Morning Report – ADP is forecasting a weak payroll number this Friday 12/3/14

Markets are flattish on no real news. Bonds and MBS are flat as well.

Mortgage Applications fell 7.3% last week, which isn’t a surprise given the holidays. Purchases rose 2.5% while refis fell 13.4%.

ADP is forecasting the payroll number will come in at 208k this Friday. The Street is forecasting 230k.

Productivity rose 2.3% in the third quarter, while unit labor costs fell 1%. Output increased 4.9% and hours worked increased 2.5%. Compensation rose 1.3% while productivity rose 2.3%, which means unit labor costs are -1%. These numbers do not suggest inflation is any sort of immediate or medium-term threat at all, which is bond bullish.

Speaking of bond bullish, just did a $6 billion (!) bond issue, which contained a $1.5 billion tranche of 30 year bonds yielding 4.95%. The funds will be used for general corporate purposes. If you look at their balance sheet, they already have $7 billion in cash vs. $3 billion in debt outstanding, so it isn’t like they need the money. 30 years at under 5%. 7 years ago, the 30 year yielded more than that.

The latest kerfuffle in Washington doesn’t involve immigration – it involves a bunch of expiring tax breaks. Many of them are for individuals – tax breaks for teachers, tuition, mortgage debt forgiveness, mortgage PMI, and mortgage forgiveness. There are a number of business breaks in there as well. The Senate came up with a two year extension, but Obama promised to veto it because it doesn’t address the earned income tax credit and child tax credits that expire in 2017. He wants them to be made permanent. It looks like a 1 year extension bill is in the works. If this doesn’t get resolved, it could make for an interesting start to the tax year.

From the polar vortex making November the coldest in decades to El Nino ushering in a mild December, natural gas investors have been taken for a ride over the past six weeks or so. Fun fact – on the NYSE, they have Bloomberg or CNBC on the big TV monitors. In the commodity pits, they have on the Weather Channel. This is why. Look at the volatility of nat gas over the past month. roughly $3.50 to $4.50 and back to $3.80. Pretty amazing.

24 Responses

  1. It is interesting to see the dam break on Democrats abandoning Obamacare.


    • A fairly stark picture painted here. See the first bar graph.

      Anyone who does not actively seek out non-left leaning sources for their news is, pretty much by default, getting a warped and one-sided picture of the world.

      The next couple of charts were equally interesting. If you read/watch the news, you are overwhelmingly being informed by the political left. If you watch movies or TV, you are overwhelmingly being entertained by the political left. If you go to school, you are overwhelmingly being educated by the political left. Is it any wonder that the left has come to have such a grip on the culture of the nation?


      • Great article from Molly Hemingway. Basically the result of the graph in my previous post.

        So we know that the national media is deeply concerned about stray insults directed toward the Obama family from Congressional staffers. Is raping people worse than that? Or not? I’m confused. Because a few years ago Congressional staffer Donny Ray Williams, Jr., was indicted for a series of alleged sexual assaults and it got only one “local crime” story in the Washington Post. Yesterday he pled guilty and that also generated one story in the Washington Post. If there’s network coverage of this congressional staffer raping people, I’m not seeing it. Did I mention he was a staff director for Democrats on a Senate panel?

        Or what about child rape? We’re still opposed to that, right? I only ask because Terry Bean, a major campaign donor to President Obama — and a co-founder of the Human Rights Campaign — was just charged with sexual assault of a minor. And the Washington Post hasn’t covered it, according to a search of their archives. I mean, there are pictures of him on Air Force One and he was at the White House seven times including for a state dinner. He’s a member of the DNC. I know, I know, he’s certainly not as important as Lauten, but maybe a single story would be in order? Maybe that Terrence McCoy reporter could dig around and see if Bean wrote anything interesting in high school or something?


  2. Apparantly that Harkin interview is blowing up DKos. That thread I linked to is over 500 comments and climbing.

    Theory, prominent D’s are hoping SCOTUS guts subsidies and forces R congress and Obama to address it or get rid of it.

    ObamaCare is an electoral albatross that can only get heavier. A SCOTUS decision keeps their hands clean. They can’t run on Obamacare and win and they can’t really run away from it.


    • Did you introduce it to PL?


    • jnc:

      Waldman is exposing his ignorance of the U.S. government. He says:

      The address is reliably boring no matter who the president is, and it’s true that for much of the country’s history it was delivered in writing. But it serves an important purpose. It’s the only time when the entire federal government — all of Congress, most of the Supreme Court, and the cabinet, representing the three branches — gathers in one room. It says to the nation, this is your political leadership. They have their differences, but once a year they assemble to hear what the president has to say. Their presence is an implicit validation of the entire political structure and the president’s place atop it.

      No, Paul, the president does not have a place “atop” the federal government. He sits “atop” the executive branch, which is just one of three constitutionally equal branches of government. And having to sit still and listen while the president lies his way through a political pep rally serves no legitimate, national purpose whatsoever.


