May 18, 2020 - Market Update

Mortgage supply remains robust with the record low rates.  A few dealers were reporting more than $4B in total originations.  Liquidity finally appeared in the FNCL 2.0 coupon this past week with about 35% of supply being sold in that coupon.  Large originators tend to play in that space at a larger percentage than smaller originators.  They have the loans to fill the trades in the event liquidity diminishes. 

The S&P index endured its worst week since March, albeit to a much lesser extent than those faded memories.  The S&P was down 1.7% over the course of the week but Friday was up 11.20, or 0.39%.  Investors everywhere are trying to gauge the true economic impact of the Covid-19 pandemic.  Stock prices seem to eb and flow with the latest model of infections.  Businesses are starting to open, in certain pockets across the country, after being in lockdown for effectively two months.  While that has given reprieve to service industry workers, others are nervous about a second round of infections.  The data tends to show a drab picture.  Retail sales fell 17% while industrial production was off 11.2%.  The Federal Reserve issued a warning that “asset prices remain vulnerable to a significant price decline” if the virus has a second wave or shows to be worse than initially though.  The thought of a V-shape recovery remains only with the most optimistic at this point. 

The unemployment rate for those with less than a HS diploma is now a staggering 21.2%, up from just 5.2% at the end of 2019. For those with a HS diploma, the respective numbers are 17.2%, up from 3.7% in 12/19. For those with some college the numbers are 15% and 2.7%. For employees with a bachelor’s the unemployment rate is 8.4%, up from 1.9% in 12/19.

Back in the heyday of TV 1955-2000, when there were growing numbers of local TV affiliates, the average TV series lasted two years and had about 20 episodes/year. With the rise of streaming and away from syndication, exclusivity, novelty, and binge-ability are paramount rather than consistency and broad popularity. Not surprisingly the average series is now one year long, and the number of episodes/year is just 10.