Morning Report – Pending Home Sales hit a 9 year high 5/28/15

Stocks are lower this morning on overseas weakness. Bonds and MBS are flat.

Pending Home Sales rose 3.4% in April, and reached their highest level in 9 years, according to the NAR. Good news for originators focused on the purchase business. After a weak start to the year, sales in the Northeast and the Midwest picked up smartly. Sales in the West were almost flat. NAR expects to see existing home sales come in at 5.24 million in 2015, and the median house price to rise 6.7%. This is ALL inventory-driven, and these increases are vulnerable if wage inflation doesn’t pick up soon. The ratio of the median house price to median income has topped 4x and is already well above its historical norm of 3.15x – 3.55x. At the height of the bubble, the ratio hit 4.8x.

Initial Jobless Claims came in at 282k, the 12th straight week below 300k. A 300k level in initial jobless claims is usually associated with strong economies. People who have jobs are definitely not losing them, however the long-term unemployed and the involuntarily employed part-time are still trying to return. I still think you won’t see meaningful moves out of the Fed until we start seeing wage inflation, and that has been slow to materialize.

The Bloomberg Consumer Comfort Index fell to 40.9 from 42.4 in the prior week. This is a 5 month low. The view of the state of the economy has fallen markedly over the past 5 weeks, however people’s personal financial situation has not changed. Consumers are still more reluctant to spend money, which is a result of their perception of the economy. Note that we will get the second revision to GDP tomorrow, and the Street is forecasting that Q1 GDP contracted by 0.8%.

Debt talks with Greece appear to be going nowhere still. The ECB is worried about contagion if a deal is not reached quickly. “In the absence of a quick agreement on structural implementation needs, the risk of an upward adjustment of the risk premia demanded on vulnerable euro-area sovereigns could materialize,” the ECB said in its twice-yearly Financial Stability Review published Thursday in Frankfurt. What this means is that you could see the yields on the PIIGS (Portugal, Ireland, Italy, Greece, and Spain) go one direction, while yields on Northern European debt move the other way. That said, you have to put this in perspective. The US 10-year yields 2.14% and the dollar is strengthening. The Italian 10 year yields 1.85%. Spain yields 1.82%. Ireland 1.2%, Portugal 2.52%. All in the context of Euro weakness. The yields on PIIGS debt is being artificially held down by central bank activity, and the fear is that they could begin to reflect economic reality.

35 Responses

  1. My deceased neighbor’s house sold after less than a week on the market. I have no idea at what price since the heirs might have just been eager to sell.

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    • McWing:

      Somewhat related to your question yesterday, and how the feds impose their will on states. Get them hooked on federal money and then threaten to pull it unless they get on their knees and perform. A new college is refusing to play along.

      http://thefederalist.com/2015/05/28/why-this-wyoming-college-decided-to-reject-federal-money/

      The worst is yet to come. This intensifying problem with Title IX enforcement provides a glimpse of the future. Although the government has not yet tied the proverbial strings between Title IX compliance to federal student loan and grant programs—governed by Title IV—the writing is on the wall.

      For that reason, at Wyoming Catholic College (WCC), we have chosen to forgo federal student loan and grant programs. As a relatively new college, we only recently earned the requisite accreditation status to be eligible for those Title IV funds. Although participating is enticing, the twin problems in higher education—the government’s social-engineering agenda and its creation of an artificial market of student loans—convinced us otherwise.

      Like a handful of other colleges, most notably Hillsdale College (Michigan) and Grove City College (Pennsylvania), we’ve taken a cue from William Buckley: looking at the landscape of American higher education, we’ve elected to “stand athwart history, yelling ‘Stop!’”

      By providing a closer look at the factors of our decision, I hope more Americans can understand the structural problems in American higher education. So doing will also answer a question that many have asked: Why has a small liberal arts college in the least-populated state in the Union captured such attention?

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      • From the linked NYT article on WCC:

        Curfews are set at 10:30 p.m. during the week. The dress code calls for businesslike attire and forbids men to walk around shirtless, but this being Wyoming, it does allow “dress jeans” in class. Couples are allowed to hold hands on campus and “an occasional hug,” but are advised not to be overly physical. And the college says it supports church teachings on marriage, which forbid premarital sex.

        Sounds like the kind of place the Duggars could safely send their kids.

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  2. Hilarious:

    “Los Angeles Unions Fought for a $15 Minimum Wage. Now They Want to Be Exempt
    By Jordan Weissmann ”

    http://www.slate.com/blogs/moneybox/2015/05/27/los_angeles_15_minimum_wage_labor_unions_want_to_be_exempt_from_it.html

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  3. So the gameplan is to make unions exempt so that business owners will be dumb enough to allow their workplace to unionize in hopes of escaping the $15 minimum?

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    • So the gameplan is to make unions exempt so that business owners will be dumb enough to allow their workplace to unionize in hopes of escaping the $15 minimum?

      WE NEED A RECOMMEND BUTTON!

