Hippo Financial

Nov housing starts and permits; starts expected at 1.530 mil increased to 1.547%; building permits sky-rocked to 1.639 mil on estimates of 1.553 mil, up 6.2% from October. Residential starts rose 1.2%; strong demand for new homes thanks to record-low mortgage rates and buyers looking for bigger spaces during the pandemic. Housing starts are back to levels set last February. Single-family starts rose for a seventh month to a 1.186 million annualized rate that was the highest since 2007, while starts for projects with five or more units, a category that tends to be volatile and includes apartments and condos, increased to 352,000. Permits rose to the best level since 2006.

The expected stimulus package is still progressing, but slowly. Talk this morning is it may drag on through the weekend. The proposal draft includes $600 in payments for individuals, $300-per-week in supplemental unemployment insurance payments and aid for small businesses, and roughly $17 billion for airlines. But it omits aid to state and local governments and lawsuit liability protection, the two issues that have stymied earlier attempts at an agreement. A stimulus package will be attached to a $1.4 trillion spending bill to fund the government through its fiscal year ( October 2021). Some 7.8 million Americans have fallen into poverty since June as benefits from the prior virus relief package lapsed, according to an analysis of ongoing Census data by economists at the University of Chicago and the University of Notre Dame. The poverty rate has increased by 2.4%, double the

Stock indexes traded higher in pre-opening trading this morning, the MBS price a little better at 8:30 am ET with the 10 yr. note unchanged after the nice decline yesterday. Yesterday the 10 yr. dropped 10 bps, and MBS prices ended +38 bps.

At 8:30 am ET October PPI; +0.3% on thoughts of 0.2%, yr./yr. PPI +0.5% higher than 0.4% expected. The Core PPI at 0.1% was lower than 0.2% estimates, yr./yr. +1.1% also better than 1.2% forecasts. The report is about what economists were thinking. There was no initial reaction to the report.

The virus is increasing at rates much higher than back in March and April. The outlook, according to experts, is for rising infections. Wide state shutdowns are increasing, and the Biden team is beginning to lean toward a possible nationwide closure again. Biden is on record many times, he would listen to the scientists, and if a shutdown was recommended, then he would do it. At this point, although the spread is growing and in some areas hospitals are over-crowded, there is no momentum to close down. The good news is now we have therapeutics, and the death toll for people under 50 is only 0.5% of those infected. It is serious, but a national shutdown now will crush the economic outlook. Wednesday Jerome Powell and the ECB continued to warn the outlook is becoming cloudy as the virus expands. Trump has two months left to make the decisions. Markets are equally confident that there won’t be a shutdown, the equity markets climbing and interest rates steady. Presently, although the spread continues to increase, no countrywide closures are likely. Closing down the economy again as the economy is continuing to improve would drive the economy back into recession and would likely last longer than the first one in March/April. The most serious impact now is many states are closing down in-person schools, which isn’t good for children and parents that have to work.