Morning Report – ADP Employment misses 4/1/15

Stocks are lower this morning after the ADP jobs data came in light. Bonds and MBS are up.

Construction spending fell by .1% in February and January was revised down by 1.7%. Residential construction continues to lag the economy, however office construction is picking up. Surprising since vacancy rates are still somewhat elevated.

The ISM Manufacturing Index fell to 51.5 in March, showing some of the slowdown is not simply weather-related.

Payrolls increased by 189k in March, according to ADP. The Street is currently predicting that Friday’s jobs report will show an increase of 245k. Note that the government will be open on Good Friday however the stock markets will be closed and bonds will have an early close. We could see some volatility in bonds if the payroll data is unusually weak or wage inflation in unusually high.

It looks like the dumb money is piling into the Chinese stock market, and much of it is leveraged. This was after the government started telling people that stocks were cheap. The government already has problems with an over-built real estate market and is pulling policy levers to support prices. Historically governments have never been able to manage the deflation of asset prices in an orderly manner, and it is unlikely the Chinese government will be able to either. Their banking system is already on shaky ground. What that means for the US is unclear. We should see Chinese money exit the luxury real estate market in the US, but what happens to Treasuries is anyone’s guess.

Student loan debt is a big problem for the first time homebuyer, as everyone knows. At the same time, there is a movement to begin debt strikes, where students refuse to pay back their loans. At the moment, it is limited to the failing private for-profit universities, however if this gains traction, it could spread. The left, led by Elizabeth Warren, has been egging this on a bit, but they are playing with fire. The government backs these loans and will have to eat the losses if this movement grows.

46 Responses

  1. Aren’t the student loan strikes being predicated on the idea that the for-profit colleges broke the law or something, so the debt should be absolved?

    And Frist!

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  2. Yes, but the question is whether it will spread. Of course no one on the left is asking whether the subsidies that are intended for students are ending up in university empire-building and real estate speculation.

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    • Brent – isn’t Kaplan the money pot for the WaPo? I think there are critics left and right of the for profit college model when it is used as a scam. But not the WaPo, AFAIK.

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  3. Scott, you aren’t the only one who sees it:

    “Democracy in America is dead, according to Silicon Valley investor Peter Thiel.

    No, not in the anthropological, Alexander-de-Toqueville sense. The PayPal co-founder means it literally.

    “It’s not clear we’re living in anything resembling a democracy,” he told a crowd Tuesday at George Mason University. “We’re living in a republic that’s modified by a judicial system, that’s been largely superseded by these agencies that drive the decision-making.”

    “Calling our society a democracy is very misleading,” Thiel went on. “We’re not a republic; we’re not a constitutional republic. We live in a state that’s dominated by these technocratic agencies.””

    http://www.washingtonpost.com/blogs/the-switch/wp/2015/04/01/why-paypal-co-founder-peter-thiel-thinks-the-american-democracy-is-dead/?tid=trending_strip_5

    That’s pretty much dead on.

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    • jnc:

      Scott, you aren’t the only one who sees it:

      Unfortunately there aren’t enough of us to make a difference.

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  4. Awesome:

    “Colorado Lawmakers Scramble to Keep Millions in Marijuana Taxes
    By JACK HEALY
    APRIL 1, 2015

    DENVER — In the State Capitol, they are calling it Refund Madness.

    A year after Colorado became the first state to allow recreational marijuana sales, millions of tax dollars are rolling in, dedicated to funding school construction, marijuana education campaigns and armies of marijuana inspectors and regulators. But a legal snarl may force the state to hand that money back to marijuana consumers, growers and the public — and lawmakers do not want to.

    The problem is a strict anti-spending provision in the state Constitution that touches every corner of public life, like school funding, state health care, local libraries and road repairs. Technical tripwires in that voter-approved provision, known as the Taxpayer’s Bill of Rights, may require Colorado to refund nearly $60 million in marijuana taxes.

    Lawmakers are scrambling to figure out a way to keep that money, and they are hoping Colorado voters — usually stingy when it comes to taxes and spending — will let them. In rare bipartisan agreement on taxes, legislators are piecing together a bill that would seek voters’ permission to hold on to the marijuana money.”

    http://www.nytimes.com/2015/04/02/us/colorado-lawmakers-scramble-to-keep-millions-in-marijuana-taxes.html?_r=0

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  5. @jnc4p: ““It’s not clear we’re living in anything resembling a democracy”

    It’s always been a representative republic. That’s how it was founded!