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      • An excellent article from Kevin Williamson on the meaning of prices, why minimum wage laws are useless, and the economic ignorance of Bernie Sanders.

        http://www.nationalreview.com/article/418926/bernie-sanderss-dark-age-economics-kevin-d-williamson

        Money is a medium of exchange, and prices are a form of communication. What do prices communicate? How much we value certain things relative to other things. This is really helpful: Everything in the economy is in reality priced in terms of other things — everything is relative to everything else — and price tags would look like the Library of Congress if we had to list the price of an airline ticket in wheat, coffee, gold, Bitcoins, signed Andy Warhol prints, Hermès scarves, etc. The underlying hierarchy of relative preferences does not change if you go from U.S. dollars to Swiss francs; you can play with the means of exchange all you like, but you’ll never arrive at a place at which people value a No. 2 pencil (the miraculous No. 2 pencil!) as much as they do a Rolls Royce automobile.

        Right now, we are embroiled in a deeply, deeply stupid debate over whether to raise the statutory minimum wage to $15 an hour. (I write “statutory minimum wage” because the real minimum wage is always and everywhere $0.00 an hour, as any unemployed person can confirm for you.) Because everything in the economy is in reality priced relative to everything else, using the machinery of government to monkey around with the number of little green pieces of paper that attaches to an hour’s labor manning the register at 7-Eleven or taking orders at Burger King is, necessarily, an exercise in futility. The underlying hierarchy of values — the relative weighting between six months’ work washing dishes and six months’ tuition at the University of Texas — is not going to change. Prices in markets are not arbitrary — they are reflections of how real people actually value certain goods and services in the real world. Arbitrarily changing the dollar numbers attached to those preferences does not change the underlying reality any more than trimming Cleveland off a map of the United States actually makes Cleveland disappear.

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        • nova:

          Private school must be looking pretty good right now:

          http://thefederalist.com/2015/05/29/virginia-school-district-to-ditch-biology-for-sexual-fluidity/

          One of the nation’s largest, sharpest, and wealthiest school systems, Fairfax County, has announced a bright, new idea (to take effect in 2016) that will directly influence district students in grades seven through twelve. It’s not a faster way to learn math, a more creative way to write stories, or a better way to get into a college: It’s recommended changes to their family-life curriculum which include lessons on “sexual fluidity” and “spectrum,” the idea that there’s no such thing no such thing as 100 percent boys and 100 percent girls.

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        • the idea that there’s no such thing no such thing as 100 percent boys and 100 percent girls.

          One of the girls my son dated in high school now has a scruffy hipster beard and a male name on his LinkedIn accounts, so I would say this is a valuable lesson. The school system should be educating people about the world, not sheltering them from it.

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        • yello:

          One of the girls my son dated in high school now has a scruffy hipster beard and a male name on his LinkedIn accounts,

          The relevant question is whether or not she has a penis.

          The school system should be educating people about the world, not sheltering them from it.

          I couldn’t agree more! Sheltering confused and troubled kids from the facts of biology is not a good idea. Fostering such confusion in the entire student body is even worse.

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  4. Nice article how the Clinton Foundation, Media Matters, etc are one big incestuous family.

    http://www.politico.com/story/2015/05/clinton-foundation-sidney-blumenthal-salary-libya-118359.html

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    • Media Matters is a pretty obvious HRC shill. They are not above taking out press members on the left who express any sort of criticism of the Clinton’s. They’re tactics can be bullying.

      Like

  5. Love how she paid her henchman Sidney Blumenthal 10 grand a month for “unsolicited advice.”

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    • Interesting essay. I think the applications of the principle are widespread.

      http://denbeste.nu/cd_log_entries/2002/02/fog0000000350.shtml

      There’s been a lot of analysis of this, and it turns out that honesty isn’t the best policy. One guy decided to run a computer tournament; people were permitted to create algorithms in a synthetic language which would have the ability to keep track of previous exchanges and make a decision on each new exchange whether to be honest or to cheat. He challenged them to see who could come up with the one which did the best in a long series of matches against various opponents. It turned out that the best anyone could find, and the best anyone has ever found, was known as “Tit-for-tat”.

      On the first round, it plays fair. On each successive round, it does to the other guy what he did the last time.

      When Tit-for-tat plays against itself, it plays fair for the entire game and maximizes output. When it plays against anyone who tosses in some cheating, it punishes it by cheating back and reduces the other guys unfair winnings.

      No-one has ever found a way of defeating it.

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  6. Apparently mining Bernie Sanders early writings is just as amusing as doing so to Republicans.

    ““She fantasizes being raped by 3 men”: Bernie Sanders’s bizarre 1972 essay on gender

    Updated by Dylan Matthews on May 28, 2015, 4:20 p.m. ET”

    http://www.vox.com/2015/5/28/8682503/bernie-sanders-rape-fantasy

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    • jnc:

      Apparently mining Bernie Sanders early writings is just as amusing as doing so to Republicans.

      Bernie’s contribution to rape culture.

