Morning Report – Some strong economic data this morning 11/20/14

Stocks are down on overseas economic weakness. Bonds and MBS are up.

Economic data dump: Initial Jobless claims came in below 300k for the 10th time this year. Lower energy prices are keeping a lid on inflation at the consumer level as the CPI came in flat. Philly Fed made a huge move upward – from 20.7 to 40.8. This is the highest reading in over 20 years. The Bloomberg Consumer Comfort Index rose to 38.5, while the Index of Leading Economic Indicators rose to 0.9%. All in all, some pretty good data this morning – surprising that bonds have taken all this in stride and are up so much.

Existing Home Sales rose to 5.26 million in October from an upward revised 5.18 million in September. They are up 2.5% on a year-over-year basis. The median home price was 208,300, which is up 5.5% from a year ago. All-cash sales increased to 27% from 24% in the prior month, but are down from 31% a year ago. Normalcy is around 20% cash sales. The first time homebuyer represented 29% of all sales. Normalcy is closer to 40%.

There was nothing earth-shattering in the FOMC minutes yesterday. Everyone agreed that QE had done its job and it was time to end it. They agreed to continue to re-invest maturing proceeds back into the market, and did not discuss suspending that or selling some of their portfolio. The staff economists tweaked their 2015 GDP estimates downward a bit. Since the October FOMC meetings don’t have a press conference of projection materials, they tend not to announce big changes. Bonds rallied on the minutes initially, but sold off to more or less end the day unch’d.

Mel Watt testified in front of the Senate Banking Committee yesterday. Elizabeth Warren laid into him about principal reductions on Fannie and Freddie loans. Mel said that reductions are still under consideration. Of course the FHFA Home Price Index (which represents homes with a conforming loan) is within 6% of the high, so if Mel continues to slow-walk principal mods, the problem eventually goes away on its own. They sound like they are bringing back the 3% down conforming loan for “targeted” borrowers.

Obama is scheduled to go on TV tonight to tout his new executive order on immigration. Something like 4 million will be given amnesty.

33 Responses

  1. this immigration thing is .. i’d say unbelievable .. but i guess that’s not accurate


    • It is, regrettably, all too believable. It is only the latest in a long line of evidence that left is entirely ends driven. It doesn’t matter how one’s goals are accomplished, as long as they are accomplished. Lie, cheat, slander, abuse power…it’s all OK in the service of the “right” policy.


  2. I was mulling over how the Republicans could effectively respond to the immigration order without going overboard and I think I have an idea:

    Do not extend an invitation to President Obama for the State of the Union address to Congress. Instead ask that he submit it in writing.

    That effectively communicates Congress’s displeasure and it’s view of the illegitimacy of the action while at the same time denying President Obama the venue to make his case to the public with the full trappings of the office. If he wants to do an Oval Office address, then that’s up him, but no reason to stand there and clap like props.

    It’s more effective politically than the joke of the lawsuit without rising to the level of impeachment.

    And I can’t think of anything he would personally find more galling than being denied the opportunity to give a grand speech on TV.


    • jnc:

      Do not extend an invitation to President Obama for the State of the Union address to Congress. Instead ask that he submit it in writing.

      That’s a great idea, I think. I had never really considered the fact that in order to speak in Congress, the president actually has to be invited.

      BTW, I think Congress should do this as a matter of course, regardless of the president. I hate the SOTU and the fact that it has turned into nothing more than a televised pep rally for the president.


  3. It’s a useful, very public, reminder that Congress is a coequal branch of government.

    If the argument is that he’s acting like an imperial president, deny him the trappings.

    I may E-mail that suggestion to Dave Brat.


    • This makes good sense, JNC. I suspect the POTUS is not in fact going to abuse his authority with this executive action, but I will wait and see about that. The Federalist Society thinks as I do – or perhaps I think as it does. But I don’t agree with the action to be taken, so if I were an R, rather than yell dumb stuff like “monarch!” I would think inviting a written submission of the SOTU would be just AOK.

      Of course, I never watch them.


      • Mark:

        I suspect the POTUS is not in fact going to abuse his authority with this executive action, but I will wait and see about that.

        What action might he take (within the context of what has already been discussed) that you wouldn’t consider to an abuse of his authority?


        • Well, Mark, it’s done, so what say you? Is unilaterally deciding not to enforce immigration laws against 5 million illegals an abuse of presidential authority?