  3. I guess Clinton’s impeachment t was a Republican acknoedgement of his Presidency?

    Remember “Selected, not elected”?

    Meh, who gives a fuck really.


  4. I’d argue that SOTU confirms Hack Waldman’s understanding.


    • McWing:

      I’d argue that SOTU confirms Hack Waldman’s understanding.

      If that is true, then far from serving an important purpose, it is actually extremely detrimental.


  5. Absolutely agree. It perpetuates the actuality of the supremacy of the Executive.


  6. This is true though:

    “Their presence is an implicit validation of the entire political structure”

    Hence the value in the symbolic disinvitation. Deny President Obama the validation for his unilateral actions on immigration. Make it clear that’s why it’s being done.

    Cue media stories on “Constitutional Crisis” should it actually come to pass


    • jnc (from Rock):

      As bad as George W. Bush was, he revolutionized the presidency. He was the first president who only served the people that voted for him. He ran the country like a cable network; he only catered to his subscribers. Obama’s main fault is not realizing that’s kind of what people want. That whole trying-to-make-everybody-happy thing is done.

      Quite an inversion of reality. I guess even Chris Rock has his blind spots.


  7. Very revealing story about people being quoted anonymously.

    Considering the state of the country, why are we supposed to celebrate Senators liking and working with eachother?

    How can a rational person not appreciate Cruz more after reading this?


    • Obama yesterday, speaking about the NYC grand jury’s decision not to indict an NYPD police officer in the death of a black man he was arresting:

      When anybody in this country is not being treated equally under the law, that is a problem. And it’s my job as president to help solve it.

      Would that he actually believed this, but of course his fundamental ideology is that different people should decidedly not be treated equally before the law.


  8. @ScottC: “The next couple of charts were equally interesting. If you read/watch the news, you are overwhelmingly being informed by the political left.”

    I think it’s interesting how this plays out, too. Through mainstream news stories reporting the news, it’s less about their editorializing than what they choose to cover. While pundits and news magazines may editorialize shamelessly, the actual reportage tends to be more about what gets covered, and sometimes the leftwards bias is trumped by what gets ratings. But often it’s just that very interesting stories and scandals don’t get reported because their bias guides them towards believing that a particular story isn’t newsworthy. Which works both ways. I remember one person, formerly of Fox news, complaining that in global warming stories that skeptic was supposed to get the last word as a matter of editorial policy . . . which was an appalling distortion of the news, apparently, when reportage that allowed the true believer to get the only word, period, in most MSM outlets was perfectly acceptable.


  9. @ScottC: “As bad as George W. Bush was, he revolutionized the presidency. He was the first president who only served the people that voted for him.”

    I don’t think this an inversion of reality, it’s simply wrong. Obama does not serve only the people who voted for him (I would suspect most of the people who voted for him who actually care about issues enough to follow them don’t care for much of his foreign policy, deployment of drones, or how the intelligence agencies have operated under his watch). But the fact is, no president can exclusively support only his voters (this would be impossible to determine, and any president is going to have at least a few people voting for him that have completely delusional expectations about what that president is like and will do). Many Obama voters are bitterly disappointed, a few non-Obama voters were probably pleasantly surprised, but on the whole no president can completely cater to everyone who voted for them only, and there is no way to please the 50% of the voters who voted for the winning candidate. Some will always be unhappy.

    Just check out the PL! Most of the diehard lefties consider Obama a center-right president, and are not happy with his governance except that he’s not a Republican. Of course, they consider the ACA a Republican plan, so . . . there ya go.

    Love Chris Rock, but the statement is purely ahistorical. No president has ever served those who voted for him exclusively, because it’s not possible. And every president has done more, policy wise, that would please many-to-most of the people who voted for him than those who did not. That did not start with Dubya, that started with Alpha Prime, George Washington. But presidencies have a lot of inputs and outputs, and no presidency has ever been exclusively about payback to voters (who are not a monolithic group, anyway) or completely excluded red meat for the base.


    • Kevin:

      I don’t think this an inversion of reality, it’s simply wrong.

      Well of course it isn’t literally true either way. But conventional wisdom on the left, particularly the far left that has been disappointed that Obama has not delivered them more, is that Obama’s main fault has been his willingness to compromise with the right, and a failure to play hardball to achieve his ideological goals. I think that is just self-delusion, and in fact O has been more ideologically partisan in his policy initiatives certainly than W, and probably most of his modern predecessors.


  10. ScottC: I don’t think I would have agreed entirely (the ACA, for all it’s faults, does read like a right wing plan when compared to Clinton’s Communist Care proposal). However, the recent executive amnesty . . . well, Bush did not declare war on Iraq with an executive order. Also, Obama is not a compromiser, he’s just been stymied. And most of the left can see that, and complain about it, and then immediately complain that he lacks a spine and won’t stand up to the Republicans. I think that means they want him to sound like James Carville while being stymied, and throw them a lot of red meat.


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