sprayed with paint onto the buildings.

Three people were arrested: Chester Hester, 24; Nicole Noriega, 38; and Bailey Willack, 23. They were each charged with 10 counts of first-degree criminal mischief.

According to Andy Ngo, a reporter who is an expert on the far-left Antifa network, Willack is a member of the network.

Police said another adult was found with a semi-automatic pistol. That person, who was not named, was referred to the Multnomah County District Attorney’s Office.

Chester Hester (L), Nicole Noriega (C), and Bailey Willack were arrested for allegedly damaging businesses during a riot in Portland, Ore., on Nov. 26, 2020. (Portland Police Bureau)

“Based on witness statements, it is likely that more people were involved in these crimes and police will try to determine their identity through further investigation,” police said.

A spokesman for Portland Mayor and Police Commissioner Ted Wheeler, a Democrat, didn’t respond to a request for comment.

Riots and protests took place nearly every night in Portland for months this year. The situation has calmed down in recent weeks, but sporadic explosions of violence still occur.

The vandalism came after the PNW Youth Liberation Front, a group linked to Antifa, called for “direct action” in Twitter posts that said, “[Expletive] Thanksgiving.”

Direct action is a term that refers to targeting buildings that anarchists feel represent things they oppose. The Front called on taking direct action “to attack symbols and structures of colonialism and capitalism.”

The group later shared a report from an Antifa website that praised the toppling of a memorial for the Mexican-American War at a cemetery in Portland on Nov. 25.

Vandals sprayed graffiti that said, “[Expletive]” USA,” and “Eat [expletive] colonizers.”

Summary:

• New US cases +125k
• US COVID hospitalizations top 90k for first time
• Cases decline day over day
• Deaths slow across US
• Travelers to Japan from China will need to isolate
• 5 COVID patients killed in fire in India

* * *

Thanksgiving has come and gone, and as Americans wait to see whether COVID cases, hospitalizations and deaths surge, the trend so far has seen cases and deaths decline day over day, surprising many experts.

The most notable numbers recorded on Thanksgiving were related to hospitalizations across the US, which showed that the number of COVID beds occupied has surpassed 90k, the highest tally of serious COVID-19-linked infections since the pandemic started 11 months ago. The exact number, according to the COVID Tracking Project (whose chart is cited above) is 90,481 patients hospitalized. It’s a record-breaking number for the 17th day in a row.

Of those, 17,802 patients are in the ICU, which is the highest amount documented during the pandemic. A total of 5,979 patients were on ventilators at last count. Still, the US confirmed 125,082 new cases on Thanksgiving, a slight dip from 150k+ new cases reported ever day since Nov. 16. Several states also either broke records or got close to breaking records for the most cases documented in a single day; Pennsylvania and Massachusetts reached new highs with 8,425 and 3,395 new cases on Thursday.

Meanwhile, over in the UK, where Prime Minister Boris Johnson announced the end of England’s nationwide lockdown the other day, the PM warned Britons not to start slacking because the UK still has “long months ahead” in the fight. According to BoJo, London will be placed in Tier 2, avoiding the toughest rules as of Dec. 2 and allowing pubs, restaurants and bars to open, but restricting alcohol to being served as part of a meal. Cities including Birmingham and Manchester were placed in the toughest tier 3, in which pubs and restaurants must close except for takeaway. Households will not be allowed to mix indoors in either tier.

“What we want to avoid is relaxing now too much, you know, taking our foot off the throat of the beast now,” Johnson said in a televised press conference Thursday. “There is a substantial relaxation across all tiers but we’re not abandoning the fight yet, of course not, because we still, as I say, have long months ahead.”

Globally, the number of confirmed cases topped 61 million according to Johns Hopkins, while 1,435,374 deaths have been recorded around the world.

Here’s a rundown of more COVID-19 news from Friday morning and overnight:

Business travelers going from China to Japan will be required to isolate themselves for two weeks after returning to China, under guidelines set to take effect Monday (Source: Nikkei).

Malaysia has a deal to buy 12.8 million doses of Pfizer’s COVID-19 vaccine, becoming the first Southeast Asian nation to secure a supply of a shot that, while reportedly 95% effective, requires ultra-cold storage to distribute, Reuters reports (Source: Nikkei).

Five COVID-19 patients were killed in a fire earlier today at a hospital in the Indian city of Rajkot, in Prime Minister Narendra Modi’s home state of Gujarat. The blaze in the coronavirus ward is believed to have been caused by a short circuit (Source: Nkkei).

