Morning Report: Exporters are cutting jobs 10/16/15

Markets are flattish this morning as earnings come in. Bonds and MBS are flat.

Consumer sentiment increased in October, according to the University of Michigan.

Job openings fell in August to 5.37 million from 5.67 million the month before.

Industrial production fell by 0.2% in September, and manufacturing production fell by 0.1%. The strong dollar and overseas weakness is obviously having an impact on exporters. Capacity Utilization fell to 77.5%. Capacity utilization hit a post-crisis high about a hear ago at 79% but has been falling ever since. This is going to concern the Fed, but keep in mind that manufacturing isn’t the dominant economic force that it was 20 or 30 years ago.

Needless to say, when exporters are facing headwinds like a strong dollar and weak overseas economies, they start cutting jobs. The biggest industries affected: transportation equipment, machinery, computer and electronic products, and primary metals. You can see below the trend in export employment versus employment overall.

Inflation remains tough to find. Social Security recipients will get no cost of living adjustment this year. Yet another excuse for the Fed to stand pat in December.

The Federal government now backs 50% of all mortgage loans made in the US. To put that number in perspective, in 1981, the Federal government backed about 7% of mortgages in 1981. Banks are reluctant to portfolio as many mortgages as they used to, which makes sense – anyone with grey hair knows how the banks got absolutely annihilated by their mortgage portfolios in the 1970s when rates went up dramatically to combat inflation.

48 Responses

  1. Finally–frist!

    Happy Friday, all. Oh, and Go, Spartans!!!

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  2. I feel like I am back in the 80s again, where Wisconsin sucks and Iowa and Michigan State are good…

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  3. Speaking of the 80s, one of the kids in the office is wearing black and white checkered Vans shoes.

    How in the hell did the fashion disaster that was the 1980s become hip again?

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  4. Heh–I hadn’t thought about that (the 80s flashbacks). Although I’ve been shaking my head over the clothes kids are wearing for about three years now–they didn’t look good when I was in college, and time hasn’t improved them any!

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  5. bring back grunge!

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  6. Give it about 10 years, NoVA. Your kid will be wearing it when he’s a high schooler.

    Did you plan ahead and save any of your old clothes?

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  7. BTW, I thought your idea of indexing retirement age by income is an interesting one.

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  8. thanks. i almost wrote that, of course, i meant that those with means could of course retire while everyone else works in the acid mines. but that would be trolling. and i think i’ve gotten under enough people’s skin.

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  9. bring back grunge!

    ah yes, the era where it was cool to suck at playing your instrument..

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  10. we were just experimenting in not caring.

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  11. “But saying stupid things about economics is why God put socialists on this planet. Sanders has to say such things because that is what socialists do. It’s Aesopian: The scorpion must sting the frog; water must seek its level; Anthony Weiner must text junk pics; and socialists must pretend that they have serious ideas.”

    Today’s Jonah Goldberg G-file

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  12. i think i’ve gotten under enough people’s skin

    It is amusing to watch at times. . .

    Did I interpret your comment correctly (that higher incomes would mean that people would be eligible for retirement later than lower incomes)?

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  13. yes. that’s what i meant. i thought it a reasonable way customize the program.

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  14. NoVA, in my ongoing ‘debate’ with Aletheia I’ve been unable to find tax breakdown by quintile data older than 1979. Do you happen know if that’s because it wasn’t collected prior to then?

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  15. i’d dig into the data avaiable from the IRS at https://www.irs.gov/uac/SOI-Tax-Stats-Individual-Time-Series-Statistical-Tables

    also look at http://www.econlib.org/index.html

    Also, if it bother’s you, i’ll refrain from posting in those threads. as a courtesy to you, not him.

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  16. i thought it a reasonable way customize the program.

    It’s definitely an interesting idea. You might even be able to sell me on it; people like me–at least, in my line of work–tend to work into their 70s anyway. Of course, for us it’s relatively easy to do that since (1) the work is fascinating, (2) we generally haven’t torn our bodies up doing manual labor, but (3) we haven’t been all that well compensated.

