Fannie Mae: Mortgage Serious Delinquency rate unchanged in January

Fannie Mae reported today that the Single-Family Serious Delinquency rate was unchanged in January at 1.55%. The serious delinquency rate is down from 1.86% in January 2015.

The Fannie Mae serious delinquency rate peaked in February 2010 at 5.59%.

Note: These are mortgage loans that are "three monthly payments or more past due or in foreclosure".

Note: Freddie Mac reported last week that their Single-Family serious delinquency rate declined in January to 1.33%, up from 1.32% in December.

Fannie Freddie Seriously Delinquent RateClick on graph for larger image

The Fannie Mae serious delinquency rate has only fallen 0.31 percentage points over the last year - the pace of improvement has slowed - and at that pace the serious delinquency rate will not be below 1% until 2017.

The "normal" serious delinquency rate is under 1%, so maybe Fannie Mae serious delinquencies will be close to normal some time in 2017.  This elevated delinquency rate is mostly related to older loans - the lenders are still working through the backlog.

Buy Baidu: Unquestioned Value

Baidu soared on solid Q4 results and guidance for Q1. The Chinese Internet search giant will benefit from multiple efforts to remove costs from the financials. The recommendation is to own Baidu as operating margins rebound going forward. Despite obvious value, Baidu (NASDAQ:BIDU) traded near its lows over the last few months. The fears over the Chinese economy have overshadowed the

How to trade the Brexit referendum

I have tried to refrain from comment on the Brexit referendum vote until the situation had settled down a bit. Now that the campaign is in full swing, it`s time to consider how the markets might react as we approach the June 23 vote.

CNBC recently summarized the debate this way:
  • First, the economy, and whether positives like free trade would exist outside of EU membership, and whether negatives like excess regulation would make a meaningful difference if removed.
  • Second, migration of workers, and whether this helps offset Britain's poor demographics, or acts as an excess strain on the welfare system.
  • And third, sovereignty; is Britain ruled by the members of Parliament in Westminster elected last May by British voters, or by unelected bureaucrats in Brussels?
The full post is available at our new site here.

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Restaurant Performance Index indicates expansion in January

Here is a minor indicator I follow from the National Restaurant Association: Restaurant Performance Index Bounced Back Above 100 in January
Although same-store sales and customer traffic indicators remained mixed, the National Restaurant Association’s Restaurant Performance Index (RPI) bounced back above 100 in January. The RPI stood at 100.6 in January, up 0.8 percent from December’s level of 99.7. The January gain pushed the RPI above the 100 level, which signifies expansion in the index of key industry indicators.
“Despite an uptick in the RPI in the first month of the year, restaurant operators still report mixed results about their business environment,” said Hudson Riehle, senior vice president of research for the National Restaurant Association. “Except for the capital expenditures arena, the current situation indicators remain dampened. However, operators are somewhat more optimistic regarding higher sales in six months.”
emphasis added
Restaurant Performance Index Click on graph for larger image.

The index increased to 100.6 in January, up from 99.7 in December. (above 100 indicates expansion).

Restaurant spending is discretionary, so even though this is "D-list" data, I like to check it every month.

The Forthcoming–Behavioral–Economics of Abundance

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Over at Project Syndicate: Economics in the Age of Abundance: BERKELEY – Until very recently, the biggest economic challenge facing mankind was making sure there was enough to eat.

From immediately after the dawn of agriculture until well into the Industrial Age, by far the most common human condition was what nutritionists and public-health experts would describe as severe and damaging nutritional biomedical stress.

Some 250 years ago, Georgian England was the richest society that had ever existed, and yet food shortages still afflicted large segments of the population. Adolescents sent to sea by the Marine Society to be officer’s servants were half a foot (15 centimeters) shorter than the sons of the gentry whose heights were recorded as they entered the army as officers. 150 years ago the working class of the United States–the richest working class that was then or ever had been–was still spending roughly 2/5 of extra income at the margin simply on more calories. Pre-Industrial Agrarian-Age human populations, even Mid-Industrial populations, and a third of the world today were and are under what nutritionists and public-health experts see as severe and damaging nutritional biomedical stress.

Inside the bubble of today's prosperous middle-class North Atlantic, however, things are now different. Perhaps 1% of America's labor force grows needed calories and essential nutrients. Perhaps 1% transports and distributes the needed calories and essential nutrients. That does not account for the entire food industry, of course. But most of what is being done by the remaining 14% of the labor force dedicated to delivering food to our mouths involves making what we eat tastier or more convenient – jobs that are more about entertainment or art than about necessity.

The challenges we face are now those of abundance. Indeed, when it comes to workers dedicated to our diets, we can add some of the 4% of the labor force who, working as nurses, pharmacists, and educators, help us solve problems resulting from having consumed too many calories or the wrong kinds of nutrients.

More than 20 years ago, Alan Greenspan, then-Chair of the US Federal Reserve, started pointing out that GDP growth in the US was becoming less driven by consumers trying to acquire more stuff. We were no longer in the business of growing economically by arranging more atoms in patterns we found luxurious, convenient, or necessary. Those of us in the prosperous middle class, at least, were becoming much more interested in communicating, seeking out information, and trying to acquire the right stuff to allow them to live their lives as they wished.

Of course, for the rest of the world this is simply not so. The rest of the world still faces dire problems of scarcity. Roughly one-third of the world’s population still struggles daily to get enough food. And there is no guarantee that those problems will solve themselves. It is worth recalling that a little over 150 years ago, both Karl Marx and John Stuart Mill believed that India and Britain would converge economically in no more than three generations.

There is no shortage of problems to worry about: the destructive power of our nuclear weapons, the pig-headed nature of our politics, the potentially enormous social disruptions that will be caused by climate change. But the number one priority for economists – indeed, for humankind – is finding ways to spur equitable economic growth.

But it is not too early to think about this job number two. This job number two--developing economic theories to guide societies in an age of abundance--is no less complicated. Some of the problems that are likely to emerge are already becoming obvious. Today, many people derive their self-esteem from their jobs. As labor becomes a less important part of the economy, and working-age men, in particular, become a smaller proportion of the workforce, problems related to social inclusion are bound to become both more chronic and more acute.

Such a trend could have consequences extending far beyond the personal or the emotional, creating a population that is, to borrow a phrase from the Nobel-laureate economists George Akerlof and Robert Shiller, easily phished for phools. In other words, they will be targeted by those who do not have their wellbeing as their primary goal – scammers like Bernie Madoff, corporate interests like McDonalds or tobacco companies, the guru of the month, or cash-strapped governments running exploitative lotteries.

This is a very, very different economics from that of creating Adam Smith system of natural liberty where it can be created and building institutions to approximate its effects where it cannot. The central challenge will be to help people protect themselves from manipulation. And it is not clear that those who currently call themselves “economists” have a comparative advantage in building it–although Thaler, Shiller, Akerlof, Rabin, it seems like half my colleagues here at Berkeley, and many others are certainly giving outsiders a run for their money. But we are starting to lead this different economics–this behavioral economics–with some urgency now. And unless things truly go to hell in a handbasket, the urgency will only grow

Over at Project Syndicate: Pragmatism or Perdition

Lin manuel miranda alexander hamilton Google Search

Over at Project Syndicate: Pragmatism or Perdition: BERKELEY – It is almost impossible to assess the progress of the United States economy over the past four decades without feeling disappointed. From the perspective of the typical American, nearly one-third of the country’s productive potential has been thrown away on spending that adds nothing to real wealth or destroyed by the 2008 financial crisis. Since the mid-1970s, the US has ramped up spending on health-care administration by about 4% of GDP and increased expenditure on overtreatment by about 2% of GDP. Countries like Canada, the United Kingdom, and France have not followed suit, and yet they do just as well – if not better – at ensuring that their citizens stay healthy. Meanwhile, over the same period, the US has redirected spending away from education, public infrastructure, and manufacturing toward providing incentives for the rich... READ MOAR 2016-02-29 20:30:55

Live from the Republicans' Self-Made Gehenna: Evan Osnos: Donald Trump and the Ku Klux Klan: A History: "There may be no better measure of the depravity of this campaign season...

...than the realization that it’s not clear whether Trump’s overt appreciation for fascism, and his sustained salute to American racists, will have a positive or negative effect on his campaign. For now, his opponents are rejoicing. Marco Rubio, the Florida senator, pronounced him ‘unelectable.’ Governor John Kasich, of Ohio, called Trump’s comments ‘just horrific.’ But it is by now a truism to note that Trump has survived pratfalls that other politicians have not.

A surprisingly large portion of Americans believed him when he pushed a racist campaign denying the birthplace of Barack Obama; a comparably chilling portion of Americans were attracted when he called Mexicans rapists. By the end of the day on Sunday, he had received the endorsement of Senator Jeff Sessions, of Alabama, the first sitting senator to officially line up with Trump. Sessions was not likely to be bothered by Trump’s flirtations with the Klan. In 1986, he was rejected from a federal judgeship after saying that he thought the Klan was ‘O.K. until I learned they smoked pot.’

In the weeks to come, Trump is virtually guaranteed to accumulate additional endorsements from politicians like Christie and Sessions, who have divined their interests in drafting behind the strongest candidate for the Republican nomination. Whether driven by fear of irrelevance, or attracted by the special benefits of being an early adopter, Christie seemed compelled to do it, and now the remnant of his political reputation is going from a solid to a gas.

But the true obscenity of his decision, and those of other Trumpists, may take years to be fully appreciated.

In an editorial last week, the _Washington Post _declared that ‘history will not look kindly on GOP leaders who fail to do everything in their power to prevent a bullying demagogue from becoming their standard-bearer.’ That’s true, but history will judge even more harshly those who stand with Trump now that it is indefensibly clear with whom they are standing.

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