Morning Report: Housing starts rebound to 1.2 million. 10/20/15

Stocks are lower this morning after IBM missed earnings. Bonds and MBS are down.

Housing starts rose 1.2 million in September, beating the 1.1 million estimate. These are up 4.7% from a year ago. Building Permits disappointed however, coming in at 1.1 million vs. the 1.2 million estimate. Starts saw an increase in single fam and multi-fam, however permits saw a drop in multi-fam.

Goldman is calling the rally in Treasuries overdone. Their argument is that investors are underestimating the potential for inflation. Not seeing where inflationary pressures are going to come from, with a strong dollar, very little wage growth, and capacity utilization at 77%. The current probability of a Dec rate hike is 33%.

Speaking of wage growth, Wal Mart was hammered last week after announcing that wage increases would cause earnings to drop next year. This will be interesting to watch – do other retailers follow suit or do they maintain lower wages? Some early hints that it will be the former. Turnover for retailers has increased to 65% from 50% and open retail positions are up 31% this year.

The Obama administration rejected calls to re-privatize Fannie and Fred, leaving GSE reform for the next president. The government is making a lot of cash from F&F. Both private investors (especially activist funds who hold Fannie prefs and common) and affordable housing advocates are pushing the government to clarify where F&F stand.

Apparently Joe Biden’s decision of a presidential run will be released any day now.

21 Responses

  1. Mark:

    You may end up being able to vote for your guy. Webb apparently thinking about an independent bid. Press conference today at 1pm

    http://www.nytimes.com/politics/first-draft/2015/10/19/jim-webb-a-blip-in-the-polls-warns-of-an-independent-run/

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  2. Curious who the establishment hates more, Trump or Cruz?

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  3. Webb as an independent and Biden as a candidate will shake things up for sure..

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    • NYT thinks there is a “drum beat” [I kid you not] for Bloomberg as an I.

      Lots of drums clustered around the Times Building in Manhattan?
      ——————————————————————
      Yglesias is correct on Ds, I think. WJC and BHO turned DP into personality cults while in office and it only got “healthy” in opposition to GWB.
      —————————————————————–
      I think Webb is a mixed bag, although I like him personally and he was the only one to understand the difference between an “enemy” and a “political opponent” during the D mutual press conference that CNN called a “debate”.
      —————————————————————–
      All I am willing to accept is that we have more free will than any other life form on Earth and that the success of the ethics of any culture or social group of humans depends on the group’s members exercising their free will to stay within the boundaries that others have set by way of establishing the ethics. This works for the longest time, it seems, when the ethics change from time to time to satisfy the group.

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      • Mark:

        WJC and BHO turned DP into personality cults while in office…

        I think the hero-worship of Clinton came largely post-presidency or at least the latter half of his second term, similar to that of Reagan among R’s. The cult-like atmosphere around Obama, which has existed since even before he was elected, seems to me to be rather unique in party politics.

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        • Scott – my comment was not about “hero worship” but about how the Ds let their elected Presidents take over the command and control of fundraising and organizing. The entire D Party effort during both those presidencies was about the WH.

          Absent a D POTUS, the DNC concentrated on the various legislative branches and actually had a 50 state thing going with Dean. But it is the two presidencies that have left Ds without a bench. And that is why Yglesias’ article rings true. The Ds are in trouble but don’t seem to understand the organizational weakness that is crippling them. Instead, they make fun of R infighting. Well the Rs have done their grass roots stuff well, win or lose the WH.

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        • Mark:

          Scott – my comment was not about “hero worship” but about how the Ds let their elected Presidents take over the command and control of fundraising and organizing.

          Ah…I guess I was thrown off by the cult of personality comment.

          The Ds are in trouble but don’t seem to understand the organizational weakness that is crippling them.