    What do you think about removing the requirement to begin drawing SS at a certain age?

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  17. Doesn’t bother me at all. I’d rather see your posts in case I’ve overlooked anything.

    Aside from Aletheia I do think the funniest post of the day was from the people claiming that those states that had expanded Medicaid had actually saved money.

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  18. This will be an interesting test of the premise that government subsidies drive up educational costs.

    http://www.slate.com/blogs/moneybox/2015/10/16/financial_aid_for_coding_boot_camps_is_a_terrible_idea.html

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  19. jnc4p: “This will be an interesting test of the premise that government subsidies drive up educational costs”

    They do. Both federal and state subsidies do, because they come with mandates that cost money, ultimately in excess of the subsidies. Sometimes well in excess. Federal involvement in public education often exacts expensive regulatory burdens that do little to improve outcomes. NCLB is just expensive, ultimately, and has led to poorly performing charter schools, many profiting by offloading management expenses onto the district they are in while adding little to the education of the children they are responsible for. State takeovers of “failing” schools does little to help those schools, but takes money away from the district they were in (less teachers for the remaining schools! Brilliant!) while making it more expensive to run those taken-over schools. There is a lot of expense in reporting to make sure state and federal government feels the district is performing (and not discriminating) that grows every year, and new online testing mandates are adding huge software and hardware expenses that cannot be avoided, but there’s no evidence that these things are improving educational outcomes.

    In other words, we’re doomed.

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  20. I love this Comment in a DKOS thread,


    * [new] it’s a small minority amplified by talk radio with (0+ / 0-)
    fox providing visual reinforcement.

    it’s also well coordinated with those radio stations at the national and local radio. the outrage and timing of the same minor but loud made-to-order constituencies, the tea party (dittoheads) before it was called the tea party, with 400 coordinated blowhards in their sails, was used to intimidate and enable media and politicians much more effectively than its much larger opposition could muster.

    that rabid minority has always been there but talk radio, with limbaugh as the well scripted and managed master of rationalization made the irrational denial of reality easy and acceptable- because the left gave it a free speech free ride.

    that effect can be seen in almost any issue and could be studied if there was a written record. but it can’t be read and i’ll bet only a small percentage of the authors above mention the main cause of the insanity, if any. maybe they blame talk raido’s little brother fox.

    since the left ignored it it was/is invisible.

    when did it start? reagan killed the fairness doctrine in 1987- and by the early 90’s it was a full blown PSYOPS swiftboating the clintons, stopping health care reform, pushing deregulation of media and wall st, etc,

    that coincides with the start of record historical partisanship and a giant increase in ALEC success.

    fox didn’t start till 1996, when talk radio had already started creating the alternate reality in which it could exist.

    and all that time NO major liberal/social/environmental orgs have done anything to monitor or challenge it.

    and all this time at least 1/4 of the stations making up that psyops have been piggybacking 90+ publicly funded universities and the whole thing would probably fold if they started pulling out.

    republicanradio.org / republiconradio.org Why RW radio kicks liberal ass and what to do about it.

    by certainot on Sat Oct 17, 2015 at 09:43:32 AM PDT

    [ Parent ]”

    http://www.dailykos.com/story/2015/10/17/1434199/-The-Struggle-To-Succinctly-State-The-Existential-Threat-That-Is-The-Republican-Party

    I don’t think there is a progressive in this country that could find fault with it.

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  21. @brentnyitray: On, Wisconsin!

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  22. Good job vs UM… Next best thing to a Wisconsin win is a UM loss…

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  23. I don’t think I’ve ever seen such a wild finish! I was in the midst of composing a nice little concession text to my family (who’d been sending me gloating texts the whole second half), when BAM. They play osu on 11/21–Go, Spartans!!!

