Morning Report – Global Bond Yields plummet 1/23/15

Global stocks and bonds are continuing their post ECB rally. It is truly stunning to see bond yields where they are. If you think the US 1.83% bond yield is rock bottom, consider this: It is higher than 3 out of the 5 PIIGS (only Greece and Portugal are higher) and is multiples higher than many G7 yields.

Some global 10 year yields:

France 10 Year Govt Bond Yield 0.54%
Germany 10 Year Govt Bond Yield 0.38%
Swiss 10 Year Govt Bond Yield -0.22%
UK 10 Year Govt Bond Yield 1.49%
Japan 10 Year Govt Bond Yield 0.23%
Canada 10 Year Govt Bond Yield 1.52%

We live in truly extraordinary times. Yes, the German Bund is pushing towards Japanese yields. Rates are negative through 7 years in Germany right now, and you’ll pay 22 basis points per year to lend to the Swiss government for 10 years.That’s not an interest rate – it is a storage fee.

With the ECB out of the way, attention turns to the Greek elections and the possibility (again) of Grexit.

King Abdullah of Saudi Arabia passed away last night. Oil markets are taking the news in stride, as it probably will not affect OPEC policy.

Existing Home Sales rose to a seasonally adjusted 5.04 million in December, from a downward revised 4.92 million in November. The median home price rose 5.3% year-over-year to $208,500.

In economic news, the Chicago Fed National Activity Index fell by a lot in December to -,05 from .73 in November. Production indicators drove the decline, however employment is still positive. It is looking more and more like we took a bit of a swoon in December economically, given what we have seen with the ISM numbers and the Industrial Production numbers.

The Index of Leading Economic Indicators rose from a downward-revised +0.4% to +0.5% in December.

41 Responses

  1. Frist!

    That’s all I’ve got at the moment. Have a happy Friday, guys!

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  2. Now that is power.

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  3. Not even blogging true, McWing:

    The overall growth in medical student enrollment can be attributed, in part, to the creation of new medical schools as well as existing schools’ efforts to expand their class sizes after the AAMC, in 2006, called for a 30 percent increase in enrollment to avert future doctor shortages. In 2013, 14 medical schools increased their class sizes by more than 10 percent. Four new medical schools welcomed their first classes this year, contributing to about half of the overall enrollment increase. Since 2002, medical schools have increased the number of first-year students by 21.6 percent.

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  4. cartel FTW!

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  5. Fitty percent population increase since ’80. 21% increase since ’00’s didn’t even keep up with growth at that time. Essentially a zero increase in slots.

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    • McWing:

      Essentially a zero increase in slots.

      The wonder to me is that they are even able to fill the slots. ACA (among other regulations) is making it increasingly unattractive to take up medicine as a career. I know at least a couple of doctors who are advising younger people not to go into medicine because the financial rewards that made the cost (in both time and money) of becoming a doctor worth it are becoming less and less achievable.

      Economics 101 tells us that shortages of a given good or service stop being a shortage only when the price of the good rises high enough to induce both the production of a greater supply and a decrease in demand. Government schemes to manage health care are inevitably going to produce shortages in health care precisely because they work to do the exact opposite, ie they attempt to keep the price of health care down, which induces reductions in supply and increases in demand.

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  6. It’s been my experience that most people want speech they don’t like controlled by the government.

    People really dont like their views challenged and instead of ignoring or arguing or even insulting as a response, they’d rather have the government stop it.

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    • McWing:

      It’s been my experience that most people want speech they don’t like controlled by the government.

      I think it is a manifestation of the more general attitude that the government exists to be a generic problem solver for people. Can’t get a job? The government should do something. Can’t afford college? The government should do something. Insulted by a cartoon? The government should do something. This is the toxic result of the left’s cultural success in advancing its ideology.

      The fact that the dean of a school of journalism in America would argue that a political cartoon, any political cartoon regardless of content, should not be protected under free speech principles, is just astounding to me. And depressing, if, as it surely is, it is any indication of the wider state of academia’s understanding of and respect for our founding principles.

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  7. Essentially a zero increase in slots.

    Be my guest and move the goal posts, though.

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  8. As a 1993 or 1977-type blizzard approaches the Northeast, let me be the first to say Global Warming, My Ass.

    Do you suppose the climate action response team at TPM is already distributing the talking points?

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    • Brent:

      As a 1993 or 1977-type blizzard approaches the Northeast, let me be the first to say Global Warming, My Ass.

      Are you kidding? Clearly the coming blizzard confirms global warming. As does all conceivable weather events. Along with even inconceivable weather events.

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      • Speaking of which, have you got the generator working? We got a call from Connecticut Light and Power yesterday telling us that if we relied on any life saving devices that required electricity, we should clear out to a place not expected to be effected by the storm. Losing power sounds likely.

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  9. GW or not……………..hope y’all weather the storm well!

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  10. “Be my guest and move the goal posts, though.”

    I don’t follow.

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  11. Like

    • Really good stuff over at The Federalist recently.

