Morning Report – Consumer Spending Returns 12/27/13

Vital Statistics:


  Last Change Percent
S&P Futures  1836.9 0.5 0.03%
Eurostoxx Index 3099.5 26.6 0.87%
Oil (WTI) 99.73 0.2 0.18%
LIBOR 0.247 0.000 -0.10%
US Dollar Index (DXY) 79.97 -0.514 -0.64%
10 Year Govt Bond Yield 3.02% 0.03%  
Current Coupon Ginnie Mae TBA 103.7 0.0  
Current Coupon Fannie Mae TBA 102.7 -0.1  
RPX Composite Real Estate Index 200.7 -0.2  
BankRate 30 Year Fixed Rate Mortgage 4.56    


Stocks are more or less unch’d while the 10 year bond is sporting a 3 handle. No economic data this morning.
Builders are getting more and more into the jumbo business. You have seen average selling prices increasing (Toll Brother’s ASPs top 700k), but even the lower end ones like Lennar have ASPs over 300k). Some of the terms are quite attractive – 270 day locks, and lower down payments (like 10%).
We saw it in the data last week, personal spending increased more than personal income increased. Does that mean we are going back to the good old (some would say bad old) days of consumers borrowing to fund a lifestyle they cannot afford? At this stage, the answer is probably “no.” Auto sales are looking great for the end of the year, but that is probably due to the record age of cars on the road – around 12 years. I have said it before – this is how recessions end. The consumer starts spending not necessarily because they want to, it is because they have to. You can only defer consumption so long. Eventually the clothes become threadbare, the car dies and needs to be replaced, etc. etc. Incomes will rise once some of the slack in the labor market is taken out. 
Separately, SpendingPulse reported that holiday spending increased 3.5% this year. The consumer is more optimistic than a couple of years ago, but isn’t back at 2006-2007 levels either. Discounts still reign supreme.The National Retail Federation is forecasting holiday sales will rise 3.9%. 

7 Responses

  1. “once some of the slack in the labor market is taken out. ”

    taken out?


  2. This is a load. Medicine has not been practiced like this for years. I doubt he ever practiced like he thinks.

    Primary care is a volume business. Period. 4 patients every 15 minutes.


  3. unless you want to pay more for the doc’s time. like in boutique.

    frankly, i’m fine with a 15 min appointment. because i get where the doc is coming from. my time has a $$ value to it as well.


  4. Nova, it’s not 4 patients per hour it’s 4 patients every 15 minutes. About 3.5 minutes per patient. Impossie you say? You’re right, that’s why you have to wait an hour unless your the first patient of the day.

    You want minimize waiting for the doctor? Be the first appt of the day or the first one after lunch. Won’t have to wait as long.

    Also, unless you have one of a dozen common conditions you’re not going to be properly diagnosed in primary care. There is just no time. You got a backache, go to an orthopedist first. Headache? Go to a neurologist first, etc.


  5. I wod like to know how many pull-ups combat actually requires. Seems weird that you would do pull-ups under fire rather than, you know, fire back.

    Go figure.


  6. do’h. good catch.


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