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Yellen said the incremental cuts to QE likely would continue, though she insisted the Federal Open Market Committee was "not on a preset course" regarding the purchases.
"The Committee's decisions about their pace will remain contingent on its outlook for the labor market and inflation as well as its assessment of the likely efficacy and costs of such purchases," she said.
Though the unemployment rate is just a tick above the 6.5 percent target the Fed said it would use to gauge when interest rates should rise, Yellen stuck to that benchmark. The Fed also has used a 2.5 percent inflation level as a guidepost for rate increases.
However, she said it's likely that the Fed will have to keep rates near zero "well past the time" that unemployment crosses below the 6.5 percent threshold.
Ambiguity on the unemployment target could become a contentious point when Yellen engages in a question-and-answer session after delivering her remarks.
>>> Crap-a-roo; the musical chairs and the game are still in place, but the music and its speed bother this house.....
I will presume most of the Fed folks still hear a sucking sound from the economy in general.
It is political kabuki theater. The markets liked the comments. That could be used as proof of an improving economy while more and more people are out of work or are underworked. The recent back stepping on 0bamacare shows what business thinks of this plan.
Reply to @JohnChisum: Improving or not, as an old ad asks,"Who do you know who wants to buy a car?" (or a house).Who's afraid of a little risk? From Seeking Alpha Feb 12-13 Morgan Stanley issues warning on auto loans
TRW Automotive Holdings (TRW +0.8%), BorgWarner (BWA +0.5%) and Delphi Automotive (DLPH +1.8%) look more attractive to Morgan Stanley's Adam Jonas than General Motors (GM -0.1%) and Ford (F +0.7%) on concerns that auto loan credit will tighten. "Subprime as a percentage of new car sales has approached pre-crisis peaks and leasing is setting new records." warns the analyst in his note to clients. The trio of auto parts makers could have more global upside potential than the Detroit automakers if the U.S. auto industry hits some speed bumps.
WFC Banks ease standards as mortgage business slows down
Wells Fargo (WFC) has lowered the minimum FICO score for borrowers applying for FHA loans to 600 from 640, and JPMorgan (JPM +0.1%) plans to lower LTV standards for both jumbos and conforming mortgages, reports TheStreet. The moves come as the MBA predicts 1-4 family mortgage originations will fall to $1.16T this year from $1.755T in 2013. An early estimate from Inside Mortgage Finance pegs MBS issuance by the GSEs in January of just $67.8B, off 10% since December and the lowest amount since January 2009. "The wall has begun to come down," writes FBR's Paul Miller of the Wells Fargo news. Miller has been calling for easier standards to combat slowing activity, and if Wells is now approving FHA product to riskier borrowers, other large originators are likely to follow suit. In this case, his own estimate of $1.3T in mortgage originations this year could prove conservative, and bank earnings surprises going forward might be on the upside.
Update Feb 14th Subprime is back; more on Wells' move
Other than trying to boost business in a slow mortgage market, key to Wells Fargo's (WFC) decision to begin courting subprime borrowers was its recent settlements with the GSEs. Among the reasons banks have become so picky in making loans is worry they would be pressed to buy back those that went bad. Banks feel the government agencies are using trivial mistakes to pressure them to repurchase loans, but after the settlements, Wells feels it has a good handle on what the GSEs consider material and on what documentation is required to avoid costly battles in the future. "As things become clearer and we are more comfortable with our own processes and controls, it gets easier" to make loans, says Franklin Codel, head of Wells' mortgage production in Des Moines, Iowa.
DE Bubbly farmland prices pricked?
After more than doubling in some Midwest states in the past few years, farmland values have begun to bear the brunt of tumbling corn prices. Wheat and beans are well off historic highs as well. Analysts assure a repeat of past collapses is unlikely as farm income remains strong and debt levels low, but a "recalculation" is at hand. "Profits will be tighter," says a 3rd-generation Illinois farmer. "There's not going to be near the returns, and guys will have to be careful how much expenses they've got into an acre." It's not exactly the kind of thing Deere (DE -1.6%) or AGCO (AGCO -0.9%) investors like to hear Winter is typically the busy season for auctions, but this year has seen a number of "no sale" results. In Iowa, 6.7% of auctions failed in 2013, double the amount in 2012. The USDA forecasts farm incomes will dive 27% this year from 2013 to the lowest level since 2010.
LQD Gundlach: Junk bonds at all-time relative overvaluation levels
"The default rate is non-existent," he says, agreeing that fundamentals in high-yield look good. "Instead of a default cycle, we've had a refinance cycle." The issue, however, is valuation. At the end of 2013, the 30-year Treasury yielded about 4%, while BB corporates "unbelievably" yielded just 4.5% - a "remarkably low incremental yield." His feelings about overvaluation extend to the investment grade corporate market (LQD) as well. Most curious to Gundlach is how universally the long bond is hated at 4%, while junk yielding 4.5% gets so much love. Besides Treasurys, Gundlach sees value in emerging market bonds. The risk is in the currency, but this can be eliminated by buying dollar-denominated paper. http://www.zerohedge.com/news/2014-02-12/jeff-gundlach-sells-apple-warns-high-yield-bonds-most-over-valued-history
Of note: " Wells Fargo (WFC) has lowered the minimum FICO score for borrowers applying for FHA loans to 600 from 640, and JPMorgan (JPM +0.1%) plans to lower LTV standards for both jumbos and conforming mortgages, reports TheStreet. The moves come as the MBA predicts 1-4 family mortgage originations will fall to $1.16T this year from $1.755T in 2013. An early estimate from Inside Mortgage Finance pegs MBS issuance by the GSEs in January of just $67.8B, off 10% since December and the lowest amount since January 2009. "The wall has begun to come down," writes FBR's Paul Miller of the Wells Fargo news. Miller has been calling for easier standards to combat slowing activity, and if Wells is now approving FHA product to riskier borrowers, other large originators are likely to follow suit."
>>> Cycles and cycles. I'm sure the common phrase remains among many companies is to "build shareholder value", regardless of methodologies to achieve the goal.
Comments
Yellen said the incremental cuts to QE likely would continue, though she insisted the Federal Open Market Committee was "not on a preset course" regarding the purchases.
"The Committee's decisions about their pace will remain contingent on its outlook for the labor market and inflation as well as its assessment of the likely efficacy and costs of such purchases," she said.
Though the unemployment rate is just a tick above the 6.5 percent target the Fed said it would use to gauge when interest rates should rise, Yellen stuck to that benchmark. The Fed also has used a 2.5 percent inflation level as a guidepost for rate increases.
However, she said it's likely that the Fed will have to keep rates near zero "well past the time" that unemployment crosses below the 6.5 percent threshold.
Ambiguity on the unemployment target could become a contentious point when Yellen engages in a question-and-answer session after delivering her remarks.
>>> Crap-a-roo; the musical chairs and the game are still in place, but the music and its speed bother this house.....
I will presume most of the Fed folks still hear a sucking sound from the economy in general.
Be safe,
Catch
From Seeking Alpha Feb 12-13
Morgan Stanley issues warning on auto loans
TRW Automotive Holdings (TRW +0.8%), BorgWarner (BWA +0.5%) and Delphi Automotive (DLPH +1.8%) look more attractive to Morgan Stanley's Adam Jonas than General Motors (GM -0.1%) and Ford (F +0.7%) on concerns that auto loan credit will tighten.
"Subprime as a percentage of new car sales has approached pre-crisis peaks and leasing is setting new records." warns the analyst in his note to clients.
The trio of auto parts makers could have more global upside potential than the Detroit automakers if the U.S. auto industry hits some speed bumps.
WFC
Banks ease standards as mortgage business slows down
Wells Fargo (WFC) has lowered the minimum FICO score for borrowers applying for FHA loans to 600 from 640, and JPMorgan (JPM +0.1%) plans to lower LTV standards for both jumbos and conforming mortgages, reports TheStreet.
