Morning Report – Decent jobs report. Bonds get crushed. 3/6/15

Markets are lower this morning after a decent jobs report raised fears of a June rate hike. Bonds and MBS are down big.

  • Nonfarm payrolls + 295k (235k expected)
  • Unemployment rate 5.5%, down from 5.7% in Jan
  • Average hourly earnings + .1% MOM / +2.0% YOY
  • Labor force participation rate down to 62.8%.

The payroll number got the attention of the Street, however the drop in unemployment was due to a drop in the labor force. So far, we are not seeing job losses in the oil patch due to lower prices, however employment did fall due to the refinery strike going on. Average hourly earnings are still rising more or less at the rate of inflation, and came in at $24.78 an hour.

This jobs report is strong enough to make it more likely the Fed will start increasing rates in June, and people who were forecasting a 2016 rate hike are probably re-assessing that outlook. Hence the sharp sell-off in bonds.

End of an era: Apple is joining the Dow Jones Industrial average. Exiting is Ma Bell, who joined the index in 1939.

FHFA Chairman Mel Watt spoke at the Goldman Sachs Housing Finance Conference yesterday. Here are his prepared remarks. Main points, FHFA is going to sell non-performing loans to the public, progress continues on a single security for Fannie and Freddie loans. Eligibility for HARP will not be expanded.

Mark Cuban weighs in on technology companies and why he thinks there is a bubble that is worse than the 2000s.

20 Responses

  1. Frist in line!

    Why is Ma Bell leaving the Dow?

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  2. Krugman makes the case for the nanny state that he denies he’s making.

    This is bullshit:

    “Nobody is proposing a ban on pizza, or indeed any limitation on what informed adults should be allowed to eat.”

    Someone needs to remind him of Michael Bloomberg.

    http://www.nytimes.com/2015/03/06/opinion/paul-krugman-pepperoni-turns-partisan.html?ref=opinion

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  3. His real argument, though, is that conservatives are fat.

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  4. Because Apple is going in, and Apple is more representative of the economy today than AT&T is anymore.

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  5. damn people want to eat what they want in spite of what their betters tell them.

    and those anti science, anti reason, anti good things republicans enable them…

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  6. And it’s shocking how “Big Pizza” would consider this a partisan issue after being targeted by Democrats.

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  7. Drudge says Senator Menendez is going to be indicted.

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    • George, Menendez has been skating on thin ice for years. When I was in HS in northeast NJ in the very industrial city where the Sopranos was conceived, we were Rs because the Ds were controlled by the mob. However, Abscam, almost twenty years later when I was firmly a Texan, showed us that in NJ the mob owned just about everyone in both parties. This has proven true in northern IL and southern LA as well, over time. Oh, it was so simple when Rs were the party of clean gummint. Menendez – just following in tradition.

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  8. Great answer to Krugman and the rest of the food Nazis by Julia Child:

    ”Everybody is overreacting,” Mrs. Child said. ”If fear of food continues, it will be the death of gastronomy in the United States. Fortunately, the French don’t suffer from the same hysteria we do.” ”We should enjoy food and have fun,” Mrs. Child insisted. ”It is one of the simplest and nicest pleasures in life.”

    Mrs. Child recalled that when she began her mission of bringing French cooking into American kitchens nearly 30 years ago, ”no one cared” about what food might do to one’s health. ”Those were halcyon days,” she said. ”You could eat anything you wanted. I remember a wonderful recipe for spinach. You put in as much butter as the spinach could possibly hold.”

    No more. Today, nutrition has ”reared its ugly head,” she said, and cholesterol has ”become a trendy word.” People are so fearful of what they eat, Mrs. Child observed, ”they are no longer enjoying food the way they once did, and the dinner table is becoming a trap rather than a pleasure.”

    http://www.nytimes.com/1990/06/20/garden/julia-child-boiling-answers-her-critics.html/blockquote>

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  9. Why we’re fucked.

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    • Good article on how the media covers scandals, and how the Hillary/e-mail problem will probably play out:

      Halperin is right, of course. The Clintons will doubtlessly wait it out because, 1 – the Clintons are always being hassled. Mostly for no good reason. Mostly by crazy people. 2 – because it’s easier to make fun of Republicans who come off clumsy and angry. 3 – because there is no legitimate or obvious Democratic challenger to take Hillary’s place. (You can already read stories about how the timing of this might actually work for Hillary.)

