Morning Report – What to watch for in economics this week 6/24/13

Vital Statistics:

  Last Change Percent
S&P Futures  1568.5 -15.6 -0.98%
Eurostoxx Index 2502.6 -46.9 -1.84%
Oil (WTI) 93.38 -0.3 -0.33%
LIBOR 0.277 0.004 1.47%
US Dollar Index (DXY) 82.8 0.483 0.59%
10 Year Govt Bond Yield 2.64% 0.11%  
Current Coupon Ginnie Mae TBA 99.5 -1.6  
Current Coupon Fannie Mae TBA 99.38 -1.1  
RPX Composite Real Estate Index 205 0.2  
BankRate 30 Year Fixed Rate Mortgage 4.36    

 

A sea of red to greet investors this morning. The SPUs are down 15, and the the 10 year is down close to a point. MBS are down as well, with the FNCL 3.5s below par. We should be best-exing into a 4% security at this point, and are well on our way to hitting 4.5s.
 
The back up in yields is not only a US phenomenon. The UK gilt and the Canadian 10 year have been moving almost in lockstep with the US 10 year. Japanese and German yields are up small, but not as much as us. For those keeping score at home, the 10 year yield increased 40 basis points last week. 
 
Economically, we have a lot of stuff coming up this week, although not much is market moving. The big question is whether the back up in interest rates is affecting the economy.Watch the consumer confidence numbers (Conference Board on Wed, Michigan on Friday) to see if the jump in interest rates is affecting people’s perception of their own financial situation. Pending Home Sales on Thursday is another one – that should affect contract signings over the past month and will give a clue as to whether the hike in rates is affecting the purchase market. On Thursday, we also get personal income and personal spending. 
 
Bond mutual funds and ETFs had record withdrawals in June, according to Trim Tabs. So far, over $47 billion has exited bond funds. This withdrawal exceeds the record set in October 2008 at the height of the financial crisis. Where that money goes is the $100,000 question. 
 
The Chicago Fed National Activity Index improved somewhat in May, although it is still negative and the the 3 month moving average is getting dangerously close to recession territory.

 

22 Responses

  1. Looks like another bad market day today. I saw this regarding the ACA and CA this morning which is mildly interesting. I have another busy week so I’ll be scarce but will check in when I can.

    As Lynn Parramore recently noted on AlterNet, a 2013 Gallup poll shows one in five Americans employed part time and at least one third of them want full-time work. A May study from the Employee Benefit Research Institute shows that part-time jobs jumped from 16.7 percent of the workforce in 2007 to 22.2 percent in 2011.

    Employers have been shifting from full-time to part-time work long before Obama’s election or the Affordable Care Act. The law may provide further impetuous, but the decisions of AAA Parking, and other companies like it, represent an acceleration of trends already in progress. But there’s currently a bill in the California legislature that could bring such employers to heel. California Assembly Bill 880 would fine large companies (those with 500 or more workers) up to $6,000 for every employee on Medicaid. The law is specifically designed to discourage companies like, say, Regal Entertainment from executing employment policies that force the state to subsidize their low-wage employment strategies. The Los Angeles Times reports that “firms would face fines based on 110% of the average cost of health insurance for every employee who is enrolled in Medi-Cal and works more than eight hours a week.”

    http://www.alternet.org/labor/companies-threaten-cut-hours?page=0%2C3

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    • big ACA enrollment rollout today:

      https://www.healthcare.gov/

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    • lms (from the link):

      The law is specifically designed to discourage companies like, say, Regal Entertainment from executing employment policies that force the state to subsidize their low-wage employment strategies.

      I pointed this out the other day, but this is yet again an example of a common rhetorical (and conceptual) deception. No one is “forcing” the state to do anything, and the “subsidy” is being given to the workers, not the employer.

      It is truly remarkable how reality gets completely inverted in order to frame employers as the bad guy. The state chooses to force taxpayers to subsidize low/no wage workers, and somehow this gets presented as employers forcing the state to subsidize employers. Totally absurd.

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  2. No better way to encourage employers to substitute technology for labor or to move to another state.

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  3. Or split up companies to get below 500. sounds like the LLC/Incorporation Act.

