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 | 1692.1 | 0.9 | 0.05% |
| Eurostoxx Index | 2888.0 | -6.7 | -0.23% |
| Oil (WTI) | 105.9 | -0.7 | -0.64% |
| LIBOR | 0.252 | 0.000 | 0.04% |
| US Dollar Index (DXY) | 81.15 | -0.146 | -0.18% |
| 10 Year Govt Bond Yield | 2.83% | -0.03% | |
| Current Coupon Ginnie Mae TBA | 104.1 | 0.1 | |
| Current Coupon Fannie Mae TBA | 103.1 | 0.2 | |
| RPX Composite Real Estate Index | 200.7 | -0.2 | |
| BankRate 30 Year Fixed Rate Mortgage | 4.53 |
Markets are flattish as we head into Day 1 of the FOMC meeting. We should get the actual announcement tomorrow around 2:15 pm. Bonds and MBS are rallying as the market continues to digest the fact that Summers won’t be the next Fed Chairman.
The Consumer Price Index came in at .1% month-over-month, below expectations, and frankly below what the Fed would like to see. As long as (a) there are no bubbles and (b) there is no inflation, the Fed will likely try and err on the side of accommodation.
That said, I believe this reprieve we have been given in rates will be short-lived. Don’t lose the forest for the trees – rates are going up, and if you have any borrowers who have been on the fence or who were floating, now is a good time to lock.
The California Association of Realtors reported that increasing mortgage rates are starting to bite as activity slipped 2%. Prices are still increasing though, as the median home price hit $441k, the highest since Dec 2007. Inventory is improving in the sub 750k bucket, although month’s supply is still extremely low at just about 3 months.
Filed under: Morning Report |
All Things in Moderation 
Good piece:
“How Detroit went broke: The answers may surprise you – and don’t blame Coleman Young
By Nathan Bomey and John Gallagher/Detroit Free Press Business Writers
1:10 AM, Sep. 15, 2013 ”
http://www.freep.com/article/20130915/NEWS01/130801004/Detroit-Bankruptcy-history-1950-debt-pension-revenue
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J, I read that piece and still felt that Coleman deserved some blame, he balanced the budget but did so by essentially raising taxes, creating a tax death spiral. Plus, targeting law enforcement often means an increase in crime, which then leads to a crime death spiral. Finally, he started borrowing when he could. That says to me that a shitty credit rating does more for fiscal discipline than anything else.
With that in mind, why shouldn’t the US default?
Also, I do not think there is any agreement the R’s could reach that would satisfy Obama re the CR. He (Obama) wants a shutdown. I say give it to him good and hard.
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Uh oh…
http://m.huffpost.com/us/entry/3940730?1379431121
Is Yellen back on the reservation now?
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Wow, the Navy Yard shooter had multiple UAs, an insubordination charge, a disorderly conduct arrest.
Back in my day, this dirtbag would have been gone after his 2nd UA. Things have changed…
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What was his discharge I wonder?
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“Also, I do not think there is any agreement the R’s could reach that would satisfy Obama re the CR. He (Obama) wants a shutdown. I say give it to him good and hard.”
That’s crazy. If they pass a CR at FY2013 levels, Obama will sign it.
The Republicans will shoulder all of the blame for a shutdown, deservedly so.
Edit: Today’s WSJ Editorial makes the same point:
http://online.wsj.com/article/SB10001424127887323846504579073083671216784.html?mod=WSJ_Opinion_LEADTop
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He (Obama) wants a shutdown.
What in the world makes you say that, McWing?
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Because the media narrative is set, R’s will be blamed and will suffer politically for it. If you’re a D, you have to capitalize n it. Plus, Obama’s on a disastrous course re Syria and needs to change the subject.
Watch, there will be no R proposal that will be acceptable.
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The administration has already said that a clean CR is acceptable. The defund Obamacare nonsense is the entire cause of the current brinksmanship.
On a broader note, Obama has pretty much always signed anything that actually passes both the House and the Senate.
