Morning Report – Partially improving labor market 8/18/14

Markets are higher as European stocks rally. Bonds and MBS are down on decreasing pressure in Ukraine.

The National Association of Homebuilders Sentiment Index rose to 55, the highest level in seven months.

This week will have some important data, with housing starts and building permits tomorrow, and the FOMC minutes on Wednesday. The minutes will be especially interesting as “lift off” (the Fed’s euphemism for increasing rates) approaches. Finally, central bankers, finance ministers, and other officials will meet at Jackson Hole on Thursday. There will be the possibility of market moving quotes so be aware.

The labor market is improving, at least at the higher end. Skilled labor is tough to find, and we are finally seeing some job growth in professional services. Low skilled labor and the long term unemployed are still struggling. Separately, part time workers who want to work full time are presenting a problem for the Fed. Which means don’t focus on the unemployment rate, focus on wage growth when thinking about the Fed’s posture towards interest rates.

What has QM succeeded at doing? Raising compliance costs. Has it changed business practices? Nope.

22 Responses

  1. Worth a read:

    “Paper Boys
    Inside the Dark, Labyrinthine, and Extremely Lucrative World of Consumer Debt Collection.
    By Jake Halpern”


  2. Many thanks for all the kind thoughts about my grandmother. You’re right, Scott, 99 3/4 years is a heck of a run. I hope that, if I live as long, I’m as with it right up to the end as she was.


    • ‘Goose, I am just now reading about your loss, upon my return to the heat of Austin in August. What a treasure she must have been for you. My condolences to you.

      jnc, the Travis County DA’s office properly recused itself from the Perry case. About a year ago San Antonio Judge Bert Richardson, an R, appointed San Antonio lawyer Mike McCrum, an R, as a Special Prosecutor. McCrum is a former fed prosecutor during Bush 41’s time and had been a shoo-in for USDA for the WD of TX as Cornyn and Kay stumped for him – but gridlock caused McCrum to duck back into private practice on the defense side – I hear he is good at what he does on either side.

      The critical part of the case against Perry will be proving he was motivated by stopping the PIU’s investigation of the misuse of the Texas State Cancer Funds. If they have got that proof he can be convicted. If not, my guess is Perry walks away untouched by human hands. The coincidental timing of the action won’t be enough to convict because of the drunk driving incident that swept our DA into the headlines, a guilty plea, jail time, and rehab. That she has little to do with the daily operation of the PIU won’t help the Special Prosecutor’s case one wit if there is no smoking gun of attempted influence of an ungoing investigation, IMHO.

      I have no idea what they have, of course.


      • Mark:

        The coincidental timing of the action won’t be enough to convict because of the drunk driving incident that swept our DA into the headlines, a guilty plea, jail time, and rehab. That she has little to do with the daily operation of the PIU won’t help the Special Prosecutor’s case one wit if there is no smoking gun of attempted influence of an ungoing investigation, IMHO.

        From what I have read, the indictment against Perry stemmed from his threat to veto funds if Lehmberg didn’t resign. Is that not right? Seems to me that if Lehmberg really does have little to do with the daily operations of the PIU, it would be even harder to establish that such a threat represents an attempt to influence an on-going investigation.


        • Total guesswork on my part, based on some actual facts:

          Suppose any of the major Perry donors who were subject of the cancer funding investigation told Perry after Lehmberg’s colossal embarrassment that they wanted her replaced by a DA who could quiet the PIU. Suppose there is a record of these conversations and they express guilty knowledge.

          Suppose, on the other hand, the indictment is based on the coincidental timing and there is no evidence of such a conversation.

          These are the two starkly different scenarios.

          Or what if there is a record of a flurry of conversations between investigation subjects and the Governor’s office, but no transcript of substance [and no testimony that Perry ever told anyone that he would try to force Lehmberg out to derail the PIU]. This would be typical of an indictable situation that would not usually result in a conviction, or, if in a conviction, one that could be successfully appealed.

          Although Lehmberg did not personally direct the PIU another DA could do that. This is just an administrative choice.

          The Travis County D.A.’s office has had notable hits and misses over the years. The worst case it ever brought was against KBH. Both KBH and Ronnie Earle were classmates and one time friends of mine. The KBH charges came from the complaints of John Connally’s unstable daughter who Kay hired as a courtesy to John. Eventually the daughter had to be fired, as was always the case with her. The daughter complained that KBH as State Treasurer was misusing state funds. KBH and Ray were remodeling a home in Austin and Kay spent a lot of time on local phone calls to the contractors. That’s what that “abuse” case came down to [!] and it got shut down by the judge an hour or less into the trial. Ronnie Earle was a devoted protege of John’s and John was dying at the time. That was my take on that sorry mess then, and still is, although Kay was too mad about it to ever talk to me about it.

          But most of their cases have been on target.

          Recall again here that their case was about billions of cancer funds that were being in large part wasted, apparently from being misspent, in some part on providers who were big donors to Perry and other pols. The original PIU case was aimed at recouping money, as I recall, but an official in the government funding unit was indicted and will not be tried before November. Last December, a grand jury indicted Jerald Cobbs, a senior executive of CPRIT, on charges that he allegedly violated the law while awarding an $11 million grant to Peloton Therapeutics, a Dallas, Texas-based biotech company. A major investor in the firm had earlier made more than $440,000 in campaign contributions to Perry and his Lieutenant Governor, David Dewhurst. Cobbs is represented by Rusty Hardin, as tough a criminal defense lawyer as one can find. Hardin headed up the legislative investigation – as special counsel – that led to the sanctions against Wallace Hall,; btw – George may see a connection here. For the rest of you, if you are imaginative, Hardin may well be in a position to know some dirt on Perry that he can use to help Cobbs, whether by helping Perry or by torpedoeing him.

