Morning Report – Tough times for East Coast builder Hovnanian 6/10/15

Stocks are flattish after Greece submitted a plan to creditors which was rejected. Bonds and MBS are down

Mortgage Applications rose 8.4% last week in spite of a massive sell-off in bonds, which took the 30 year fixed rate mortgage from 4.02% to 4.17%. Purchases were up 9.7% while refis increased 7%. Note that this bump is following the shortened Memorial Day week, so that accounts for some of the increase. The purchase index is approaching 2 year highs, although we are a long way from normalcy.

How much have the banks been fined / spent on legal for the financial crisis? About $300 billion. And the governments aren’t done yet. They still are scratching their collective heads wondering why credit is so tight, though.

For all the talk about how tough the Millennials have it, Generation X has it even worse. The financial crisis hit them during their peak earnings years. Want to know why consumer spending is down so much? The elderly boomers already bought their last TVs, while Gen-Xers are struggling with the 50% hit to their net worth they took in the bust. Millennials are just trying to find a job. I do think that the next big political schism will fall along generational lines, with the baby boomers trying to extract more resources from their broke offspring who want to means test the benefits their parents get.

Hovnanian, the New Jersey based homebuilder, fell 13% yesterday after they disappointed the Street with earnings. Margins fell as they company had to offer more incentives to move their inventory. Gross margins fell from 20% to 16%. The company characterized the housing market as “a  bit tentative.” Hovnanian operates in New Jersey, North Carolina, Pennsylvania, Virginia, Maryland, California, Texas, Tennessee, Alabama, and Mississippi. Not surprising since the Northeast / Mid Atlantic / Deep South housing markets have been lagging the red-hot West Coast markets.

More gloomy prognostications from JP Morgan: The US is entering a period of slower growth due to low productivity (which fell 3.1% last quarter). They anticipate job creation to average around 75,000 a month, unless some new productivity-enhancing technological development comes around. The last time we went through that was the 1970s, productivity stagnated and the oil shocks along with automatic wage increases in union contracts ignited a wage-price spiral. FWIW, I am not sure I buy that argument – cheap energy is not going away, and solar keeps getting cheaper and better.

36 Responses

  1. I take it that stocks are flattish because nobody really thinks that anything Greece does is going to materially affect the global market?

    Oh–frist!

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  2. To be absolutely honest, I get bored continually writing “stocks are up / down / flat on no real news” although that is usually the truth…

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  3. It’s all just part of the drunkard’s walk.

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  4. “I do think that the next big political schism will fall along generational lines, with the baby boomers trying to extract more resources from their broke offspring who want to means test the benefits their parents get.”

    I suspect the response to this will be working and getting paid off the grid.

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  5. Keerisst but baby boomers are leeches.

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  6. Interesting interview of Bill Kristol by Ezra Klein on the politics of replacing Obamacare:

    “The man who helped kill Clintoncare explains why Obamacare can’t be killed
    Updated by Ezra Klein on June 10, 2015, 12:00 p.m. ET”

    http://www.vox.com/2015/6/10/8759221/bill-kristol-1993-health-memo-obamacare

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  7. For Mark and Scott.

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    • McWing:

      Who’d have guessed?

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    • Heh. Some college student lectures Jerry Seinfeld on how to do comedy.

      http://www.huffingtonpost.com/anthony-berteaux/jerry-seinfeld-politcally-correct-college-student_b_7540878.html

      My favorite part:

      While it’s not the sole role of comics to be social commentators on every issue through their comedy, I believe there is a responsibility, especially when a well-known comic is talking about sensitive topics like race and gender politics, to have an underlying message to be said.

      Memo to college student: Seinfeld became a millionaire precisely by doing comedy that was self-described as “a show about nothing”.

      (BTW…”an underlying message to be said”? Does HuffPo have editors?)

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      • Mark:

        More “little shit” for us be unconcerned about, this time actual federal government policy.

