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 | 1755.0 | 4.0 | 0.23% |
| Eurostoxx Index | 3062.3 | -5.7 | -0.18% |
| Oil (WTI) | 95.64 | -0.7 | -0.77% |
| LIBOR | 0.238 | -0.004 | -1.76% |
| US Dollar Index (DXY) | 80.53 | 0.338 | 0.42% |
| 10 Year Govt Bond Yield | 2.58% | 0.02% | |
| Current Coupon Ginnie Mae TBA | 106.2 | -0.3 | |
| Current Coupon Fannie Mae TBA | 105.2 | 0.1 | |
| RPX Composite Real Estate Index | 200.7 | -0.2 | |
| BankRate 30 Year Fixed Rate Mortgage | 4.15 |
Markets are up as Twitter increases the price of its IPO from $17-$20 to $23-$25. Bonds and MBS are up as well.
This week promises to be a big one with Friday’s jobs report. The bar is set pretty low – nonfarm payrolls are expected to increase 125k. Given that this report will include the government shutdown, you probably should put an asterisk next to it, but all jobs reports are huge these days. The unemployment rate is expected to tick up to 7.3% from 7.2%. The ADP report, which forecasts the same payroll number came in at 130k, weaker than the 150k estimate. Given the shutdown, I would expect a good jobs report to be bond bearish and a bad jobs report to not necessarily be bond bullish. Weakness would be taken as par for the course given the shutdown, and strength in spite of the shutdown would bring a December tapering back into the picture.
Deutsche Bank is out with a gutsy call in Treasuries – a 2.25% yield on the 10-year by the end of the year. The reason? The economy isn’t growing as strongly as forecast. That said, Friday’s ISM report was reasonably strong, but overall consumer confidence has been dropping, and we didn’t see blockbuster numbers out of the retailers for back-to-school. It certainly makes you wonder what the Fed is looking at when they talk about a strengthening economy. Remember, however the Fed has been consistently high in its economic forecasts for GDP growth. The last time rates were at that level, the Bankrate average 30 year fixed rate mortgage was below 4%.
Homebuilder Tri Pointe Homes is making a big bet on housing construction with its purchase of timber conglomerate Weyerhaeuser’s home-building division. In many ways, this deal simply recognizes the reality that there is a huge advantage to size for the builders. On one hand, you have small builders who are having difficulty borrowing money, and on the other hand the big builders are having money thrown at them by the market. Exhibit (a) for that was KB Home’s (KBH) convertible bond deal earlier this year. 10 year paper, 1.375% coupon, initial conversion premium at 50%.
71% of single family homes were built before 1990, according to RealtyTrac’s Aging Home Analysis. This speaks to the merger mentioned above (we have underbuilt for 6 years) and represents an opportunity for 203k loans.
Filed under: Morning Report |
All Things in Moderation 
2.25% 10yr yield is a gutsy call. But possible if the Fed further diminishes the possibility of taper.
On an wholly different note, this is a good article from Reason, re O-care.
LikeLike
More sticker shock. But this bit drives me nuts:
“There are definitely winners and losers,” said Sabrina Corlette, a senior research fellow at Georgetown University’s Center on Health Insurance Reforms. “The problem is that even if the majority are winners . . . they’re not the ones writing to their congressmen.”
The administration says that about 12 million Americans, or 5 percent of the population, buy individual polices — they don’t get coverage through their employers or programs such as Medicare and Medicaid. Millions of them will be required to get new policies, but many will qualify for federal aid to pay for the premiums. Thus, they will end up with better coverage at lower costs, officials say. If they are sick, they won’t be denied coverage or charged more.
Can we please apply a little logic here. If millions of people will qualify for subsidies that allow them to get “better coverage at lower cost”, then someone else is paying for the subsidy. For every one of these “winners” under O-care, there is, by necessity, at least one other, and almost certainly multiple, “losers”. There is no free lunch.
LikeLike
I realize that Ezra isn’t always respected around here, but he does dispense with the “fake plan for $54” BS that’s the current talking point in defense of the chasm between what President Obama promised and what is actually happening:
LikeLike
jnc (from Ezra):
That sounded good every time the president said it. But part of the reason it sounded so good is that the people benefiting from this discrimination didn’t know they were benefiting from it. But people in the individual market right now are paying less because of discrimination against the old and sick. When that discrimination ends, a lot of them will end up paying more.
The above is precisely why Klein doesn’t deserve any respect. This is just linguistic dishonesty. Properly pricing insurance risk is not “discrimination” against the old and sick. He pretends that O-care is somehow eliminating a free lunch, when in fact it is granting one. And he is too smart not to know the lie he is perpetuating.
LikeLike
A throw away line about a “tradition of arson” that covers some of Detroit’s cultural problems nicely:
LikeLike
But Scott, even the NYT says that they are “free”
Someone needs to come up with a pithy one word description that means “paid for by someone else”. “Subsidized” doesn’t seem sufficient, and “stolen” probably doesn’t work either.
LikeLike
jnc:
Someone needs to come up with a pithy one word description that means “paid for by someone else”. “Subsidized” doesn’t seem sufficient, and “stolen” probably doesn’t work either.
Welfare
Dole
Hand-out
There is no lack of words. There is only a lack of desire to use them honestly.
LikeLike
“paid for by someone else”
dependent?
“requiring someone or something for financial, emotional, or other support”
LikeLike
compulsorily bestowed
LikeLike
“compulsorily bestowed”
good band name.
LikeLike
I wanted to name our band Lacey Underall
LikeLike
Or Fawn Leibowitz
LikeLike
I think Juicer isn’t being deceptive, he literally does not understand the difference between Insurance and healthcare.
I bet he can’t understand why teenage males are more expensive to insure for driving then a woman in her sixties.
LikeLike
McWing:
I think Juicer isn’t being deceptive, he luterally does not understand the difference between Insurance and healthcare.
I’d be pretty surprised if that was the case, but he is definitely either not well educated on the concept of insurance or dishonest.
I just read his Trilemma post. Speaking of the “tradeoffs” involved between premiums, coverage, and access, he says:
But it’s not all zero sum. The law pumps a trillion dollars of subsidies into the market to help people making less than 400 percent of the poverty line — which is $94,200 for a family of four — afford insurance. So now the actual premiums people are paying exist on a continuum, with some people seeing premiums increases and some people paying literally nothing at all.
I guess in Klein’s worldview that “trillion dollars of subsidies” just magically appears out of thin air, to no one’s detriment at all. And this it supposed to be the thinking man’s liberal?
Even the concept of his “trilemma” is ill-conceived. He pretends (or perhaps really thinks) that “affordability” and “access” represent two different things. But in the real world they are for the most part essentially the same thing. Sick people, or people very likely to be sick, can’t get “access” to insurance not because insurance companies arbitrarily want to “discriminate” against them, but rather precisely because any policy that is properly priced (ie based on their risk factors) would be unaffordable.
In fact the third leg of his triangle (to the extent that the triangle concept makes any sense in the first place) should be “risk”. The two things that effect premiums are comprehensiveness and risk. But even these are related, as increasing the comprehensiveness of a policy widens the number of risk factors that must be considered, and therefore increases the total amount of “risk” that is being covered.
LikeLike
Nice Animal House reference.
LikeLike
Scott, that poor woman from the WSJ piece is about to experience the tendr mercies of the pro-Obamacare left.
LikeLike
And it starts.
http://thinkprogress.org/health/2013/11/04/2881581/wall-street-journal-horror-story-cancer-patient-losing-doctors-wrong/
Link was tweeted by Dan Pfieffer.
LikeLike
McWing:
The breathlessness of the link is hilarious.
Get that? The company packed its bags and dumped its beneficiaries because it wants its competitors to swallow the first wave of sicker enrollees only to re-enter the market later and profit from the healthy people who still haven’t signed up for coverage.
Uh, yeah. I guess insurance companies are still capable of making at least some sensible business decisions in light of O-care.
Sundby is losing her coverage and her doctors because of a business decision her insurer made within the competitive dynamics of California’s health care market.
Uh, yes, a market dynamic that has recently been altered by the realities of O-care.
LikeLike
“Uh, yes, a market dynamic that has recently been altered by the realities of O-care.”
I am altering the deal. Pray I don’t alter it any further
LikeLike
nova:
I am altering the deal. Pray I don’t alter it any further
I think there may in fact be a force that Obama uses to alter the minds of people on the left. “These aren’t the reasons for insurance cancellation that you are looking for. Move along.”
LikeLike
Y’all are just jealous that a liberal is getting a major policy in place.
LikeLike
No Michi, we are irritated at being stuck with the bill. “Shared” sacrifice and all that.
LikeLike
That’s just good old fashioned group think and boosterism. Even Greg Sargent is apparently a right wing hack if he points out that the web site isn’t working according to the majority of his commentators.
LikeLike
Obama’s next presser: “They told me they fixed it! I *trusted* them to *fix* it! It’s not my fault!”
LikeLike
He’s saving that one for the conference after the revised November 30 deadline.
LikeLike
“if he points out that the web site isn’t working according to the majority of his commentators”
It can’t fail. it can only be failed.
LikeLike
nova:
It can’t fail. it can only be failed.
Isn’t that pretty much the mantra of leftist ideology in general?
LikeLike
I think so. but i’m a wacko-bird. so what do I know.
LikeLike
The nomads of Walmart.
I can hear the left now: Walmart should be forced to build public housing for these people. Social Security is subsidizing Walmart parking lots!
LikeLike
I have to admit that I was previously unaware of this quotation, apparently from an interview with Obama
groupieadvisor, Valerie Jarret:I think Barack knew that he had God-given talents that were extraordinary. He knows exactly how smart he is. . . . He knows how perceptive he is. He knows what a good reader of people he is. And he knows that he has the ability — the extraordinary, uncanny ability — to take a thousand different perspectives, digest them and make sense out of them, and I think that he has never really been challenged intellectually. . . . So what I sensed in him was not just a restless spirit but somebody with such extraordinary talents that had to be really taxed in order for him to be happy. . . . He’s been bored to death his whole life. He’s just too talented to do what ordinary people do.
How cringe-worthy is that?
LikeLike
“How cringe-worthy is that?”
It’s not just that. Why would such a man choose politics?
They’re forgetting the rules. For the lie to work, it has to be believable.
LikeLike
nova:
Why would such a man choose politics?
Because that is the only way he gets to force other people to behave as he chooses.
They’re forgetting the rules. For the lie to work, it has to be believable.
I’ll bet Obama believes it.
LikeLike
Nova, you may find the commentary about CMS in the linked memo here of interest.
http://www.washingtonpost.com/blogs/wonkblog/wp/2013/11/04/the-memo-that-could-have-saved-obamacare/
LikeLike
I just read a re-cap of a FOX debate between Jim Capretta and Ezekiel Emanuel, re O-care. It reminded me of another deception of the O-care supporting left that irritates the hell out of me. Explaining why people should not be allowed to keep insurance that they are happy with, Emanuel says:
First of all, if she goes in and that insurance doesn’t cover enough, and—which is typically what happens with these very low cost plans, and she gets sick and it exceeds, typically, we who are insured pay the difference. That’s call cost-shifting . . .
And then a bit later, explaining (I use the word generously) why a women beyond child-bearing age should have to pay for maternity care:
We all share in the costs so that everyone can get it. She will need another high-cost service, like cancer care or like a stroke care, God forbid, or her kid might be hit by a car, or her kid might father a baby. We have to make sure that people are covered for those things.
So when a person buys insurance that covers less than they need, that is condemned as “cost-shifting” which forces some people to bear the costs of others, but when a person is forced to by insurance that covers more than they need, that is celebrated as “cost sharing”, which also, er, forces some people to bear the costs of others.
This is a good illustration of the real motive of the left, and how they try to hide it. They don’t really care that costs might be shifted. Indeed that is exactly what they actually want (although they describe it using the happy-talk of “sharing”). They just want the power to dictate how those costs will be shifted/shared. They don’t care so much that there are winners and losers, as long as they get to decide who wins and who loses.
LikeLike
Like I said. . .
Nothing that any of you are saying strikes me as more than jealousy over a left-wing policy making it through. “Irritation” also works.
We can revisit this 10 years from now when everybody loves it. I’ve listened to enough of my Republican relatives complaining about Medicare and SS to know that they’re going to love Obamacare.
LikeLike
Is that before or after Medicaid destroys state budgets?
LikeLike
nova:
Is that before or after Medicaid destroys state budgets?
But if everyone loves it, how could it possibly be economically problematic? The progressive faith in a free lunch is in some ways quite touching.
LikeLike
one of my favorite Far side cartoons (which are impossible to find online):
A cricket floating in a specimen jar as the scientists signs to himself “when you wish upon a star.”
LikeLike
nova:
which are impossible to find online
A challenge!
LikeLike
Here’s a few, although probably in violation of the copyright.
Several more.
This one has my favorite: What we say to dogs; what dogs hear. (I feel like that a lot when I post blog comments.)