    That being said, the quality of representatives may have been lacking for the past 250 years. Once they gave to the vote to non-land owners, it was all downhill.

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  6. I’m probably the last one…

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  7. I’m probably closest to briefly tempting . . . except he says nothing about cutting taxes. 😉

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  8. Also, a few of them are universals, so probably shouldn’t be included a list of “libertarian”. Arrogance known no ideology, and in my personal, completely anecdotal experience, I’ve met far more arrogant liberals and lefties than of any other kind (though I have encountered arrogant folks of every ideological stripe).

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    • KW:

      Also, a few of them are universals, so probably shouldn’t be included a list of “libertarian”.

      Listing types of X does not imply that only X can be of that type. Distinguishing green apples from red apples doesn’t imply that there are no other green or red fruits.

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  9. The left wing version of The Apostle would need to exchange “market” for “government”, but I’ve certainly encountered plenty of them. 😉

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  10. I could also be considered the “Too Much Heinlein” sort, with the caveat that the notion of there being “too much” Heinlein is absurd. Simply is not possible to have too much Heinlein.

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  11. Fair enough. But “Arrogant” is so common amongst humanity, that’s it’s like including a category of “Clothes Wearing Libertarian”. 😉

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  12. Probably “The Island”.

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    • I see that Pence and the Indiana legislature caved. The left is just a bunch of bullies, and the right is a bunch of moral cowards. Very depressing state of affairs.

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  13. @ScottC1: “I still don’t think you get it.”

    “It” is such am ambiguous reference that I would need more information to determine whether or not I actually get “it”. I’m giving it some though (I’ve got a migraine right now so that’s sluggish) but I’m thinking that if the “it” is that the cartoonist believes arrogance is the sole purview of libertarians, and thus that is the point, maybe I don’t. Or if the “it” is that it is not a serious list of classifications, but a joke, then I think I get that but I’m just too pedantic.

    Or, if the it is . . . crap, I had as I typed the “or” and then lost it. Oh, that it’s merely an adjective in this case, and it’s like I’m complaining about the use of modifiers, then . . . fair enough. I think you’re right. I retract my original objection.

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  14. Rolling Stone retracts it’s UVA story.

    http://www.rollingstone.com/culture/features/a-rape-on-campus-what-went-wrong-20150405

    However, no one resigns or is fired over it.

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  15. facts, schmacts. it is the narrative that matters.

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  16. So, does this hurt or help Matt Taibbi’s credibility that he continues to work at Rolling Stone?

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  17. Erdely said she was searching for a single, emblematic college rape case that would show “what it’s like to be on campus now … where not only is rape so prevalent but also that there’s this pervasive culture of sexual harassment/rape culture,” according to Erdely’s notes of the conversation.”

    and there’s your problem.

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    • This article gets so close to the right answer:

      http://www.nytimes.com/2015/04/05/opinion/sunday/the-real-reason-college-tuition-costs-so-much.html?_r=1

      BOULDER, Colo. — ONCE upon a time in America, baby boomers paid for college with the money they made from their summer jobs. Then, over the course of the next few decades, public funding for higher education was slashed. These radical cuts forced universities to raise tuition year after year, which in turn forced the millennial generation to take on crushing educational debt loads, and everyone lived unhappily ever after.

      This is the story college administrators like to tell when they’re asked to explain why, over the past 35 years, college tuition at public universities has nearly quadrupled, to $9,139 in 2014 dollars. It is a fairy tale in the worst sense, in that it is not merely false, but rather almost the inverse of the truth.

      But in the end it just can’t bring itself to say explicitly what it implies above: the dramatic increase in college tuition prices has been caused by too much, not too little, spending going into higher education.

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  18. i’ve been pitching universities for federal lobbying work. with earmarks gone, they don’t know what to do. and there’s $$ there. might was well diversify a bit. and after health care, education seems to be a good target.

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  19. Shot:

    Chaser:

    Btw, it’s “Fauxahontas”.

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  20. I’m partial to “Liawatha” myself

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  21. “Does the author of this article believe Jackie? If so, why?”

    Because even if she made it all up, she’s still the “victim”.

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  22. What do we think of this?

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    • What do we think of this?

      George, many times in the comments view, which is the way I read the blog when I ck in late in the day, whatever you have linked to doesn’t appear.
      This time there was no link in any view.

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  23. Sorry,forgot to add it and now can’t find it.

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  24. @gbowden41: “Does the author of this article believe Jackie? If so, why?”