        I actually linked to this one back in early May, but forgot about it. The EEOC ruled back in April that a man who thinks he is a woman had been subjected to “disparate treatment on the basis of sex” because he was denied access to the common female bathroom. The panel also claimed that “there is no cause to question” that the man ” is a female”. We truly live in Orwellian times.

        http://transgenderlawcenter.org/wp-content/uploads/2015/04/EEOC-Lusardi-Decision.pdf

        And now the EEOC has sued Deluxe Financial Service Corp for essentially the same offense.

        http://www1.eeoc.gov/eeoc/newsroom/release/6-5-15.cfm?renderforprint=1

        According to the EEOC’s suit against Deluxe Financial Services, Britney Austin had performed her duties satisfactorily in the company’s Phoenix offices throughout a lengthy tenure there. However, after she began to present at work as a woman and informed her supervisors that she was transgender, Deluxe refused to let her use the women’s restroom. Supervisors and coworkers subjected Austin to a hostile work environment, including hurtful epithets and intentionally using the wrong gender pronouns to refer to her.

        BTW, the charge as worded is almost certainly misleading. Surely it wasn’t “after” he began dressing like a woman that they refused to let him use the women’s restroom. I have no doubt he was refused even before he announced he was a woman.

        Also, on this:

        Such alleged conduct violates Title VII of the Civil Rights Act of 1964, which prohibits sex discrimination, including that based on transgender status and gender stereotyping. This includes subjecting an employee to different terms and conditions and a hostile work environment because of sex.

        This, too is false. Title VII does not say anything about “transgender status” or “gender stereotyping”.

        Thus does “little shit” take us deeper and deeper into the Orwellian world of progressivism.

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        • When I was in active practice I often thought the EEOC was very, very, wrong, and I am proud to say I beat them every time. I think they are very wrong on elevating subjective preference over visible organs. I think EEOC will eventually lose that one in a Federal Appeals Court. I think EEOC should have stayed out of it. I think Title VII does not address transgender in this way, although I do think it is applicable to an employment discrimination claim.

          Threatening a federal judge in a blog is not a crime. Wearing a [legally carried] gun within 500 yards of a federal courthouse is not a crime. But if a known person threatened a federal judge and THEN appeared armed near the courthouse, he could be charged with the serious threat, because of the subsequent action. So it is not investigative over reach for the FBI to try to determine who the anonymous threatening blogger is, so they can pounce on him if he shows up armed near the judge.

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        • Mark:

          So it is not investigative over reach for the FBI to try to determine who the anonymous threatening blogger is, so they can pounce on him if he shows up armed near the judge.

          By labeling them “threatening bloggers” you are presuming that the things they wrote were, in fact, true threats. As a lay person it is obvious to me that they were not. And even in the byzantine legal world it appears they aren’t either. As the link explained:

          “True Threats” are those threats that are outside the protection of the First Amendment; they are not mere political hyperbole or bluster. For instance, in 1967, when Mr. Watts said that if he were drafted the first man he’d want in his rifle sights was President Lyndon B. Johnson, that wasn’t a true threat: it was conditional political hyperbole. In other words, it was mere angry bluster of the sort no reasonable person would take to be a serious threat.3

          What of these comments on Reason.com, then? I submit that they are very clearly not true threats — that this is not even a close call.

          True threat analysis always examines context. Here, the context strongly weighs in favor of hyperbole. The comments are on the Internet, a wretched hive of scum, villainy, and gaseous smack talk.4 The are on a political blog, about a judicial-political story; such stories are widely known to draw such bluster. They are specifically at Reason.com, a site with excellent content but cursed with a group of commenters who think such trash talk is amusing.

          The “threats” do not specify who is going to use violence, or when. They do not offer a plan, other than juvenile mouth-breathing about “wood chippers” and revolutionary firing squads. They do not contain any indication that any of the mouthy commenters has the ability to carry out a threat. Nobody in the thread reacts to them as if they are serious. They are not directed to the judge by email or on a forum she is known to frequent.

          Therefore, even the one that is closest to a threat — “It’s judges like these that will be taken out back and shot” isn’t a true threat. It lacks any of the factors that have led other courts to find that ill-wishes can be threats.

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        • By themselves they are not actionable threats. In fact, I did not think them worth investigating, from a prosecutor’s view. But that doesn’t mean it is “overreach” to find the names of the persons who wrote the comments.

