THE COLLINGWOOD GROUP MORNING BRIEFING
Everything you need to know to stay ahead of your competitors
December 14, 2015
CNBC: Investors Going to the Mattresses Ahead of the Fed
Investors are going to the mattresses, stuffing their money away until they get better clarity on the Fed’s intentions for interest rates.
Of course, the move hasn’t been to actual mattresses but an intensifying push to money market funds, which have taken in $48 billion over the past four weeks and $212 billion in the second half of 2015, according to Bank of America Merrill Lynch. The $13.4 billion inflow over the past week marks the 10th-straight positive week, the longest streak since March 2008 for the $2.7 trillion money market industry.
The trend comes ahead of this week’s two-day Federal Open Market Committee meeting, which likely will see the central bank approve the first increase in its key interest rate since late 2006. The Fed has kept the funds rate near zero since late-2008 after lowering it to help spur economic growth amid the Great Recession.
Markets Tanked big time on Friday with the Dow down over 300 points.
read more: http://www.cnbc.com/2015/12/11/investors-flock-to-cash-ahead-of-fed-meeting.html
Housing, Mortgage & the Fed
Yellen and company begin their two-day meeting tomorrow and announce a rate decision on Wednesday afternoon. Most forecasters are betting on a small rate increase, but many fear with this “lift off,” other rate increases may come fast and furious in the New Year.
Collingwood Group Chairman Tim Rood says there’s a great deal for the FOMC to consider before raising rates. “Think about it like a drug addict, if they’re recovering and they’ve been on methadone for seven years, just like the Fed’s been on zero interest rate policy for seven years – yet you’re still concerned that by getting off of that methadone that you’re going to have a relapse, there’s bigger problems ahead of us,” says Rood.
Auction.com EVP Rick Sharga, a Collingwood Group Media client forecasts the Fed will raise rates in December. Sharga says, “ A Fed rate increases could actually be good for housing.” He explains,”One of the biggest headwinds in the housing market today is tight credit. There’s virtually no non-agency lending…nothing outside of QM, other than jumbo loans to rich borrowers the banks want to grab as customers for other services. Higher interest rates would actually allow for loans to be priced in a way that accommodated some degree of risk.”
WSJ: Cheap Oil Better for Main Street than for Wall Street as Markets Tanked Friday….
When oil and gasoline prices began to tumble in mid-2014, experts widely expected it would jolt spending by U.S. consumers and businesses. It hasn’t turned out that way.
Instead, the pace of business investment has slowed significantly, due to drags from weak commodity prices, a strong dollar and concern about the global economy. Consumer spending, meanwhile, has been uneven, with car and home sales up, but inflation-adjusted spending at retailers sluggish since the middle of this year.
Now, oil and commodity prices are showing still more weakness, with wide ramifications to U.S. industry and the Federal Reserve.
Oil prices dipped again Thursday after a report from the Organization of the Petroleum Exporting Countries indicated demand for its crude was lower than earlier estimates. Brent crude, the global benchmark, fell 0.9% to $39.73 a barrel, while U.S. crude slid 1.1% to $36.76 a barrel.
Oil prices are pressured by OPEC’s decision last week to keep its spigots open despite a world-wide glut of crude.
In 2016, “Main Street is expected to outperform Wall Street as the tailwind of low rates, oil prices and rising employment continues to benefit consumers,” Bank of America Merrill Lynch economists said Tuesday.
read more: http://www.wsj.com/articles/boost-from-oil-price-drop-is-elusive-1449773546
WA Post: Trump’s businesses feel few adverse effects from an unfiltered candidate
Donald Trump’s statements about Muslims and Latinos have drawn widespread rebuke from politicians in both parties and many other national leaders.
But the companies that do business with Trump have generally remained silent in the face of those polarizing remarks, and so far there’s little evidence that his businesses are suffering substantially as a result of his candidacy. Sales of his condominiums in New York appear normal, and there’s no public evidence his golf courses and hotels have been significantly affected. Personally, he’s seeing a surge in book sales.
The overall resilience of Trump’s businesses may be a reason that he feels empowered to stake out controversial positions — such as this week’s call to temporarily ban Muslims from entering the United States — without suffering financially.
In the longer term, however, Trump could face problems. There have already been several worrisome harbingers for the Republican presidential candidate. This week, a major retailer in the Middle East cut ties with him. Canadian politicians have warned developers they could lose business if they don’t terminate a real estate deal with the mogul.
That followed decisions earlier this year by NBC and Macy’s to stop doing business with Trump, while the city of New York has said it will go out of its way to avoid dealing with the businessman.
“I think we’re going to have to explore how much baggage this all entails,” said Jim Dinegar, president of the Greater Washington Board of Trade, who will decide whether to hold events at the Trump hotel scheduled to open next year in the District’s Old Post Office Pavilion. “I get very wary of litmus tests, because once you pull that thread, you can pull a whole lot of threads in terms of who owns this and who has an investment in that.”
read more: https://www.washingtonpost.com/business/economy/trumps-businesses-feel-few-adverse-effects-from-an-unfiltered-candidate/2015/12/11/fd9a11e8-9ebf-11e5-bce4-708fe33e3288_story.html
TampaBay.Com: Santa Comes Early for Some Florida Homeowners
More than 4,000 Floridians will get checks from SunTrust Mortgage this week as part of a settlement over foreclosure abuses during the recession.
The mortgage lender sent checks totalling more than $6 million earlier this week, Attorney General Pam Bondi’s office said in a news release. That works out to more than $1,300 apiece.
The payments stem from a $550 million nationwide settlement announced this summer. They were sent to people who encountered “servicing abuse” and lost their homes between 2008 and 2013.