          The Perry case is NOT a PIU case. The Perry case is pretty damned local.

          George, the AG has no prosecutorial function in house. A DA’s office somewhere would have to prosecute crimes by state officials. Most of these crimes have nexus to Austin. Voila – either the Travis DA does this out of local funding [in which case there is no likelihood that it will ever be done] or the state funds a PIU in the Travis DA’s office, or the state funds a permanent Special Prosecutor.


  3. Thanks. I hadn’t heard about the Texas State Cancer Funds investigation angle.


  4. Mark it’s interesting how things look from the outside of a state when all we get are snippets of information portrayed through the lens of a political angle. That happens a lot when I read what others say about a CA issue or news event as well. If you don’t read the local coverage you don’t really get all the facts.

    Because Perry looks like he wants to run again for Pres, suddenly everyone has an opinion.


    • Lulu – I used to read Fix and PL comments for local takes, but substantive contributors were largely replaced by folks who wished they had a political blog of their own. I believe MSJS often had local news from MI and WI that was incisive, for instance.


  5. Would Perry have been prosecuted if he was not running for office in ’16?

    I say no.


    • Would Perry have been prosecuted if he was not running for office in ’16?

      IDK. My guess is “yes” considering who the Special Prosecutor is. I would have guessed this was not going to happen before it did, because I had no reason to connect the dots.


  6. Mark,

    I believe MSJS often had local news from MI and WI that was incisive, for instance.

    I agree and so did Emily from the same area and also Sue. It’s interesting that I could, and maybe should, give all of y’all more news from CA (I actually remember QB suggesting that in the “glory” days of ATiM), I have it after all, but generally I don’t think anyone is that interested. You may not know this but my second home, was Texas insofar as both my mom (raised in TX and OK) and little sis were born there.


  7. Ahh, God’s Country! We’re here when you’re ready!


  8. Lol McWing, not in a million years. I’m really a CA girl but if I relocate anywhere it would be CO, but only because that’s where my current and future grandkids are or will be. I was only three when we lived in Houston but I remember how freaking’ hot and humid it was.


  9. One theory about Drinky McHiccup not resigning is that it would then allow Perry to appt. her successor. Can’t have that I guess.

    What’s the logic anyway of having the PIU, with statewide responsibilities, run out of the Travis county DA’s office? Seems like a division for the State AG, no?

    Also, isn’t this the same unit that indicted, tried and lost vs. KBH in the early 90’s?

    I think they went after Cornyn to, didn’t they?


  10. As usual Mark, your commentary is more lucid on the subject than any actual well known internet blogging source.


  11. What I’m getting from you Mark is that of the 3 PIU cases I brought up, 2 are political in that, at the least, they did not belong in the PIU. Opinion on the Cornyn prosecution? Also, didn’t they go after Bush prior to 2000?


    • From 1978-2008 there were 19 actual prosecutions of which 5 were against Rs. That totally reflects who was in office at the time, of course. Used to be Ds.

      I don’t recall a prosecution that went anywhere near GWB, George. What were the circumstances you remember?
      The only thing I recall involving Cornyn is that when he was AG his office assisted the Dept of Health in defending against a PIU investigation, which I think was its duty, provided it did not hide evidence. I know the most recent PIU investigation was against the Office of Violent Sex Offender Management and that its director has taken a permanent leave, I think. Most of this stuff is routine watchdogging but because it takes white collar crime investigators hardly any law enforcement body has enough of them.

      I don’t think the deLay case was bad on the facts – just questionable as to which law applied. A technical victory for deLay.

      Your guy Patrick wants to create a PIU with the power to seek indictments in any county within the AG’s office, btw. I think it could be done by statute, but I am not sure. Effectively, it would be a Special Prosecutor answerable to the AG.

      Sec. 22. ATTORNEY GENERAL. The Attorney General shall represent the State in all suits and pleas in the Supreme Court of the State in which the State may be a party, and shall especially inquire into the charter rights of all private corporations, and from time to time, in the name of the State, take such action in the courts as may be proper and necessary to prevent any private corporation from exercising any power or demanding or collecting any species of taxes, tolls, freight or wharfage not authorized by law. He shall, whenever sufficient cause exists, seek a judicial forfeiture of such charters, unless otherwise expressly directed by law, and give legal advice in writing to the Governor and other executive officers, when requested by them, and perform such other duties as may be required by law.

      You could hang the Special Prosecutor function on that last phrase but the Lege might not want to open that can of worms.

      Addendum: That Dept of Health thingie I vaguely recall – I went back and looked it up. Seems a whistle blower went to Dan Morales [D] when he was AG and complained of Medicare waste through the DoH to its main contractor. Morales defended the Dept. So the whistleblower hired a private lawyer who sued DoH and the State. Cornyn became AG and continued the AG’s position that there was nothing to see here. PIU took over the medicare fraud case, won a settlement, but in the process others pointed to Cornyn having defended the DoH while he was running for Senate. Not PIU. poiticking by smearing a lawyer [the AG] with his client’s [DoH’s] problem.

      I don’t think there has been anything else.


      • The worst TX public integrity case I recall was NOT handled by the Travis County DA PIU. George, you may recall the scandals in the operation of the TYC. Dogged determination by the Texas Rangers for three years finally brought to light stuff everyone else in the system just did not want to deal with. Even the Justice department declined to prosecute the heinous crimes the Rangers uncovered and detailed.


  12. I do remember that Mark.


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