Brent Nyitray
Fairlington Blade
Let the mutherfuker burn!
jnc4p
Kevin S. Willis
Michigoose
lmsinca
markinaustin
Arcanaut
novahockey
quarterback
ScottC
yellojktVital Statistics:
| Last | Change | Percent | |
| S&P Futures | 1345.8 | -12.7 | -0.93% |
| Eurostoxx Index | 2215.7 | -20.4 | -0.91% |
| Oil (WTI) | 95.84 | -1.2 | -1.21% |
| LIBOR | 0.467 | 0.001 | 0.21% |
| US Dollar Index (DXY) | 80.02 | 0.281 | 0.35% |
| 10 Year Govt Bond Yield | 1.80% | -0.04% | |
| RPX Composite Real Estate Index | 175.2 | -0.1 |
Another sloppy morning as people watch the Greeks try and form a governing coalition which may well reject the austerity measures agreed to with the EU. The Greek 10 year is yielding 23.3% and the Athens Stock Exchange Index is now touching 20-year lows. The turmoil in Greece has investors nervously eyeing Spain and Portugal.
This has put pressure on the S&P futures, and a bid under Treasuries. The 10-year traded below 1.8% this morning. I am watching the 1345 level in the S&P 500, which is the 200 day moving average and the low of early March. We came within a couple of points yesterday. Mortgages are rising, but not as much as Treasuries.
Corelogic released its March 2012 Home Price Index yesterday, which showed prices flat YOY. Excluding distressed sales, prices increased overall. The top markets were Wyoming, Virginia, Arizona, North Dakota, and Florida. The worst were Delaware, Illinois, Alabama, Georgia, and Nevada.
FHA foreclosures increased in March, and it released an interesting statistic – that half the mortgages it modified entered into foreclosure a year later. Speaking of mods, Bank of America is offering principal reductions to 200,000 homeowners as part of the State AG settlement.
University of Chicago economist Raghuram Rajan has an interesting paper discussing the best way forward to improve the economy. He points out that for the past 20 years, the US has attempted to address inequality through the credit mechanism. If we can’t do something directly for the middle class, we can allow them to do cash-out refis to spend as if they weren’t middle class. Ideologically, there will be something for everyone to love and something for everyone to hate. It provides an excellent historical background on how we got here in the first place. Good read.
Filed under: Morning Report |
All Things in Moderation 
” Raghuram Rajan has an interesting paper discussing the best way forward to improve the economy.”
Good read, thanks. Interesting argument that inequality is the result of deregulation. I’m not sure that I agree with that, but do agree with his conclusions & recommendations.
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His point was that deregulation has lowered incomes, but has also lowered costs, so that lower income goes farther.
Think of airlines – the salaries of pilots and flight attendants has dropped since airlines have been deregulated, however the inflation – adjusted price of flying has been cut in half.
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S&P 500 probing support. Have to imagine a lot of stops are going to get triggered below this level.
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Brent, what do you know about Donald Layton, the proposed new FreddieMac chief?
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Mark, don’t know anything about him..
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Then I will treat him as an”unknown quantity”. Thanx.
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” His point was that deregulation has lowered incomes, but has also lowered costs, so that lower income goes farther.”
I get that part; but the change in the ratio between topearners & bottom earners within companies has also changed dramatically. I don’t recall exact numbers; I think it changed from a factor in the tens to the hundreds; maybe from 20ish to 400ish. Deregulation has surely not shrunk lower incomes by that much.
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Not mentioned is today’s speech by the Queen. It was quite entertaining to listen to the program this morning on C-SPAN radio.
BB
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My preference.
http://m.youtube.com/watch?v=7wKSWzA3OIY
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@bsimon,
I think the reason why earnings for the top earners rose so much was the move in the 1980s to link CEO pay to stock performance. Prior to 1970, CEOs were paid mainly in cash and perks. The perks were not officially considered “salary.” After the Armand Hammer fiasco at Oxy, big institutional investors like CALPERS demanded that the incentives of CEOs be aligned more closely with shareholders. This of course means stock.
So cash comp dropped, but stock comp increased a lot. And since stock comp typically has a vesting schedule, you have to pay extra to compensate for that. And if the stock drops, then nobody goes back after the fact to update what the CEO made.
So, in a lot of ways, comp for top earners was understated in the 70s because of perks, and overstated since because so much is in stock.
Deregulation didn’t drive this.
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OT (sorry Brent):
A story on NPR about the study of political partisan psychology.
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thanx, Mike.
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Mike, from the NPR Story: Nyhan and Reifler hypothesized that partisans reject such information not because they’re against the facts, but because it’s painful. That notion suggested a possible solution: If partisans were made to feel better about themselves — if they received a little image and ego boost — could this help them more easily absorb the “blow” of information that threatens their pre-existing views?
I tend to suspect that’s barking up the wrong tree. I tend to suspect our tribal loyalties skew our perspectives on a range of issues, as we are wired to use social proof (sometimes excessively), as exhaustive analysis of everything we might want or need to take a position on or express an opinion about is . . . exhausting. Thus, our partisan loyalties give use a lens through which to view our issues, so certain things that seem unacceptable when someone is looming tall and draconian evil through our partisan lens becomes bearable, if not a net good, when viewed through the same lens we see brave knights in white armor defending fair maidens (because they are members of our tribe).
I don’t think ego boosts will address the natural skew of perspective. Though talking about how our own perspective is affecting our assessments is unlikely to help much: the warping may be measurable, en masse, via political surveys, and observable by dispassionate observers with no skin in the game, but is, most likely, entirely invisible to the person whose views are so framed by their political perspective.
At least, that’s my suspicion. Thus, “ego boosting” will have no effect on receptiveness to information that affects their pre-existing views. More better to gather sufficient social proof, as regards the new information, and partisan enemies are immediately discounted, and their information tainted, because they are enemies—and thus poor sources of social proof.
Of course, I may be mistaken. But, that’s what I’m kicking around in my head, anyhoo.
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