The Week Ahead: Senate to Vote on Next Treasury Secretary

On Monday the U.S. Senate is expected to vote on the confirmation of hedge fund manager and former Goldman Sachs partner Steven Mnuchin as Treasury Secretary.

The full senate vote comes after Democrats on the Senate Finance Committee previously boycotted his approval. Mnuchin, 54, who served as the President Trump’s national finance chairman during his campaign, previously laid out a number of his initiatives should the U.S. Senate confirm him as the 77th Treasury Secretary. These included the roll back the Dodd-Frank Wall Street Reform and Consumer Protection Act and the end the governmental conservatorship of Fannie Mae and Freddie Mac.

If confirmed by the Senate, Mnuchin would succeed Jack Lew, who took office on February 28, 2013 under former President Barack Obama. Adam Szubin is currently serving as acting secretary. Mnuchin would be the third former Goldman Sachs executive to lead the Treasury after Henry M. Paulson and Robert E. Rubin.

The vote, which is set for 7 p.m. EST, is expected to come down to 52-48 in favor of Mnuchin with the Senate voting along party lines.

 

Fannie Mae Announces Q4 Earnings

Fannie Mae reported net income of $3.2 billion, comprehensive income of $3 billion, and a positive net worth of $4.2 billion for the third quarter. That means that Fannie Mae expects to pay the U.S. Department of Treasury a $3 billion dividend in December.

Net revenues were up for the GSE. In Q3 net revenues were $5.6 billion. In Q2, they were $5.5 billion. Similarly, net interest income rose from $5.3 billion to $5.4 billion for the third quarter. Fannie Mae's Q3 net income of $3.2 billion was an increase from Q2's net income of $2.9 billion and from Q3 2015's net income of $2.2 billion. Overall, Fannie Mae took the report as positive news, which it has not often been able to do in recent years.

Net fair value losses were down. In Q3 they were $491 million, compared with $1.7 billion in Q2. Fannie Mae attributed the Q3 losses mainly to losses on Connecticut Avenue Securities debt.

Credit-related income was also down in Q3. Fannie Mae reported $563 million in credit-related income in the third quarter, compared with $1.5 billion in Q2. Fannie Mae attributed this to an increase in home prices, including distressed property valuations.

Single-family net income was $1.9 billion in Q3, driven primarily by guaranty fee income and credit-related income. This was also a drop. In Q2, the total was $2.7 billion. Single-family guaranty fee income remained at $3.3 billion for Q3.

Fannie Mae's Q4 report will be released on February 17^th. How will it compare with Q3's strong earnings?

Quicken Loans National Home Price Perception Index (HPPI)

Quicken Loans is releasing its National Home Price Perception Index (HPPI), which represents the difference between appraisers’ and homeowners’ opinions of home values and gives insight to how homeowners are viewing the market. The index showed improvement between December 2015 and December 2016, but that the average appraisal value was still 1.33 percent lower than expected in December.

“The gap between actual appraised value and opinions had been narrowing since June, but December’s perception difference of 1.33 percent erases all improvement made in the last few months,” the report stated.

Average home value also dropped 1.19 percent between November and December. Despite the dip in though, Quicken Loans Home Value Index (HVI) showed an average 3.85 percent increase in HVI from the same time last year. HVI numbers varied by geographic region with the West and South regions rising faster, with an average of 4.69 and 4.17 percent; almost double the 2.14 and 2.21 percent growth in the Northwest and Midwest.

Wednesday February 15, 2017

National Association of Home Builders Housing Market Index, 10 a.m. EST

Thursday February 16, 2017

Bloomberg Consumer Comfort Index, 10 a.m. EST