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Up Up and Away, Again 3/3/23

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Lumber prices have finally dropped back down to normal pre-pandemic levels ($365.00). Prices usually peak around March or April. We're not seeing strong demand for new construction. It'll be interesting to see how this unfolds as mortgage rates continue to rise past 7%.




Meanwhile mortgage wholesalers are getting demolished. Rocket which used to be the largest slashed expenses by 40% as origination volume fell. After cutting 28.8% of its headcount (7,500) they are still losing money trying to maintain market share. The new leader United Wholesale Mortgage (UWM) cut staff by 25% after seeing a 44% decline in volume. Pennymac cut 42% of staff.



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On 3/4/2023 at 5:37 PM, potatohead said:

or the longer term picture



Long term arithmetic graphs are the drama queens of charts. 

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On 3/4/2023 at 5:36 PM, potatohead said:


You accurately pointed out the intergovernmental accounting paydowns. The reason is now clear. entitlements are becoming a massive outflow.

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OK, but I don't understand why that would explain why the government would do more public borrowing to make those payments. 

And $140 billion y/y change is hardly earth shaking relative to the total Federal Budget. 

No, I will stick with the thought that the reason is that they want to keep bill rates and bond yields from collapsing, which is what would happen if they stop issuing paper. 

In any case, the "why" doesn't matter. Only the "what" matters. What are they doing, and how does that impact the market. 

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