And finally…yours, among a lot more.
LikeLike
BTW, nova, you missed a crucial part of the cartoon. It wasn’t just any old cricket. It was a cricket with atop hat!
LikeLike
OT: The American Prospect piece on the Virginia gubernatorial race is well reported and very detailed.
http://prospect.org/article/how-virginia-ended-stinker-governors-race
Edit: & a good piece on Sarvis
http://prospect.org/article/virginia%E2%80%99s-libertarian-surge-wasn%E2%80%99t
LikeLike
hmm. that link is blocked as “pornography”
right. it’s jiminy cricket the top hat (do’h, how’d i forget) is floating on the top. hilarious.
LikeLike
nova:
that link is blocked as “pornography”
That is interesting. Usually I get blocked from all kinds of things. I assure you that it is not cricket porn!
LikeLike
What is the liberal policy that so far has resulted in more people losing insurance than gaining it?
LikeLike
rule 34.
and on that note…..bye!
LikeLike
Mind blowing comment over at DKos about one of the many, many Abomination victims.
That’s not the issue here.
The issue here is that United Health is using the law change to get out of their moral OBLIGATION to continue supporting this woman through her illness.
by RASalvatore on Mon Nov 04, 2013 at 08:44:50 AM PST
There literally is NO understanding of the law over there, at least in the comments.
But I’m just jealous I guess.
http://www.dailykos.com/story/2013/11/04/1252957/-How-ObamaCare-Cancelled-Your-Plan-is-really-an-Insurance-Co-Scam-to-Rip-You-Off
LikeLike
jnc:
Unfortunately behind the firewall, but the WSJ has an editorial you’d probably be interested in.
Therefore, after a multiyear investigation, the legal conclusion seems to be that Mr. Cohen is a noncriminal running a criminal enterprise. In a Monday statement, Mr. Bharara claimed that “individual guilt is not the whole of our mission. Sometimes, blameworthy institutions need to be held accountable too. No institution should rest easy in the belief that it is too big to jail.”
But institutions don’t rest, don’t believe and certainly don’t go to jail. People do. And if—without much in the way of cooperating witnesses or wiretaps—Mr. Bharara has decided he can’t make a case against Mr. Cohen, will he now slap the cuffs and an orange jumpsuit on SAC’s Stamford, Connecticut headquarters?
…The SAC case centered on this gray area of tips, and of course Monday’s settlement involved the Department of Justice and criminal charges, where the government must clear a much higher bar than in the SEC’s civil cases. At trial Mr. Bharara would have had to prove guilt beyond a reasonable doubt, rather than simply having to demonstrate a preponderance of the evidence as the SEC does. Had the Justice case gone to trial, however, there’s no guarantee that SAC could have capped its payouts at even $1.8 billion.
So we have the unsatisfying result of Mr. Cohen, who remains a multibillionaire, going on his way after agreeing to a hefty fee. And we have $1.8 billion flowing from the private economy to Washington, though prosecutors haven’t proven that the government deserves a single dollar.
LikeLike
@Troll: “There literally is NO understanding of the law over there, at least in the comments.”
I think you are being too generous. I don’t think there is any understanding of how life works, period.
@Scott: “They don’t care so much that there are winners and losers, as long as they get to decide who wins and who loses.”
That may be the case of politicians. I think with the general public (I consider everyone here members of the specific public, which is totally different), they just want magic solutions that they don’t have to handle, save for, or think about, and want to feel comforted that their vote takes care of poor people who need healthcare and they are done. I don’t think they want to decide who wins and loses, they want to believe that everybody can win and it’s easy with no secondary or tertiary consequences.
Everything has a cost, and the more complicated a thing is, they more unanticipated outcomes are not only likely but inevitable. Actually, one of the reasons the Obamacare website is such a debacle: very complicated things attract unanticipated interactions and consequences like iron filings. They idea that the government is just going to engineer this perfect 1500 page law and there aren’t going to be unintended consequences (not to mention loopholes which companies can use to their own benefit in a way that negatively impacts the people the law ostensibly exists to help) is just magical thinking. IMO.
Again, Obama and his admin just got too greedy. If his approach had been to expand Medicare to cover the unemployed and provide better coverage for certain conditions . . . heck, all they would have had to do is expand the dialysis model to cancer treatment and say, “and, yeah, your medicare tax is going up 5%, but nobody will ever be denied treatment for cancer again” and he would have been a hero and one more incremental step would have been taken on the path to single payer.
