Morning Report: Retail Sales rise 8/13/15

Markets are flattish on no real news. Bonds and MBS are down.

Retail Sales rose 0.6% in July, in line with expectations. The control group, which strips out volatile items like autos, gasoline and building products rose 0.3%, below expectations. It looks like people are spending shifting spending from goods to services (ie restaurants). August’s sales will be important – it signifies back-to-school shopping, which is a good predictor of holiday sales.

Mortgage foreclosures fell to 2.09% in the second quarter from 2.22% in the first. Delinquencies fell from 5.54% to 5.3%.

Import prices fell 0.9% in July, a little less than expectations. Inflation remains nowhere to be found.

Initial Jobless Claims continue to hang around 4 decade lows. They rose slightly to 274k.

The Bloomberg Consumer Comfort index ticked up slightly to 40.7 from 40.3. Sentiment remains soggy.

As we head into the September FOMC meeting, here is a dovish take on why the Fed should maintain ZIRP. His point is that the withdrawal of QE has already softened the economy and interest rates reflect the new normal of weak global growth and no inflation. Increasing rates risks tipping the economy back into a recession. While I am somewhat sympathetic to his argument, I doubt that 25 basis points on the Fed Funds rate is going to have that big of an impact, and the Fed will go slow. Janet’s Addiction dies hard.

The rent versus buy decision is getting easier. While home prices continue to rise, rents are rising faster as vacancy rates fall. In expensive places like LA, people are spending half their income on rent. Something to point out to first time buyers who are on the fence: Buy a home and get a 30 year fixed rate mortgage, and your principal and interest payment won’t increase, ever. Beats the heck out the annual negotiation with the landlord.

48 Responses

  1. I keep seeing news stories like this one that say housing supply problems are driving prices up and making homes unaffordable for new buyers.

    It seems like there are a lot of contraindicating trends out there.

    Like

  2. Housing supplies will increase if the demand is there. And, ultimately, “affordable for new buyers” depends on how much house they feel entitled to and where they want to live. Recently met some guys living in San Diego who pay rent for efficiency apartments that could get them a nice 4 bedroom house in a nice part of town in the Memphis area. Of which there are plenty available.

    Also, there’s an issue of how much work you want to do. After the housing bust, there are still a lot of houses out there in bad shape that need a lot of work. While I would still advise against being a house flipper, if you’ve got the chops to do some carpentry and drywall and have a plumber and electrician friend, there’s a reasonably priced house out there for you.

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  3. Two things,

    1.) For my money, The Yardbirds For Your Love has the best rock and roll bongos of any song in the last 5o years.

    2.). Joe Strummer and the Mescaleros really produced some great music. It was like an extended Sandanista album (which is a much richer album than London Calling). Very strong reggae/ska influence and interesting lyrics. My favorite of their songs is Johnny Appleseed.

    I can’t get enough of that song.

    Like

  4. Yes, housing supply is tight overall. NAR has it at about 4.6 months or so. 6.5 is considered a balanced market.

    Tight credit remains a problem. Construction loans are hard to get.

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  5. I’ve never listened to much of Strummer’s post-Clash solo work, but that is a very nice song. I am more of a fan of Mick Jones’s Big Audio Dynamite work.

    Like the Beatles, the Clash was a band that was more than the sum of its parts.

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  6. I did like BAD though it was a little poppish for me, though I agree with you on your assessment.

    I also think John Lyden did/does a good job with Public Image Limited, he was the talent w/in the Sex Pistols.

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  7. Serious question, is there a significant chunk of our voting electorate that worries about AGW? Not in an abstract way, like worrying about what you’d do if your kid would come down with a serious illness, but the kind of worrying you’d do if your kid did come down with a serious illness. Cause the questions Katie asks seem really moronic to me and it suddenly occurred to me that maybe there is w chunk of voters that vote on this.

    http://ace.mu.nu/archives/358435.php

    Are we this far gone?

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    • Interesting take on the most recent GOP debate. I most definitely agree with his conclusions. I mostly ignore any presidential debates now, but I would definitely watch if it was a Lincoln/Douglass format.

      http://thefederalist.com/2015/08/13/megyn-kelly-shows-how-low-our-political-discourse-has-sunk/

      Since presidential debates started in 1960, the journalists who are supposed to “moderate” them have increasingly set the agenda and determined the substance of what the public sees. In the first 2016 presidential debate, Fox News’ “moderators” focused on what might embarrass candidates rather than on their record or proposals. Also, they indulged the Republican Establishment’s animus against its least favorite candidate. Though this made for an exciting show, the biggest loser was the public’s interest in understanding candidates and issues. The public interest would be best served were candidates to question one another. That’s how it was done in Lincoln’s day. We could and should get back to that.

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    • McWing:

      Are we this far gone?

      My sense is not yet. I suspect that the number of ordinary citizens who are genuinely worried about AGW is pretty small, and that the focus on it as a political matter is driven primarily by a relatively few people with unspoken agendas and their lackeys in the media.

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  8. Curic’s goal there was to label her a denier. a smear. nothing more, nothing less.

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  9. @McWing: “Serious question, is there a significant chunk of our voting electorate that worries about AGW?”

    Liberal democrats. And if you’re a liberal democrat, you want to get them to the polls on election day. But I’ve told AGW true believers that they just aren’t going to get the general public clamoring for draconian legislation until their lives are viscerally altered by the climate. The beaches have to be underwater. Or New York. It has to be 140° outside. Sinners can go to church every sunday without changing a thing about their lifestyle, because they aren’t struck by lightning when they walk through the door. And they generally won’t, until the consequences are tangible to them. And saying “by then it will be too late, it’s really too late now” is not going to convince most people that immediate action (especially any changes to their own lifestyle) are necessary.

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  10. Given the sheer volume of global warming propaganda on TV, the movies, etc, I think a lot of people are concerned about it. I don’t know how much more concern they are going to build, however.

    That said, are they willing to pay more in taxes to do something about it? IMO probably not. People’s environmentalism begins and more or less ends with recycling, using a re-usable shopping bag or water bottle and slapping a bumper sticker on their car. Even things like the light bulb ban were incredibly unpopular.

    Like

    • Even things like the light bulb ban were incredibly unpopular.

      Largely among people who do not think that climate change is a serious problem. Even low flush toilets faced a strong level of resistance.

      Like

  11. “are they willing to pay more in taxes to do something about it?”

    The progressives are willing to have someone else (the evil rich) pay more taxes to do something about it. And if those additional taxes actually get used for something else—well it’s the thought that counts.

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  12. @yellojkt: “Largely among people who do not think that climate change is a serious problem. Even low flush toilets faced a strong level of resistance.”

    And even some people who think climate change is a problem, but like decent light bulbs, like inexpensive lightbulbs, and aren’t fans of the mercury in compact fluorescents. Don’t get me wrong. One day I’m going all LED.

    And of course the low flush toilets faced a strong level resistance. Especially the early ones. Want to get rid of an especially impressive bowel movement? Flush, flush, flush, flush, flush, flush, flush, flush. Ugh.

    Fortunately, the low flush toilets I have are low flush because of the settings of the ballcock, which can be changed. So they are medium flush toilets now (much better).

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  13. @ben1brigade: “The progressives are willing to have someone else (the evil rich) pay more taxes to do something about it. And if those additional taxes actually get used for something else—well it’s the thought that counts.”

    In the case of environmental legislation, and carbon taxes, it’s not the evil rich, and everyone knows it. It’s everybody. It will be the evil rich who are least affected by a 10% bounce in their electricity bills, and have the resources to replace everything they own with something more energy efficient, should they wish, or have a complete energy efficient remodel of their house or business done.

    It’s everybody else (especially the middle class) for whom punitive environmental legislation will have the most disparate impact, which is why Carly Fiorina is right: things need to be looked at very closely before passed into law.

    The carbon credits thing just strikes me as just a strategy to make money in trading carbon credits and working to create carbon credits you otherwise do not need or have no rational reason to have so that you might sell them and so on.

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  14. Hence the proposals to have an income based carbon tax rebate to make sure only the right people are stuck with the bill.

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  15. Progressive denialism at least as strong as anything about climate change:

    http://www.vox.com/2015/8/13/9145467/extreme-poverty-global-poverty

    Nowhere is the term “capitalism” mentioned. Apparently it was a big collective action movement by the “world”.

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  16. @jnc4p: “Hence the proposals to have an income based carbon tax rebate to make sure only the right people are stuck with the bill.”

    I’m dubious. The rebates would cover increase in energy costs? Increase in the cost of shipped goods? Some sort of financial coverage for those put out of business, or those who liked/used/depended on their products?

    And the rebates would go to who? Households with an income of less than $30k a year? Although folks making $60k probably can’t afford bigger energy bills much better? Meh.

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  17. “Nowhere is the term “capitalism” mentioned. Apparently it was a big collective action movement by the “world”.”

    Heh. Social programs. Funded by magic.

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  18. “The rebates would cover increase in energy costs?”

    or more. It’s an excuse to do some more redistribution on top of it. Rounding up in effect.

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  19. Largely among people who do not think that climate change is a serious problem. Even low flush toilets faced a strong level of resistance.