          Personally I kind of doubt they are in that much trouble. The destruction of federalism has made state houses largely irrelevant, and the rise of the regulatory bureaucracy is making Congress increasingly irrelevant. Holding the presidency nowadays gives you both the power to make law and the power to appoint judges that will uphold the laws you make. True, it is (mostly) the case that huge, society transforming legislation like Obamacare requires control of the legislature, but it is also true that most governing involves far more pedestrian types of legislation that can be and routinely are enacted via the regulatory state, under the control of the executive. And frankly, given that most of the career bureaucrats are of the left themselves, even if the D’s manage to lose the presidency they will still retain significant power within the the regulatory state. (See Lois Lerner’s IRS). And with the political left’s infiltration of the legal system, sometimes it even manages to pass huge, society transforming legislation even without the legislature, via courts…see abortion and SSM.

          To think that the left’s lack of a plan to capture legislative bodies is a problem for the D’s is, to my mind, to significantly overestimate the need to hold those institutions. It’s not your father’s Constitution any more.

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  4. Hell freezes over. Krugman calls for less cowbell in Japan.

    “But Japan and the world look different now, and trying to pin down that difference may help clarify matters.

    It seems to me that there are two crucial differences between then and now. First, the immediate economic problem is no longer one of boosting a depressed economy, but instead one of weaning the economy off fiscal support. Second, the problem confronting monetary policy is harder than it seemed, because demand weakness looks like an essentially permanent condition.”

    http://krugman.blogs.nytimes.com/2015/10/20/rethinking-japan/

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  5. If one believed in the theory of Gaia, should this milestone be touted or mourned?

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  6. The Case for the Empire:

    The very anti-democratic premise of the Star Wars movies is pretty well documented. I mean, one of the heroes is a princess. It is based on the premise that a semi-hereditary elite based on mystical powers has the duty to act on their own.

    David Brin, a noted science fiction author, has made that claim multiple times and places.

    http://www.davidbrin.com/starwars1.html
    http://www.davidbrin.com/starwarsontrial.html

    In tone and philosophy, Star Wars is epic fantasy, not science fiction.

    BTW, I already have reserved seats for Episode 7.

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  7. I didn’t realize that EP VII is going to be rated PG-13. I don’t have a problem with that, but I’m a little bummed that I can’t take my kid to see it. he’s seen I, 4, 5, and 6 without a problem. but he was eerily quiet after seeing the latest preview. i might have to watch it first without him and make a call.

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    • I had heard that the cutting off of the arm in the cantina in Episode IV was inserted solely to avoid a G rating which would have been the kiss of death from a marketing point of view. Also, at that time, the PG-13 rating did not exist. It was instituted as a reaction to Indiana Jones and the Temple of Doom which has some scenes I still find bothersome.

      I don’t know how old your kid is, but that is a good feature of the rating system. Parents should be making these decisions. I was very lax in what I allowed my kid to watch. At 14 we took him to see “Avenue Q” which has live puppet sex on stage. At 15 we took him to see “Spring Awakening” which involved partial nudity and the simulated rape of a pre-Glee Lea Michelle.

      In our house, he had complete run of our DVD collection but the only R-rated movies in that were the collected works of Kevin Smith. His favorite movie as a teenager was the PG-13 “Bring It On” which IIRC has no actual nudity.

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  8. he’s 6. and very hit and miss with things. he gets more upset with “the main character is in trouble and might not make it out of this” which in any kid movie, of course things are okay at the end.

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    • My granddaughters, the 6.8 YO twins who live with me, get scared during our readings of Nancy Drew and watching Nature.

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    • Six strikes me as young for any non-animated movie with a 2 hour plus running time. My parents took my eight-year-old sister to one of the James Bond movies with Richard “Jaws” Kiel in it and she hid behind her seat the entire movie and was terrified for weeks afterwards.

      As kids, my parents used to take my brother and me to the drive-in where the first feature was a Disney live action movie (think anything starring Tim Conway and/or Don Knotts) and the second feature was something for the grown-ups. We would fall asleep in the back seat or back window. But one time my brother stayed up and say the horsehead scene from The Godfather. That scarred him good.

      My advice would be to leave the kid at home and watch it with him when it comes out on DVD next summer.

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