I’m doing my best not to pay attention to anything political, or newsworthy, in my life. And I still can’t avoid seeing how horribly this thing is imploding.
LikeLike
Kevin:
That may be the case of politicians. I think with the general public (I consider everyone here members of the specific public, which is totally different), they just want magic solutions that they don’t have to handle, save for, or think about, and want to feel comforted that their vote takes care of poor people who need healthcare and they are done. I don’t think they want to decide who wins and loses, they want to believe that everybody can win and it’s easy with no secondary or tertiary consequences.
The “they” I was talking about was politically active progressives, not the general public.
LikeLike
@Troll: “What is the liberal policy that so far has resulted in more people losing insurance than gaining it?”
I believe it is referred to at the Hubris and Overreach Act of 2014.
If anyone thinks that trying to everything at once is a good idea, they should try it. It doesn’t work.
Also, if the government is going to spend instance amounts of money on websites, why don’t they contract with a company like IBM that has the resources to pull it off? Instead of CGI Federal Inc, and a company that exists to win government contracts and charge them 10 or 20 times what development should cost to produce working software, only the software they produce doesn’t work.
And Rush Limbaugh is proved right. I think he has said it more about the Democrats than the government, but it certainly seems true that the way to advance in government, or get more government contracts, is to fail and fail spectacularly:
http://www.foxnews.com/politics/2013/11/05/government-awards-more-contracts-to-company-that-created-obamacare-exchange/
They’ve awarded more contracts to this incompetent company! When I guarantee you IBM would do the work for the same or less money (but might not lie in the bidding process to lowball and then freight the final bill with bullshit extra charges). Ah, well. C’est la vie. Despite Obama being the great techno-savvy Generation X hope, there is still nobody in government who really gets technology or understands who to use and how to tackle huge technology projects. Hint: not a company with the word “Federal” in the name.
LikeLike
Scott, yep it’s an incoherent result.
“the legal conclusion seems to be that Mr. Cohen is a noncriminal running a criminal enterprise.”
One would think that if an institution itself is criminal, then it should be shut down, or at least have whatever licenses it happens to have to conduct trading revoked.
To me, this result resembles nothing so much as a criminal paying off the cops.
LikeLike
jnc:
One would think that if an institution itself is criminal, then it should be shut down, or at least have whatever licenses it happens to have to conduct trading revoked.
I think SAC is in fact prevented from managing anyone’s money except Cohen’s own, now.
To me, this result resembles nothing so much as a criminal paying off the cops.
This suggests to me that you are not so much interested in a trial to establish guilt or innocence as you are punishment for a crime that in your mind has already been established.
But that aside, I don’t agree with your analogy at all. In such a case, the cops are benefiting as individuals for turning a blind eye to criminal activity, or in other words for not performing the job they are paid to do. In this case, first of all, it’s not the cops who made a deal, it is the prosecutors. Second, the prosecutors as individuals don’t stand to gain anything at all from the settlement. I don’t think there is anything to suggest that the prosecutors are not doing their job in good faith. So to me this doesn’t resemble in the slightest the kind of corruption you suggest.
The problem as I see it is that the government as an institution has potentially competing interests. It not only has a duty to pursue and punish individual criminals, but it has a financial interest in getting the biggest fines possible out of the corporations it regulates. And these two interests can come into conflict, as in the case at hand. If the government only had an interest in punishing individual criminal activity, it would be much more likely to take its chances in bringing a case to trial even if a conviction was not reasonably assured. But once the ability to fill government coffers with corporate fines is introduced into the mix, that makes the decision to bring an individual to trial much more difficult. The possibility of failing to get a conviction (and hence no fines) must be weighed against the ability to win a negotiated settlement. It may be perfectly rational, from the government’s point of view, to pass up on the uncertain opportunity to win an individual conviction in order to win a certain financial settlement. And, even more troubling, the ability to get a financial windfall by alleging criminal activity gives incentive to the government to do precisely that, even when it isn’t justified. (An analogy of equal applicability to your criminals paying off cops would be government inspectors shaking down legitimate business owners.)
And, of course, the existence of corporate fines gives incentive to executives accused of criminal activity to negotiate away corporate funds in exchange for the certainty of their personal freedom.
Eliminate the government’s ability to fine corporations for criminal activity, or at the very least make the assessment of corporate fines dependent upon the personal conviction of individuals accused of such activity, and this problem will go away.
LikeLike