Fight over Cato

Someone mentioned this the other day, but the Washingtonian has an article on the fight over control of Cato.

“Politicians surf public opinion,” says Cato scholar Jim Harper. “They are not interested in the right answer; they are interested in the answer that gets them reelected.” Crane told a colleague that the entrance to Cato’s building faced away from the Capitol “so Congress can kiss my ass.”

Whole thing is worth reading.

Morning Report 5/31/12

Vital Statistics:

  Last Change Percent
S&P Futures  1309.6 1.0 0.08%
Eurostoxx Index 2124.7 8.5 0.40%
Oil (WTI) 87.6 -0.2 -0.25%
LIBOR 0.467 0.000 0.00%
US Dollar Index (DXY) 82.81 -0.212 -0.26%
10 Year Govt Bond Yield 1.59% -0.03%  
RPX Composite Real Estate Index 177.5 0.0  

Equity markets are flat after yesterday’s bloodbath, while bonds continue to rally.  The 10 year is trading at 1.59%. MBS are up as well. Lest anyone think this is strictly a US phenomenon, yields in the “safe” European countries like Switzerland, Denmark, Germany are even lower. On the other hand, Greek debt now yields 30.6%, which is pretty much the same level it was before default. 

Today is Jobs Day with a slew of labor-related economic releases at 8:30. Challenger has already said that announced job cuts were up 67% YOY in May.  This is a notoriously volatile index because one large employer (in this case HP) can dominate the month, so you have to focus on the trends and here 10 out of the last months showed increases. On the other hand, announced job cuts don’t always happen so take it with a grain of salt.  That said, there aren’t a lot of forward-looking labor measures out there.

Initial Jobless Claims came in at 383k, higher than the 370k estimate. The ADP Employment change report predicts 133k jobs were added in May.  1Q GDP was revised downward to 1.9%, in line with expectations. Consumption, exports, and residential fixed investment (finally!) drove Q1 GDP growth.

Delays in foreclosures and recent incentives by the Obama administration are making short sales more attractive to lenders than foreclosures.  Short sales were up 25% from a year ago as opposed to bank-owned sales which dropped 15%.  More aggressive pricing on the part of lenders is driving the increase.

Given the outsized rally in Treasuries yesterday, you would have expected a commensurate drop in mortgage rates.  But that didn’t happen. Mortgage rates are moving lower only grudgingly as rates fall, indicating that we may be reaching a floor, or at least further drops will be very hard to come by.

%d bloggers like this: