Morning Report – Not too shabby jobs report 12/5/14

Markets are higher after a good jobs report. Bonds and MBS are getting slammed.

A not-too-shabby jobs report today. Payrolls increased by 321k, much better than the 230k estimate and the 208k ADP number. The two month revision was +44k. The unemployment rate held steady at 5.8% as did the labor force participation rate at 62.8%. We had a nice month-over-month increase in wages: up 0.4%, however on an annual basis, it was steady at 2.1%.

One strange anomaly: the household survey and the establishment survey differed in a big way – the household survey (which is conducted by sending questionnaires to individual houses) showed no employment growth, while the establishment survey (which is conducted by sending questionnaires to businesses) showed strong payroll growth. The market is clearly choosing to focus on the establishment data.

We could finally be hitting the point where the lagging employment indicators are catching up with the leading indicators. Recoveries after asset bubbles tend to be bathtub-shaped. We could finally be at the inflection point. Lower energy prices are going to be a big help as well.

Of course lower energy prices are not great for everyone – especially those companies in the energy patch. The big new distressed trade is energy debt as many over-leveraged and now cannot borrow. Shades of the mid / late 1980s.

Of course with lower energy prices, Washington is chomping at the bit to raise the gas tax.

Why can Apple borrow money more cheaply than the US government? Believe it or not, the 2.29% 10 year can’t get any respect.

It is an old cliche that all real estate is local. When I talk to people in San Diego, they describe a completely different housing market than the one I see up here in the Northeast. Interestingly, on the way to work today, I saw the first single family home being built since probably 2007. So maybe the Northeast is getting better at long last..

52 Responses

  1. Are we at the lounging end or the faucet end of the bathtub, do you think?

    Oh–frist.

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  2. “Of course with lower energy prices, Washington is chomping at the bit to raise the gas tax.”

    I’d actually be willing to see an increase of 25 cents over five years (5 cents a year) for dedicated funding for transportation at this point. I think that more than doubles the funding?

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    • jnc:

      I’d actually be willing to see an increase of 25 cents over five years (5 cents a year) for dedicated funding for transportation at this point.

      We are already taxed plenty for government to provide for proper public goods like transportation. There is no need to raise taxes to fund it. All that is needed is to stop spending money on all the things the fed shouldn’t be doing in the first place.

      BTW, the fed shouldn’t really be involved in transportation anyway, apart from the interstate highway system.

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  3. I just had a fascinating discussion on uber economics with my driver, who is a PhD economics student at GW.

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  4. With regular gasoline dipping below $2.75 a gallon, perhaps now could be a time to adjust the formula for the gas tax.

    BB

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    • FB:

      With regular gasoline dipping below $2.75 a gallon, perhaps now could be a time to adjust the formula for the gas tax.

      Whenever I hear people advocate for raising the gas tax as a result of declining oil prices, I always wonder what they think the optimal gas price is, and how they managed to figure it out.

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  5. “Are we at the lounging end or the faucet end of the bathtub, do you think?”

    Lounging end… The improvements will accelerate, but won’t be super-abrupt.

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  6. Thanks, Brent–I was kinda afraid that was going to be the answer. But at least it’s improving!

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  7. I just had a fascinating discussion on uber economics with my driver

    Tom Friedman is wearing a top hat these days? 🙂

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  8. @jnc4p: “I’d actually be willing to see an increase of 25 cents over five years (5 cents a year) for dedicated funding for transportation at this point. I think that more than doubles the funding?”

    Can we exempt diesel fuel?

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  9. “All that is needed is to stop spending money on all the things the fed shouldn’t be doing in the first place.”

    I’m assuming that’s never going to happen.

    I suspect the calls to put the gas tax in during temporary dips is simply about political optics, i.e. less likely to be noticed given the otherwise declining price.

    Kevin, I see no need to exempt any specific class of vehicle that uses the roads. I’d repeal all the tax incentives for electric/hybrid vehicles at the same time.

    I’d also tie it to repealing all the ethanol mandates. I’ll happily pay the tax to be able to buy real gasoline again.

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    • jnc (missed this from earlier):

      I’m assuming that’s never going to happen.

      A Libertarian is never going to get elected governor of VA, but you’d still probably vote for one over the R or D candidate, I suspect.

      Personally I am just tired of the slow grind of the liberal ratchet, in which progressive policies nearly always come to be accepted as permanent, and future initiatives, even legitimate ones, suffer from having to make concessions to that assumed reality. Screw that. Overspending on illegitimate programs by the feds certainly will never be lessened if people like you and I simply accept it as a fait accompli, and demand even more taxation for the things we think the feds ought to be doing.

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  10. A much better written version of the argument Aletheia usually tries to make on PL.

    https://www.jacobinmag.com/2014/12/capitalisms-gravediggers/

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  11. From NoVA’s piece.

    “But because that’s no fun, right and left had to find some way to tear each other apart over this. And so the contention—made by some libertarians and conservatives—that punitive cigarette taxes are a contributing factor in Garner’s death has driven many on the left into a fit of rage.”

    That’s not the primary reason for the fit of rage per se. It’s the refusal to acknowledge that racism and WMP is the root of all social & economic problems in the United States.

    The focus on the taxes is dismissed as an attempt to distract from racism. It’s not even addressed on it’s own merits.

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  12. “never depended fundamentally on satisfying market imperatives and could still produce to meet their own subsistence needs.”

    well that sounds great!

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  13. That’s how Aletheia argues that feudalism was superior to the post Industrial Revolution world.

    Those who aspire to live above a subsistence level simply want to exploit the workers.

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  14. what bugs me the most is the completely unsupported contention that a return to such a condition would be nonviolent.

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  15. Whenever I hear people advocate for raising the gas tax as a result of declining oil prices, I always wonder what they think the optimal gas price is, and how they managed to figure it out.

    Whenever I hear people advocate that the gas tax cannot be raised as a result of increasing oil prices, I always wonder what they think the optimal gas price is, and how they managed to figure it out.

    BB

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    • FB:

      Whenever I hear people advocate that the gas tax cannot be raised as a result of increasing oil prices, I always wonder what they think the optimal gas price is, and how they managed to figure it out.

      I confess I haven’t heard such advocacy from many people (certainly not any here at ATiM), but if I did, I would agree with you. It doesn’t really make a lot of sense to me to change the rate of taxation up or down based on the price of gas, unless one is attempting to manipulate the cost of gas to the consumer to achieve a specific price target, which leads to the question I posed, and which you mimicked.

      Of course, usually when prices at the pump go up, the big government/anti-oil crowd, which more generally advocates for higher taxes, usually just rails against the oil companies for making unfair or windfall profits at the expense of the ordinary joe. It becomes somewhat difficult to call for higher gas taxes at the same time that you are complaining about the cost of gas to the average guy, so they usually lay low with regard to taxes when prices are climbing. Only when gas prices begin to drop, and it becomes less plausible to demonize the oil companies, do they revert back to their usual call for higher taxes.

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  16. There’s going to be hell to pay at Rolling Stone. They are walking back the UVA rape story.

    “In the face of new information, there now appear to be discrepancies in Jackie’s account, and we have come to the conclusion that our trust in her was misplaced.”

    http://www.rollingstone.com/culture/news/a-note-to-our-readers-20141205

    Edit: It’s even worse than I thought

    “A lawyer for the University of Virginia fraternity whose members were accused of a brutal gang rape said Friday that the organization will release a statement rebutting the claims printed in a Rolling Stone article about the incident. Several of the woman’s close friends and campus sex assault awareness advocates expressed doubt about the published account, and the magazine’s editors also apologized to readers for discrepancies in the story.

    Officials close to the fraternity said that the statement will indicate that Phi Kappa Psi did not host a party on Sept. 28, 2012, the night that a university student named Jackie alleges she was invited to a date party, lured into an upstairs room and was then ambushed and gang-raped by seven men who were rushing the fraternity.

    The officials also said that no members of the fraternity were employed at the university’s Aquatic Fitness Center during that time frame — a detail Jackie provided in her account to Rolling Stone and in interviews with The Washington Post — and that no member of the house matches the description detailed in the Rolling Stone account.”

    http://www.washingtonpost.com/local/education/u-va-fraternity-to-rebut-claims-of-gang-rape-in-rolling-stone/2014/12/05/5fa5f7d2-7c91-11e4-84d4-7c896b90abdc_story.html

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    • jnc:

      They are walking back the UVA rape story.

      I finally read the original story about 3 days ago. It struck me as extremely implausible. In fact the implausibility of the story almost made it more believable to me, since if you were going to make up such a story you would try not to go too far over the top.

      BTW, reading all these UVa stories I’ve noticed something that I don’t quite understand. Why do people refer to “survivors” of rape instead of “victims” of rape?

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  17. I have no idea about how PC terminology is determined.

    Scott, this is what set off my BS detector on it originally:

    “SABRINA RUBIN ERDELY, Rolling Stone: Well, we were looking to address the problem of rape on college campuses.

    This is an issue that’s being discussed everywhere and we were looking to really investigate, what does it really look like on the ground level when there’s a rape at college against the greater context of college?

    So I looked around at a lot of different campuses and I interviewed a lot of different students. I was looking to set this story at a university that had a good reputation, but also felt very representative of what was going on at American colleges across the country with regard to sexual assault.

    I was also hoping that it would be a college that was under Title IX investigation, and on top of that, a place where people were willing to talk to me about their sexual assault experiences. And I found all that at University of Virginia.”

    http://www.pbs.org/newshour/bb/article-brutal-sexual-assault-provokes-investigation-university-virginia/

    Not about following the facts wherever they may lead but where to “set” the predetermined story. Facts were something to be filled in later.

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    • jnc:

      Not about following the facts wherever they may lead but where to “set” the predetermined story. Facts were something to be filled in later.

      I am tempted to say that this seems to be an increasing problem for journalism, but I wonder if that is true. It is plausible (likely?) that it has always been the way a lot of journalists operate, but that with the hugely increased and diversified array of information sources available to the average reader, it is simply easier for us to ferret it out now than ever before.

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    • Amazingly idiotic tweet from one Melissa McEwan, on the Rolling Stone story:

      I can’t state this more emphatically: If Jackie’s story is partially or wholly untrue, it doesn’t validate the reasons for disbelieving her.

      Like

  18. Can the concept of “free will” exist outside of theism? Doesn’t make sense that it would.

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    • McWing:

      Can the concept of “free will” exist outside of theism? Doesn’t make sense that it would.

      Great topic. I’m not sure why free will absent a theistic explanation makes any less sense than the existence of a theistic force creating free will. Although I would say that the deterministic views of evangelical atheists like Richard Dawkins do ultimately imply the absence of free will.

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  19. “Facts were something to be filled in later”

    when i graduated from j-school, she would have failed. today, i’m not sure.

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  20. @jnc4p: ““In the face of new information, there now appear to be discrepancies in Jackie’s account, and we have come to the conclusion that our trust in her was misplaced.””

    Translated: What? Of course we don’t fact check stories that fit the desired narrative. Why would we do that?

    Shattered Glass is a great movie to watch about how credulous people can be when fiction, presented as truth, can be accepted so uncritically when it fits the narrative. When Glass made up insane stories about the Young Republicans or whatever, no thought that it might not be true. He starts making up stories about young hackers getting hired for a million dollars and web start-ups, and then they start saying: hmmm, that doesn’t sound right, I’d better check it out. Of course, the Republicans getting lied about complained. Their complaints were dismissed. When the lies were about the young hacker, other reporters said it didn’t check out, and they were listened to. And so on.

    Journalism is basically fallible human beings with incomplete understanding giving the truth, as they see it. Which generally ends up it making most journalism opinion pieces that the folks writing often aren’t aware aren’t simple, objective truth.

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  21. @jnc4p: “Kevin, I see no need to exempt any specific class of vehicle that uses the roads. I’d repeal all the tax incentives for electric/hybrid vehicles at the same time.”