Indonesia reports a new record high with 5,828 new infections in the past 24 hours, and its deadliest day since the beginning of the pandemic with 169 deaths. Cases reach 522,581 in total, including 16,521 fatalities (Source: Nikkei).

Authored by Michael Kern via OilPrice.com,

Residents in a natural gas-producing northeastern Chinese province have made a video of tap water being set on fire with a lighter – a video that went viral – prompting an investigation by local authorities and a shutdown of the water supply to part of a city because natural gas had leaked into the groundwater. 

Videos of tap water in the city of Panjin, in China’s Liaoning province, surfaced on Chinese social media and became so popular that the story was picked up by the People’s Daily, a Chinese state-affiliated media outlet.

According to People’s Daily’s tweet:

“The odd scene is caused by natural gas infiltration due to temporary underground water supply system error, which is now shut down. Normal supply has resumed.” 

The local government has said that further investigation would be conducted into the cause of the incident, People’s Daily reported. 

However, according to media reports in China, carried by Newsweek, flammable tap water is not a new phenomenon in the district of the city of Panjin where the latest video was recorded. Residents in Dawa district have said that they had seen instances of burning tap water since at least 2018. Other residents say that their tap water has always been more “oily”. 

A report from the CCTV outlet said that residents had first noticed the flammable tap water “three to four years” ago. 

Chinese authorities said that after a “comprehensive investigation of the tap water sources in the whole district, no such problems have been found in other areas.” 

The Liaoning province has natural gas reserves, and last year in November, a unit of China National Petroleum Corporation (CNPC)— Liaohe Oilfield—started construction of an $8.5-billion gas storage project in the city of  Panjin, which would be the biggest underground natural gas storage center in northeast China.  

As Doug Kass writes this morning, “the market is overbought and statistically overvalued after experiencing the third best month (in November), in percentage terms, in history.” He correctly notes that speculation is now running amok (EV, SPACs, etc.) and sentiment is at an extreme – whether seen by the CNN Fear and Greed Index sentiment studies…

… or, as we previously noted, the record high gross and net hedge fund exposure as well as other data. This is in marked contrast to September/October when many were fearful of the election and its consequence on equities.

BofA CIO Michael Hartnett showed further evidence of the rampant stock mania citing the latest EPFR fund flow data which shows nothing short of a “buying bonanaza”, with flows in the latest week as follows: $17.5bn into equities, $6.4bn into bonds, $2.2bn out of gold, $2.9bn out of cash.

Extending the lookback period to the post-Pfizer announcement on Nov 9 shows a remarkable surge in bullish sentiment over the past three weeks as follows:

Record inflow to equities of $89.0bn (prior high was Jan’18 )

Record inflow to EM debt & equity of $28.0bn (prior high was Jan’18)

2nd largest inflow ever to value stocks of $7.6bn (all-time high was Dec’19)

4th largest inflow ever to small cap stocks of $9.9bn (in past 4 weeks, all-time high was Jun’18 – Chart 5).

As a reminder, Hartnett recently said that amid the unprecedented euphoria, he would be “selling the vaccine” expecting a near-term peak (something which Morgan Stanley agreed with, as Michael Wilson also expects a modest correction before year end).

So far that has yet to materialize, even as the signs are clearly indicating that everything is extremely overbought:

• BofA Bull & Bear Indicator: up from 4.5 to 4.7: “BofA Bull & Bear Indicator on the rise, likely accelerates coming weeks…stocks seeing record inflows, BofA FMS Cash Rule close to “sell signal” (FMS cash at low 4.1%), BofA Breadth Rule “sell-signal triggered Nov 11th.”

• BofA private clients: $2.8tn AUM…60.6% stocks, 20.6% bonds, 12.5% cash; private client flows show largest equity inflow since July ($0.9bn – Chart 8) this week.
• 2021: a year of vaccine not virus, a year of reopening not lockdown, a year of recovery not recession…a year of asset market rotation not asset market rally.

In short, the market appears to have digested all the good news not only for the rest of 2020 but 2021 and beyond as well. This may lead to indigestion as Kass concludes: “As the market’s advance gained speed in the last two months, many of the positive conditions that I highlighted a while ago have reversed. Positioning is no longer defensive, the election outcome is now certain and, in recent weeks, the market advance has accelerated coincident with a Biden victory. Several vaccines, with fantastic results, have been announced and will enter the market in early 2021. A weak market and investors’ uncertainty/fear have been replaced with all-time Index highs and investor ebullience, and even greed.”