Morning Report – More evidence of tightening in the labor market 3/10/15

Markets are lower this morning as commodities fall and the dollar climbs. Bonds and MBS are up as the German Bund hits new highs, with a yield of 26 basis points. German Bund yields are negative through 7 years, as the ECB buys the 5 year at a negative yield.

The continuing rally in European bonds will probably support the US 10 year as global bond managers unload Bunds to the ECB and buy Treasuries instead. The caveat is that inflation has to remain nowhere to be found in the US. Yesterday, Cleveland Fed President Loretta Mester sounded hawkish, saying that at 5.5% unemployment we are close to meeting the Fed’s full employment mandate. Of course this assumes that the current labor force participation rate of 62.8% is the new normal. Color me skeptical – I think a lot of these people who are out of the labor force want to work and will choose to if given the opportunity. This will keep a lid on wage growth.

Job Openings remained around 5 million, according to the JOLTs job report. We are back to early 2001 levels. Hires decreased to 5 million and separations were unch’d at 4.8 million. The quit rate was unchanged at 2%.

Small business optimism rose a hair in February, according to the NFIB to 98 which has been the long-term average of the index, including the Great Recession. It is the third highest reading since 2007. We are seeing more evidence of labor shortages, however, with 53% of the respondents trying to hire, but 47% reported few or no qualified applicants. 29% of all owners reported job openings they cannot fill, which is the highest reading since early 2006. That said, sales fell, which could have been weather-related. 60% reported increased capital expenditures, which is the strongest reading since Oct 2007. Inflation remains nowhere to be found, and it looks like business owners are unable to raise prices.

CFPB Director Richard Cordray appeared before the House yesterday to discuss QM, payday lending, and overdraft protection. The discussion fell along usual partisan lines, with Democrats pushing for more consumer protection, and Republicans worried about limiting consumer choice.

Foreclosures continue to fall, according to CoreLogic. They were down 14.7% month over month and 22% year over year. The seriously delinquent rate of 4% is the lowest since June of 2008. Foreclosure inventory is 549k, down 33% from a year ago.

22 Responses

  1. Frist Interviews Nixon.

    Should have happened.

    Like

  2. Speaking of tight labor markets, this is worth a note:

    “As Demand for Welders Resurges, Community Colleges Offer Classes

    By PATRICIA COHENMARCH 10, 2015”

    http://www.nytimes.com/2015/03/11/business/economy/as-demand-for-welders-resurges-community-colleges-offer-classes.html

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  3. Brent, from the WSJ piece you linked on student debt in PL is misleading. It’s not on par with credit card debt and mortgages. Primary residence mortgages can’t be crammed down and while you can discharge the debt, you don’t get to keep the asset if you do so.

    All in all, primary residence mortgages are more like how student loans are currently treated than credit card debt.

    http://www.wsj.com/articles/white-house-studying-new-bankruptcy-options-for-student-loan-borrowers-1426004272

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  4. I think student loan debt and back taxes are the only things you can’t discharge through bankruptcy. This might be an attempt to change it for student loan debt.

    The question of course is who eats the loss?

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  5. OT (actually, OATiM) @brentnyitray:

    MSMEM?

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  6. mainstream media ex murdoch

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    • Twilight Zone time.

      Last year I linked to a story about how Disney World’s generous policy towards disabled people was being abused by some of those disabled people, who were profiting by selling the special jump-the-line access that Disney afforded them due to their handicap. So, in order to stop the abuse, Disney altered its policy. And as anyone familiar with our f-ed up culture might have guessed, it got sued for doing so. And today…..

      Parents of the kids sued the entertainment giant after Disney replaced an abuse-prone guest pass program that let disabled guests move to the front of the line,the Orlando Sentinel reported.

      The suits alleged the new system, which lets disabled guests make appointments, doesn’t work for people who have autism, because they don’t have the patience to wait.

      The Florida Commission on Human Rights recently sided with the first five of 27 plaintiffs, according to the Sentinel.

      “The accommodations offered would not allow (the child) to enjoy the park as it was intended to be enjoyed by all other patrons,” the commission wrote.

      You really can’t make this stuff up.

      http://www.nydailynews.com/news/national/walt-disney-parks-discriminate-disabled-kids-report-article-1.2143459

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  7. Brent what will be interesting will be if the educational institutions start to revoke the degrees being granted if they aren’t paid.

    Or, what’s probably more relevant will be whether or not a lender can put a lien on the degree.

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    • jnc:

      Or, what’s probably more relevant will be whether or not a lender can put a lien on the degree.

      What use would it be? I know why a lien on real property works to compel payment of a debt, But one doesn’t realize the value of a degree through the sale of it. The value of a degree cannot be transferred to anyone outside of the person who earned it. So how would the lien do anything to compel payment of the debt?

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  8. They can’t claim to hold the degree when applying for a job. Universities withhold the granting of diplomas currently over fee issues. This would extend that to the lien holder.

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    • jnc:

      They can’t claim to hold the degree when applying for a job. Universities withhold the granting of diplomas currently over fee issues.

      Sure, but once it is granted they can’t take it back just because of subsequent events. I don’t know how the law can possibly stop a person from honestly claiming to have graduated from Harvard just because they aren’t current on their student loan.

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  9. Anybody watch the presser? Thoughts?

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    • McWing:

      Anybody watch the presser? Thoughts

      I watched it. Classic non-answers. And most of the reporters should be ashamed of themselves for the softballs.

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  10. Like

  11. Like

  12. @markinaustin: That picture. It’s worth a thousand words. It looks like the evil sorceress Hil’arie is about to throw a curse at the knights gallant riding in to save the kingdom. 😉

    @ScottC1: “And most of the reporters should be ashamed of themselves for the softballs.”

    Is there ever a time that hasn’t been true between the media and democrats? Especially during election season?

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  13. I’m guessing the media isn’t busy digging through Hillary’s trash. And her neighbors.

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  14. “Sure, but once it is granted they can’t take it back just because of subsequent events. ”

    Yes they can. Degrees can be revoked. Usually it’s because of evidence of plagiarism or something similar.

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    • jnc:

      Yes they can. Degrees can be revoked. Usually it’s because of evidence of plagiarism or something similar.

      Well it would be interesting to see if they could/would do so for actions unrelated to academics or the university itself. If so, I wonder why they don’t already do it for other types of disapproved post-graduation behavior, like for instance crimes committed later in life.

      And I still wonder what additional compelling effect it would have on someone to make good on their debt. It could only effect their employment prospects, and any employer who cares whether or not a prospective employee is a deadbeat can already do a credit check to find out.

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  15. “I watched it. Classic non-answers. And most of the reporters should be ashamed of themselves for the softballs.”

    The question I would have loved to see asked would be did she consider E-mails regarding the Clinton foundation or that involved foreign donors as “personal” and thus they were not turned over and may have been deleted?

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  16. Premise being that jobs that require degrees for specific positions will be the motivation.

    Like

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