    I’m still pissed.

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  20. i just flush twice.

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    • i just flush twice.

      Heck. Flush five times. A man of your means can afford that level of (in)conspicuous consumption.

      Like

    • Scott, I have re-read our conversation and I want to be sure I understand you. I think I do, and I think you may be correct, but I am not sure, upon re-reading.

      First, we agree, I think, that the Court said fetuses pre-viability are not persons under the 14th A. and have no discernible rights to be weighed against the rights of the mama, which are 14th A. rights. Or do you think the rights the Court assigned to mama were common law rights and not 14th A. rights?

      Second, we agree that post viability, fetuses have rights of some sort that may be recognized and balanced against the mama’s rights. Right? But you think the rights being discussed for the fetus cannot be 14th A. rights, or they would trump the mama’s rights. Right?

      I don’t think that is necessarily the case: it could be that the rights being discussed are 14th A. rights on both the part of the mama and the fetus, but if so, are being read as recognizing that the state has a duty to protect the mama first, she being a citizen and what have you, but in doing so can make allowances for the potential citizen who is now viable outside the mama, the logic being that since the 14th applies to persons “born” the recognition that is being extended to post viable fetuses is “optional”.

      I think you are saying that logically if the fetus can be viable outside the womb then while the pregnancy can be terminated, the viable fetus cannot be, if the 14th attaches. Which I too think is logical.

      You have got me thinking about this – and of course the case itself is not – how shall we say this? – crystal clear.

      Just let me know if I am reading you correctly.

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      • Mark:

        First, we agree, I think, that the Court said fetuses pre-viability are not persons under the 14th A. and have no discernible rights to be weighed against the rights of the mama…

        I don’t know if they explicitly said that, but certainly that is the unavoidable implication of their decision.

        the rights of the mama, which are 14th A. rights. Or do you think the rights the Court assigned to mama were common law rights and not 14th A. rights?

        I thought that the primary right which the Court assigned to the mother, upon which the entire Roe regime rests, was the right to privacy discovered by the court in Griswold. I did not think that the court claimed to have discovered that right in the 14th, but rather in “penumbras, formed by emanations” from the guarantees found in the Bill of Rights.

        Second, we agree that post viability, fetuses have rights of some sort that may be recognized and balanced against the mama’s rights. Right?

        No. I don’t think Roe recognizes the rights of any unborn baby at any stage. The Court specifically grounded the state’s power to regulate abortion post viability not in any rights interest held by the unborn, but rather in the state’s interest in protecting “potential life”. The fact that the court described a post viability baby as a merely a potential human life rather than simply a human life I think strongly implies that it was not assigning any constitutional rights to the unborn, constitutional rights being reserved for citizens, a living human being one necessary characteristic of citizenship.

        I also think the fact that the states were given the option to protect post-viability life, but were not commanded to do so (within the confines of also respecting the right to life of the mother), also unavoidably implies that the court was not recognizing the rights of the unborn, but rather was recognizing the right of states to act on a perceived interest.

        But you think the rights being discussed for the fetus cannot be 14th A. rights, or they would trump the mama’s rights. Right?

        Even if I thought that a fetus was granted 14th A rights, I would not say that they trump the mothers’ rights. I am not sure how exactly the right to equal protection under the law for two different people could conceivably conflict such that they could not be reconciled, but in the event I am not at all sure there is an obvious legal solution.

        I don’t think that is necessarily the case: it could be that the rights being discussed are 14th A. rights on both the part of the mama and the fetus, but if so, are being read as recognizing that the state has a duty to protect the mama first, she being a citizen and what have you, but in doing so can make allowances for the potential citizen who is now viable outside the mama, the logic being that since the 14th applies to persons “born” the recognition that is being extended to post viable fetuses is “optional”.

        One problem with this is that the option to protect the fetus was not conditioned on the rights of the fetus being in conflict with the rights of the mother. Even if there was no threat to the mother’s life, the court (implicitly) said that the state could choose not to protect the fetus. If the court was assigning constitutional rights to the fetus, it would not have made sense to allow such an eventuality. Again, I think Roe’s (empty, to be frank) allowance for the state to regulate or prohibit abortion post viability was based strictly on the interests of the state, not the fetus.

        I think you are saying that logically if the fetus can be viable outside the womb then while the pregnancy can be terminated, the viable fetus cannot be, if the 14th attaches.

        I don’t think that is what Roe said, but that is certainly what I believe. And I believe it should be the case even if the 14th doesn’t attach.

        Like

        • Thanks, Scott. I understand the privacy right to be an emanation from the 4th, 5th, 1st, and 14th As, specifically. But an emanation it is. I tend to agree with it as a logical consequence of prohibiting unreasonable searches and seizures in Griswold, etc.

