Salvage Law – at 1 a.m. on the morning of November 15th, 1994, Captain ‘Skip’ – a sailor since the age of 5, answered a distress call. He successfully maneuvered a 688 foot oil tanker carrying 10M gallons of heavy fuel oil near shallow water close enough to rescue tow a tugboat and barge. Once everyone was safe and secured, Skip radios over to the tug to ask what they are towing and is excited to discover it is the liquid fuel cell for the space shuttle. When he calls the boss at the shipping company to report they are now towing a big piece of NASA equipment report, everyone offers congratulations, and then the in-house counsel pops on the phone to congratulate him on the salvage rights. A maritime law that goes back thousands of years Greeks, Romans, Spanish, French, and English Navy’s all recognized it. Most of the word recognizes it today with the basic principle being that if you rescue a ship from danger at sea, you get a reward. Of course, collecting from the Government isn’t always the easiest thing, even after NASA agreed on $5M – the DOJ thought $1M was a better number. A federal judge decided 12.5% ($6.5M) was a fair number after a very short trial and riveting testimony from the captain.
Mortgage Rates improved very marginally this week. The price of Mortgage-Backed Securities has remained constant since mid-December. Rates are up approximately 0.5% from this time last year.
Jobs – the Bureau of Labor Statistics (BLS) reported 353,000 jobs created in January, much higher than expectations. This caused a sell off of Mortgage-Backed Securities and an increase in Mortgage rates. Worth noting in the report is that 2.635M jobs were actually lost during January but the BLS ‘seasonally adjust’ this number as January is a heavily adjusted month. Weekly earnings were flat from the previous months’ report and are declined to a 3% year over year increase from a previous 3.8% increase.
Home Values – Case Shiller’s home price index, the gold standard of appreciation, showed that home prices hit another new all-time high. Values increased 0.2% in November and are up 5.2% year over year.
Rents – Apartment List released their January Rent Report which showed rents declined 3% in January and are down 1% year over year. This is the 6th consecutive month in rent declines which will eventually carry through to inflation reports and be helpful for mortgage rates.
Fed – the Fed met this week and mentioned that the last 6 months of inflation data is what they want to see, but they also want to see more data. Fed chair Powell doesn’t think it likely that the committee will reach a high level of confidence to cut rates by the March 20 meeting.
Mortgage Applications to purchase homes fell 11% from the previous week and are down 20% year over year. Refinance applications increased 2% last week and are up 3% from last year.