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  4. Knew you guys would love that one. It’ll be interesting if it passes to see what Brown does. I wouldn’t normally think he’d sign it but I know he’s also not crazy about the medi-cal expansion so it could get interesting here.

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  5. Mandating benefits if you work more than 8 hours a week is pretty crazy. Hope they thought of the unintended consequences of this, but I’m guessing they didn’t.

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  6. Hate to go off topic, but it may be a topic for discussion.

    I know most of you are aware that I have health issues. The primary being that I was born with spinal stenosis (born with boney spinal column too narrow for housing spinal cord properly), causing several pinched nerves and at least 1 pinched artery.

    In Jan, my orthopedic surgeon sent me home with a letter saying I could no longer work. Of course I applied for SSDI.

    SSA sent me to my orthopedic surgeon to be looked at again. They also sent me to a physician ‘of their choice’, and also had me re-visit my family doctor. All had to respond to SSA with their findings. All 3 stated I am disabled.

    However, I received my letter from SSA on Saturday informing me that they are denying my disability claim. And their reasons for denying me were:
    1) My age. – I will be 58 in a couple weeks
    2) My education level – I have two associates degrees
    3) That while I can no longer do what I have always done I should be able to find a different type of job which I should be able to do by “working through the pain”.

    Hmmmm, my disabilities prevent me from standing or walking more than about 15 mins, and then I am down for at least a couple hours. The career I had for 32 years required I sit at a desk and use a computer. The pinched nerves affect my neck, shoulders, arms and hands the most, with the lumbar coming in a fast second.

    Soooo, basically the SSA ignores what 3 qualified, experienced physicians stated, and evidently based on my age and education, they know more and I am to go get me a job elsewhere, doing something I’ve never done before, and be able to work, while sitting but not using my arms and hands.

    EVEN if there were such a position to be had ROFLMAO
    1) It is extremely difficult to get a job where you have no experience..
    2) It is extremely difficult to get a job when you are as close to 60, as I am.
    3) 1 AND 2 above, combined, is a definite job opportunity killer.

    All I can say is how disappointing this was. When I applied, we had about 6 months of savings. We no longer have those savings and are now considered just below the poverty level for a family of 2. So I guess at this point, while I await whatever my attorney can do for me to appeal, etc., all I can do is become one of the so-called “takers” and sign up for TANF, in hopes of some assistance.

    This is disgusting to me. I worked 32 years and I paid for health insurance the entire time and hardly even used it. I also paid into SS and Medicare those 32 years. I paid my taxes and took care of myself. Now when I actually, really needed, I am denied and am faced with doing whatever is possible so we don’t end up losing our home. With me actually not being able to work, hubby’s SSDI check alone is not enough to keep us in our home.

    While I certainly understand some people with disabilities may be able to move to another field to continue working, I simply cannot. Welcome to the world of reality for many, many Americans.

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  7. Geanie — I’m sorry you are having such difficulty.

    I saw you have a lawyer working your case, which was to be my first recommendation.
    my second is to reach out to your congressional representation. your senators and rep will have staff to handle casework. sometimes a call from the Hill can get the ball rolling. squeaky wheel and all that. i’d start with your district office — not the one in DC — and ask for the Social Security constituent services representative. if you need help finding phone #, let me know who your members are and I’ll pull them for you.

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    • Nova, thank you for your concern and advice. I need all I can get LOL. While I cannot post on a daily basis, depends on pain levels, I will try to keep ATiM informed of how this goes.

      I am also the one here who posted a few months ago about the city flooding our home for 4 years to alleviate flooding of 2 NEW additions (my home is just over 30 years old). We still have not resolved the issue, pre-trial is Oct.3… but we just learned that we have a home that is worth 0 now, when we should have had at least $30k equity in it. Since all walls, interior and exterior, are titled, the recommendation from all is to demo and rebuild. Point I’m making is, the city has taken our equity, we’ve been this way for 5 years now. I’m really getting tired of all the procrastination and am completely at the mercy of those who are only thinking $$$, nothing else matters. Our home equity would mean a lot to us right now, but we have none.

      And I know I am coming across as someone just fuming their anger…. but I think I’ve earned it. Please be patient with me.