      Constitutional Rights and Wrongs:

      Richard Weaver, in The Ethics of Rhetoric (1953), highlights and evaluates three types of arguments in political rhetoric: reasoning from consequences, reasoning from circumstances, and reasoning from definition. These correspond well to the three approaches to constitutional interpretation that we can expect from the Court as it takes up these questions.

      The Progressive pragmatist judges the case based on the result desired; that is, from its consequences. Now that Progressives have adopted the gay marriage cause–and only now that they have done so–the Fourteenth Amendment’s “equal protection” clause must require states to sanction and recognize gay marriages.

      The establishment moderate judges the case with a political calculator; that is, from its circumstances. Now that gay marriage is legal in thirty-six states (albeit mostly because of federal court action and inaction) and supporters of gay marriage consistently outpoll opponents (though not in a number of individual states)–and only because such is the case–it is time to square the Fourteenth Amendment with this emerging consensus . . . and thereby strengthen that consensus by putting the moral weight of the Constitution behind it.

      The problem with both of these rhetorical approaches is obvious: they make the judge both a sovereign and an interested party rather than the impartial arbiter he is intended to be.

      http://thefederalist.com/2015/01/26/constitutional-rights-and-wrongs/

      Then The United States’ Unwritten Blasphemy Laws:

      A culture of free expression depends on a proper legal regime, but it also requires a people who value and actively support diverse and challenging expression, both in form and in content. A society where many fear exercising their legal rights due to the threat of social reprisal may have free speech, but not a culture of free expression. Sometimes, especially where constitutional schemes are different or weaker than in the United States, an anemic culture of free expression can corrode legal free speech.
      A society where many fear exercising their legal rights due to the threat of social reprisal may have free speech, but not a culture of free expression.

      Any enthusiasm we might have about America’s culture of free expression in the wake of Charlie Hebdo should be tempered by the relative silence of the free-speech brigade about controversies where speaking out carries real risk. Tweeting a hashtag in support of murdered cartoonists is costless. Almost everyone agrees the killing was wrong, and there’s no way the Islamists are going to track down Mr. #JeSuisCharlie from Paducah, Kentucky. You can cancel your ADT Security subscription.

      But what about when standing up for a culture of free expression carries the risk of a loss of social or professional standing? What about when the fire chief of Atlanta, Georgia, was fired for expressing boilerplate Christian disapproval of homosexual acts in a book he published? What about when Brendan Eich was forced out at Mozilla for donating to Proposition 8? What about when Bret Baier and Gary Sinise were harangued for agreeing to appear at a run-of-the-mill Catholic gala until they canceled?

      http://thefederalist.com/2015/01/26/the-united-states-unwritten-blasphemy-laws/

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  12. @scott. still having an issue with the governor ande / or choke on the generator. The engine stalls out after running about 20 seconds or so.

    Gonna mess with it this morning..

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  13. I don’t follow

    McWing is trying to move from being wrong to being essentially wrong.

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  14. NoVA – it’s whether the number of doctors should be judged based on just the nominal number or per capita.

    Beyond that, there also appears to be a factual dispute between the sources.

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  15. there also appears to be a factual dispute between the sources

    There isn’t any factual dispute–there has been an increase in the number of medical students enrolled (“slots” in McWing’s source). Whether or not it is a large enough increase is something that can be debated.

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  16. ScottC: “Are you kidding? Clearly the coming blizzard confirms global warming. As does all conceivable weather events. Along with even inconceivable weather events.”

    All extreme weather events confirm global warming. Then we can make the case for our urgent it is we change our lifestyles, based on the results of similar extreme weather events that happened before the 1970s, or indeed, before the industrial age.

    Couldn’t be macro seasons. That’s crazy!

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  17. @ScottC: “The wonder to me is that they are even able to fill the slots. ACA (among other regulations) is making it increasingly unattractive to take up medicine as a career.”

    Well, as with all things, I expect it depends on the field and the nature of your practice. I suspect some areas may be more attractive. If not, there’s always elective and cosmetic surgeries where the profit motive may still be operative.

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  18. I’ve worked with literally hundreds, possibly over a thousand, medical students and doctors over the years; the very few who go into it for the money alone are the unhappy ones. Nobody complains about being well-paid, but that’s not why they go into medicine. And, as Kevin says, there are still highly lucrative options available.

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    • Mich:

      I’ve worked with literally hundreds, possibly over a thousand, medical students and doctors over the years; the very few who go into it for the money alone…

      That’s a key word, there, “alone”. No doubt you are right that very few go into it for money alone. But to think that medicine or health care is somehow magically immune to the normal free market laws of supply and demand with regard to prices would be foolish. The more you limit the compensation doctors might achieve, both in dollars and status, the fewer of them you will have.

      I’d also add that the more of a bureaucracy that you impose on doctors, the fewer of them you will have.

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  19. The more you limit the compensation doctors might achieve, both in dollars and status, the fewer of them you will have.

    I’d also add that the more of a bureaucracy that you impose on doctors, the fewer of them you will have.

