by Bill McBride on 7/30/2013 09:06:00 PM
Tuesday, July 30, 2013
Here are two excellent articles. Really long term readers (back in 2005 and 2006) will remember my posts about contacting regulators about housing, and discussions of the Non-traditional Mortgage Guidance (when it was finally released). The first article mentions Janet Yellen's reaction to the guidance. Yellen had the same reaction as Tanta to the guidance (my former co-blogger). The second article discusses when Yellen was more hawkish than Greenspan in the '90s.
From Cardiff Garica at FT Alphaville: Already-strong case for Yellen strengthens further, and a word about the inanity of “market” preferences
Alan Blinder:And from Neil Irwin at the WaPo: Why we shouldn’t think of central bankers as hawks and doves
Fast forward to her days leading the San Francisco Fed, where she warned, as early as 2005, that the titanic real-estate market was heading for an iceberg. Ms. Yellen was frustrated that the Fed’s Board of Governors would not even issue regulatory guidance to curb disgraceful lending practices like piggyback loans that exceeded 100% of the house’s value, or loans with little or no documentation. When the board finally did so, she was dismayed at how weak the guidance was. She later told the Financial Crisis Inquiry Committee: “You could take it out and rip it up and throw it in the garbage can.” The guidance, she added, “wasn’t of any use” to the San Francisco Fed.
For example, Janet Yellen, the current Fed vice-chair, is viewed in markets as an uber-dove because she has been a strong advocate of the Fed’s unconventional monetary easing to try to help the job market. But it wasn’t always so. Larry Meyer served as a Fed governor with Yellen in the 1990s. In 1996, the two of them had concluded that the Fed needed to raise interest rates to fight the threat of inflation. They went to Alan Greenspan and told him of their concerns, threatening to dissent at a future meeting unless there was a rate increase. They lost the argument, but it is a sign that while Yellen may be a dove right now, the same would not be true in all states of the world.Wednesday:
• At 7:00 AM ET, the Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.
• At 8:15 AM, the ADP Employment Report for July. This report is for private payrolls only (no government). The consensus is for 179,000 payroll jobs added in July, down from 188,000 in June.
• At 8:30 AM, the BEA will release the advance estimate of Q2 GDP. The consensus is that real GDP increased 1.1% annualized in Q2. This report will includes a Comprehensive Revision from 1929 through 1st quarter 2013.
• At 9:45 AM, the Chicago Purchasing Managers Index (PMI) for July. The consensus is for an increase to 54.0, up from 51.6 in June.
• Ar 2:00 PM, the FOMC Meeting Announcement will be released. No change to interest rates or QE purchases is expected at this meeting.
Earlier on House Prices:
• Case-Shiller: Comp 20 House Prices increased 12.2% year-over-year in May
• Comment on House Prices: Real Prices, Price-to-Rent Ratio, Cities