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  24. Like

  25. @Scottc1: “such as Senator Warren’s demand that companies be made to publish statements on the ratio of CEO pay to median worker pay in order to facilitate public-shaming sessions”

    Reading the article (which I like, very interesting how it dovetails with a book I just finished, Incognito, addressing how pretty much everything we do has a large biological component and a genetic determinism to it, thus making our incarceration system highly irrational), this stuck out to me, because don’t all the big companies have to publish that data (without a chart pointing out the disparity between the pay scales, of course).

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  26. @scottc1: “When it comes to getting people off of unemployment and into a job, it may be the case that punishing malingering is less effective”

    What does one consider punishment in this scenario? And don’t the numbers indicate the best way for someone on unemployment to get a job is to end their unemployment checks?

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  27. More observations on the Williamson article:

    Our mass shooters are the product of failed mental-health practices (members of which political party do you imagine dominate the ranks of public mental-health facilities?), failed schools (members of which party dominate the public schools?), failed families (members of which party have spent 25 years pooh-poohing “family values” as a blend of bigotry and nostalgia?) and, of course, of their own personal demons.

    … and their prescriptions to mind-altering prescription drugs, such as anti-depressants.

    So when a product of a fractured family and a single-mother household slips through a social safety net staffed by unionized Democratic voters, the obvious party to blame is the party that has nothing whatsoever to do with the situation.

    Quotes for truth.

    We “got tough” on drugs rather than help addicts, as though a few months in prison makes an addict anything other than an addict with new traumas and additional criminal skills.

    Also quoted for truth. I wish Kevin Williamson was running for the Republican nomination. 😉

    The entire debate about economic inequality is focused on punishing the wealthy (with higher taxes or regulation) rather than on improving the prospects of low- or moderate-income Americans.

    Yup.

    The desire to punish Christians and social conservatives for their views on homosexuality and gay marriage is far more powerful than the desire to facilitate gay Americans’ ability to organize their own lives as they see fit

    And these people all populate the Plum Line comment boards.

    After having read it, I conclude that Williamson must be brilliant, as I agree with him entirely.

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    • KW:

      After having read it, I conclude that Williamson must be brilliant, as I agree with him entirely.

      It was a very good article, but one of the problems, of course, with deterministic claims is that they themselves are then subject to determinism. The obvious rejoinder to anyone who claims to have concluded that determinism best explains things is “You are just saying that because you have no choice.”

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      • The Williamson article was very well written and had food for thought, but it was hardly ground breaking. We all know that heredity, plus womb environment, plus early childhood nutrition and stimulation are all biggies, as is “nurture”. But as one neuroscientist I knew – now deceased – used to say [half seriously], nature [the sum of heredity, pre-natal environment, and nutrition] may be as much as 90% of human makeup, attitude is in the other ten per cent, and for most practical purposes, attitude is everything.

        Williamson is usually a good read – IMO.

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        • Mark:

          To me the most interesting notion raised is the possibility that free will doesn’t exist. We have talked about that here in the past, and I think that both you and McWing have expressed at least tepid skepticism that it does. Williamson only alludes briefly to the implications of that fact – if it is a fact – but I am not sure you guys appreciate how fundamental the notion of free will is to our politics, our governance, even our generic thinking, and quite hwhat a rabbit hole (to use Williamsons term) one enters by rejecting it.

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  28. http://www.washingtonexaminer.com/gop-vet-trump-win-looking-more-and-more-likely/article/2574360

    Castellano: “No GOP nominee in modern history has failed to win either Iowa or NH. Period.”

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    • McWing:

      No GOP nominee in modern history has failed to win either Iowa or NH. Period.

      No GOP nominee in modern history has been such an unthinking clown as Trump, either. So if Trump wins both, we will see history being made one way or another.

      That being said, if the final contest is between Trump and [name a Democrat], I will vote for Trump. That is how truly awful Democratic ideas are.

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      • When even the likes of the New York Times is publishing pieces pointing out that environmentalism is a religion, you probably should pay attention.

        http://mobile.nytimes.com/2015/10/04/opinion/sunday/the-reign-of-recycling.html?_r=0

        [Recycling] makes people feel virtuous, especially affluent people who feel guilty about their enormous environmental footprint. It is less an ethical activity than a religious ritual, like the ones performed by Catholics to obtain indulgences for their sins.