        • From the president:

          And to those Members of Congress who question my authority to make our immigration system work better, or question the wisdom of me acting where Congress has failed, I have one answer: Pass a bill.

          One wonders if this alleged Constitutional scholar has actually even read the document. It seems he would be surprised to learn that no where does it say that the failure of congress to pass a bill the president desires authorizes him to make up the law himself.


        • Scott, Somin explains it is if you are actually interested. You too, QB.

          Nevertheless, the challenge to Congress is a political pander, of course. Arrogant? Not if you accept he has acted within precedent.

          However, the imperial presidency post RMN grows from congressional inaction. Typically, statutes are broadly drawn with leave it to the executive discretion that is very broad, and Congress doesn’t care until the executive branch does something with the discretion they wish they had not left wide open. I am pretty much with JNC all the way on this. Congress has many remedies here and should hit upon one.

          For me, this executive action foreshadows an eventual immigration act that Ds see as continuing “family reunification” as a goal. Which I think is bad BS. I think the goal [aside from refugee status doled out sparingly] should be to seek and recruit the most productive and required persons for the national economy. UK got all the south Asian MDs it seems, but that would be the idea.


        • Mark:

          I am pretty much with JNC all the way on this.

          Perhaps he can clarify, but I have the distinct impression that jnc agrees that this is a plain abuse of power by Obama.


        • Scott, did you read the Volokh link? Did you read either Somin or Adler? What did you think of the Originalist point? After all, foreign policy is in the hands of the POTUS.

          JNC, do you think this is an unconstitutional power grab or just a poor choice by the executive?

          Not only do I think this was a poor choice, I think it will bite Ds in the butt in legislative races, unless Rs overplay it.


        • Mark:

          What did you think of the Originalist point?

          I am very much in favor of returning to a pre-1889 understanding of the meaning of the Constitution. (Do you think Somin is? Are you?) If that means all of our immigration laws are therefore invalidated and we have to start over, so be it. What I am not in favor of, however, is the selective use of originalist arguments by those to whom originalism is otherwise anathema, in order to get preferred policy results. I don’t really know anything about the 1889 SCOTUS precedent establishing the legitimacy of immigration legislation. Perhaps it was an incorrect decision. But since it is precedent, and the issue under question is not challenging that precedent but rather assumes its legitimacy, I figure I will do so as well.


        • I think original intent is of paramount importance where it can be clearly divined, which is in a great many areas, most of which have never been litigated exactly because they are clear. It is also important to determine what the arguments were for a clause or an amendment when the authors were not unanimously or obviously all in agreement, because that provides guidance if not total clarity. It often leads to arguments that echo the arguments the writers originally made with each other.

          For an example of total clarity: the death penalty is constitutional. For an example of muddy waters, the death penalty is not appropriate in all circumstances for all crimes committed by all people, nor is every method of execution constitutional. So, for example, is it originalist to take the view that death by stoning is cruel and unusual because it was considered so in 1789? Is it originalist to take the position that death by injection, if terribly painful, is not a constitutional issue because it had not been considered by anyone in 1789?

          And so forth.

          As I wrote earlier, I think BHO made a big mistake with this executive order. At some time a Congress with approval of the President is going to revise our immigration laws. Impatience is not a good enough political reason to formalize executive action here, thus certainly postponing the actual revision into some other Administration.
          We can also see the invitation for future Presidents to keep pushing this envelope whenever they are impatient. It’s just unsound, to use a word we haven’t heard since Dana Carvey was imitating Bush 41.

          George, independent of other authority in the executive branch, IRS can issue a taxpayer ID [ITIN] to an undoc. We can collect taxes from these people when they work. ITINs are also used by real estate brokers to facilitate mortgages for unauthorized aliens. In addition to use by unauthorized aliens, ITINs are used by foreign investors in United States real estate. IDK what POTUS is doing, but it would be true that someone signing up for a 2 year reprieve from deportation could get an ITIN.


        • Mark:

          As I wrote earlier, I think BHO made a big mistake with this executive order.

          I do too. I also think it clearly exceeds the legitimate bounds of his authority.

          BTW, as I think you already know, I totally agree with Somin’s point that congress has, for a long time, encouraged and enabled the executive’s encroachment on legislative authority, by writing vague and ambiguous laws, inviting the executive to fill in the blanks himself. It is a real problem, and is as destructive of our constitutional order as is Obama’s lawlessness.