More than 8,000 borrowers were eligible for payments, and over half claimed payments, Bondi’s office said.
read more: http://www.tampabay.com/news/business/banking/more-than-4000-borrowers-in-florida-to-get-payments-from-suntrust-mortgage/2257437
Detroit News: Ally returns to mortgage business 2 years after exit
Ally Financial Inc. is reentering the mortgage business two years after it stopped making new home loans. Ally, whose defunct GMAC Mortgage unit was one of the biggest lenders of subprime mortgages in the run-up to the 2008 housing bust, will inch back into direct home loan originations next year, the bank’s Chief Executive Officer Jeffrey Brown said this week at a Goldman Sachs Group Inc. financial conference in New York. The bank will not service the mortgages it originates, he said.
“Don’t think of this as Ally going down the road of the old GMAC,” Brown said, referring to GMAC Mortgage, the home lending unit that brought Ally to the brink of collapse.
The bank will detail new product offerings, including a new credit card, at its investor day in February.Gina Proia, a spokeswoman at Ally, did not immediately reply to e-mail messages seeking comment.
At the height of the housing boom in 2006, GMAC’s Residential Capital, ranked 12th among U.S. subprime lenders, according to trade publication Inside Mortgage Finance. When Ally exited home lending in 2013, former CEO Michael Carpenter said mortgages were in its “rearview mirror.”That ended an almost 30-year foray that led to more than $10 billion in losses and a $17.2 billion U.S. bailout.
WA Post: Racial bias in everything: Airbnb edition
Information is supposed to be the antidote to distrust on the Internet. You’ll buy from an unknown retailer on Amazon because you can see the seller’s rating. You’ll get in a stranger’s car with Uber because you know up front the driver’s name and license plate. You’ll rent someone’s private home on Airbnb because the host has a public identity: Ann in Brooklyn who likes baking cakes and looks perfectly nice in her profile photo.
The decline in online anonymity, though, may introduce its own problems. Researchers at the Harvard Business School studying Airbnb now warn that all this information makes it easier for us to discriminate.
Researchers Benjamin Edelman, Michael Luca and Dan Svirsky sent out 6,400 messages earlier this year to hosts in five cities — D.C., Baltimore, St. Louis, Los Angeles and Dallas — from invented accounts looking to rent homes on the site under distinctly black and white names. Among the replies, the study uncovered “widespread discrimination” against black guests, and by nearly every kind of host.
read more: ttps://www.washingtonpost.com/news/wonk/wp/2015/12/12/racial-bias-in-everything-airbnb-edition/
’Tis the Season
Fannie Mae and Freddie Mac announced that they will suspend foreclosure evictions during the holiday season.
Beginning on Dec. 18, 2015 and lasting until Jan. 3, 2016, Fannie Mae and Freddie Mac will not conduct any eviction lockouts, allowing families to remain in their homes for the holidays.
“As we have done in past years, we are suspending evictions during the holidays,” said Joy Cianci, senior vice president of credit portfolio management for Fannie Mae.
Bloomberg: NYC’s Biggest Rental Tower Is a Stand-Alone City, Pet Spa Included
By yearend, Manhattan renters with a taste for luxury will have more than 2,000 newly built apartments to choose among. Almost half will be in just one building on the far West Side.
Exteriors of the Sky Building is photographed in New York, NY, U.S., on Wednesday, November 18, 2015
Exteriors of the Sky Building is photographed in New York, NY, U.S., on Wednesday, November 18, 2015 Photographer: Chris Goodney/Bloomberg
Next week, the first tenants will move into Moinian Group’s Sky tower at 42nd Street and 11th Avenue. It’s the borough’s largest single multifamily building, with 1,175 units. Leasing of about 300 apartments at the luxury property—featuring two outdoor pools, a pet spa, and a regulation basketball court—began in June. Rents start at $3,000 for studios, $4,200 for one-bedrooms, and $6,200 for two-bedroom units.
The project’s opening just as soaring rents send Manhattan’s vacancy rate to its highest level in more than nine years. It also precedes the biggest wave of Manhattan apartment development in a decade. The 71-story tower is Moinian Group’s bet that leasing demand—and prices—will continue to rise as would-be buyers remain shut out of a sales market that offers few choices for residents who aren’t multimillionaires.
CNBC: ‘Porch pirates’ stealing people’s holiday deliveries
It’s a nasty practice that’s become common enough to warrant a new term: porch pirates.
As package deliveries surge during the peak holiday season, so too do the incidents of packages being swiped from doorsteps.
Specific data on package theft is limited, since shipping companies and retailers don’t typically parse it out. The U.S. Postal Service insists the “vast majority of the mail it delivers arrives intact”; FedEx doesn’t share stats; and UPS will only say that of the tens of millions of packages it handles daily, reported thefts are “scant.”
An Amazon.com worker sorts packages onto a conveyor belt at an Amazon fulfillment center in Tracy, California.
Is Amazon going to cut UPS, FedEx out?
Nonetheless, insurancequotes.com, an insurance comparison site owned by Bankrate.com, estimates that a “whopping” 23 million Americans have had packages stolen from their homes before they could open them.
read more: http://www.cnbc.com/2015/12/11/porch-pirates-stealing-peoples-holiday-deliveries.html
Events Ahead this Week:
Housing Market Index for December is due at 10 AM ET and closes out a topsy-turvy year with the National Association of Homebuilders index unexpected falling last month
Housing Starts for November come at 8:30 AM ET. Starts in October fell to a seven-month low as single-family home construction in the South tumbled, but an increase in building permits suggested the housing market remained on solid ground.
Have a prosperous day and great week ahead.