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J, he’s going to hold out to break the sequester. If the media narrative is right, that shutdown under all circumstances will be blamed on R’s and will hurt them in 2014, he has to do it. It would be politically suicidal not to.
I know this is counter-narrative but think about it. Either shutdown unambiguously damages R’s for 2014 or it doesn’t, He’s a lame duck now and needs something of a legacy besides Carteresque incompetence. He has to take every opportunity to advance D electoral chances in the Senate and especially the House.
If there is no shutdown it’s because the media narrative is wrong, and we both know that’s unpossible!;-)
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McWing:
J, he’s going to hold out to break the sequester.
If Obama is never going to sign a CR, then what is the downside to passing it? If he does refuse to sign, then Obamacare isn’t funded, and the ability to blame O for the shutdown increases a lot.
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The Democrats have already precaved on the sequester. Their last stand on that was in March and it was over when they fixed the FAA by reallocation.
And it’s counter narrative because it’s wrong. Obama isn’t the reason that Boehner can’t get the votes for the CR and the separate defund Obamacare bill.
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Scott, I don’t think there is any circumstance in which blame for a shutdown falls on anybody but the extremist unreasonable Republicans. So, a CR that does not bust the sequester will be unacceptable. Like I wrote, if Obama and the D’s think there is political advantage to themselves via supposed R electoral damage in 2014, there will be a shutdown. No shutdown means there is not belief among the D’s that R’s would suffer politically in 2014
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J, I don’t disagree that Boehner has his hands full with us crazy Teabaggers and that a defund CR will be brought forward for a vote. I believe that there will be a shutdown, R’s will be blamed and that, in the end, the sequester is broken.
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Politico summs up nicely:
The real opportunity here for Republicans is to pass the CR and set it as the new budget baseline at the same time to lock in the spending cuts.
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” I believe that there will be a shutdown, R’s will be blamed and that, in the end, the sequester is broken.”
And that will be entirely the fault of the Republicans for overeaching on defunding Obamacare.
The WSJ editorial page is right. It’s elevating kamikaze tactics as a strategy.
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“So, a CR that does not bust the sequester will be unacceptable.”
That’s just wrong and not supported by any reporting that’s been done to date.
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I also happen to think that some of the Kamikaze narrative coming out of the House is a bit of brinksmanship. Boehner’s “hold” on his caucus always seems the most “tenuous” during negotiations and I think the House R’s like that part of the narrative.
I know it sounds like a bit of circular reasoning here. Either the media narrative (touted by a lot of the R punditry) is right, in that a shutdown will significantly damage the R’s for 2014, or it’s wrong. The 96 election is often cited as proof that the R shutdown hurt them electorally. In my opinion the opposite was true; Dole was NEVER going to win (in two party Presidential races, the incumbent does not lose. Not ever.) and the R’s picked up, what, 2 Senate seats and the House R’s, after an enormous victory for them two years prior only lost 8 seats.
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Agreed, the reporting coming out is all about R’s desire to shutdown for the sake of a shutdown. There has been no reporting on what the D’s negotiating stance will be once the shutdown occurs. I think they will move back from their current position, or will move away from it the closer we get to deadline.
There is going to be some sort of CR voted on that will defund Obamacare. What the R’s fallback position will be afterwords is anybody’d guess but there are plenty in the party that want sequestration gone as well.
I’m probably all wet as I have a terrible headcold
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OT: Worth noting on the Farm Bill.
http://www.politico.com/story/2013/09/house-gop-seeks-tighter-food-stamp-rules-96873.html?hp=l5
http://www.politico.com/story/2013/09/the-farm-bill-is-back-96831.html?hp=l5_b1
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“There is going to be some sort of CR voted on that will defund Obamacare.”
Boeher should just get that vote done so the Senate can reject it, and then move to pass a clean CR.