        Religious rituals don’t need any practical justification for the believers who perform them voluntarily. But many recyclers want more than just the freedom to practice their religion. They want to make these rituals mandatory for everyone else, too, with stiff fines for sinners who don’t sort properly. Seattle has become so aggressive that the city is being sued by residents who maintain that the inspectors rooting through their trash are violating their constitutional right to privacy.

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  29. @scottc1: “When even the likes of the New York Times is publishing pieces pointing out that environmentalism is a religion”

    Yes, but the apocalyptic pronouncements of the climate change folks isn’t typical religious “revelations” about end times, it’s hard science. Science! That’s totally different.

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  30. @scottc1: “That being said, if the final contest is between Trump and [name a Democrat], I will vote for Trump. That is how truly awful Democratic ideas are.”

    I’m clearly more excited by the novelty that is Trump than you are but I will also vote for Trump if he gets in the nomination! I think it’s by no means guaranteed, but very possible, that he would do more to shake up the grinding Washington machine than any other political candidate, including every last “I want smaller government—oops, just couldn’t do it, sorry, had to make it bigger, don’t know how that happened” Republican in the race.

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  31. That there are people who feel guilty about their “enormous environmental footprint” (except for Al Gore, presumably) don’t deserve the wealth the have. I fully support confiscating wealth that makes you felel guilty.

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    • NDP was biggest loser. It was first in the polls going into this 11-week campaign.

      Note what multi-party parliamentary governing does to the popular numbers:

      2011 – the Conservatives won 166 of 308 seats — or 53.9 per cent — but only 39.6 per cent of the popular vote.

      Yesterday –
      Liberals took 184 seats — 54.4 per cent of the new total of 338 seats — with 39.5 per cent of the popular vote.

      Provincial elections are more important in Canada than in the USA because of the looser federation. There were none on Tuesday and only Newfoundland-Labrador are scheduled this year, in November.

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  32. @scottc1: I think free will exists, but is much more limited than we societally accept. While determinism has become the rage on the left for their issues (homosexuality is not a choice, and so on) they remain all about free will when it comes to other issues, where there is a bad guy to condemn for their poor choices. But when you combine instinct, the limitations of the wetware we cogitate with, and context, I think free will is highly constrained and tend to believe the punishment model doesn’t make much sense, and doesn’t constitute “justice” in the sense we emotionally feel it does.

    But, one of deep limitations in appreciation of the limitations of our “free will” is how little we have conscious access to the construction of our thoughts and beliefs inside our brains, and our neocortex “writes” a narrative of choices, good and bad, where arguably we actually have little choice in our decisions and behaviors.

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    • KW:

      I think free will is highly constrained and tend to believe the punishment model doesn’t make much sense, and doesn’t constitute “justice” in the sense we emotionally feel it does.

      In the absence of free will, nothing constitutes justice. The concept would be meaningless.

      But if free will exists, albeit in a highly constrained manner, perhaps the punishment model and our feelings about justice are a part of that constraint, ie we promote a punishment model and have feelings about justice precisely because we must, it is a part of our nature to do so. And if so, it might also be (in fact almost certainly would be) the case that a belief in free will, justice, and the efficacy of a punishment model actually does more to promote our survival (both as individuals and as a species) than the alternative. In which case it might ultimately be detrimental to reason our way out of that belief, even if it is false.

      This is definitely a rabbit hole, as Williamson suggested.

      Like

  33. “I’m so glad women in Canada can vote.”

    Universal voting rights are inevitable in every 1st world society. There was never any stopping them. Doesn’t matter: every voter is a low information voter, ultimately, and makes poor decisions when voting no matter how good they think their decisions are. It is only luck that has, so far, kept us from destroying ourselves with Democracy.

    Alas, it is the best of all political systems thus far tried, so . . .

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    • KW:

      It is only luck that has, so far, kept us from destroying ourselves with Democracy.

