Brief conversation with Gary Cohn, former executive of Goldman Sachs and former advisor to President Trump. When asked what he would advise on the economy: ‘We need an all-hands-on-deck virus stop methodology. That would be the most important thing we could do right now because instead of going through this cycle of stopping and starting…Once we get it stopped, we could then try and re-normalize our economy.’ Cohn also thinks that congress will have to agree on another stimulus package of some sort as the current stimulus expires next week.
Rates – held steady this week and remain at historic lows. Mortgage Backed Securities continue their upward trading pattern which indicates a further decrease in mortgage rates.
Jobs – 1.4 million people filed for unemployment benefits for the first time last week, and alarming number that is 7X pre-covid levels. This is the 7th straight week of initial claims reported at that level. Roughly 16M additional people are claiming unemployment insurance on an ongoing basis and an additional 14m people are receiving Pandemic Unemployment Assistance (for 1099 workers) bringing the total to nearly 32M people. This represents roughly 20% of the work force. 68% of laid off workers receive more in unemployment benefits than they did from payroll by roughly 34%. The extra $600 of federal benefits expires at month’s end but could be extended or reduced.
Homes Sales – new homes, which make up approximately 10% of the market, are selling well. Year over year sales are up 6.9% and sales have increased above January levels. Existing homes sales increased nicely in June from March levels but are down 11.3% from the previous June (previous report was -27%). 35% of buyers are first time homebuyers and only 7% of sales are virtual.
Applications – purchase volume remains strong, up 1.8% from last week and nearly 20% higher from this time last year. Refinance volume continues overwhelm – up 5.3% from last week and 122% year over year.
Small Businesses – Yelp reported that 66,000 small businesses will never re-open and Havard estimates that 110,000 will shut down permanently.
Forbearance – the share of mortgage loans in forbearances decreased from 8.18% to 7.8% last week marking the 5th consecutive week of declines. While the number of forbearance requests is diminishing the number of household in forbearance that aren’t making payments is increasing.