Morning Report: Strong jobs report 11/6/15

Posted on November 6, 2015 by Brent Nyitray

Stocks are lower this morning after the jobs report sets the stage for a December rate hike. Bonds and MBS are down.

  • Nonfarm payrolls + 271k
  • Unemployment rate 5.0%
  • Average Hourly Earnings 0.4% MOM / 2.5% YOY
  • Underemployment rate 9.8%
  • Labor Force Participation rate 62.4%

Bond yields dropped hard on the report, with both the 10 year and the 2 year yields up 9 basis points. The Fed Funds future contracts moved substantially after the report, going from a 56% probability of a December rate hike to a 72% chance. Retail and construction drove the increase. Manufacturing payrolls were flat, as manufacturers struggle with a strong dollar. Still hard to reconcile the strong payroll and nascent wage growth with the low labor force participation rate.

In response to the jobs report, RBS, BNP, and Barclay’s all moved their first rate hike forecasts to December.

The holy grail for the economy (and the Fed) is wage growth. Prior to the Great Recession, wage inflation was running around 2.9%. Subsequently, it has grown at about 2%. If you look at the graph below, you can see where the slope of the line changes at 12/31/08.

RealtyTrac’s latese Home Sellers Report shows that people who sold in the third quarter realized an average gain of just over $40k, which amounts to a 17% increase in price. This is the best level since 2007. They calculate the average sales price was about $264k. The use of FHA loans continues to grow – FHA loans were 23.4% of all financings. All-cash sales as a percent fell to their lowest levels since 2008 – a sign that professional investors are being replaced by “real” buyers.

That said, we still have a problem with the first time homebuyer. The percentage of first time homebuyers fell again to 32% from 33% last year and is the third straight annual decline. The 32% number is the lowest since 1987. “Normalcy” is about 40%. The big problem: affordability and a dearth of inventory.

In a novel theory, New York Attorney General Eric Schneiderman is accusing Exxon Mobil of securities fraud. The crime? Downplaying the risk of climate change to the company’s business model. Not sure how something that might happen in 2100 is material to their stock price, but there you go. But, the government is now in the business of suppressing and criminalizing research that it doesn’t like.

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27 Responses

  1. novahockey, on November 6, 2015 at 10:14 am said:

    https://www.reddit.com/comments/3qvj6w/

    Jar Jar Binks was a Sith lord.

    discuss.

    to be honest, after i read this, i felt like Agent Kujan at the end of the The Usual Suspects.

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  3. Brent Nyitray, on November 6, 2015 at 12:08 pm said:

    guess Schneiderman’s suit is payback for not paying their protection money to the Clintons

    http://freebeacon.com/politics/clinton-calls-for-exxon-probe-after-company-cuts-off-foundation-funding/

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  4. jnc4p, on November 6, 2015 at 12:48 pm said:

    Charles Pierce on Keystone XL:

    “The Keystone Pipeline and the Defeat of Faceless Corporate Power

    “It’s like watching the biggest bully on the school grounds getting his nose bloodied. It’s very gratifying.”
    By Charles P. Pierce
    Nov 6, 2015 @ 12:59 PM”

    http://www.esquire.com/news-politics/politics/news/a39521/keystone-pipeline-rejected/

    That quote sums up how I feel every time the government loses.

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    • ScottC, on November 6, 2015 at 1:24 pm said:

      jnc (from the link):

      …continent-spanning death funnel…continent-spanning death funnel and Republican fetish object…the death funnel’s primary political supporters…seeking to build the death funnel…the death-funnel in Nebraska…the death-funnel’s route…

      Charles Pierce needs either a thesaurus or a ghost writer.

      I never cease to be amazed at the people who, contrary to all conceivable expectations, somehow manage to make a living as writers.

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  5. Brent Nyitray, on November 6, 2015 at 1:15 pm said:

    That is certainly how I feel every time obama loses…

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  6. novahockey, on November 6, 2015 at 1:23 pm said:

    “no continent-spanning death funnel bringing the world’s dirtiest fossil fuel from the environmental hellspout”

    oh FFS.

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  7. jnc4p, on November 6, 2015 at 1:50 pm said:

    So does this count as a lie?