    Compensatory tax breaks for shipping companies then? My concern tends to be that adding expense to the shipping of goods presents a drag on economic activity, in addition to inflating the prices of staple goods that, out of necessity, must be shipped. Those costs ultimately get passed on to the consumer at all levels. I just worry that increased shipping costs mitigate whatever good new road construction and repair might create. Then, when gas prices go back up, prices inflate even more.

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  22. “My concern tends to be that adding expense to the shipping of goods presents a drag on economic activity, in addition to inflating the prices of staple goods that, out of necessity, must be shipped. “

    If the cost increase to shipping reflects the actual costs associated with maintaining the roads, then so be it. Pass along the costs and let the chips fall where they may rather than try and micromanage the outcomes.

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  23. “in which progressive policies nearly always come to be accepted as permanent,”

    I’m not sure if road building counts as progressive. I was taking the issue in isolation rather than addressing the overall problem of the size of government.

    Whacking entitlements to fund roads suits me just fine, but in terms of how things are actually funded now, there are things that offend me worse than road building funded by gas taxes.

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    • jnc:

      I’m not sure if road building counts as progressive.

      I’m not suggesting that. Quite the opposite, actually. Road building is one of the few things I think the government is legitimately involved in (ignoring for the moment whether it should be the feds or states or local). Which is why it should be funded by generic government revenues, not by some specialized tax necessary because generic funds are squandered on all kinds of other stuff.

      I’d rather have the transportation infrastructure crumble and force “the people” to choose between fixing it or continuing to spend on progressive folly. Accepting the folly and setting up additional revenue to cover the stuff government is supposed to be doing in the first place merely enables the progressives to further their folly.

      Like

  24. Scott, my thinking, muddy though it be is that a All Knowing Creator must instill Free Will in its sentient creations if it wants them to freely choose allegiance? But outside of that construction would there even be a need to think of the concept of Free Will. Why would a human even need to consider whether they have Free Will if there is no creator. I guess I’m going in circles here and covering 1st year philosophy.

    Which is funny cause I minored in it.

    Like

    • McWing:

      Why would a human even need to consider whether they have Free Will if there is no creator.

      I don’t think it is a question of a “need” to consider it. Normal human experience, notably (but not limited to) feelings of conscience and the notions of morality that such feelings imply, inevitably provoke curiosity about human free will.

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    • George, I do not think a deity is relevant to the “free will” discussion.

      I do think the discussion would bubble up continually in human society just in terms of the analysis of acceptable behavior and child rearing. Your kid steals your Porsche and says “the devil made me do it” or “I couldn’t help myself”. Without a concept of “Free will” there is no accountability for conduct.

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  25. But only in the context of a supreme being, right? What other reason would there be to even dream it up? I guess I’m asking if humans had never considered the concept of a God, there never would have even been the concept or notion of free will.

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    • McWing:

      I guess I’m asking if humans had never considered the concept of a God, there never would have even been the concept or notion of free will.

      I don’t understand why you think that. In fact the reverse seems to me more likely to be true. I suspect that the concept of a deity came about to help explain (among other things) the source of free will, a belief in which is a perfectly natural and self-evident thing.

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  26. I suspect that the concept of a deity came about to help explain (among other things) the source of free will, a belief in which is a perfectly natural and self-evident thing.

    I think you have it reversed. It would seem hard to deny that a belief in (a) deity(ies) is as old as mankind, and that the concept of Free Will was developed to explain knowing opposition to perceived direction from the deity. A more modern understanding, a secular understanding I think comes from a perceived need to “paper over” a belief in, for lack of a better phrase, animalist determinism as well as randomness. What I mean is that human action seems more than mere biological need and or the cause and effect of Newtonian laws. If there had never been the idea of a supreme creator, I think there would never have been a need to create the concept of Free Will. That we are more than biological needs and cause and effect is self evident.

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    • McWing:

      That we are more than biological needs and cause and effect is self evident.

      If it is self-evident, then one doesn’t need to be prompted to see it by some other notion.