    I don’t have numbers to back me up, but I’m going to go with my experience on this and say “not so that you’d notice”. Sure, there will be folks who normally would have gone into medicine as a lucrative career who choose not to, but the spots in medical school that they would have filled will be taken by people who recognize that they’re still going to make darn good money and want to practice medicine. And some of them will be discouraged by the bureaucracy and decide to go into other fields. But not so many that we would run out of practitioners.

    I do happen to agree with McWing’s original point (despite the fact that his source was wrong) that we need to be graduating more doctors/NPs/PAs.

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    • Mich:

      I don’t have numbers to back me up, but I’m going to go with my experience on this and say “not so that you’d notice”….we need to be graduating more doctors/NPs/PAs.

      If the former is true, then why would the latter be true?

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  20. why would the latter be true?

    Because McWing’s larger point–that we don’t have enough practioners for our population–is true, and has been for quite some time. We need to be enrolling and graduating more doctors, period.

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    • Mich:

      Because McWing’s larger point–that we don’t have enough practioners for our population–is true, and has been for quite some time. We need to be enrolling and graduating more doctors, period.

      You’ve simply repeated the claim, essentially saying that it is true because it is true. But the point is this: If, as you claimed, limited compensation and greater bureaucratic burdens have produced no noticeable effect on the number of doctors available, why is there a shortage such that you think we need more of them?

      Beyond that, why do you think that the field of medicine is somehow immune to the regular forces of supply and demand such that government trying to artificially control the price wouldn’t have the effect of increasing demand and decreasing supply from what would exist without the government’s interference?

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  21. It just occurred to me that I may be assuming that you know something that you don’t: medical school class sizes are dictated by the state (for public universities–I don’t know about private institutions). State legislatures and Boards of Reagents have to authorize changes in enrollment, so until they do so nothing will change.

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  22. why is there a shortage such that you think we need more of them?

    Because there aren’t enough medical school spots.

    Beyond that, why do you think that the field of medicine is somehow immune to the regular forces of supply and demand

    I don’t–that’s one of the reasons that the AMA lobbies heavily to keep the number of graduating doctors constant. The government–at least up till now, and I’m not convinced that anything has changed–hasn’t had anything to do with it at a federal level.

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    • Mich:

      Because there aren’t enough medical school spots.

      There would be if there was a free market in medicine (and education).

      BTW, this explains why you wouldn’t notice the negative effects of limiting compensation and increasing bureaucratic burdens. If a shortage of a good has already been orchestrated by directly limiting the production of that good, then market forces that would tend to lead to less production will (up to a point) no longer operate to do so.

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      • Instead of looking at how prospective doctors are being influenced by the current state of the health care industry, look at how existing doctors are being influenced by it:

        http://www.thefiscaltimes.com/Articles/2014/04/01/Doctors-Leave-Primary-Care-More-Patients-Need-Them

        Just as millions of Americans are obtaining insurance coverage through the federal health law, doctors like Finer, Gassner and Devitt are voting with their feet. Tired of working longer and harder because of discounted insurance payments and frustrated by stagnating pay and increasing oversight, many are going to work for large groups or hospitals, curtailing their practices and in some cases, abandoning primary care or retiring early.

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  23. AMA accredites Medical Schools.

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  24. The Guild system beloved by The Left.

    http://www.lcme.org/faq.htm

    Except when they don’t.

    Edit: I changed Mathew to The.

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  25. There would be if there was a free market in medicine

    Talk to the AMA.

    And why do medical schools care about being accredited by the AMA?

    Because unless a school is accredited its degrees aren’t recognized. This is true for every degree from BA/BS on up at both public and private institutions.

    EDIT: And, btw, accreditation is not done by the government in the US, but by private, non-profit (yeah, right) organizations. So don’t be Blaming Obama for this one! 🙂

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    • Mich:

      Because unless a school is accredited its degrees aren’t recognized.

      From the LCME website (emphasis added):

      Why is accreditation important?

      Accreditation signifies that national standards for structure, function, and performance are met by a medical school’s education program leading to the M.D. degree. LCME accreditation establishes eligibility for selected federal grants and programs, including Title VII funding administered by the Public Health Service. Students and graduates of LCME-accredited medical schools are eligible to take the United States Medical Licensing Examination (USMLE). These graduates also have eligibility to enter residencies approved by the Accreditation Council for Graduate Medical Education (ACGME). Graduating from an LCME-accredited U.S. school and passing the national licensing examinations are accepted as prerequisites for medical licensure in most states.

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  26. @ScottC1, @kjmmurphy: “That’s a key word, there, “alone”. No doubt you are right that very few go into it for money alone. But to think that medicine or health care is somehow magically immune to the normal free market laws of supply and demand with regard to prices would be foolish.”

    And, of course, the esteem the field is held in, the autonomy you enjoy as a doctor, your options as to where you live, how large your student debt will be, what sort of time off you will be able to get . . . all these figure in, too. Not to mention, other restrictions, what sort of people you’ll end up working with, yada yada. How much time is spent doing paperwork rather than seeing patients. There’s a lot of factors involved.

    Like

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