Morning Report: Weak factory orders and strong vehicle sales 11/3/15

Markets are lower this morning on no real news. Bonds and MBS are down.

Vehicle sales are coming in strong this morning, as the US goes through a long-delayed upgrade cycle. The average age of a US car has been at record levels for years, but consumers have been reluctant to spend on a new car.

The ISM New York index jumped to 65.8 from 44.5 last month. This is a surprising reading given that factory orders fell 1% in September and August was revised downward from -1.7% to -2.1%.

Economic optimism fell in November, according to the IBD / TIPP Economic Optimism Index.

Weaker economic data has prompted the Atlanta Fed to take down its fourth quarter estimate for economic growth to 1.9%. Their prior estimate was 2.5%. While 1.9% growth is probably strong enough that we shouldn’t be on the zero bound anymore, it is hard to see how this economy is overheating.

Home Prices continue to climb, according to CoreLogic. Prices rose 0.6% in September and are up 6.4% year-over-year. Interestingly, they put out a map of the overvalued and undervalued real estate markets, and Southern California is largely undervalued. Green is considered undervalued, red is overvalued, grey is normal. Not sure how they are calculating this, but I find these results surprising.

If you wondered what the median house looks like in these supposedly “undervalued” markets, here you go.

Bill Gross is suggesting that the Fed do “Operation Switch” which is the reverse of Operation Twist. The idea is to steepen the yield curve by selling longer-dated bonds and buying shorter dated bonds. Here is novel concept: How about we let the Treasury market be an actual market and let investors determine the cost of money.

Seriously delinquent loans have hit a new post-crisis low, hitting 1.59% in September down from 1.96% a year ago. Seriously delinquent loans hit a high of 5.59% in February 2010. A “normal” rate of delinquency is below 1%, so the numbers are still somewhat elevated. I suspect many of these remaining seriously delinquent loans relate to zombie foreclosures left over from the bubble days, largely in states with judicial foreclosure laws.

13 Responses

    • Great writing.

      And like a boulder thrown into a pond, it will have public consequences for decades.

      Boulders thrown into a pond have public consequences for decades? Huh? (Sorry…couldn’t let that one pass.)

      Like

  1. Like

  2. “Forget it, he’s rolling.”

    Like

  3. Perfect example of why people hate the media:

    “NYT series on arbitration clauses omitted NYT’s own arbitration clause”

    https://www.washingtonpost.com/blogs/erik-wemple/wp/2015/11/03/nyt-series-on-arbitration-clauses-omitted-nyts-own-arbitration-clause/

    Like

  4. Funny, the party that loves to throw out charges of hypocrisy is cool with their own..

    Like

  5. ” the party that loves to throw out charges of hypocrisy”

    That’s different. The only hypocrisy that counts is the “family values” kind. If the source of your moral authority isn’t traditional/religious, it isn’t hypocritical to do the opposite of what you say others should, it’s enlightened. It’s just recognizing that, while all animals are equal, some are more equal than others.

    But if you are religious and you have an affair, or are opposed to drugs and get addicted to pain pills? Well, there’s a reason “Hitler” and “Hypocrisy” both start with an “H”.

    Like

  6. @markinaustin:

    From the article: “When it comes to cultural analysis, many evangelicals have sex too much on their minds.”

    Man, ain’t that the truth? But it’s human nature.

    “By many indicators, our society has gotten better. The divorce rate has been declining since the early 1980s. Since 1990, the rate of abortions has fallen by more than a third, and the number of abortions each year has fallen by more than half. This year, the Centers for Disease Control and Prevention reported that the percentage of teens having sex has declined significantly over the past 25 years. Crime, violent crime, and rates of homicide are down by more than 50 percent from the early 1990s.”

    Good news is pretty much invisible, bad news is always obvious (and, usually, “the worst ever”). Again, human nature.

    Like

    • @KW –

      There also seems to be a false sense of modesty that prevails over liguistic purity.

      A vaguely written “transgender” statute or ordinance is practically unenforceable, as would be any state of mind rule.

      A clearly written ordinance that said “if you have a penis [original or built] you go to the men’s room and if you have a vagina [original or built] you go to the ladies room” would be easily followed and observed.

      But this is too literal for the delicate sensibilities of too many folks at every step of the political spectrum.

      A private solution exists for the property owner that labels its bathroom doors correctly, of course.

      Like

  7. Two important points to remember about Planned Parenthood and Texas Medicaid, 1. Mammogram referrals ain’t gonna pay for themselves. 2. As RBG says “Frankly I had thought that at the time Roe was decided, there was concern about population growth and particularly growth in populations that we don’t want to have too many of.”

    Like

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