      Also, it seems to me that the need/ability to make choices manifests itself in all kinds of aspects of life, not just with regard to religion. So I still don’t understand why you see theism as a necessary pre-condition to the concept of free will. The question of whether I should go fishing or hunting today for my food comes up regardless of whether or not I think there is a Supreme Creator.

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  27. The point is the more complex the creature, the more complex the thinking. Elephants don’t seem tomworry about Free Will but after reading this it’s obvious their thinking is more complex than driven purely by biology.

    http://www.thenewatlantis.com/publications/do-elephants-have-souls

    Like

  28. “ScottC, on December 5, 2014 at 6:31 pm said:

    Amazingly idiotic tweet ”

    The full length version. Just as idiotic.

    http://www.washingtonpost.com/posteverything/wp/2014/12/06/no-matter-what-jackie-said-we-should-automatically-believe-rape-claims/?hpid=z3

    Like

  29. That woman is downright scary…

    This article is the sort of click bait nonsense that belongs in Salon, not the WaPo

    Like

  30. Part Deux to counter Shrink’s incessant douchebaggery re Socialim and Fascism.

    http://blogs.telegraph.co.uk/news/danielhannan/100260720/whenever-you-mention-fascisms-socialist-roots-left-wingers-become-incandescent-why/

    One of the greatest whitewashes in history is how Progressives foisted the Nazi’s on the Right. The equivalent in the US is how the Progressives foisted the Ku Klux Klan on the Republicans.

    Like

  31. My favorite from the above link:

    ht”.
    What is it based on, this connection? Little beyond a jejune sense that Left-wing means compassionate and Right-wing means nasty and fascists are nasty.

    Like

  32. What a mess for Rolling Stone.

    http://www.washingtonpost.com/blogs/erik-wemple/wp/2014/12/07/updated-apology-digs-bigger-hole-for-rolling-stone/?hpid=z2

    When you set out to do advocacy journalism, it’s even more incumbent to double check the facts and get them right because there’s not going to be any benefit of the doubt if you screw up.

    Like

  33. I guess I don’t follow. If there never was a concept of a deity we’d probably attribute what we call Free Will to increasing brain and societal complexity. Read the link I provided re Elephants. We don’t as a rule attribute the concept of Free Will to animals yet there is evidence that some animals behave as if the have some level of it. We don’t say the deity granted partial Free Will do we? No, we say that some animals, some mammals, behave in increasingly comes ways. My position is that we would use that on humans in absence of a deity.

    And I don’t understand the “accountability for conduct” point. Is it your position that an athiest cannot be accountable for their conduct or raise accountable children sans theology?

    Like

    • McWing:

      Is it your position that an athiest cannot be accountable for their conduct or raise accountable children sans theology?

      I can’t speak for Mark, but I understood his point to be not that atheism leads to an absence of accountability, but rather the natural desire for accountability requires a belief in free will, even if one is an atheist. I think the point is well taken. Even the most hard core and sophisticated atheists, like Richard Dawkins, don’t explicitly disavow the notion of free will even when their otherwise deterministic views would suggest they should.

      Dawkins answer in the above link is, I think, refreshingly honest and correct. Individual experience, and our own natural inclinations, imply to us the existence of our own free will, and those exist wholly independently of any belief in a theology. This is what I mean when I said earlier that free will is pretty much self-evident, and not the result of theological thinking. In my understanding of history, religion generally arises as an attempt to explain earthly phenomenon that we already experience but can’t quite explain. With that in mind, I think it much more sensible that theology arose as an explanation for our experience of free will, rather than that the notion of free will arose out of a belief in a deity.

      Like

      • Missed Scott’s reply to you on the question you asked me, George. I can adopt the rest of what Scott said, beyond our having the same view on the narrow question presented.

        Like

    • Is it your position that an athiest cannot be accountable for their conduct or raise accountable children sans theology?

      Exactly the opposite. Theism is irrelevant. Accountability requires better choices. Choosing requires the ability to do so. I call that Free Will. Even in an elephant.

      Perhaps we define these terms differently.

      Like

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