          To be clear, if I were the USA in that District, I would refuse to investigate unless the Judge were receiving other threats, anonymously,in which case I would have the FBI run all the traps.

          As I wrote, threats are usually not actionable without more because intent is so hard to infer, never mind prove beyond a reasonable doubt. But threat plus an action that can be inferred to be in furtherance of the threat is something else, again. And to make those cases, the prosecutor may have to show that the an otherwise innocent action is in furtherance of the threat, which then becomes a serious threat. And to do that, the prosecutor has to know who authored the threat.

          There is always the possibility that she was receiving anonymous direct threats, of course, which would have raised the attention level of the FBI.

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        • Mark:

          There is always the possibility that she was receiving anonymous direct threats, of course, which would have raised the attention level of the FBI.

          Yes, that is a possibility. Short of that, I think it is an abuse of power. Even if ambiguity did exist, the government should not generally be given the benefit of the doubt. Ambiguity should be resolved in favor of free speech, not government information collecting.

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        • BTW, Mark, did you read the link itself? Here is more from it:

          On Friday, June 5th, the day after a source sent me the subpoena, I decided to call Niketh Velamoor, the Assistant U.S. Attorney who issued the subpoena. My purpose was to tell him that I would not print the subpoena if he could convince me that he had specific evidence demonstrating that to do so would put a life in danger. Mr. Velamoor — who said he could not discuss grand jury investigations, which is the standard AUSA statement — said that it was unreasonable to expect the government to be able to prove such a threat before it identified the commenters. That answered my question on the point.

          Mr. Velamoor was suspicious and defensive. At one point he told me that he “believed” that there was a gag order prohibiting this subpoena from being released by its recipients, and that whoever gave it to me must have violated that order, and that he would be “looking into it” and how I got it.

          Such gag orders do exist. However, I note that two days earlier on June 2, 2015, Mr. Velamoor signed the cover letter on the subpoena, which contained the Department of Justice’s standard language about secrecy:

          “The Government hereby requests that you voluntarily refrain from disclosing the existence of the subpoena to any third party. While you are under no obligation to comply with our request, we are requesting you not to make any disclosure in order to preserve the confidentiality of the investigation and because disclosure of the existence of this investigation might interfere with and impede the investigation.”

          In other words, two days before he told me that he believed there was a gag order on the subpoena, Mr. Velamoor told Reason.com that it was not required to keep the subpoena secret.

          Perhaps Mr. Velamoor misspoke. Perhaps Mr. Velamoor misremembered. Perhaps Mr. Velamoor didn’t secure the gag order until after he issued the subpoena.

          Or perhaps Mr. Velamoor, bless his heart, was lying in an attempt to intimidate me.

          In any case, Mr. Velamoor has provided me with no such order, despite a request.

          Whatever the answer, consider this: Mr. Velamoor, and government attorneys like him, will be the ones deciding whether the federal government will use the grand jury to pierce the anonymity of your comments. No doubt in some cases they will exercise that power on genuinely frightening threats. But other times will be like this one, where the government subpoenaed the identity of people indulging in crass but obvious bluster.

          They will target political speech.

          Does that make you feel safer?

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        • Scott, I understand.

          I will only add that an AUSA will take more note of threatening language about courtroom personnel in his court than s/he would about anyone else. That is a function of human nature. I have seen that play out in similar circumstances in other courtrooms, wrt leftist threats in the 60s, and drug gang “banter” since.

          After [SA USDJ] John Wood was assassinated by Woody Harrelson’s father, all federal courthouses I entered became armed garrisons, and the edginess of previously friendly GSA and US Marshal staffs became pronounced.
          Federal courthouses have not been the same, since. It was the first ever contract killing of a USDJ and everyone in the establishment went to the equivalent of DefCon 4, and pretty much ratcheted there. If you think I am over stating this, talk to another lawyer you know who does federal practice and ask him about fed courthouse security and how they respond to any perception of threat, no matter how obviously a joke.

          I admit that I sometimes hoped that some AUSA would take an interest in Cao’s comments, but then his true ID was easily known.

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        • Mark:

          I admit that I sometimes hoped that some AUSA would take an interest in Cao’s comments

          Funny, that same thought occurred to me last night. If what the Reason commentators said was a threat worth investigating, then Cao is definitely worth investigating too.

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  8. The link to the source is hilarious.

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  9. This is better Scott

    “While, respectively, your daughter might not quite know what’s considered “sexist” yet, I can say with confidence that most college students can distinguish the boundaries of what’s considered appropriately sexist or not.”

    I’d say it’s the opposite, or at least the vocal minority that drives the debate clearly can not.

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  10. I guess you’ll be Made to Care on the “little shit” as well, Hunh.

    Through the force of law.

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  11. All the chicks dig cao though, so tread lightly.

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    • You guys, plus some outside reading, have somewhat altered my thinking on “transgender”. Indeed, a mountain IS being made out of a molehill by the TG “activists”, and the EEOC.

      An agency of the gummint is making Big shit out of Little shit.

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      • Mark:

        An agency of the gummint is making Big shit out of Little shit.

        What would it take to convince you that this isn’t just a one-off, but is indeed the modus operandi of the progressive left as a general matter, to create a federal case, literally, out of every whim, desire, and preference that they have, in an effort to transform the culture?

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        • And, worse, that the federal bureaucracy actually enables the left to do exactly that (with the help of well placed progressives in the federal judiciary).

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        • Mark:

          Fuel to the fire.

          http://www.washingtonpost.com/news/morning-mix/wp/2015/04/03/california-prison-ordered-to-grant-inmates-sex-change/

          In a rare move, a Northern California district court judge has directed the state to grant a transgender inmate’s sex reassignment surgery — marking a first in the state’s history. The judge said the procedure is the “only adequate” treatment for her(sic) condition.

          Michelle-Lael Norsworthy, 51, was born as Jeffrey Bryan Norsworthy. In the 1990s, she(sic) started living as a woman in state prison and was later diagnosed with severe gender dysphoria, a condition in which people identify with a different gender from the one they were born with, according to court documents. California corrections officials have said she(sic) has been given proper medical care over the years, including counseling and hormone therapy, the Associated Press reported.

          However, U.S. District Court Judge Jon S. Tigar in San Francisco said on Thursday that the department denied her(sic) request for sex reassignment surgery, or SRS, likely because it has a policy against approving it as a treatment for transgender inmates. He granted a preliminary injunction, telling the prison system to let her(sic) have the operation “as promptly as possible.”

          Note also the WaPo’s rejection of reality, repeatedly referring to Norsworthy as “she” and “her”. The very fact that sex reassignment surgery is being requested shows that its use of the pronouns “she” and “her” are being used incorrectly, (why would a “she” need sex reassignment surgery to become a female?) but this is obviously neither here nor there for either the WaPo or the incredibly stupid/disingenous/politicized judge – an Obama appointee (shocker!). But the WaPo’s usage can’t be put down to misplaced courtesy to Norsworthy, as the article is aimed at WaPo readers in general, not just one pitiable, convicted felon. So what, then, is the WaPo’s purpose in using the demonstrably incorrect pronoun? It can only be an attempt to acclimatize its readers to this unreality, to normalize the notion that gender is not an objective reality, but is rather completely subjective, a function of personal “feelings”, or perhaps worse a function of whatever the culture (read elites like the WaPo) say it is.

          This truly is Orwellian stuff, Mark. War is peace. Love is Hate. He’s a she. And this corruption of language and concepts is not just random happenstance, or the result of confusion. It has a point, a goal, one that Orwell understood well. It is exactly what progressives want, and it is Big Shit.

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        • Mark:

          Today over at Bench Memos on NRO, Michael Stokes Paulson poses a question, and the premise underlying the question:

          Congress passes, the President signs, and the Supreme Court upholds a flagrantly unconstitutional “Sedition Act of 2015” that makes it a crime to criticize government policy, defines the crime as treason, obliges the president to prosecute, is punishable by slow torture, forbids presidential pardons, and works a corruption of blood. The point is that the statute is, objectively, incontrovertibly unconstitutional. Can we all agree with that as a starting point for discussion? (Pause and reflect on this for a moment before proceeding. A necessary premise of what follows is that there are such things as objectively correct answers to constitutional questions. We may disagree sometimes as to what those answers are – and sometimes the “correct” answer is that the Constitution permits of a range of legitimate answers – but in theory there is always some correct answer and in this hypothetical that correct answer is an easy one.)

          I wonder if you agree with his premise, that there is always objectively correct – and by implication incorrect – answers to constitutional questions.

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        • To the caveat suggested by the author (sometimes there are a range of correct answers) I would add that sometimes there is no readily apparent correct answer. I don’t expect you to completely accept that, but Scalia absolutely does, and so do most judges. That is why we have so many “canons of judicial construction”.

          These canons let us attempt rational statutory construction, but they also are sometimes applied to constitutional construction.

          It would be so much easier if all cases were like the one posed.
          —-
          Scott, when the 14th A. was passed, it had language about “equal protection” and “all persons born or naturalized in the United States”, but it was not applied by the courts to women. It simply never occurred to either Congressmen or male judges that women were included. Congressional debates indicated that coolie Chinese were talked about, as well as former slaves, but not women. Still, the language is clearly inclusive, unless you think women are not “persons”.

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        • Mark:

          That is why we have so many “canons of judicial construction”.

          I thought those were meant to guide statutory interpretation, not constitutional interpretation.

          It would be so much easier if all cases were like the one posed.

          I don’t know if you went to the link itself, but the case was posed specifically to to illustrate a point about the notion of judicial supremacy. It needed to be a clear cut case in order to illustrate the point.

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        • I thought those were meant to guide statutory interpretation, not constitutional interpretation.

          I thought I said that. However, as I wrote, sometimes they are handy for constitution reading, as well. Other times they are handy for contract construction. For example, in Constitutional reading, one maxim that is often used historically is that whatever is omitted is excluded.

          If the Court, the Congress, and the POTUS conspired together to take away our freedom as in the example, rebellion would indeed follow. Judicial supremacy is limited by the facts on the ground – as Jackson said after the Cherokee case, “Marshall has made the law, now let’s see if he can enforce it.”

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        • Mark:

          Judicial supremacy is limited by the facts on the ground – as Jackson said after the Cherokee case, “Marshall has made the law, now let’s see if he can enforce it.”

          Well, the question Paulson was addressing was precisely whether a reaction such as Jackson’s can be seen as constitutional, or whether Jackson was constitutionally obligated to defer to SCOTUS. The notion of Judicial Supremacy suggests the latter. Paulson says the former, which is why he rejects the idea of Judicial Supremacy.

          If the Court, the Congress, and the POTUS conspired together to take away our freedom as in the example, rebellion would indeed follow.

          I recommend you read Paulson’s post. The extreme example was meant to illustrate a point, not to be taken as a serious possibility. Although I must say that the Court, Congress, and POTUS have in fact conspired in the past to take away our freedom, albeit not to quite such an extreme as in the example.

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        • It is an interesting point, but we operate under the assumption that judicial review is as close as humans can get to “getting it right”. I will leave it at that.

          Meanwhile, if you want to dive into the textualist/canon issues, here is one law professor’s view:

          http://law.campbell.edu/lawreview/articles/33-1-115.pdf

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        • Mark:

          It is an interesting point, but we operate under the assumption that judicial review is as close as humans can get to “getting it right”. I will leave it at that.

          Paulson makes a distinction between judicial review and judicial supremacy. The members of each branch of government take an oath to protect and defend the constitution. Judicial review is the means by which the judicial branch fulfills that obligation. A judge would not be fulfilling his oath if he allowed the enforcement of a law he believed to be unconstitutional simply because the legislature had passed it. But the other branches of government take the same oath, and are constitutionally equal branches, so they too have the same obligation to make their own constitutional assessment. And they too would not be fulfilling their oaths if they acted on a court’s judgements despite their belief that the judgement was incorrect.

          As a practical matter, the judicial branch gets the last say on constitutional matters because it is the last stage in the process of law enforcement. But as a constitutional matter, there is no such thing as judicial supremacy. No branch is obligated to adhere to the erroneous judgement of another branch, and each branch is obligated to makes its own judgement about what is and is not constitutional.

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