Morning Report – meh jobs report 2/7/14

Vital Statistics:

Last Change Percent
S&P Futures 1775.2 8.6 0.49%
Eurostoxx Index 3005.0 -5.8 -0.19%
Oil (WTI) 97.71 -0.1 -0.13%
LIBOR 0.234 -0.003 -1.27%
US Dollar Index (DXY) 80.71 -0.195 -0.24%
10 Year Govt Bond Yield 2.67% -0.03%
Current Coupon Ginnie Mae TBA 105.9 0.0
Current Coupon Fannie Mae TBA 105 0.4
RPX Composite Real Estate Index 200.7 -0.2
BankRate 30 Year Fixed Rate Mortgage 4.29
Markets are higher after a weak jobs report. Bonds and MBS are up.
Jobs report data dump
  • Payrolls + 113k vs +180k expected
  • Prior 2 month revision +34k
  • Unemployment rate 6.6% vs 6.7% expected
  • Hourly earnings + .2%, in line with expectations
  • Labor force participation rate 63%
Retailers cut back jobs after the holidays and government hiring fell. Construction added 48k jobs. Surprising to see weak payrolls in conjunction with a drop in the unemployment rate and a tick up in the participation rate, but it appears to have been driven by annual population adjustments out of Census. It is important to keep in mind that the Employment Situation report is a noisy report that is often very sensitive to modeling adjustments and revisions after the fact. It probably gets more attention than is warranted. This report seems more or less in line with what the Fed has been forecasting, so it shouldn’t have any effect on Fed policy re QE.
Sellers are returning for the Spring Selling season, which should help alleviate the inventory problem. At some point, we should see the pros getting itchy to ring the register as well. What does this mean? Probably (a) more purchase transactions with a mortgage, and (b) a moderation in home price appreciation. Remember, cash sales have been 40% to 50% of all purchase transactions lately, and that number has been historically closer to 20%. Cut the cash transactions in half, and the gettable business increases by 30% to 60%, even if the number of existing home sales doesn’t increase.
Immigration reform appears to be dead for the time being. The reason is that the right believes the WH would only enforce the parts of the law it likes based on the administration’s fast and loose way of handling obamacare.

39 Responses

  1. Love the title line, Brent!

    First. . .

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  2. Probably (a) more purchase transactions with a mortgage, and (b) a moderation in home price appreciation.

    i.e., good news for the individual home buyer?

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  3. yes, the market has been highly skewed towards sellers. Now buyer will have some inventory to choose from and we won’t see the bidding wars we have seen in the past.

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  4. except in NoVa. where houses are selling in hours.

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  5. The DC market has been hot for years… The continuous growth of government keeps the real estate market afloat…

    Something like 7 of the 10 richest counties in the US surround DC… Lot of vested interest to keep government big

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  6. Crappy jobs report!

    NoVA, I think you said you do Cross Fit. I don’t (too old), but I did start circuit training last September to help with my swimming. I was reading a piece on Cross Fit from Huff Po and read this which I thought you might find interesting.

    Out of the 10 million self-described CrossFitters, about 60 percent are female, according to the American Council on Exercise.

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  7. “I think you said you do Cross Fit. I don’t (too old)”

    Nope! we have all ages. it’s all in the scaling. less weight/reps.

    “about 60 percent are female”

    🙂

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  8. Cross Fit? Circuit training? Meh! Do you even lift?

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  9. “Are you strong? No .. Go directly to CrossFit.”

    hilarious.

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  10. Hey, why do the 99% have to support NEA grants that really cater to the 1%?

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  11. Nova, somehow I expect this to be waived much like No Child Left Behind standards when push comes to shove:

    “The proposal released Thursday is a thorough outline of the policies that would replace the doc-fix. What Congress wants to do differently this time around is, by 2021, put as much as nine percent of doctors’ reimbursements at stake if providers can’t hit certain quality standards. It would also include a bonus pool of $500 million for the doctors who do provide really great care.”

    http://www.washingtonpost.com/blogs/wonkblog/wp/2014/02/07/the-doc-fix-is-in-congress-actually-has-a-plan-to-overhaul-doctor-payments/

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  12. This might not even get off the ground. the Doc Caucus hasn’t signed off yet.

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  13. Why, for the love of God, don’t we just give Medicaid cash to recipients and let them shop for care? Or blow it on hookers and cocaine?

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  14. oh, but there will be another punt if this doesn’t gain traction. of course.

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  15. The author of this piece is very conflicted.

    http://www.slate.com/articles/life/history/features/2014/the_liberal_failure_on_race/how_the_left_s_embrace_of_busing_hurt_the_cause_of_integration.html

    He agrees with all of the Republicans’ critiques of the various busing policies, but feels it’s important to emphasize the fact that the Republicans are still wrong because they made the critiques due to being racists, not for the right “policy” reasons.

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  16. ” critiques of the various busing policies”

    related to education. you’ll like this.

    We’ve applied for kindergarten at private school. the director at our current pre-school used to work at the private school and is friendly with the admissions director. so my 4-year-old is using his connections to secure a spot. its the DC way.

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  17. Does he have a standing reservation for a high chair at Charlie Palmer’s yet?

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  18. he’s got his own stool at the bar. “Milk.. neat.”

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  19. Nova, as a parent you obviously want the best for your child. How diminished will your 4 year olds long term prospects be if your 4 year old ends up in a public school system?

    What’s the trade off here, cost wise for future earning capacity?

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  20. for a kindergartner?

