Morning Report – Housing Starts 12/16/14

Stocks are lower as oil continues to fall. Bonds and MBS are rallying hard.

Euro yields are continuing to move lower. The German Bund is currently trading at 57.6 basis points. It began the year at close to 2%. Think about that for a moment. FWIW, the trader in me is starting to think about a capitulation low in rates. Which means we are ripe for a snap-back in yields. LOs, I know this is a dead period of the year, but there might be some refis to be had with the us 10 year yield falling towards 2%. I don’t know how long this gift lasts.

Another observation is that we are getting close (40 basis points or so) to the lows set before the the Fed hinted that QE was ending. If we are getting this sort of movement in rates without QE, it does beg the question of whether QE was effective in the first place.

The Russian Ruble fell to a record low as the Russian Central Bank raised interest rates to 17%. The ruble has been slammed by a combination of low oil prices and international sanctions over Ukraine. The last stop is capital controls. The swoon in oil prices has hit Russia and Venezuela particularly hard.

Housing starts fell to 1028k in November from an upward revised 1045k. Building Permits fell from 1092k to 1035k. For once it was single fam that accounted for most of the decline – multi-fam actually rose. Note that weather may have affected the numbers as winter storms arrived early this year for the upper Midwest and New England.

The FOMC meeting begins today. The decision will be released tomorrow at 2:00 pm.

The Buildfax remodeling rate came in at just under 4 million, which is 4% below September and is 10% higher than a year ago. Activity continues to be strongest in the South and West, with the Midwest and Northeast lagging.

BFRI Remodeling Index

22 Responses

  1. Frist!

    @jnc: I’m still thinking abou the business boycotting an individual issue (I haven’t read your link yet). My initial reaction is “sure”, but I’m mulling.

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  2. Michi I’m fine with it of course, but I view it exactly the same as the wedding cake business not serving gay customers.

    The hypocrisy comes in if you oppose one but not the other.

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  3. @jnc:

    We’re talking purely private businesses, correct? In which case, I have no problem with businesses “boycotting” individuals.

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    • Mich:

      I have no problem with businesses “boycotting” individuals.

      Banks should ban together and boycott Elizabeth Warren. No savings or checking or (especially) investment accounts for her.

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      • 51% of the public believe that CIA interrogation methods were justified. 29% believe they were not justified. No matter how the numbers were broken down (age, race, sex, party affiliation), the belief that they were unjustified never garnered a majority, with Democrats being most likely (46%) to say they were unjustified. No indication on whether or not those who thought they were unjustified believe that they ever could be justified in different circumstances.

        http://www.people-press.org/2014/12/15/about-half-see-cia-interrogation-methods-as-justified/

        For me the claims of a majority of the public are irrelevant to my understanding of what is or is not in fact moral. But for those who maintain that no objective morality exists and that morality is nothing more than what society says it is at any given time, this ought to confirm that waterboarding can indeed be justified.

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  4. ” I have no problem with businesses “boycotting” individuals.”

    you don’t. i think you just joined the dark side. we have cookies. but not for everyone.

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  5. “We’re talking purely private businesses, correct?”

    As opposed to what? Government institutions? Yes the piece was about private businesses.

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  6. Courtesy NoVA,this is going to be great.

    “District court declares Obama immigration action unconstitutional
    By Jonathan H. Adler December 16 at 1:16 PM”

    http://www.washingtonpost.com/news/volokh-conspiracy/wp/2014/12/16/district-court-declares-obama-immigration-action-unconstitutional/

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  7. Banks should ban together and boycott Elizabeth Warren.

    Those aren’t private businesses. For all we know, some of their stockholders may agree with the good senator.

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    • Mich:

      Those aren’t private businesses.

      Sure they are, but you seem to be distinguishing between a privately held and a publicly traded company. Joe’s diner should be able to legally boycott an individual but McDonald’s shouldn’t be able to? Why?

      For all we know, some of their stockholders may agree with the good senator.

      I can see how that might be relevant to a shareholder or board discussion about company policy, but why would it be relevant to what the law should be?

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  8. i think you just joined the dark side

    Nah. I’m just one of those Left Libertarians that Aletheia crows about.

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  9. This will offend everyone.

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  10. you seem to be distinguishing between a privately held and a publicly traded company

    Correct

    Joe’s diner should be able to legally boycott an individual but McDonald’s shouldn’t be able to? Why?

    Well, for one, a publicly traded company has stockholders. It isn’t just about the owner and his/her beliefs at that point. A private, i.e., privately held, business can (as far as I’m concerned) conduct business however the owner wants to; once the public is involved, either as stockholders or through taxes, the owner doesn’t have that luxury any more.