    “”The TPP would allow foreign corporations to sue federal, state, and local governments in an international tribunal for passing an increase in the minimum wage or any other law that could hurt expected future profits,” Sanders says.
    …
    “You can’t sue over an increase in the minimum wage,” Hufbauer says. “Both foreign and domestic corporations pay a minimum wage. It’s not discriminatory. Now, if you said foreign corporations have to pay double the minimum wage of local corporations, that would be a different story.””

    http://www.vox.com/2015/11/6/9683852/bernie-sanders-tpp

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  8. jnc4p, on November 6, 2015 at 3:05 pm said:

    You know NoVA, based on PL interactions I think I’ve moved from supporting immigration reform to opposing it just as a Fuck You to the progressives there.

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  9. Brent Nyitray, on November 6, 2015 at 3:21 pm said:

    Immigration reform is about turning Texas purple. That is it.

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  10. novahockey, on November 6, 2015 at 3:52 pm said:

    oh yeah. same thing.

    basically, most of my policy choices are now based on spite.

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  11. novahockey, on November 6, 2015 at 3:53 pm said:

    i’ll add. i’ve not once heard immigration advocates or illegals say “i’m sorry.”
    “i’m sorry I didn’t respect the process. that is is flawed is not your problem, but mine.”

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    • markinaustin, on November 6, 2015 at 4:13 pm said:

      I was shouted down a long time ago at PL for suggesting that immigration be based on America’s needs, not on the immigrants’ desires to reunify there families.

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  15. jnc4p, on November 8, 2015 at 1:38 pm said:

    Yep, that pretty much sums up college students (& a large chunk of PL) these days:

    “”I don’t want to debate. I want to talk about my pain.””

    http://www.vox.com/2015/11/7/9689330/yale-halloween-email

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    • ScottC, on November 9, 2015 at 6:57 am said:

      jnc:

      Ultimately this is the real problem on campuses:

      Nicholas Christakis apologized Friday, though saying he thought his wife’s email was well-intended: “We understand that it was hurtful to you, and we are truly sorry,” he wrote in an email to Silliman students, according to the Yale Daily News. “We understand that many students feel voiceless in diverse ways and we want you to know that we hear you and we will support you.”

      One word….enablers.

      BTW, “…feel voiceless in diverse ways…”? What a bunch of progressive buzzword mumbo jumbo.

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  16. Let the mutherfuker burn!, on November 8, 2015 at 2:19 pm said:

    I had no idea was a KKK headquarters. Must be awful for non-whites.

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  18. Kevin S. Willis, on November 9, 2015 at 8:37 am said:

    Cao posted this on Plumline in the wee hours of Sunday morning, and it is so emblematic of the ideological take on the other side (but especially for the left), I thought I’d share it:

    Just saw Spectre, latest Bond film, haven’t seen the first three Daniel Craig flicks though. Ralph Fiennes is starting to look old.

    Good and Evil are clearly delineated in this kind of entertainment, with shades limited to hidden loyalties, double agents and such. In real life evil people rarely regard themselves as such; they see themselves are clear-sighted, their understanding unconfused by ambiguities and a pretense of conscience, which evil people always regard as feigned, and as weakness.

    And in light of what we talk about here … it really couldn’t be clearer that the great philosophical division between liberals and conservatives is a mirror of this.

    I won’t say liberals are angelic. We aren’t. We’re conflicted, subject to temptation, fallen. But conservatives are, to a very strong first approximation, evil people. They love war, they cheer at judicial murder, they scream “let him die!”at their rallies, they revel in despoiling nature, they see an extinction as a triumph.

    Friend of mine at Microsoft used to ask, if Satan were running the GOP, what would be different? And that was before 2008, when they really plunged down into the hate and nihilism that grips them now.

    We’re in Armageddon. The sides are drawn. The world is dying, and conservatives everywhere are egging it on. Religious conservatives murder children and destroy antiquities. We’re in the fight if our lives.

    And half of you don’t have the strength of will to stop talking to them.

    First, how many people actually think having a conscience, or exhibiting ethics, or having a moral standard is a bad thing and thus they are more “clear sighted” by not being burdened with a conscience? People who actually do not have what we normally describe as a conscience don’t spend any time thinking about it, from everything I’ve read. Those who lack empathy (usually due to recognized disorders) are not aware of their lack of empathy at all. There isn’t some big hole where empathy or conscience goes that they are aware of or have proudly eliminated, they just don’t have it. These lacks rarely have them in positions of functioning in society, much less running it. It’s an issue of others not sharing a given set of values or priorities with us that we tend to describe as a lack of conscience. I recently got into a debate on a movie site, of all things, about empathy being limited. The other said it was unlimited. I argued that it is highly limited, and I believe it is. Thus, those who “lack empathy” simply are empathetic in other ways or to other people or situations than you.