The moves come as the MBA predicts 1-4 family mortgage originations will fall to $1.16T this year from $1.755T in 2013. An early estimate from Inside Mortgage Finance pegs MBS issuance by the GSEs in January of just $67.8B, off 10% since December and the lowest amount since January 2009.
"The wall has begun to come down," writes FBR's Paul Miller of the Wells Fargo news. Miller has been calling for easier standards to combat slowing activity, and if Wells is now approving FHA product to riskier borrowers, other large originators are likely to follow suit. In this case, his own estimate of $1.3T in mortgage originations this year could prove conservative, and bank earnings surprises going forward might be on the upside.
Update Feb 14th
Subprime is back; more on Wells' move
Other than trying to boost business in a slow mortgage market, key to Wells Fargo's (WFC) decision to begin courting subprime borrowers was its recent settlements with the GSEs.
Among the reasons banks have become so picky in making loans is worry they would be pressed to buy back those that went bad. Banks feel the government agencies are using trivial mistakes to pressure them to repurchase loans, but after the settlements, Wells feels it has a good handle on what the GSEs consider material and on what documentation is required to avoid costly battles in the future.
"As things become clearer and we are more comfortable with our own processes and controls, it gets easier" to make loans, says Franklin Codel, head of Wells' mortgage production in Des Moines, Iowa.
DE
Bubbly farmland prices pricked?
After more than doubling in some Midwest states in the past few years, farmland values have begun to bear the brunt of tumbling corn prices. Wheat and beans are well off historic highs as well.
Analysts assure a repeat of past collapses is unlikely as farm income remains strong and debt levels low, but a "recalculation" is at hand. "Profits will be tighter," says a 3rd-generation Illinois farmer. "There's not going to be near the returns, and guys will have to be careful how much expenses they've got into an acre." It's not exactly the kind of thing Deere (DE -1.6%) or AGCO (AGCO -0.9%) investors like to hear
Winter is typically the busy season for auctions, but this year has seen a number of "no sale" results. In Iowa, 6.7% of auctions failed in 2013, double the amount in 2012. The USDA forecasts farm incomes will dive 27% this year from 2013 to the lowest level since 2010.
LQD
Gundlach: Junk bonds at all-time relative overvaluation levels
"The default rate is non-existent," he says, agreeing that fundamentals in high-yield look good. "Instead of a default cycle, we've had a refinance cycle." The issue, however, is valuation. At the end of 2013, the 30-year Treasury yielded about 4%, while BB corporates "unbelievably" yielded just 4.5% - a "remarkably low incremental yield."
His feelings about overvaluation extend to the investment grade corporate market (LQD) as well.
Most curious to Gundlach is how universally the long bond is hated at 4%, while junk yielding 4.5% gets so much love.
Besides Treasurys, Gundlach sees value in emerging market bonds. The risk is in the currency, but this can be eliminated by buying dollar-denominated paper.
http://www.zerohedge.com/news/2014-02-12/jeff-gundlach-sells-apple-warns-high-yield-bonds-most-over-valued-history
Thank you.
Of note: " Wells Fargo (WFC) has lowered the minimum FICO score for borrowers applying for FHA loans to 600 from 640, and JPMorgan (JPM +0.1%) plans to lower LTV standards for both jumbos and conforming mortgages, reports TheStreet.
The moves come as the MBA predicts 1-4 family mortgage originations will fall to $1.16T this year from $1.755T in 2013. An early estimate from Inside Mortgage Finance pegs MBS issuance by the GSEs in January of just $67.8B, off 10% since December and the lowest amount since January 2009.
"The wall has begun to come down," writes FBR's Paul Miller of the Wells Fargo news. Miller has been calling for easier standards to combat slowing activity, and if Wells is now approving FHA product to riskier borrowers, other large originators are likely to follow suit."
>>> Cycles and cycles. I'm sure the common phrase remains among many companies is to "build shareholder value", regardless of methodologies to achieve the goal.
Take care,
Catch