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    • Mich:

      once the public is involved, either as stockholders or through taxes, the owner doesn’t have that luxury any more.

      Stockholders are not “the public”. Whether or not a company’s specific policies are objectionable to shareholders (or some portion of them) is a matter for the shareholders to sort out with management through shareholder meetings and the process of electing a board of directors. If it cannot be sorted out to the satisfaction of specific shareholders, they retain the option of divesting themselves of their shares. The government has no legitimate role to play in picking which shareholder policy preferences the company will adopt.

      It isn’t just about the owner and his/her beliefs at that point.

      Actually that is exactly what it is about. It is just that the “owner” is more than one person, and so may have competing beliefs. I can think of no reason, however, for having the government be the arbiter of which of those beliefs will dictate ultimate policy.

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  11. Yes, I knew that you were going to lecture me about how business “really works” (I actually deleted a sentence to that effect).

    Shareholders divesting themselves of shares is not that simple for those of us who are holding those shares through investment funds; perhaps you have time to scrub all of your investments to make sure that you agree 100% with the owners of the company, but I certainly don’t. Once a company becomes publicly held the original owners have to give up some level of autonomy. Being able to boycott individuals would certainly be one decision that should, at the very least, be put to a vote of the shareholders.

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    • Mich:

      Shareholders divesting themselves of shares is not that simple for those of us who are holding those shares through investment funds.

      Sure it is. Sell the fund.

      perhaps you have time to scrub all of your investments to make sure that you agree 100% with the owners of the company, but I certainly don’t.

      I’m not that concerned with agreeing 100% with all the company policies. But if you are, then you should make time to do so. My only point is that it isn’t the proper function of the government to prevent a company from putting in place a policy that Mich, or any other shareholder, might object to.

      Once a company becomes publicly held the original owners have to give up some level of autonomy.

      Not to the government, they don’t.

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  12. “Once a company becomes publicly held the original owners have to give up some level of autonomy.

    Not to the government, they don’t.”

    They already have. See SEC filing requirements.

    Michigoose’s distinction is the same one Chief Justice Roberts mused on in the recent Hobby Lobby case I believe, so it’s not just her coming to that conclusion.

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    • jnc:

      They already have. See SEC filing requirements.

      On that logic, all businesses, whether privately held or publicly traded, have “already” given up “some level” of autonomy. After all, even privately held companies are subject to government regulation in one way or another. So on that basis, Mich’s claimed distinction between a privately held and publicly traded company, ie that by issuing publicly traded stock it must give up “some level” of autonomy, isn’t any distinction at all. All companies must give up “some level” of autonomy.

      Michigoose’s distinction is the same one Chief Justice Roberts mused on in the recent Hobby Lobby case I believe, so it’s not just her coming to that conclusion.

      I very much doubt that any of Mich’s conclusions, or those of anyone else here, have been arrived at without agreement from some quarter or another. But I confess I don’t see the relevance of that fact to the discussion at hand.

      Recall that the original question was whether or not we think a business should be able to boycott an individual. The question wasn’t what do we think the Supreme Court might say about the issue, or whether the government had the ability to disallow such a boycott. It was, again, whether it should be allowed. So while it may be true that the government already does regulate publicly traded companies, and while it may be true that the government already does treat publicly traded companies differently than privately held companies in one way or another, that fact alone neither justifies itself nor does it justify further disparity in treatment. If any disparate treatment is justified, it must be justified on some other grounds. Mich’s justification, that individual shareholders don’t have the time to look for objectionable policies at the companies they are invested in , doesn’t strike me as a legitimate reason for the use of government coercion.

      In any event…

      Mich thinks that the government shouldn’t be telling a privately held business whether it can boycott an individual, but for some reason she thinks that the fact that a company issues publicly traded stock justifies government interference on this issue, and would want the government to prevent it.

      I think the government has no business telling either a privately held company or a publicly traded company that it can’t boycott an individual. I think the distinction between the two is wholly and entirely irrelevant to the question at hand, and Mich’s justification for making the distinction central to whether or not such a boycott should be allowed makes no sense to me at all. (Just to be clear, if John Roberts was making Mich’s arguments, I wouldn’t think they made any more sense, so the appeal to authority isn’t convincing.)

      So what say you? Should such a boycott be allowed, and is the distinction between a publicly traded and privately held company relevant at all, much less central to, how you answer the question?

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  13. so it’s not just her coming to that conclusion

    And I don’t even think like a lawyer!

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  14. It’s not clear that Roberts was either in that particular instance, merely looking for a neat dividing line.

    Like

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