      I think we ran out of luck somewhere between 1913 and 1932.

      Like

      • Interesting take from Yglesias:

        http://www.vox.com/2015/10/19/9565119/democrats-in-deep-trouble

        The Democratic Party is in much greater peril than its leaders or supporters recognize, and it has no plan to save itself.

        Yes, Barack Obama is taking a victory lap in his seventh year in office. Yes, Republicans can’t find a credible candidate to so much as run for speaker of the House. Yes, the GOP presidential field is led by a megalomaniacal reality TV star. All this is true — but rather than lay the foundation for enduring Democratic success, all it’s done is breed a wrongheaded atmosphere of complacence.

        He goes on to point out that, outside of the presidency, the R’s control huge percentages of the rest of government – congress, state houses, governors mansions, etc – and the D’s have no plan at all for how to reverse that trend.

        Not only have Republicans won most elections, but they have a perfectly reasonable plan for trying to recapture the White House. But Democrats have nothing at all in the works to redress their crippling weakness down the ballot. Democrats aren’t even talking about how to improve on their weak points, because by and large they don’t even admit that they exist.

        Instead, the party is focused on a competition between Bernie Sanders and Hillary Clinton over whether they should go a little bit to Obama’s left or a lot to his left, options that are unlikely to help Democrats down-ballot in the face of an unfriendly House map and a more conservative midterm electorate. The GOP might be in chaos, but Democrats are in a torpor.

        Yglesias’ observations about the trends are correct, but I don’t think it is because of D complacency or “torpor” about capturing the dispersed levers of government. It is much more efficient and less messy to capture the least representative portions of government, the presidency and the courts, and then use those in an authoritarian manner to impose its will. The progressive left knows this, and indeed the whole progressive project relies on it and has in fact been quite successful at doing it. Why should it waste its time trying to control state governments in order to pass progressive programs when it can degrade and eliminate the power that such governments can wield and thus impose its policies through the will of 1 president and 5 robed lawyers?

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  34. Interesting date range, income tax through Hoover’s twin.

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    • McWing:

      Interesting date range, income tax through Hoover’s twin.

      I just figured that once FDR got elected, we clearly had run out of the luck KW was talking about, and we may well have already run out of it as soon as Wilson took office and the 16th Amendment got passed.

      Like

  35. @scottc1: “In the absence of free will, nothing constitutes justice. The concept would be meaningless.”

    Objectively. But if we subjectively experience our instinctual compulsions and reactions as a retconned illusion of “free will”, then justice would have a subjective meaning. Indeed, the compulsion towards a punishment model might give a sense of retconned “justice”.

    “But if free will exists, albeit in a highly constrained manner, perhaps the punishment model and our feelings about justice are a part of that constraint, ie we promote a punishment model and have feelings about justice precisely because we must,”

    Pretty much! Ultimately, if we were to change our punishment model into a more pragmatic model, it would be because of the domination of people who feel compelled towards pragmatism rather than justice. I have no choice but to feel a pragmatic model is better!

    “it is a part of our nature to do so. And if so, it might also be (in fact almost certainly would be) the case that a belief in free will, justice, and the efficacy of a punishment model actually does more to promote our survival (both as individuals and as a species) than the alternative.”

    Than any alternative? I tend to suspect that’s not the case, although I suspect it’s certainly a model far superior to others, which has led, in no small part, to Western democracy. So ultimately it has had it’s benefits!

    “In which case it might ultimately be detrimental to reason our way out of that belief, even if it is false”

    Potentially it could be. Change is not without risk! In any case, it’s unlikely we’ll get the vast majority of people to agree to stop seeking punishment/justice/revenge when they feel someone or some group of people has gotten away with something.

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    • KW:

      …then justice would have a subjective meaning.

      I have no idea what this means, but perhaps that is because, as mentioned, to reject the notion of free will is to retreat into a linguistic and conceptual rabbit hole.

      Than any alternative?

      There is only one alternative to a belief in free will, and that is a rejection of the belief. So, yes.

      Like

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