        • Mark:

          You may be interested in Yuval Levin’s case for how Obama exceeded his authority.

          He also makes the point that even Obama has implicitly acknowledged that he is legislating! not enforcing.

          What we see here is the president describing his action as legislative in character. If Congress questions his authority, it should act where he has acted; if Congress acts then his own action would be deemed unnecessary. He is saying he has stepped into a legislative space that Congress has declined to occupy.


        • Mark, from your link:

          At the very least, there is no meaningful difference between a de facto policy of exempting a large category of violations from prosecution (as with marijuana possession on campus) and a more explicit, formal decision to the same effect. If anything, the latter is preferable because it is more transparent and more readily subject to public scrutiny and debate.

          I totally disagree with this. There is a gulf of difference between silently not enforcing the law due to the lack of resources and announcing to the world that you aren’t going to bother enforcing the law because as a policy matter you don’t like the outcome. And since the point of law is to deter certain kinds of behavior, it makes no sense to me at all to announce publicly that you aren’t going to enforce the law, even if that is in fact the case. An empty threat of enforcement is far more likely to deter the unwanted behavior than is an open acknowledgement that no threat exists. Besides which, the requisite “public scrutiny and debate” has presumably already taken place, which is why the law got passed in the first place.

          To the extent that large-scale use of prosecutorial discretion is ever appropriate, it is surely so in the case of helping people whose only violation of the law is fleeing poverty and oppression under terrible Third World governments.

          Nope. Their violation is to have entered the US illegally, not to have fled wherever they came from for whatever reason they had, which he can’t actually know in any event. This characterization suggest to me that his analysis began with the conclusion, with the rationale being developed after the fact.


        • I agree with Somin on the MJ point and think the explicit policy is better in a free society; but with you on the (mis)identification of the illegality of the act as fleeing poverty and oppression.


        • With regard to Somin, Kevin Williamson makes a similar point to what I said to McWing earlier:

          “Discretion,” in the prosecutorial context, means that we recognize that law-enforcement officials are not necessarily obliged to act in every case; which is to say, the discretion they have is the discretion to not act. It is not the discretion to confer legal rights and privileges upon people who are not entitled to them, e.g. to offer them work permits to which they are not entitled. This isn’t a case of the Obama administration’s not acting, but a case of not not acting, the equivalent of making a declaration that every mass shooter charged with killing fewer than three people not only is safe from federal prosecution but also will be awarded $1,000 a month in federal welfare payments regardless of eligibility, or that they will all be admitted to national parks for free for the rest of their lives.

          The word “discretion” is related to the word “discrete,” meaning distinct, separate, and particular — the opposite of general, categorical, and universal, which is the scope at which the president here purports to operate. The power to exercise discretion in the enforcement of one law is not the power to exnihilate another law into existence. That this should be so thoroughly obfuscated seems to me another piece of evidence that the corruption of the English language is the main project of the legal profession.


  4. I may E-mail that suggestion to Dave Brat.

    Is he your member? I think you should. let me know if you need an email address for a better staffer than the front desk.


  5. I like that idea a lot.


  6. Fear of racism charge is one reason why it won’t happen. Another reason R’s will do almost nothing is because this is what the leadership wants. Business is happy with cheap labor, the issue is off the table and it keeps the R base ginned up. For Boehner et al its win / win.


  7. small hands, smell of cabbage?


  8. They’re shifty looking. Also, bad teeth.


  9. Nary a top hat.


  10. Scott, I also found that remark astounding. My answer to those who question my authority is pass a bill. A remark like this tells us that Obama is indeed every bit the dictator, authoritarian, and Constitution shredder many have said he is, and even worse. It is impossible that he and his lackeys are so stupid as not to realize the logic of his statement. L’etat, c’est moi.

    Who also could but marvel at the logic that he must change the rules because all these millions of people just want to follow the rules, which the demonstrate by not following the rules. He must dispense with those rules they just want follow so they can follow them. Or something.

    Also, I propose that it is time to retire the term “anchor baby” and replace it with the more accurate “grappling hook baby.” That is been the impending truth for a long time and now is the present truth. Illegals have en masse abused our ridiculous interpretation of the 14th Amendment to


  11. Mark, that’s not a work authorization permit though. From what authority does POTUS have to issue those?


    • George, I don’t know what he has done, exactly. Because he is going outside this framework

      which does allow wide discretion in and of itself, then he must claim some other authority. He is indirectly claiming a statutory rather than inherent authority and I would prefer that he be claiming a statutory authority, myself.

