Today in history – September 13

Posted on September 13, 2013 by ScottC

2011 – A motley crew of political junkies and refugees from other blogs join forces to create All Things in Moderation, “a place where political discussion and debate can take place in the absence of the kind of unproductive vitriol that has come to characterize much of blog commentary these days.” The significance of this on the world outside their little bubble is highly questionable, but since this post is inside that bubble, it remains worth noting.

1971 – A four day riot in Attica prison in New York, during which prisoners held employees hostage and took over portions of the prison, ends abruptly when police open fire on the prisoners, killing 29 inmates and 10 hostages. Four days earlier, an inmate attack on a guard had grown into a full-fledged riot and inmate take-over. Three days of negotiations ensue, with prisoners demanding improved living conditions. When negotiations fail, Governor Nelson Rockefellar authorizes the police to re-take the prison by force. Lawsuits surrounding the event will carry on for decades, with New York State being ordered by a federal judge to pay $8 million in damages to sruviving inmates in 2000, and in 2005 the state finally settles with the families of those employees who were killed, for at total of $12 million.
http://www.youtube.com/watch?v=JPHRnMQULrw

1814 – As the British bombard Fort McHenry from the waters of the Chesapeake Bay, American Francis Scott Key pens The Defense of Fort McHenry, a poem that will eventually be set to music, renamed The Star Spangled Banner, and go on to become the US national anthem. Key had gone to Baltimore in order to negotiate the release of a friend of his who had been captured by the British. Brought aboard a British ship, Key secures the release of his friend, but is prevented from going ashore until the British finish their attack on Fort McHenry. Key was inspired to write his poem when, after an all night barrage, he awoke in the morning to the sight of the Stars and Stripes still flying over the fort. The Star Spangled Banner is now heard virtually daily in sports stadiums throughout the nation.

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Morning Report – retail sales weak 09/13/13

Posted on September 13, 2013 by Brent Nyitray

Vital Statistics:

Last Change Percent
S&P Futures 1684.9 -3.9 -0.23%
Eurostoxx Index 2858.6 -3.5 -0.12%
Oil (WTI) 107.6 -1.0 -0.89%
LIBOR 0.254 -0.001 -0.20%
US Dollar Index (DXY) 81.46 -0.030 -0.04%
10 Year Govt Bond Yield 2.88% -0.03%
Current Coupon Ginnie Mae TBA 103.7 0.0
Current Coupon Fannie Mae TBA 102.6 0.1
RPX Composite Real Estate Index 200.7 -0.2
BankRate 30 Year Fixed Rate Mortgage 4.55
Markets are flattish on no real news. Bonds and MBS are up small. Liquidity should be light due to the Jewish holiday. Today is the last big data day before the FOMC meeting.
Mohammed El-Arian of PIMCO says the Fed is tapering to head off excessive risk taking. PIMCO is forecasting a “taper-lite” announcement of $10 billion in Treasuries, which would mean the Fed will continue to purchase MBS at its current rate. Given that foreigners have been net sellers of MBS and REITs have been de-leveraging (in other words, they have been net sellers too), it makes you wonder where the replacement for the Fed’s buying will come from. What does that mean for your average mortgage banker? If TBAs are weak (bond prices falling), then mortgage rates will be higher.
Twitter announced its IPO in 140 characters or less:  “We confidentially submitted an S-1 to the SEC for a planned IPO. This Tweet does not constitute an offer of any securities for sale.” Note that roughly half of the characters are legal disclaimer. Some things never change.
The Producer Price Index came in flat ex food and energy, showing that there is no inflation at the wholesale level. Inflation has been figuring into the Fed’s calculus for a while now, primarily on the downside. They desperately want to create a little inflation. 3% inflation and 3% wage growth feels a lot better to the average American than no inflation and no wage growth does.
Retail sales came in lower than expected, .2% on the headline number, and the same for the control group. Looks like back-to-school sales were disappointing, which bodes ill for the holiday shopping season. Since consumption is roughly 70% of the US economy, it doesn’t bode will for the 2H recovery we are supposed to be seeing according to Fed forecasts.
It will be Summers, at least according to the Nikkei newspaper. Supposedly this will be announced next week sometime. Summers would mean a quicker withdrawal of quantitative easing and a more vocal support of fiscal measures to stimulate the economy. The knives are out for Summers on the Left.

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Two Years and Still Hanging On…Barely

Posted on September 13, 2013 by ScottC

Happy birthday, ATiM. Hard to imagine, but yes, it was 2 years ago today that our long lost colleague Kevin Willis put up the first ever ATiM post. In many respects it has been a long haul. Too much of a haul for some as, truth be told, we are currently a much diminished operation from last year. We operate now on what is basically a skeleton crew, with barely a comment on some days. Unfortunately I think the future of ATiM is much in doubt. But still, a special thanks to Brent for his daily efforts in the Morning Post, and thanks also to everyone else who continues to find the time in their busy schedules to contribute, and the fortitude to tolerate both the thoughts of those they disagree with and the rough and tumble that it sometimes produces. I wish there were more of us, but those who remain are a solid crew. Thanks.

Here’s to another year….I hope.

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