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  8. OT, but this is going to add a new twist to the Snowden story:

    Edward Snowden secured a job with a US government contractor for one reason alone – to obtain evidence on Washington’s cyberspying networks, the South China Morning Post can reveal.

    For the first time, Snowden has admitted he sought a position at Booz Allen Hamilton so he could collect proof about the US National Security Agency’s secret surveillance programmes ahead of planned leaks to the media.

    “My position with Booz Allen Hamilton granted me access to lists of machines all over the world the NSA hacked,” he told the Post on June 12. “That is why I accepted that position about three months ago.”

    During a global online chat last week, Snowden also stated he took pay cuts “in the course of pursuing specific work”.

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  9. You would think evidence of this would have come up in his TS / SCI investigation.

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  10. Genie, I’ve heard that most SSDI claims are denied the first time but granted during the appeal process. I’m not sure how true that is but keep the faith. A friend of my daughters went through virtually the same process and is now collecting disability so hopefully that will be the case for you as well. The program was designed for people like yourself.

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  11. Mandating benefits if you work more than 8 hours a week is pretty crazy. Hope they thought of the unintended consequences of this, but I’m guessing they didn’t.

    What is the point of diminishing returns on full time workers? When I was a fast food employee as that archetypal teenager who doesn’t have to support a family, I rarely worked more than ten hours a week. However, that limits the pool of employees if all positions are going to be under 30 hours.

    Yes, there will be unintended consequences as employers adjust their business model to skirt the new rules. Most likely there will be more part-time jobs which could meet a needed niche in the labor supply.

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  12. “Edward Snowden secured a job with a US government contractor for one reason alone – to obtain evidence on Washington’s cyberspying networks, the South China Morning Post can reveal.”

    awesome.

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  13. Edward Snowden secured a job with a US government contractor for one reason alone – to obtain evidence on Washington’s cyberspying networks

    His future public defender is cringing.

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    • There is a thought out there that Snowden is exaggerating his importance and his actual knowledge.

      Don’t you wonder how a contractor obtains all this “access” during his first six months of employment?

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      • Interesting post by Kevin Williamson:

        What is worrisome to me is the double standard we all seem to have accepted here. If we are to put people in prison for violating our classified-information laws, then we have to deal with the fact that official Washington abuses those laws while at the same time being the main violator of them. For example, the Obama administration is pretty clearly leaking classified information to the media when it suits it to do so. Placing Anwar al-Awlaki on the CIA hit list did not end up on the front page of the New York Times without the White House’s blessing. We can take the Times at its word on that: “‘The danger Awlaki poses to this country is no longer confined to words,’ said an American official, who like other current and former officials interviewed for this article spoke of the classified counterterrorism measures on the condition of anonymity.” The Times reports the crime as though it were standard operating procedure, because it is.

        My objection here is not to simple hypocrisy but to the creation of a standard of selective prosecution under which official Washington can use leaks of classified information as a political weapon while at the same time using the prosecution of rival leaks as a political weapon. We are in effect adopting the Nixon rule: When the president does it, it isn’t illegal.

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  14. I actually kind of agree with the excerpt Scott posted from the Wialliamson post. Just a reminder though that there was a lot of “on the condition of anonymity” going on in the Bush run up to the Iraq war, if I remember correctly. I freely admit though that I was expecting more from an Obama Administration.

    In my opinion the Nixon rule is pretty much accepted Washington SOP, which is extremely discouraging.

    I personally think our government has run aground and it’s not because of SS or Medicare, immigration or even Obamacare, but they’re all a nice distraction.

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    • I take Williamson’s thrust, too, but remember that the executive branch has the power to declassify info that I do not.

      My recollection is that selective secret sharing by leak without declassification has been shown to occur in every Admin since LBJ, except I don’t recall any in Ford’s.

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      • Mark:

        My recollection is that selective secret sharing by leak without declassification has been shown to occur in every Admin since LBJ, except I don’t recall any in Ford’s.

        I am sure that is true, but it is no less an abuse of power for that. If the executive wants to declassify, then he should do that. But members of the admin who leak classified info should be in just as much legal jeopardy as those who leak classified info but are not members of the admin.

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  15. “but remember that the executive branch has the power to declassify info that I do not. ”

    That’s not the same thing as self serving leaking by the administration.

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