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LenderHub

SWBC's LenderHub blog is a one-stop resource for lenders.

 

Recent Posts

Market Commentary: Week of May 18, 2020

What happened:

Last week was shaped around Fed Chairman Powell’s speech to the Peterson Institute for International Economics. The Chairman warned that the economic recovery might be a prolonged one with the recovery period lasting until late 2021. He also restated what most acknowledge about the 2nd Quarter—it will be awful.

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Market Commentary: Week of May 11, 2020

What happened:

From the “Never thought I was going to see that!” department, the January 2021 Fed Funds Futures contract crossed the Rubicon and closed over 100, which means an expectation of a negative Fed policy rate.  What makes this even more “interesting” is that this occurred BEFORE Friday’s Employment report which, while expected to bad, felt even worse when the numbers posted.

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"Do Not Pick up Nickels in Front of the Steamroller!"

It seems like every time a sudden and severe shock hits the financial markets, all the fancy hedge fund investment strategies that use monikers like, “Enhanced Return,” or “Alpha Plus” go from being perfectly fine to gone within a month. This has happened in the major market blow-ups in 1998, 2001, 2008, and 2020, with a few notable semi disasters (2002, 2013, 2016) thrown in between.

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Market Commentary: Week of May 4, 2020

What happened

While stocks finished relatively unchanged for the week, and corporate bonds were steady, the market didn’t feel good at all as we went into the weekend. Corporate earnings have been as awful as most suspected, but the big-tech companies like Apple and Amazon reporting dismal outlooks seemed to surprise. These companies along with other tech giants like Microsoft, Facebook, and Google make up nearly 20% of the S&P 500 on a weighted basis.

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For Commodity Exchange-Traded Products, the "Futures" are Uncertain

Following this week’s stunning collapse of WTI crude oil exchange-traded funds, and exchange-traded notes, both referred to as Exchange-Traded Products (ETPs), retail investors were tagged with huge losses. The event was probably best summed up by cocky, professional oil traders as a fight between “muppets and sharks.”

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Market Commentary: Week of April 27, 2020

What Happened

It was another wild week in the financial markets—with oil taking the crazy prize. We are not sure if anyone had seriously thought before April 2020 that a hard commodity like oil could ever trade negative. On Monday it did, as anyone holding a May WTI contract that did not have the ability to take delivery of 1,000 barrels of WTI crude (the size of one contract) began paying those who had somewhere to take delivery as much as $40 a contract.

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Market Commentary: Week of April 20, 2020

What happened?

It was a strange week, in our opinion. Economic news was grim as another 5 million Americans filed for unemployment insurance leading the way, bringing the 1-month total to over 22 million. First-quarter earnings releases had very few—if any—bright spots as our largest banks significantly raised their loan loss reserves and predicted a deep recession as part of their future earnings outlooks.

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The Mortgage Market Needs a Plumber...Fast!

When you own a house, most hope that they never have to know too much about the intricacy of the home’s plumbing system. Odds are, if there’s a plumber at your home telling you about how your waste line connects to the public sewage system, it’s not a good thing. The financial system has a lot of plumbing that, like the plumbing in your house, if you hear about it, there’s a big problem.

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Market Commentary: Week of April 13, 2020

What happened?

Equities had their best four-day rally since 1974. Yes, 1974, the good old days. Inflation skyrocketing, unemployment soaring, the President resigning, and negative GDP growth. It seemed that optimism over the drop in hospitalizations in the New York Metropolitan area, as well as hard-hit European countries like Italy and France, helped take equities and corporate debt up.

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Market Commentary: Week of April 6, 2020

What happened?

Another wild and exhausting week in the financial markets. From the old adage, “seeing is believing,” COVID-19 has begun to ravage New York and the New York City Metro Area (New Jersey and southern Connecticut) and key markets such as Agency MBS and Municipals began to feel shaky again.

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