Morning Report – The Week Ahead 11/10/14

Markets are higher this morning on no real news. Bonds and MBS are flat.

The week after the jobs report is typically slow data-wise, and this week is no exception. Bonds will be closed tomorrow for Veteran’s Day. The most important data will probably be retail sales on Friday.

On Thursday, we will get the JOLTs job openings, numbers which are at boom-time levels. The labor market seems to be at an interesting place, with the leading indictators (initial jobless claims, job openings) signalling strength, while the lagging indicators (labor force participation rate, wage inflation) are still recessionary.

Luxury builder Toll Brothers pre-announced good numbers, as deliveries increased 22% in units and 29% in dollars. ASPs increased to $747,000 from $732,000 last quarter and $703,000 a year ago. Signed contracts rose 10% in units and 16% in dollars. Clearly things are still hitting on all cylinders at the luxury end of the market. Tomorrow, we will hear from D.R. Horton, who is increasing their focus on starter homes in anticipation of the return of the first-time homebuyer.

Obama has nominated Loretta Lynch to succeed Eric Holder as Attorney General. She will likely face questioning from two different directions. Republicans will want to press her on her support of “disparate impact” theory of discrimination, which says that if the numbers don’t reflect the population, the firm is guilty of discrimination, no questions asked. Even if they didn’t intend to discriminate. Note that this theory has been struck down by the courts and is probably headed to the Supreme Court. Democrats will press her on prosecuting actual bankers, not the banks themselves. The left is still seething that DOJ hasn’t gotten a scalp from the financial crisis. Angelo, call your lawyers…

Job cuts continue in mortgage-land, with JP Morgan cutting 7,000 jobs.

The Black Knight Financial Services Mortgage Monitor is out. We saw a big jump in foreclosures starts, up to 91k, however delinquencies are down in a big way. Interestingly, the biggest jump in foreclosure starts are repeat foreclosure starts, which I take to mean loans that were modified under HAMP, which ended up going back into foreclosure. So much for the “avoidable foreclosure” theory.

16 Responses

  1. Found this quote regarding the passage of the PPACA from Jonathan Gruber while searching for something else. It nicely encapsulates the legislative strategy involved in passing it:

    “This bill was written in a tortured way to make sure CBO did not score the mandate as taxes. If CBO scored the mandate as taxes, the bill dies. Okay, so it’s written to do that. In terms of risk rated subsidies, if you had a law which said that healthy people are going to pay in – you made explicit healthy people pay in and sick people get money, it would not have passed… Lack of transparency is a huge political advantage. And basically, call it the stupidity of the American voter or whatever, but basically that was really really critical for the thing to pass… Look, I wish Mark was right that we could make it all transparent, but I’d rather have this law than not.”


    • Apparently Gruber has said all kinds of inconvenient things. I wonder if Gruber’s acknowledgement that the exchange subsidies were intentionally restricted to those created by a state, in order to encourage states to create them, will play a part in the Supremes review of King v Burwell.


  2. More than anything, it was the score driving this. need to come in under $1 trillion.


  3. Fuck it guys, it’s Chinatown.


  4. I now believe that the Perry indictment is on its way to being tossed.


    • Late to this party: Sutton pretty much ruled as I would have in the same boat – although I would have stressed my personal view that it was bad law, just not unconstitutional and not without rational basis.

      QB, I am intrigued by the Volokh folks and their view that one can avoid the rational basis trap by treating SSM as a gender and not a sexual orientation issue.


      • Mark:

        Sutton pretty much ruled as I would have in the same boat – although I would have stressed my personal view that it was bad law, just not unconstitutional and not without rational basis.

        Are court decisions really the place for a judge to offer up his personal political opinions on the utility/value of a given law? Why should anyone care whether or not a judge personally approves of the law he is tasked with analyzing? It is not his political judgement that makes him an authority worth listening to.


  5. It may also preempt some of the “the decision was solely based on bigotry” attacks.

    I know, naive to the point of stupid.


  6. Gotta respect naivete.


  7. TSA Global Entry process was impressively efficient. Drive to Dulles was a long pain, but the interview & enrollment process itself took 15 minutes and they activated my account today so that if I had needed to travel I could immediately use the automated kiosks.


  8. “The comments in the video were made at an academic conference,” Gruber said. “I was speaking off the cuff and I basically spoke inappropriately and I regret having made those comments.”
    Although Gruber apologized for the language he used, Gruber said that the larger point he was trying to make centered on the political pressures that shaped the law. He added that those pressures “led to an incomplete law with some typos.”

    No harm no foul, right, you stupid Americans?


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