      Moreover, when a Democrat is implicated, journalists are compelled to spend a lot of their time examining how the damning evidence was uncovered and how those who uncovered it act after the scandal breaks. When all these stories are exhausted, journalists will start asking why America cares anymore. And when conservatives continue to press, we’re going to hear about how bitter and partisan Washington has become. The scandal will be throw in into a crockpot with all the scandals that went nowhere. The media will start wondering why Republicans insist on tearing this country apart, rather than why so many of them don’t do their jobs.

      http://thefederalist.com/2015/03/06/unifying-theory-of-media-scandal-coverage-its-always-the-republicans-fault/

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      • An excellent point….political/media scandals, whether on the left or the right, tend to confirm a conservative world view and oppose the liberal world view.

        Call this the O’Reilly Disequilibrium. When someone on the left is caught in a scandal, it is proof that power corrupts and therefore that no one should be given too much of it. When someone on the right is caught, it’s proof of the same thing. So a Bill O’Reilly scandal doesn’t cancel out the message of a Brian Williams scandal. It amplifies it.

        That’s why it doesn’t fundamentally disturb me if Bill O’Reilly is embellishing his journalistic exploits. And when the left complains that we’re not taking it seriously enough, I will reply that we take it far more seriously than they do. We have taken the human capacity for dishonesty, corruption, and abuse of power so seriously that we want to make sure our whole political system is built around it.

        http://thefederalist.com/2015/03/06/why-bill-oreilly-doesnt-cancel-out-brian-williams/

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        • From my viewpoint, the HRC email thing is bad. I also think Rs would be wise to continue the inquiry about it, quietly asking “why?” again and again rather than supplying speculation about it. It is thoroughly unexplainable as an innocent endeavor so keeping it alive by questioning would be far more effective far longer than speculatively supplying answers, that inevitably make it seem like a partisan attack, more easily dismissed by non-Rs.

          Simply repeating the known facts and the obvious security issues will continually call her judgment into question.

          Oh, well, nobody cares what I think, even when I am correct.

          Now my advice to Ds is to stop acting like HRC is “inevitable” or the “only choice”. Start featuring some from among the many senators, congressmen, governors, and general officers who are at least as capable and likable as HRC. This is a mindset problem, only – not a reality – that HRC is somehow the Annointed One.

          They won’t pay any attention to me either.

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        • Mark:

          I also think Rs would be wise to continue the inquiry about it, quietly asking “why?” again and again rather than supplying speculation about it.

          I don’t think it matters much what the Rs do. How this effects Hillary/the election will most likely be determined by the narrative established by the media. Either it is a legitimate scandal that Hillary must answer for, or it is just a bunch of partisan, hypocritical bickering by those opposed to her. I predict the media largely dismisses it as the latter.

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  10. The ONLY thing we have on our side is that the press hates this kind of shit. They hate it when officials play hide the ball with FOIA inquiries.

    But other than that, journalists are infatuated with the idea of the first Democratic woman president and that will undoubtedly matter the most in the end. They will circle the wagons for her.

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  11. @Brent: Well, some of the press will. Some really don’t like Hillary, and would much prefer Warren, and until Warren says there’s no way in hell she’s running, they will likely continue to hound Hillary under the assumption another great Democratic hope, probably Warren, is there to take the mantle.

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  12. @ScottC: “I predict the media largely dismisses it as the latter.”

    Part of that is timing, if this is the only scandal to erupt (seems unlikely), as, right now, many in the MSM and the left-leaning pundit arena are treating it seriously (timing being one reason, is there is lots of time to bury it, if that becomes necessary). But I predict investigation and how hard it is pursued depends on several factors. The primary one being the interest of the audience, which given that most left-leaning pundits and MSM-consumers are Democrats, may not sustain. Secondary but very important is how successful are the Republicans at fielding a compelling candidate, and what other options are the Democrats able to come up with.

    There is a certain logic to approaching Emailgate with a certain detached verisimilitude of objectivity and critical thought, as it provides a reasonable counterpoint to: why isn’t the MSM trying to nail Warren on her fabricated Native American heritage claim, or whatever else? And why are they going so hard against whatever scandal has tainted the Republican front-runner(s)? Well, it’s certainly not bias: don’t you remember the hard questions they kept posing for HRC in their daily columns?

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    • There is a certain logic to approaching Emailgate with a certain detached verisimilitude of objectivity and critical thought

      EXACTLY.

      Scott, the press are lemmings. They think HRC is INEVITABLE. But they thought that in 2007. Events change Media focus and message in a matter of weeks. They are not leaders; they are noise machines.

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      • Mark:

        They are not leaders; they are noise machines.

        I think the more relevant question is: Are they agenda setters? And the answer is, yes, quite often they are.

        There are, of course, occasions when a particular story grabs and sustains the attention of the wider populace despite the MSM’s lack of interest or even active attempt to bury it. The internet and new age media have been helpful on this front, and perhaps this will be one. But I think it is a mistake to dismiss as insignificant the MSM’s ability to set and influence the terms of political debate by choosing which stories to cover and how they get covered.

        Like

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