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The Wall Street Greek blog is the sexy & syndicated financial securities markets publication of former Senior Equity Analyst Markos N. Kaminis. Our stock market blog reaches reputable publishers & private networks and is an unbiased, independent Wall Street research resource on the economy, stocks, gold & currency, energy & oil, real estate and more. Wall Street & Greece should be as honest, dependable and passionate as The Greek.



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Tuesday, September 23, 2014

Real Estate this Week

In real estate this week, we receive data on new and existing home sales, and we get the first clean reading of mortgage activity since before Labor Day. Also look for a housing price data point to color the view and for K.B. Home’s (NYSE: KBH) solid earnings news. Barron’s brings good news for the housing sector as it sheds light on the improving situation at Bank of America (NYSE: BAC), which has to benefit the real estate relatives. See the full real estate report here. Article should interest investors in the SPDR Homebuilders (NYSE: XHB), Home Depot (NYSE: HD), Annaly Capital (NYSE: NLY), iShares U.S. Real Estate (NYSE: IYR), Lennar (NYSE: LEN) and MGIC Investment (NYSE: MTG).

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Wednesday, January 15, 2014

Hold Your Horses! The Mortgage Report is Misleading

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The Mortgage Bankers Association (MBA) today reported is Weekly Applications Survey, which measures applications for mortgages. It showed a surge in activity, giving real estate relative stocks and especially mortgage originators, a lift in early Wednesday trading. Temper your enthusiasm, though, as the latest gains are not to be misread; the mortgage market is not quite that hot.

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Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

Mortgage Activity Report


The MBA showed that its Market Composite Index of mortgage activity gained by a seasonally adjusted 11.9% in the period ending January 10, 2014. Purchase activity, or mortgage applications on home purchases, rose by 12%, while refinancing activity improved by 11% on the week. That is amazing right? Wrong!

I have been following the real estate sector for over two decades now, and have gained some familiarity with the regular reports and their flaws. I have noticed something in particular about the MBA’s weekly mortgage report that keeps me from writing wildly varying summaries from week to week on the often volatile data point. For instance, last week we might have said the sky was falling given the decline in mortgage activity. This week, we would have climbed back off the ledge and celebrated life. Let’s take a closer look shall we?

Obviously, a weekly measure is going to vary around holidays. “But the report is seasonally adjusted Greek!” you might yelp in response. Yes, it is seasonally adjusted, as evidenced by the unadjusted 61% increase in the Market Composite Index week-to-week. Still, I have noted that around holidays, activity still seems to be more volatile than through regular periods. In the past, I’ve noted my belief that while the report may be adjusted for the one-day holiday, it may not adequately account for business drop-off that occurs on the day before and the first workday after the holiday, as Americans prepare for it and recover from it. This is something that number counters focused on the pure math might miss, but it makes perfect sense nonetheless. And the evidence is in the wild swings week-to-week, which I have noted in my regular following of this data point.



As you can see, the shares of nation’s most important mortgage originators are moving sharply higher Wednesday. Now, a good bit of that is due to the strong EPS report from Bank of America (NYSE: BAC), which we recommended again yesterday in our EPS preview piece. BAC is up more than 3% today after a gap open start to the morning, and we are proud to have recently called it our top real estate play of 2014.

Mortgage Originator
1/15/14 Morning Gain
Bank of America (NYSE: BAC)
+3.1%
Wells Fargo (NYSE: WFC)
+1.5%
J.P. Morgan Chase (NYSE: JPM)
+1.1%
Citigroup (NYSE: C)
+1.1%
U.S. Bancorp (NYSE: USB)
+0.9%

Certainly, the company’s good news had something to do with the gains of the other major mortgage originators for real estate today, but it did not have everything to do with it. That is evidenced by the 1.0% gain on the morning by mortgage insurer MGIC Investment (NYSE: MTG). This latest stellar mortgage report from the MBA certainly is providing some uplift. Unfortunately, it is a bit overdone, and so I suggest you temper your enthusiasm in the real estate relative stocks today.

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

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