    I took the tour and saw 5-year-olds writing complete sentences in cursive. and by 1st or 2nd grade, there’s spanish or french. algebra at grade 7. daily recess. no standardized testing. etc. ratio of teacher (and aide) to 12-15 kids.

    Diminished? hard to tell. i’m sure he’d do just fine at the public school. but just fine is not good enough. this environment will challenge him and push him. not just pass him along. and, i guess that comes with a price. my biggest complaint/concern with he public school is that he wont’ get the attention i’d like him to get, b/c (so far) he’s not a trouble maker and (I don’t expect) that he’ll have any sort of learning disability.

    long term ..he’ll likely do well b/c of the intangibles. A stable home environment from a family that is doing well financially.

    and FWIW, it’s my wife that’s ultimately pushing this decision. she doesn’t share my ideology (mostly) when it comes to public schools.

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  21. NoVa, I think public schools generally are a disaster. I’m an obvious product of a public school system that was/is thought to be good.

    I was wondering if, from a cost/benefit standpoint, your money might be better spent at, say, a 2nd or 3rd “tier” private school or, attending a public school and having the child tutored several days a week throughout their education by a good or series of good tutors.

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  22. but if he’s at the public school, he’s wasting several hours a day.

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  23. Actually, here in Lewisboro NY, the public schools are second to none…

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    • Ours are good too. The only reason I moved to New Canaan was so that I could send my kids to public school rather than pony up for private.

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  24. my zoned elementary school is 40-45% ESL and subsidized lunch. Fairfax County is running on reputation at this point.

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  25. Too stupid for words:

    “Ten years ago, Junipero passed an anti-hunger ordinance limiting the total number of meals served in the city each day. The goals were many, but they included reducing food waste, preventing wild swings in the supply of food, promoting home-cooked dishes over bulk processed junk, and fighting obesity by keeping compulsive eaters from downing 12 meals in a day.”

    http://www.washingtonpost.com/blogs/wonkblog/wp/2014/02/07/this-restaurant-fable-explains-everything-wrong-with-san-francisco-right-now/

    Truly the full blossoming of the nanny state.

    Edit: They got me. It’s an allegory for the San Francisco real estate market I believe, not an actual law or city.

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    • jnc:

      It’s an allegory for the San Francisco real estate market I believe, not an actual law or city.

      Only because no one out there has thought of it yet.

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  26. I’m the first to admit that I hate, with the heat of a thousand suns, a classroom setting. I mean I really loathe it and hated it from Kindergarten on through college. The only way I was able to manage an MBA is on-line through the University of Phoenix.

    Ultimately, I am a product of public schooling, my parents were very conscientious parents about my (and my sisters) education. I got good grades and was woefully unprepared for a low tier, large western state school.

    I’ll posit this, the worst Catholic school will generally be better then the best public school.

    My question to NoVa is, how much better is Exeter Acadamy than an average Catholic school? Is the cost worth it? I’m not so sure. I am sure that a Catholic school, no matter how modest, is better than, for example, Scottsdale High or Santa Clara High School.

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  27. I’ll posit this, the worst Catholic school will generally be better then the best public school.

    Disagree from personal experience… In the town I grew up in, the Catholic schools were the best. When I went to UW – Madison and began competing with public-school educated kids, I realized that it wasn’t all it was cracked up to be..

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    • McWing:

      I’ll posit this, the worst Catholic school will generally be better then the best public school.

      It may be a function of time, but I went to a Catholic high school, definitely the best in the city where I grew up, and it doesn’t compare all that favorably with the public schools my kids go to.

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  28. We’ve looked at a Catholic school too and have submitted an application.
    The only issue, if you want to call it that, is that religion is used in all aspects of the curriculum. like Math.

    we took a tour and had a 7-grader as a guide. she was very well spoken, clearly doing well, and a great representative of the school. when i asked what she liked best about the school, it was a faith-based answer. which is fine. i’m just not sure how much of an emphasis i want that to be.

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  29. yeah, totally believable.

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  30. Don’t confuse me with the facts!

    God, what are all anyways, a buncha commies?

    And what about the literally billions of Americans that are job-locked?

    Didn’t think about that, did ya?

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  31. Giggle.

    We wish Team Juicebox the best of luck in their crusade to promote nuance and pedantry in defense of a law that never would have passed if its proponents had been held to the same standards they now demand from its critics.

    http://freebeacon.com/blog/the-vox-challenge-obamacare-v-the-cbo/

    Like

  32. Shorter NYT, we need to lower our standard of living by 3/4’s and turn all economic decision making to Al Gore.

    http://www.nytimes.com/2014/02/08/opinion/sunday/the-end-of-snow.html?emc=edit_tnt_20140207&tntemail0=y&_r=3

    I know it’s early but I nominate this for dumbest article of the year.

    Unless Greg busts open another Aqua Bhudda Scandel. Then all bets are off.

    Like

  33. On behalf of the Republican Party, I want to apologize to all women for the Republican War on Women. The following is deeply, deeply offensive.

    http://michaelgraham.com/naacp-president-compares-dems-assault-on-a-woman-to-jaywalking/

    Like

  34. For Lms and Mark

    Consider two details: In 2013, more homes were built in Houston, which has no formal zoning rules, than in all of California, which has thousands of restrictions. As for costs, the existing residential permit fees in Carlsbad could pay the entire construction cost of a new house in San Antonio.

    http://www.utsandiego.com/news/2014/Jan/24/city-policies-worsen-housing-affordability/2/#article-copy

    Texas mon amor.

    Like

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