    Yes, because she’s predisposed to believe Jackie, and it was exactly the story she wanted to tell, so she didn’t want to be skeptical. People have an amazing ability to believe the dubious when they really want to believe.

    That, and rape and date-rape is bad and does happen, so it seems entirely credible to a woman who wants to report on it when she hears the story.

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  25. So, if she believes Jackie then wouldnt it be bad for RS to even attempt to corroborate Jackie?

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  26. @jnc4p: “The parsing here is hilarious.”

    At first, it seems reasonable, because the context is obviously not racist. It’s using a word that is a terrible racial slur for some in every age group, but especially people who are in their 30s or 40s or 50s.

    To the 20-and-younger group, it simply has another meaning. It’s an urban-slang update of “dude”. Sort of a place where “guy” would be too nice and “a$$hole” would be too strong. But can also be used as a substitute for “a$$hole”, so it’s flexible. It is universally spelled in text messages and liner notes with an “a” at the end instead of an “er”.

    He begins to lose it in the parsing here:

    “If someone finds it a burden that white people cannot use “the n-word” without inciting anger, they operate from within a bubble filled with entitlement, privilege and delusion about what real racial burdens in America look like. It’s exhausting to have to repeatedly explain something that ought to be so easy to understand. The fact that we continue to have this debate, over whether black people should be able to repurpose a slur that is not their own invention”

    What language gives to one, language gives to all. You can explain the context all you want to a white, urban caucasian teen (and most modern suburban caucasian teens who grow up steeped in urban culture: thanks, Obama!) and be oh so tired of it, and it doesn’t frickin’ matter. To them, the word is “dude”, and equally applicable to black people and white people and people of other races. That’s where the language is going. To say: “well, that’s not allowed, because of slavery” is just dumb. You aren’t going to stop it.

    “or the racist systems that lead to disproportionate poverty and criminalization of black men and women in our country?”

    Well, thank goodness that’s been fixed by affirmative action and entitlements! War on poverty: mission accomplished!

    “We are quick to jump on racist words, but remain wilfully blind to racist systems.”

    Because on the mainstream media and college classes and popular artists and entertainers and almost everybody is constantly talking about those racist systems, so nobody knows they exist. That’s not even parsing, that just, ahem, willful blindness.

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    • I am tempted to rely on my own experiences in City League hoops when discussing the various usages for the n word. my last year was 1984. Then, in the informal context, the word was usually a slur, but could be used as a backhanded compliment, as it was by Harrison for Kaminski, a white dude. I have no idea what one can get away with now. I was never comfortable with the word and avoided it. I could do some stuff and get away with it – Madison Holloway, a 6’6″ teammate of mine of the darker persuasion, liked to shoot from a corner of the gym we practiced in that was dark in the early evening, and I would yell “Holloway’s alone in the shadow” as if he was getting loose for a corner jumper by deceit. That was about it for me. I do not like that n word.

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  27. @gbowden41: “So, if she believes Jackie then wouldnt it be bad for RS to even attempt to corroborate Jackie?”

    I think that’s Erdely’s position. RS should have known better. Apparently they never watched Shattered Glass.

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  28. @Markinaustin: “hat was about it for me. I do not like that n word.”

    Neither do I. I used to once in 4th grade because a boy was being mean to me, and I knew it was supposed to be hurtful, so I said it. My very liberal, very lesbian, very sweet 4th grade teacher hauled back her hand and was trembling with rage and was about to take my head off. And I loved that teacher; she was a better mother than my mother was, and I was so devastated by her anger and threatened violence that I never, ever, ever used that word again. I used to have some African-American friends where I’d say things like “I’m gonna start a company and you’ll be my token black employee” and other things like that that, in retrospect, I did not mean ill but I think I should not have said. One guy I’m pretty sure didn’t care but the other one, in retrospect, I think thought of me as “poor entitled white dude who just doesn’t know any better so he confuses stupid with funny”.

    But my daughter uses that word frequently as a term of endearment for friends of both races and for her boyfriend (who is black, which is fine, and is clearly a sociopath, which is not, so I worry about everything she does in relation to him, but my daughter regards me as a moron with nothing useful to say about anything an no relevance to her life outside of my role as a wallet . . . so I’m hoping I do better with the younger one, but boy do I digress). Point being, it’s very common in her age group to use the word as once folks used the word “buddy”, “pal”, or “dude”. I ain’t going to do it. But it’s a weird evolution of the term. I live in a very urban area with a 50% black population, and there’s a lot of intermingling, so that may have something to do with it.

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