      The legal opinion he relies upon is here:

      At page 2, it cites the CFR as follows:

      aliens who are granted deferred action—like certain other categories of aliens who do not have
      lawful immigration status, such as asylum applicants—may apply for authorization to work in the United States in certain circumstances,
      8 C.F.R.§ 274a.12(c)(14) (providing that deferred action recipients may apply for work
      authorization if they can show an “economic necessity for employment”)

      The memo cites the same CFR section at p. 13 and references other temporary work permits ancillary to temporary discretionary decisions not to deport a class of people in the past.

      I do not vouch for the strength of these citations. But that is the best I can do to answer your question.


      • George, after you read my previous comment, take a look at this. It is the statute under which the CFR section cited is validated.

        (B) Documents establishing both employment authorization and identity
        A document described in this subparagraph is an individual’s—
        (i) United States passport; [1]
        (ii) resident alien card, alien registration card, or other document designated by the Attorney General, if the document—
        (I) contains a photograph of the individual and such other personal identifying information relating to the individual as the Attorney General finds, by regulation, sufficient for purposes of this subsection,
        (II) is evidence of authorization of employment in the United States, and
        (III) contains security features to make it resistant to tampering, counterfeiting, and fraudulent use.
        (C) Documents evidencing employment authorization
        A document described in this subparagraph is an individual’s—
        (i) social security account number card (other than such a card which specifies on the face that the issuance of the card does not authorize employment in the United States); or

          other documentation evidencing authorization of employment in the United States which the Attorney General finds, by regulation, to be acceptable for purposes of this section.


        (D) Documents establishing identity of individual
        A document described in this subparagraph is an individual’s—
        (i) driver’s license or similar document issued for the purpose of identification by a State, if it contains a photograph of the individual or such other personal identifying information relating to the individual as the Attorney General finds, by regulation, sufficient for purposes of this section; or
        (ii) in the case of individuals under 16 years of age or in a State which does not provide for issuance of an identification document (other than a driver’s license) referred to in clause (i), documentation of personal identity of such other type as the Attorney General finds, by regulation, provides a reliable means of identification.

        So as I and Scott have noted repeatedly Congress has left a HOLE here for REGULATION as in other statutes. If Homeland [or AG] reg’d that a university ID was sufficient for an employee permit the AG could approve it, and so forth.


        • For a way to fight over regulation before it occurs, see this:

          New quotation is up, tracking the theme of “too much regulation”.


        • MArk:

          Seems like registration is required to see that. Any way you can paste a good extract?


        • Clement and Tribe have been retained to fight draft guidance by the U.S. Food and Drug Administration to regulate certain laboratory tests—proposed nonbinding rules that are open for comment until February.

          The unusually aggressive early move by the laboratory trade group underscores how important the issue is to its members. They oppose the FDA’s push to bring so-called laboratory developed tests under its regulatory oversight.

          “We are pleased that Laurence Tribe and Paul Clement, two of the nation’s most preeminent experts in constitutional law and administrative procedure, will advise ACLA in its opposition to the FDA proposal,” said Stephen Rusckowski, president and CEO of Quest Diagnostics Inc. and ACLA chairman, in a written statement.

          Some of the lab tests at issue are relatively simple—measuring, for example, a person’s cholesterol. But in recent years, many tests have gotten more complex, detecting someone’s risk for breast cancer or Alzheimer’s disease, for example. Making matters more complicated, depending on the manufacturer, some tests for these conditions are already subject to FDA regulation.

          But laboratory-developed tests—designed, manufactured and used within a single lab—are not regulated by the FDA.

          Instead, test makers have been regulated for decades by the Centers for Medicare & Medicaid Services under the Clinical Laboratory Improvement Amendments, and by state law.


          While Clement said he’s usually brought in after an adverse decision, ”From my standpoint, it’s a huge luxury to be able to get involved in an issue at the beginning… and have the ability to shape the argument and debate,” he said. He added, “We’ll try to make the argument in a way that prevents the need for litigation.”

          The FDA wants to change that, arguing that oversight should be “based on risk to patients rather than whether [the tests] were made by a conventional manufacturer or a single laboratory.”


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