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Congressional Budget Office Predicts Unsustainable Debt
By JACKIE CALMES
WASHINGTON — As the White House and Congress careen toward another fiscal showdown, the nonpartisan Congressional Budget Office warned on Tuesday that President Obama and lawmakers have been cutting the wrong kind of federal spending as they try to avoid unsustainable levels of debt in coming decades.
In its annual long-term outlook, the budget office projected that because of government spending cuts and rising tax revenues from the recovering economy, annual deficits will fall in the short term — to a projected 2.1 percent of the economy’s output by the 2015 fiscal year, or about one-fifth of the peak shortfall at the height of the recession in 2009. But starting in 2016, the office projected that deficits will rise again as more aging baby boomers begin drawing from Medicare, Social Security and Medicaid’s long-term care benefits.
By 2023, the annual deficit would rise to an estimated 3.5 percent of the gross domestic product, which is just beyond the level that many economists consider sustainable in a growing economy. By 2038, it would be 6.5 percent.
The accumulated federal debt held by the public, which had averaged 38 percent of the G.D.P. for the 40 years preceding the financial crisis that began five years ago this week, would reach 100 percent of the G.D.P. in 2038. But that probably understates the potential crisis, the budget office said, because it does not account for “the harmful effects that growing debt would have on the economy.”
Budget experts have been warning since at least the Reagan era that an aging population in the early 21st century would drive spending for entitlement programs — chiefly Medicare and Medicaid and to a lesser degree Social Security — to levels that would crowd out military and domestic spending. Interest on the debt would also be a major and growing expense.
What is different now is that the Republican-controlled House and the White House have been on a two-year budget-cutting run that has resulted in reductions in areas that are not driving the projections of future debt. Those discretionary spending programs include things as varied as Pentagon weapons buying, air traffic control, science and research, education and national parks.
Discretionary spending had already been in line, since 2011, for annual cuts over nine years. But the across-the-board sequestration reductions that took effect in March, when Republicans and Mr. Obama could not agree on alternative deficit reduction measures, has pared the domestic and military programs further, resulting in increasing layoffs, furloughs and service cutbacks.
Republicans have supported keeping the sequestration cuts in place rather than accepting Mr. Obama’s proposal for a mix of higher taxes on wealthy people and some corporations and cuts in future entitlement spending. And he will not accept their alternative for deeper reductions in Medicare and Medicaid without new taxes.
By 2038, spending for discretionary programs and others unrelated to health care, Social Security and interest on the federal debt would, according to the budget office’s report, “decline to 7 percent of G.D.P., well below the 11 percent average of the past 40 years and a smaller share of the economy than at any time since the late 1930s.” Discretionary spending alone, for domestic and military programs, would fall to 5.3 percent of the G.D.P. from this year’s 7.3 percent, which already is below the average of the past 40 years.
In contrast, federal spending for the major health programs and Social Security would equal 14 percent of the G.D.P. in 25 years, double the level of the last four decades.
While federal revenues are projected to grow — to 19.5 percent of the G.D.P., compared with the 40-year average of 17.5 percent — that is not enough to offset the rising spending for federal benefit programs.
“Unless substantial changes are made to the major health care programs and Social Security,” the report said, “those programs will absorb a much larger share of the economy’s total output in the future than they have in the past.”
Budgets proposed by House Republicans would replace Medicare with federal subsidies to buy private insurance, although at limited amounts, and would transform Medicaid into much-reduced block grants to states.
Mr. Obama refuses to consider those far-reaching changes and has proposed savings for the existing Medicare, Medicaid and Social Security programs. But Republicans refuse to accept the higher taxes he also demands.
In the current budget debate, Republicans propose to repeal or delay Mr. Obama’s health insurance program. Representative Paul D. Ryan of Wisconsin, a Republican who leads the House Budget Committee, responded to the budget office’s report with a statement suggesting that eliminating or delaying the program, called the Affordable Care Act, would address the nation’s fiscal woes.
But the Congressional Budget Office has reported that the Affordable Care Act would reduce deficits and that repealing it would increase them, largely because its costs would be offset by taxes and savings from care providers who benefit from an increase in insured patients.
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