      Like

  7. You sure?

    I’d love him or her the same regardless. I caught him watching hentai at the age of 14 so I’m pretty sure what his orientation is. Otherwise I try not to think too much about his sex life. I’m not that eager for grandkids yet.

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    • yello:

      I’d love him or her the same regardless.

      That wasn’t the question.

      I caught him watching hentai at the age of 14 so I’m pretty sure what his orientation is.

      Are you behind the curve or what? Orientation is entirely different from gender identity. He could be a transgender woman lesbian. Get with the times, man.

      Like

      • He could be a transgender woman lesbian. Get with the times, man.

        Sure he could. So what’s you’re point? At what point is he/she not my child and unworthy of my love? You are treading on some really sensitive ground here.

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        • yello:

          Sure he could. So what’s you’re point?

          The irony in your unconscious acceptance of biological reality (he’s your son, not your daughter) even as you congratulate others’ attempts to evade it.

          At what point is he/she not my child and unworthy of my love?

          Never, of course.

          You are treading on some really sensitive ground here.

          You are the one who introduced the subject of loving your kids, not me. I never said anything about it. Why you would bring up such a subject is beyond me.

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        • The irony in your unconscious acceptance of biological reality (he’s your son, not your daughter) even as you congratulate others’ attempts to evade it.

          I’m just stating that it’s something I’m aware of and it’s not a point of pride or shame. It is what it is regardless of my opinion about it.

          Why you would bring up such a subject is beyond me.

          The point is that as a counter to your doctrinaire rejection of a curriculum change, I was showing anecdotally that is a real issue and concern of actual teenage students. The gender fluidity in my son’s high school was much more open and aware than when you or I were in school. But my son’s extracurricular activities were marching band and theater tech where that stuff is more likely to be encountered. If he were on the football or wrestling team, the perspective might have been different. But then again, maybe not.

          Sexuality and gender are both on continuums. Ignoring that reality is not a benefit to our children and their education.

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        • yello:

          The point is that as a counter to your doctrinaire rejection of a curriculum change

          The “subject” your introduction of which I was baffled about was the “sensitve” subject about which you accused me of treading upon, ie your love for your son. Again you, not I, introduced the subject for reasons unknown.

          Sexuality and gender are both on continuums.

          This is the point. Gender is not a “continuum”. Whether one is a male or a female is a biological fact of reality, not a function of how one “feels” about oneself. And it does a disservice to kids, especially those that are confused about who they are, to pretend that it isn’t a fact.

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  8. Good for the residents of Fairfax County, I salute their desire to educate their kids in a way they see fit.

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  9. Ah. Yello, should the taxpayer’s of a school district be able to decide what their kids are taught in public schools?

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  10. He’s your child? I thought he was a former girlfriend of your son?

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    • He’s your child?

      The comment where Scott questions if I’m certain my son is a straight male has been deleted.

      Like

      • yello:

        The comment where Scott questions if I’m certain my son is a straight male has been deleted.

        I never posed such a question. I posted the following:

        yello:

        …my son…

        You sure?

        It was up for about a minute, but I deleted it because I realized that it could be construed in two different ways, one of which was not intended. (What I meant was to ask “Are you sure he is your son?” but it could have been construed to have asked “Are you sure he is your son?”, which would have been offensive.) In any event, I never posed the question of whether he was a “straight male”. Whether or not he is a straight male is totally uninteresting to me in the context of the current discussion. What is interesting to me is yello’s characterization of him as a “son”, and why he uses that characterization.

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  11. Oh, your son was watching hentai porn then. I pissed the transition.

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  12. (What I meant was to ask “Are you sure he is your son?” but it could have been construed to have asked “Are you sure he is your son?”, which would have been offensive.)

    Both constructions are offensive. And the paternity of my child has never been in question. Photographic evidence alone is usually sufficient.

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    • yello:

      Both constructions are offensive.

      Why? If you really believe that 1)whether one is a male or a female is a function of personal psychology, not physical biology and 2) that such determination is not digital but exists on a spectrum and 3) that there is nothing abnormal about thinking that one is male or female despite physical biology to the contrary, then what in the world would be offensive about asking how it is that you come to call your offspring “son” rather than “daughter”?

      Like

  13. Neither are. You brought him into the conversation.

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  14. Whether one is a male or a female is a biological fact of reality, not a function of how one “feels” about oneself. And it does a disservice to kids, especially those that are confused about who they are, to pretend that it isn’t a fact.

    As someone who knows several transgendered people, all I can say is that that is not a realistic world view or there would not be transgendered people.

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    • yello:

      As someone who knows several transgendered people, all I can say is that that is not a realistic world view or there would not be transgendered people.

      Why wouldn’t there be? If a person who is not Napolean went around claiming and acting as if he was Napolean, would you conclude that he has a psychological problem and needs help, or would you conclude that whether or not he is Napolean is indeed strictly a function of his own internal psychology and that it isn’t “realistic” to think that whether or not a person is Napolean is a function of objective reality.

      Like

  15. If a gynecologist refuses to perform a hysterectomy on a biological male (who identifies as female) is he committing gender discrimination? If not, why not?

    Like

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