Morning Report – FOMC minutes review 5/9/15

Stocks are lower this morning as the ECB raises aid to Greece. Bonds and MBS are flat.

The FOMC minutes really didn’t have much new information in it and bonds ignored the release for the most part. The decision to remove the word “patient” was not intended to signal that a raise is imminent, just that they will continue to be data-dependent. The strong dollar is beginning to have an effect on the economy, or at least the big multinationals. The stronger dollar is what drove them to revise their near-term GDP forecasts down.

They didn’t discuss housing much except to say that the pace of activity was “slow” and noting the decrease in starts. FWIW, the homebuilders seem to be seeing a bit brighter picture. We’ll get a better idea when D.R. Horton and Pulte report in a couple of weeks. Regarding credit, they said that credit conditions were pretty much easy for everything but mortgages, where credit remains tight. For borrowers who can qualify, rates are low.

Alcoa kicked off earnings season last night with a miss on the top line as demand for aluminum is expected to grow at 6.5% in 2015 compared to 9% last year. They see a glut lasting through 2015. Interestingly, Alcoa continues to shutter production while China increases output. They already have tremendous overcapacity in steel, and are contending with a deflating real estate bubble.

Initial Jobless Claims came in at 281k, more or less in line with expectations. The Bloomberg Consumer Comfort Index rose to 47.9. Wholesale inventories rose while sales fell in February.

Consumers are getting a little more bullish on housing, according to the Fannie Mae National Housing Survey. They expect home prices to rise 2.7% over the next 12 months. Last February had a blip where more people thought the economy was on the right track than the wrong track, but it has reverted back to normalcy.

26 Responses

  1. Like

  2. he meant well, bagger and that is all that matters.

    Like

  3. its the arrogance that really gets to me. the idea that with the right policy or action, we can mold the world.

    Like

  4. And of course NoVA, the policy only applies to those people.

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  5. Also, Ehrlich’s predictions in The Population Bomb were universally incorrect. Famine, drought and cannibalism was what he was forecasting for the 1980s. There’s more food than ever. But forecasts by generalists always tend to be terrible. As with most science fiction authors.

    The models for climate change have been very poor and, although shrouded in scientific analysis, ultimately made up. There is no way to model the millions of inputs that affect client, and very easy to bend the major inputs the wrong way. There is a first time for everything, of course, but we cannot predict what will happen with even simple multi factor systems. Which is why it’s a terrible idea to take actions and set policy based on what we imagine may happen and better, in cases of global scope, to address problems as the arise in specific locales. I doubt we’ll actually let New York end up underwater.

    Not to mention, geologic history is full of major climate change. Assume we stop producing pollution and the climate changes anyway . . . what are we going to do then?

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  6. The issue with all of these “population bomb” analyses is that they extrapolate the growth of emerging countries. As countries go from third world to first world, infant mortality drops dramatically. However as infant mortality drops, people have smaller families. But there is a lag between the two.

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    • Brent:

      The issue with all of these “population bomb” analyses is that they extrapolate the growth of emerging countries.

      I think an even bigger issue is that they are premised on the notion that each new human being represents a liability to existing society rather than an asset.

      Like

    • McWing:

      Would never happen here.

      If contraception is to be a “covered” item, why not toothpaste? Toothpaste is a bigger health necessity for far more people than is an IUD.

      Like

  7. “Toothpaste is a bigger health necessity for far more people than is an IUD.”

    Why do you hate women, bagger?

    Like

  8. What’s funny is the Ehrlich article is dated from ’69. I was forced to read that turd biscuit in college.

    In the ’80’s.

    Because the AP thought it was legitimate.

    In the ’80’s!!!

    Like

  9. @gbowden41: Certainly, by the 80s, the evidence of humanity descending into famine-and-drought driven cannibalism was everywhere. Didn’t you see it?

    @ScottC1: “I think an even bigger issue is that they are premised on the notion that each new human being represents a liability to existing society rather than an asset.”

    This. Exactly. It’s a zero-sum game, there’s only so much of everything, so each new person is another mouth to feed, takes up another parcel of real estate, takes up more of our money (and there’s is only so much of it, as wealth is not created, merely stolen from the workers and hoarded by the wealthy) and creates another person’s worth of pollution. Humanity is a disease, and will ultimately lead to death of the planet if not unchecked.

    But there is a problem that is common with global prognosticators that applies to AGW or climate change as much today as it did and does to The Population Bomb (in addition to the obvious: that the continuing liability of humanity is destroying the planet, and this is a much better thought out and scientifically rationalized account of how this is happening than previous ones) in that predicting outcomes in complex systems is simply not possible for us at this time. Big things that are controlled almost entirely by big laws, like celestial mechanics, we’ve got down. What’s going to happen with growing populations . . . not so much, because everything from technological innovation to disease to social mores to government edicts to popular entertainment have an effect, and things like technological innovation can effect it in not just a few but in millions of ways. AGW is affected first and foremost, IMHO, an intractable problem: our planet’s own variable climate. Which simply cannot be separated from whatever effect humans are or are not having on global climate. Plausible explanations can be offered after the fact, as to what climatological variation made their models invalid, but rarely seemed to be accurately predicted before occurring. Which is why setting policy (or doing anything) based on insanely simplified models of hugely complex systems is crazy. Not unlike a farmer determining their planting for the season based on an almanac. 😉

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  10. @Scottc1: “If contraception is to be a “covered” item, why not toothpaste? Toothpaste is a bigger health necessity for far more people than is an IUD.”

    I suspect you detected the ironic in that. 😉 Of course toothpaste will be covered here. And suncream. And antacid. And everything that can be turned into a prescription or by some OTC extension for health insurance.

    Recently had someone tell me all other nations healthcare is way cheaper than the US, with better results. I shrugged at that, as it seems credible: we’ve introduced 3rd party payers long ago and turned health insurance into health-pay-for-everything, so it seems plausible. This certainly doesn’t seem to work much better to me than single-payer. But I’m not sure how that can be the case with the NHS paying for toothpaste and suncream, even of the ostensibly prescription variety.

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    • KW:

      Recently had someone tell me all other nations healthcare is way cheaper than the US, with better results.

      How is “better results” measured?

      Two people need a hip replacement. One person waits 6 months to get it and pays X. The other person waits 2 weeks and pays 2X. Which result is “better”?

      Like

  11. @brentnyitray: “Why do you hate women, bagger?”

    Have you met one? 😉

    Like

  12. The dude who goes to India / Costa Rica and gets it done?

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  13. I’m pretty sure Brent has met women. Hell, he might have even bagged one or two, IYKWIMAITYD!

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  14. @Scottc1: “Two people need a hip replacement. One person waits 6 months to get it and pays X. The other person waits 2 weeks and pays 2X. Which result is “better”?”

    I’m also assured that the ACA has saved 50,000 lives since it’s implementation. The measurement is very scientific. 😉

    Science!

    I assume better results would be customer satisfaction surveys (?) and longevity in other countries vs. the US. I question those numbers, anyway, as there are lies, damned lies, and statistics. I think if you were able to really dig into the numbers, you would find healthcare results globally are very similar. We can extend life at the fringes with advanced healthcare in treating rarer diseases that otherwise would be fatal, otherwise past vaccines and antibiotics, it’s mostly nutrition and physical activity that ultimately impacts medical longevity.

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  15. @gbowden41: “I’m pretty sure Brent has met women. Hell, he might have even bagged one or two, IYKWIMAITYD!”

    Sheesh, that’s a long one. Well, I dunno about you, but my experience with women has been TANSTAAFL. Also, they’re angry a lot. Maybe that’s just me.

    Like

  16. My hope is pinned on a ranch in Colorado where they are teaching sheep to cook.

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  17. This seems weird:

    Given this:

    https://www.americanprogress.org/issues/immigration/report/2014/10/23/59040/the-facts-on-immigration-today-3/

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  18. Have you met one? 😉

    There used to be a few around here. Don’t know why they don’t come around more often.

    Like

    • yello:

      There used to be a few around here. Don’t know why they don’t come around more often.

      Because Kevin is a misogynist, obviously.

      Like

  19. The issue with all of these “population bomb” analyses is that they extrapolate the growth of emerging countries.

    Malthusian doomsday predictions have proven false for centuries. They do no better than street corner preachers proclaiming the impending apocalypse. My current prediction for peak human population is 12 billion in 2100. Don’t know if I’ll be around to collect that bet.

    Like

  20. *not rising to the bait*

    Like

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