          Yes, it seems it must be that the Court did not extend personhood back to viability, as you first asserted.

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        • Mark:

          Yes, it seems it must be that the Court did not extend personhood back to viability, as you first asserted.

          Thanks. I wish it were otherwise, but alas it is not.

          BTW…good discussion.

          Like

        • Mark:

          I’ve been away for a few days. I read back through our discussion and I wanted to correct one thing. At the end, in response to the point that the Court has not extended rights to a fetus, I said:

          I wish it were otherwise, but alas it is not.

          That isn’t really right. I think it would be just as wrong for the court to read fetal rights into the constitution as it was for the court to read a right to abortion into the constitution. The constitution grants neither fetal rights nor a right to abortion, which is exactly why resolution of the issue belongs in state legislatures, not federal courts.

          Like

  21. what i really should do i crap in the stream in the park by my house, right? that’s the libertarian way.

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    • Is the stream on your property? Is it navigable and subject to federal law? Can you let your cows bathe in it? These are truly basic questions that we must address before you crap.

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  22. what i really should do i crap in the stream in the park by my house, right?

    Sure. Why should you be held to a higher standard than Freedom Industries?

    It’s a good thing that Chinese companies don’t have to deal with job-killing regulatory agencies like the OSHA and the EPA.

    http://www.bbc.com/news/world-asia-33900268

    Like

  23. I love the logic of no-water urinals and low flush toilets in the temperate rainforest that is the Northeast. As if my using less water does a damn thing for California.

    But hey, we’re all in this together

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    • -I have a serious – if I were King – plan for water in the dry parts, like where I live.

      First, we recognize that the Oogalala which undergirds the plains states from Nebraska to Texas is part of the Missouri-Mississippi system. It is. Then we build pipelines from known flood stage areas on all the northwestern tributaries of the M-M system, that drain flood water and save the lower M-M from periodic flooding, and dump into various wells/reservoirs drilled into the Oogalala. This would all move from higher altitude to lower altitude and would be gravity feed for the most part, thus being a big but doable engineering project.

      All states that wanted to participate would form an interstate compact and let bids. Employment boon. Water solution without crazy east to west uphill pumping.

      To fix the drain on the Colo river, SoCal will have to do massive desalination and AZ will have to work out desalination in the Gulf of Lower California, probably in cooperation with Mexico. The Colorado River can probably handle the Las Vegas load by itself if it isn’t expected to provide water to the SoCal coast and to Phoenix.

      More good jobs. Just takes a little foresight by the states. An AZ deal with MX might take a federal gummint blessing of course.

      TX below the Llano Estacado might benefit from its own desalination plants on the Gulf of Mexico, but the trouble there is that pumping uphill would be required. This uphill pumping issue would also plague trying to reach the Inland Empire of SoCal with Pacific desalinized water. However, for TX and CA, plentiful wind and solar power, much of it already in place, might make uphill pumping somewhat feasible.

      Like

      • Tianjin looks like what a gas-air bomb would do, and I think that is in effect what occurred. I have been afraid of an intentional gas-air bomb along the Houston Ship Channel since 9-11.

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  24. that story says their EPA equivalent is on the scene.

    Like

  25. “It’s a good thing that Chinese companies don’t have to deal with job-killing regulatory agencies like the OSHA and the EPA.”

    Not a good time to by talking trash about how great the EPA is. #YouHadOneJob

    Like

  26. @markinaustin: “-I have a serious – if I were King – plan for water in the dry parts, like where I live.”

    You need to be in charge, dude. Ah, for the days where we seriously tackled such problems!

    Like

  27. @markinaustin: “Is the stream on your property? Is it navigable and subject to federal law? Can you let your cows bathe in it? These are truly basic questions that we must address before you crap.”

    I thought it was pretty much considered that every creek that runs from one place to another is considered navigable. 😉

    Like

    • KW:

      was pretty much considered that every creek that runs from one place to another is considered navigable.

      I’m pretty sure that any puddle deeper than 1 inch is considered navigable these days. This is what comes from an unconstitutional and unelected bureaucracy.

      Like

  28. “BTW…good discussion.”

    I have learned so much about law here..

    Like

  29. Like

  30. Worth a read:

    “Hillary Clinton on the Sanctity of Protecting Classified Information
    Glenn Greenwald

    Aug. 12 2015, 11:47 a.m.”

    https://firstlook.org/theintercept/2015/08/12/hillary-clinton-sanctity-protecting-classified-information/

    Like

  31. I was not in the room when I heard a comment so absolutely Ignorant and & stupid

    Like

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