    But Cao, and I do not believe he is alone at all, believes his ideological opposites, or those that vary from him by more than 5° (at least, this has been my observation) lack a conscience. And are proud of it.

    I disagree with Cao about a lot (or, most everything) but I don’t love war, don’t cheer at judicial murder, would never scream “let him die” at any rally (unless I was referring to Osama Bin Ladin or Adolph Hitler, I guess), don’t revel in despoiling nature (although I don’t feel the construction of homes and businesses and building roads to be despoiling nature, any more that beavers constructing their dams would be despoiling nature). And who sees extinction as a triumph? This is not a remotely accurate depiction of even some of the most right-wing politicians and Tea Partiers out there. Except possibly McWing. 😉

    And his ultimate solution? Stop communicating outside the echo chamber.

    When I was a good liberal, or thought I was, in college, I was attacked by the “real liberals” for my lack of ideological purity, in addition to not hating the right people with enough fervor, and being interested in subjects that were verboten to the enlightened left (such as life drawing and photography that involved female models, some kind of gender-crime, apparently). When there were disagreements about things (such as the first Gulf War) the liberals on campus had a simple solution: refuse to communicate, stomp out in a rage, make angry artwork but refuse to discuss, and try to keep the minority of conservatives on campus from having a voice. It was really the part where “discussing things” is bad that turned me and made me think: holy crap, this being a liberal thing isn’t remotely what I thought it was. Maybe I need to go back and research the other side a little deeper.

    Also, “if Satan were running the GOP, what would be different?” is just idiocy. On every possible level. And these are supposed to be intelligent people?

    Granted, Cao has also expressed the sentiment that religious conservatives should be lined up and shot so is not a standard-bearer for modern liberals, but . . . I dunno, there are a lot of folks who feel like the best response to opposing ideas is to shut them up or ignore them. I find this ironic, as they often spend some time finding liberal positioning of conservative ideas or statements to post (and lampoon) and yet want to ignore them when there are actual people they could engage in a debate with.

    Also, the folks on Plumline don’t seem to find it coincidental that most of the right wingers they left with are “trolls” or snipers. After chasing out the QBs and ScottCs and, heck, even MarkInAustin’s while treating the Cao’s as serious, thoughtful thinkers.

    There is some larger observation to be made about the human tendency towards simplifying the positions of people we don’t agree with and choosing echo chambers over alternative information that might, in fact, be informative, but I’m not quite there yet.

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  19. Kevin S. Willis, on November 9, 2015 at 8:38 am said:

    @Scottc1: ““We understand that many students feel voiceless in diverse ways and we want you to know that we hear you and we will support you.””

    Unless you are conservative. Or a young Republican. Or a Military Recruiter. Or outwardly Christian.

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  20. Kevin S. Willis, on November 9, 2015 at 8:42 am said:

    @jnc4p: “I don’t want to debate.”

    I don’t believe that’s even it. I think it’s: I do not want to expose myself to any opposing information and, if accidentally exposed to any information that challenges my worldview, I refuse to think about it in any meaningful way.

    “Debate” often requires some bare minimum of cogitation to respond to an opposing view, and even that is becoming too onerous a requirement. It may also require treating a view you disagree with seriously or respectfully, and that’s like asking sensitive folks to eat live bugs.

    “I don’t want to debate” = “I only want to hear that I’m right about everything and that I’m a special little snowflake”.

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  21. Kevin S. Willis, on November 9, 2015 at 8:48 am said:

    @jnc4p: From the article: “Nicholas says, if you don’t like a costume someone is wearing, look away, or tell them you are offended. Talk to each other. Free speech and the ability to tolerate offence are the hallmarks of a free and open society.”

    Free speech and tolerance? At college? Is that guy smoking crack? I hope they kick out Mr. Microagressions out on his obviously racist and regressive ass.

    Even President Obama weighed in on the debate in September, criticizing college students who want to be “coddled.” “Anybody who comes to speak to you and you disagree with, you should have an argument with ‘em,” he said. “But you shouldn’t silence them by saying, ‘You can’t come because I’m too sensitive to hear what you have to say.’ That’s not the way we learn.”

    I’m 100% with president Obama on this one. No wonder the Plumliners call him right-of-center.

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  22. Let the mutherfuker burn!, on November 9, 2015 at 10:01 am said:

    Still bitter that Cao never gave me a solo death wish, I had to share it with one of his many death wishes for QB.

    But I’m sure he’s a gentle and considerate lover.

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Be kind, show respect, and all will be right with the world.