Morning Report: Distressed sales fall 8/10/15

Markets are higher on M&A and strength in overseas markets overnight. Bonds and MBS are down.

This week promises to be slow as we are in the dog days of summer, the week after the jobs report inevitably has a dearth of data, and earnings season is winding down. I don’t see much in the way of potential market-moving data, except for unit labor costs / productivity tomorrow. I think we would have to see a big surprise for that to move bonds around. Think we continue with the risk-on / risk-off dynamic where stock prices drive bond market movements.

The Fed’s new index – the Labor Market Conditions Index – rose 1.1% in July, and June was revised upward. This index is a meta-index of 24 different indicators.

Consumer attitudes towards housing cooled somewhat in July, according to Fannie Mae’s National Housing Survey. This seems to be driven by deterioration in people’s financial situations and their attitudes towards the economy in general. Fannie Mae notes that the survey questions were being asked when we had both the Greek situation and the Chinese stock market meltdown going on, so perhaps that is coloring the data. Given the strong support of Bernie Sanders on the left and Donald Trump on the right, it looks like people are hopping mad about their financial condition and this isn’t a spurious reading based on Greece and China.

Commodities continue to drop as West Texas oil dips below $44 a barrel. Oil cannot get out of its own way, and if the Iran deal gets passed, another million barrels a day will hit the market. We have been watching Venezuela come apart at the seams as the state relies on high oil prices to provide revenue for social services. Another looming disaster is Norway, which not only is hurting from falling oil prices, but it also has a real estate bubble of its own. Another one reeling – just say the headine: Russian GDP contracted by 4.5% last quarter.

As we creep up on the September FOMC meeting, sovereign wealth funds are dumping Treasuries. Japan dumped almost $10 billion in June, the most in two years. Not sure if this sort of selling is going to impact US rates in any meaningful way – where are sovereign wealth funds going to put their cash? German Bunds, which yield 68 basis point? Portuguese bonds yielding 20 basis points more than Treasuries? Given the relative attractiveness of US Treasuries and the US dollar, I don’t see much in the way of foreign selling. As Bill Gross used to say: The US is the cleanest dirty shirt in the bunch.

23 Responses

  1. “Cleanest dirty shirt” has permitted us to avoid George’s Debt Armaggadon (which should have already occurred, I agree)for fifty years. Don’t knock it.

    FRIST.

    Like

  2. This is truly stupid:

    “Target to move away from gender-based signs

    By Emanuella Grinberg, CNN

    Updated 3:55 PM ET, Sat August 8, 2015

    (CNN)Attention Target shoppers: Say goodbye to “girls’ building sets” and “boys’ bedding.”

    The big box retailer announced Friday that it will start phasing out gender-based signage in some departments. The shift comes in response to customer feedback that distinguishing between products for girls and boys is unnecessary and maybe even harmful.

    Parents and gender equality advocates welcomed the news as a significant step with potential to inspire other retailers.”

    http://www.cnn.com/2015/08/08/living/gender-based-signs-target-feat/

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  3. @jnc4p: “The shift comes in response to customer feedback that distinguishing between products for girls and boys is unnecessary and maybe even harmful.”

    How did we survive until now? I can’t imagine how damaged I was as a child, with all the gender-based segregation I grew up with.

    Sheesh. I mean, Target can do things however they want, but sheesh. Generally, gender based signs just make it easier for people to find things. I’m betting they aren’t getting rid of the men’s and women’s section.

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  4. A good take on Jon Stewart:

    http://thewilderness.me/end-of-days/

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  5. Great. now i’ll spent an extra five minutes looking for boys pants in the “child” section.

    Language is intended to communicate. Not confuse.

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    • nova:

      Language is intended to communicate. Not confuse.

      For much of the political left, confusion is precisely what their language is intended to do.

      Like

  6. These people are so weird… Of all the things to get bent out of shape over…

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    • Brent:

      These people are so weird… Of all the things to get bent out of shape over…

      I suspect it has a lot more to do with a long term strategy of changing the culture than it does with the specific offense they are ostensibly complaining about.

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  7. anyone who actually has kids will understand that this will make absolutely zero difference…

    I don’t understand why big companies think it makes sense to inconvenience 99% of their customers to appease a handful of scolds..

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    • Brent:

      I don’t understand why big companies think it makes sense to inconvenience 99% of their customers to appease a handful of scolds..

      The 99% isn’t going to complain or try to organize a political campaign against them.

      Like

  8. But if your customers leave because they can’t find anything, what have you accomplished?

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    • But if your customers leave because they can’t find anything, what have you accomplished?

      This, exactly.

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    • Brent:

      But if your customers leave because they can’t find anything, what have you accomplished?

      Hopefully that is exactly what happens to Target. We’ll see.

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  9. @ScottC: “The 99% isn’t going to complain or try to organize a political campaign against them.”

    Bingo. More to the point, if they do, the MSM will step in a dutifully portray those people as loons and whack jobs and sexist pigs. And make Target a hero!

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  10. From the first Jon Stewart link: ” 24 million people tuned into a GOP debate last Thursday and a stage that included an African-American, a woman and two young Latinos who are at least somewhat engaged with the tech-obsessed viral media world that Stewart himself was the avatar of. Meanwhile, when the Democrats take the stage for their debates in September it’s going to look like the cast of Cocoon.”

    An interesting observation, and very much not the take away of most of those left-of-center. I wonder if it will be at all relevant in the actual elections. I’m dubious, because young people don’t vote in great numbers. But we will see!

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  11. “But if your customers leave because they can’t find anything, what have you accomplished?”

    I have to think Target will maintain a de facto product segregation that will make it reasonably clear what section you are in without the name placards. Folks selling products already do that: girls toys are packaged in pink and pastels or bright cyan or magenta, while boys stuff is black and brown and camouflage. However I’m guessing it won’t be long until the use of colors (especially pink!) to designate girl’s toys comes under attack. Or complaints are raised about Target’s “unofficial” gender separation of products.

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  12. @ScottC: “For much of the political left, confusion is precisely what their language is intended to do.”

    The political left is just trying to tear down false constructs of “man” and “woman” and “child” and “adult” and reveal the vibrant truth that everyone is magical (except fundamentalist religious people and old white men) and entirely indistinguishable, and it’s a terrible, terrible, terrible thing that society has been conspiring to program boys and girls with separate restrooms and clothing sections and different color schemes for toy packaging.

    It’s not about confusion, it’s about getting to a greater, deeper truth.

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  13. @ScottC: From your Jon Stewart link: “He appeared in 2004 on “Crossfire,” a CNN yelling program”

    A CNN yelling program. A perfect description.

    Like

    • KW:

      A CNN yelling program. A perfect description.

      It’s interesting that the article calls that appearance Stewart’s “best” moment. It was exactly that appearance on CNN that led me to begin to lose respect for him for resorting to the “it’s just a comedy show” in defense of his own failure to meet the standards he was trying to hold others to.

      Like

  14. @ScottC: Yeah, that would not be his best moment in my book. And an easy jibe. If Crossfire was staid and sedate and rational and calm and deeply researched on both sides, it would have also been . . . cancelled. The same thing that would have happened to him if Stewart’s show had been all calm, placid erudition.

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  15. No one believes her, correct?

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  16. “No one believes her, correct?”

    I believe her. Of course, colleges are going to be less enthusiastic about accepting students receiving financial aid (and helping them get it) with that scenario.

    What’s it matter? Our next president will be Donald Trump!

    Like

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