Morning Report – The Bund passes the JGB 2/3/15

Stocks are higher this morning after the Greek government backed off from the ledge and decided not to restructure their debt. The Greek 10 year is trading at 9.68%, down 126 basis points from yesterday. The German Bund has officially passed the Japanese Government Bond in yield. There is generally a risk-on feel as G7 debt gets sold to buy the PIIGS.

Vehicle sales are coming in strong this morning as we go through an upgrade cycle.

The ISM New York dropped by a lot in January, from 70.8 to 44.5. Factory orders fell 3.4%, but it could be weather-related.

James Bullard is speaking this morning, calling the 10 year yield “astonishingly low” and talking up the US economy.

Construction Spending rose .4% in December, lower than estimates. In his latest budget, Obama proposed a one time tax on overseas earnings to pay for infrastructure spending. Of course this is going to go nowhere as Republicans will only entertain special taxes like this in the context of overall corporate tax reform. Special taxes are going to be traded for lower rates, not stimulus spending.

About 10% of US refining capacity is offline as a union walkout has launched the biggest strike since 1980. Talks have been going on since January 21. The workers want higher wages and to pay less in deductibles and premiums for health care. If the workers get what they want, it could mean that we will finally start seeing wage inflation in the US. Of course the other issue could be wage increases being eaten by rising healthcare costs…

Old merger arbitrage professionals might feel a sense of deja-vu. Office superstores Staples and Office Depot are in talks to combine. This is the second time these two companies tried to merger – the first time was blocked by antitrust regulators in 1997. (The internet? Whats that?)

Banks are easing standards for mortgage loans, however some have noted weaker demand for mortgages linked to purchase activity, according to the Fed’s Senior Loan Officer Survey. This is a strange observation given that the MBA Purchase Index is up about 26% in January…

Agency Mortgage REIT giant American Capital Agency reported earnings yesterday. They have been aggressively moving down-coupon in TBAs, which is one of the big reasons why higher coupon TBAs have underperformed so much on the way down. This means a borrower is going to be somewhat disappointed in the points they receive for going up in rate.

13 Responses

  1. I have to say that Office Depot and Staples seem to have some of the worst marketing analysis out there; within about two miles of my house I’ve got two Staples and three Office Depots. A merger might get rid of two of the excess stores.

    Oh, and frist!

    Like

  2. You could have a future at Bain Capital, assuming that you don’t mind laying off all those workers.

    Like

  3. assuming that you don’t mind laying off all those workers.

    I’d lay off the two that seem to be the only ones present when I stop by the Office Depots. Staples has at least six at any given time.

    Like

    • McWing:

      Am I right?

      More evidence that it is the activist left, not the religious right, that are the truly intolerant ones.

      Like

  4. I guess ISIS burned the pilot from Palestine. Balls’s now in their court. Will they hang all their prisoners? Hard to think a a stronger provocation.

    Like

  5. @Michigoose: “I’d lay off the two that seem to be the only ones present when I stop by the Office Depots.”

    And neither of them working the register.

    Like

  6. @ScottC: “More evidence that it is the activist left, not the religious right, that are the truly intolerant ones.”

    Intolerance is one of those things people want to ascribe to the character flaws of others, when, in truth, almost everyone is intolerant of something, and often many things. There are, I am sure, bakers out there would who refuse, out of principal, to cater a known White Power of Neo-Nazi event. You can argue that catering a gay wedding versus catering a White Power-themed wedding are hardly the same thing, but intolerance as a concept doesn’t include caveats that it’s technically not intolerance when the thing we’re intolerant is broadly considered bad or evil by the general consensus of our majority peer group.

    That being said, if we’re going to keep making political correctness more and more a condition of doing business in certain markets, there need to be grandfather clauses. These bakeries started before 2013 can refuse to cater gay weddings, but please note that all future new businesses that intend to offer catering services will be obligated to cater gay weddings and transgender coming out partiers, or be fined punitively . . . something like that.

    Like

    • KW:

      Intolerance is one of those things people want to ascribe to the character flaws of others, when, in truth, almost everyone is intolerant of something, and often many things.

      I think there is a pretty fundamental difference between personal disapproval of something and legal disapproval of it. And some people are decidedly more willing to use the law against those they are personally intolerant of than are others. As far as I am concerned, such people are indeed more intolerant than those who would not use the law in such a way.

      Like

  7. And neither of them working the register.

    You’ve been to the Office Depots here?! And you didn’t even let me know that you were in town!!

    Like

  8. There goes the neighborhood.

    Ha!

    Like

  9. Not working the register is part of the training of all Office Depot employees, nationwide.

    Like

Be kind, show respect, and all will be right with the world.

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: