Morning Report – Home price appreciation is decelerating 6/30/15

Markets are higher this morning after the Chinese stock market posted an impressive turn-around and rallied 5.5% overnight on hopes the government would do more to support stock prices. Bonds and MBS are down.

Greece’s bailout expires tonight, and they are preparing for life post-bailout. The government has scheduled a referendum for 7/5 to accept or reject the austerity. Mohammed El-Arian lays out the path forward.

After the Greek situation gets resolved, attention will turn to the melt-down in China. Chinese stocks entered bear market territory (notwithstanding yesterday’s humongous rally) and a lot of this rally is being supported by dumb money – margined retail money. People are looking to the government to do something to support the markets, and it feels a lot like the Japanese market did in the 90s, where the Ministry of Finance would call the banks during the lunch break and basically tell them to tear up their sell tickets for the day.

House prices increased 4.9% year over year in April, according to Case-Shiller. Home price appreciation is decelerating as wages fail to keep up with house prices.

Consumer confidence rose to 101.4 in June, according to the University of Michigan.

Obama just increased the cost of labor by demanding that anyone who earns just less than $1,000 a week be eligible for overtime, whether they are managerial or not. The new rules will take effect in 2016. IMO, this will only accelerate the replacement of technology for labor and the Uber-ization of the economy, but I suspect Obama isn’t thinking about that. He is focused on whipping up the base, which is lukewarm with Hillary. With employment costs already soaring from regulatory mandates, I don’t see how this helps overall employment levels. I suspect this is a variation of the French mentality that limiting hours will somehow encourage more hiring. It never ceases to amaze me that the left is completely comfortable with the concept of raising the price of gasoline and cigarettes via excise taxes in order discourage consumption, but yet they somehow imagine the laws of supply and demand are suspended in the labor markets.

42 Responses

  1. they somehow imagine the laws of supply and demand are suspended in the labor markets.

    Markets are always tilted towards incentives. Employers are encouraged to get as much labor out of each worker as possible because certain overhead costs (office space, heath insurance if they offer it, etc.) are fixed so additional hours cost much less. Raising the salary level where employees qualify to be exempt just shifts the calculus on that incremental cost calculation a little.

    My son went to work for an IT company straight out of college where he was salaried but was expected to work about 70 hours a week. He burned out after a year and quit. He is now a brewer for half the pay. But he also gets time and half for overtime and double time holiday pay.

    He now has all the typical labor-management issues that an hourly employee has. Their biggest beef is not enough advance notice on shift schedules. It is hard to schedule personal time when you don’t know your hours until a week ahead of time. That is also a common complaint with workers in fast food and big box retail. By keeping them on-call, workers with low hours can’t schedule fill-in work or take structured educational courses. Don’t think that’s not deliberate.

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  2. the solution is the reduce barrier to entry so he can be his own brewer.

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    • the solution is the reduce barrier to entry so he can be his own brewer.

      The problem is that a successful craft brewery also requires marketing, distribution, packaging, etc. People who go into brewing because they like making beer don’t necessarily make the best personnel managers or finance officers. This lack of skill portfolios is what kills a lot of small entrepreneurial business. You have to bootstrap to a certain economy of scale but that gets you further and further removed from the actual production.

      He’s interned at nanobrewers which are basically storage lockers with tasting rooms. That’s not what he wants to do.

      Brewing (and distilling which is now a hot market) is fairly capital intensive so the key is to find an investor that wants a cool business but needs someone with the necessary technical knowledge.

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  3. Brent:

    It never ceases to amaze me that the left is completely comfortable with the concept of raising the price of gasoline and cigarettes via excise taxes in order discourage consumption, but yet they somehow imagine the laws of supply and demand are suspended in the labor markets.

    The foundational principle of all progressive thought is that if they want something to be true, it is true. Keep that in mind and you will never be shocked by the incoherence and absurdity of what a progressive might argue.

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  4. “Obama just increased the cost of labor by demanding that anyone who earns just less than $1,000 a week be eligible for overtime, whether they are managerial or not.”

    Should have gotten rid of the “managerial” loophole a long time ago, if they were going to mandate overtime at all. Ultimately, I’m all for this, myself. Of course:

    “IMO, this will only accelerate the replacement of technology for labor and the Uber-ization of the economy, but I suspect Obama isn’t thinking about that. ”

    I’m all for both those things as well. 😉

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    • Obama just increased the cost of labor by demanding that anyone who earns just less than $1,000 a week be eligible for overtime, whether they are managerial or not.

      More violation of the equal protection clause, when certain employees and employers are granted different rights under the law than others when negotiating mutually agreeable payment conditions.

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  5. @yellojkt: “Don’t think that’s not deliberate.”

    I don’t think it’s deliberate. I know it’s not. I’ve known too many of those people.

    They. Do. Not. Care. On-call is most convenient and profitable and controllable for them. End of story.

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  6. @Scottc1: Has SCOTUS led us to the point where everything is a violation of the equal protection clause? I think it might have.

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    • KW:

      Has SCOTUS led us to the point where everything is a violation of the equal protection clause?

      I would say that SCOTUS has emptied the phrase of any reasonable meaning, so that they can then fill it with literally anything they want, including the exact opposite of what it says. Not necessarily everything, of course, just anything they want.

      Think about it. Affirmative action laws, ie laws that require different treatment of different people depending on their race, are as plain a violation of a clause requiring “equal” protection as one can imagine. Yet SCOTUS has blessed such affirmative action laws. But a law that does indeed apply equally to everyone, such as a law that defines marriage as a man/woman union for purposes of state law, is somehow a violation of equal protection. Only an “equal protection clause” empty of content could possibly render both of these positions legitimate.

      As Mark has noted, essential to the courts reading of the equal protection clause has been the judicial invention of different “classes” of people, and different levels of “scrutiny” for analyzing whether a given law is in violation. None of these classes or levels of scrutiny are actually mentioned anywhere in any way in the constitution, much less defined, meaning that judges can fill them in with literally anything they want. Leading to such insane constitutional questions as whether a “new” class of specially protected citizens should be read into the clause in order to mandate SSM, or whether it can be achieved under an already invented class of specially protected citizens. So providing special (undefined) protection to special (undefined) classes of citizens somehow is now mandated by a clause that, by its plain words, requires equal protection for all ctiizens. This is what passes for “interpreting the constitution” these days. As I say so often, this is twilight zone stuff, and is so absurd only a lawyer could find it compelling.

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      • I’ve been trying to come up with a good metaphor to describe how lawyers and judges transform a law from what it actually says into something totally different, all the while convincing themselves (or, at least, trying to convince others) that they are somehow being true to what the law actually says. I’ll keep working on better ones, but for now….

        A chef’s specialty is clam chowder, so he sets down in writing the ingredients so other chefs can accurately follow his recipe. A subsequent chef sets about to make clam chowder, but the recipe calls for clams and he doesn’t have any. He reasons that clams are a shellfish, and so is crab, so if he throws in bits of crab instead of clams, it qualifies. A precedent has been set! The next chef comes along and sees that crab was used the last time, but he doesn’t have any of them either. Crab, however, is a seafood, and he does have some seabass laying around, so he throws that in, under the assumption that any old seafood qualifies. The next chef doesn’t have any seafood at all, but he does have frogs legs, and frogs live in water, just like seabass, so that must qualify. The next chef doesn’t have frogs legs, but he knows that frogs legs taste just like chicken, so he throws in chicken instead.

        Thus does chicken soup qualify as clam chowder under the insane precedent-heavy reasoning process under which our judicial system labors.

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  7. The thing the left does not get is the concept of marginal product of labor – in other words, the value an employee brings to the table. That is a completely separate issue from what an employer is being told to pay for it.

    The marginal product of labor is a number. It cannot be changed by government diktat. It cannot be shamed into increasing. it cannot be Alinsky’d. It has nothing to do with morality. It has nothing to do with fairness. It simply is.

    The left has never figured out that you can set the price of something or the supply of something, but you cannot set both.

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  8. “Brewing (and distilling which is now a hot market) is fairly capital intensive so the key is to find an investor that wants a cool business but needs someone with the necessary technical knowledge.”

    i spent an afternoon looking at what it would take to open a brewery in Fairfax. forget it. the regulatory side was going to crush it before i even considered investing in equipment.

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    • i spent an afternoon looking at what it would take to open a brewery in Fairfax. forget it.

      We spent five minutes online looking at the federal penalties for unlicensed distilling before we decided that that was never going to be a father-son hobby for us.

      Micro-distilleries are becoming a thing despite the regulatory headwinds. A Georgia Tech alumnus and her husband run Catoctin Creek in Purcellville. Belmont Farms Distillery near Culpeper offers tours.

      In beer, the laws from state to state are Byzantine at best. In Georgia, my son’s brewery is not allowed to sell beer on the premises so for their tasting room they sell $10 beer glasses which entitles you to six 4 oz samples although the bar tenders have been known to overpour when tipped generously.

      We were at Cigar City Brewery in Florida where some tourists showed up from North Carolina with empty growlers which they couldn’t get filled. Florida law only allows 32 oz and 128 oz growlers, thus eliminating the most popular size. Big Beer is responsible for most of this through regulatory capture aided and abetted by the 21st Amendment.

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  9. http://reason.com/blog/2015/06/30/supreme-court-will-hear-mandatory-dues-c

    well, here’s something that might work out well.

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  10. The Libertarian case for polyamory. Now that the gays have made it so that anything goes.

    From income-tax breaks to estate planning benefits to Social Security and insurance benefits to the right to make medical decisions for one’s spouse, there are all kinds of carrots dangled in front of Americans as rewards for getting hitched. Instead of putting unmarried individuals on equal footing with married people, the government has chosen to appease the masses by blessing another category of monogamous couples with the privileges of marriage—those of the same sex.

    This is discrimination, plain and simple. It discriminates against single people who have no formal romantic relationships and a growing number of people who identify as polyamorous, who maintain multiple romantic relationships at once. The government has no business incentivizing any type of romantic or non-romantic behavior. It has no business rewarding us or penalizing us based on our relationship status.

    By granting gay couples the same “privileges” as straight couples, we are widening the gap of inequality between coupled and non-coupled individuals. The only way to have real equality in this country is to treat everyone as individuals with equal rights, not unequal privileges. Otherwise, we open the doors to social conservatives’ worst nightmare—polygamy! Not long after that, single people, vying for the same entitlements, will surely fulfill former Sen. Rick Santorum’s prophecy by requesting to marry their dogs!

    So instead of legislating sexual morality, the government should stick to what it was designed to do best: protecting individual liberties.

    So if polygamy does become legal, I’m going to blame conservatives.

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    • yello:

      Now that the gays have made it so that anything goes.

      Kennedy and the fantastic 4 are gay?!?!? Shouldn’t that have disqualified them from ruling on the SSM case?

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  11. I have a bottle of Catocin rye at home. it’s good. not great. they’ll get there.

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    • I have a bottle of Catocin rye at home. it’s good. not great. they’ll get there.

      Virginia wines are the same way. Mediocre quality and over-priced. It’s the bane of boutique wine and booze in markets where they mostly serve as a novelty.

      I went to a really sketchy part of Brooklyn to tour a rum distillery whose interesting quirk was that the owner and all the employees were women.

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  12. Kennedy and the fantastic 4 are gay?!?!?

    No, they were just following marching orders on how to implement The Gay Agenda.

    Shouldn’t that have disqualified them from ruling on the SSM case?

    Does Clarence Thomas have to recuse himself from affirmative action cases?

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    • yello:

      Does Clarence Thomas have to recuse himself from affirmative action cases?

      No because he doesn’t think for himself anyway, remember?

      Ultimately it doesn’t matter anyway, because a requirement to recuse oneself over a conflict of interest is based on a presumption that the role of a judge is to make an objective judgement about the law. I think we have effectively dispensed with that charade, and since SCOTUS rulings are now to be based on personal political interests, the idea of a conflict of interest doesn’t really make sense anymore.

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  13. Yello, is marriage to more than one partner Constitutional? Should it be if it’s not?

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  14. Detroit Lions are doing a LGBT event http://www.freep.com/story/sports/nfl/lions/2015/06/29/detroit-lions-lgbt-pride-night/29478141/

    Ok, first, is this necessary? Second, in a division of queens, bears, and fudge packers, why do the lions need to be involved?

    And yes, that is a joke…

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    • The NFL jumped the political correctness shark when they went all Komen-Pink for weeks at a time.

      And American football is already the gayest professional sport there is. Not that there is anything wrong with that.

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  15. And i agree the Komen thing is lame. Is the WNBA going to do a prostate awareness month?

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  16. Nothing is gayer than soccer

    That’s a pretty convincing video but it’s rough watching a quarterback top his center a couple of dozen times a game in those tight pants and not get a little worked up. Let alone what goes on in a huddle.

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  17. Is the WNBA going to do a prostate awareness month?

    I accidentally jogged into a Prostate Awareness 5k on Father’s Day. Men get one day. Women get an entire month.

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  18. Father’s day – isn’t that the day you get a bunch of op-eds from female columnists telling men to do more housework or something?

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    • Father’s day – isn’t that the day you get a bunch of op-eds from female columnists telling them to do more housework or something?

      It is a rather schizo day. It seems the most common form of celebration is to give Dad ugly clothes and then make him cook dinner. I always insisted on going to a hamburger joint and then on a family bicycle ride. This year it was barbecue in Philly and then a tour of Victory Brewery (everything my son does with us is a bit of a busman’s holiday).

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  19. btw, nothing gayer than this: https://www.youtube.com/watch?v=LC-H2wXK4T4

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  20. my son was born on Father’s day. so that’s cool. and it aligned this year.

    i took him to Pirates @ Nats. Watch the Buccos give up 9 in the bottom of the first. he asked if i’d buy him a Nats jersey. some holiday.

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  21. This is the only *real* holiday worth celebrating.

    http://www.officialsteakandblowjobday.com

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  22. “This is the only *real* holiday worth celebrating.”

    It just not the same when you have to celebrate it alone. But at least there is steak.

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  23. Thank god for my Yoga lessons.

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  24. Thank god for my Yoga lessons.

    If you are that limber, then EVERY day can be Steak and a BJ Day.

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  25. I can’t handle all that red meat.

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  26. No because he doesn’t think for himself anyway, remember?

    These numbers are now a year old but the actual stats are interesting.

    Thomas votes with Alito and Scalia 91% of the time. However, Kagan votes with Sotomayor 94% of the time and with Ginsburg 93%. It seems the sisters stick together better than the conservatives.

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  27. Has anyone ever seen an article gaming out how the liberal justices will vote? For all the talk about a political SCOTUS, no one ever mentions that…

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  28. The pure bitchiness on Couric’s face as Cruz answers reminds every man of their first ex wife.

    https://m.youtube.com/watch?v=aXMGGq-45tY

    Fixed. [MiA]

    Like

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