Morning Report: Surprising calm in the markets 11/16/15

Markets are flattish despite the terrorist incidents in Paris over the weekend. Bonds and MBS are up small.

Not much in economic data today, but we will get some important numbers with industrial production / capacity utilization tomorrow, housing starts and building permits on Wednesday, and the FOMC minutes as well.

The Empire Manufacturing Index fell for the fourth month in a row.

The usual playbook says things like terrorism are stock bearish and bond bullish. Surprised to see so little reaction to the news. Even oil is flat. Not a lot is making sense in the bond markets these days.

To me, the most striking statistic about ISIS is this: 3 attacks (Russian airliner, Beirut suicide bombing, and Paris) in 2 weeks. These guys are stepping it up. If there is one thing markets weren’t counting on, it is a war.

The Fed Funds futures markets are still predicting a 77% chance of a rate hike at the December meeting.

29 Responses

  1. Frist!

    … and in the wake of the Paris attacks, human trafficking, sex slavery, and the fact that billions of human beings in 2015 still live in abject, no-plumbing, dirt-eating poverty in the 3rd world . . . don’t forget the special snowflakes at #Mizzou! They are the true victims. Pay attention to them!


  2. To me, the most striking statistic about ISIS is this: 3 attacks (Russian airliner, Beirut suicide bombing, and Paris) in 2 weeks. These guys are stepping it up. If there is one thing markets weren’t counting on, it is a war.

    Will this [downing a Russky plane] focus Putin’s attention on ISIS?

    Will France call for a NATO war council?

    Inquiring minds want to know.


  3. Interesting documentary on Richard Holbrooke on HBO last night, but it looks like it was a rebroadcast from 11/2.

    His audio diary extracts were interesting. HRC comes across quite well. President Obama not so much.


  4. the left is fucking stupid. Christ on a cracker.


  5. Well, PL is. Bill Maher had a good segment on Paris on Friday with his initial interview.


  6. Any politician that campaigns on the US sending in ground troops is on a suicide mission. That’s why I have my doubts about Rubio’s ultimate viability, he’s in the McCain/Graham “Invade All the Places” camp, he just says it more eloquently. The electorate however, Left, Center and Right are not in ground troops fighting mood. Some will support bombing, until a pilot is shot down and captured/killed.


      • President Obama speaking this morning:

        What I’m not interested in doing is posing or pursuing some notion of American leadership or America winning or whatever other slogans they come up with that has no relationship to what is actually going to work to protect the American people and to protect the people in the region who are getting killed and to protect our allies and people like France. I’m too busy for that.

        President Obama, sloganeering in his 2015 National Security Strategy (emphasis original):

        The President’s new National Security Strategy provides a vision and strategy for advancing the nation’s interests, universal values, and a rules-based international order through strong and sustainable American leadership. The strategy sets out the principles and priorities that describe how America will lead the world toward greater peace and a new prosperity.

        – We will lead with purpose, guided by our enduring national interests and values and committed to advancing a balanced portfolio of priorities worthy of a great power.

        – We will lead with strength, harnessing a resurgent economy, increased energy security, an unrivaled military, and the talent and diversity of the American people.

        – We will lead by example, upholding our values at home and our obligations abroad.

        – We will lead with capable partners, mobilizing collective action and building partner capacity to address global challenges.

        – We will lead with all instruments of U.S. power, leveraging our strategic advantages in diplomacy, development, defense, intelligence, science and technology, and more.

        – We will lead with a long-term perspective, influencing the trajectory of major shifts in the security landscape today in order to secure our national interests in the future.


  7. @Scottc1: Hah! Only interested in avoiding slogans when there’s been a recent terrorist attack and a presidential election is coming up, where slogans will be used by everybody, all the time.


  8. That’s awesome Scott. I highly recommend the Holbrooke documentary. They make several good points about how the White House micromanages every aspect of foreign policy and undermines it’s own representatives.


    • jnc:

      That’s awesome Scott.

      I have to hat tip Sean Davis at The Federalist for that one. He tweeted about it so I looked up the actual document.

      I’ll watch the Holbrooke documentary tonight.


  9. “the left is fucking stupid. Christ on a cracker.”

    You’ve been hanging out over on PlumLine.

    There . . . sometimes. A lot of them. Yeah.


  10. Bill Mahr recognizes, I think, as did Christopher Hitchens, that radical Islam (enabled by moderate Islam) seeks to destroy the west and put the world under a caliphate that would represent perhaps the most illiberal existence imaginable. Not that they would ultimately be successful, but just the fact that’s where their aiming is bad news. Some liberals can recognize that radical Islam and those who enable it are a much bigger enemy to liberal society than, say, the GOP.

    Not as many of them as one might think, however.


  11. I think it is funny the left considers fighting back to be playing into the terrorist’s hands…

    Don’t bomb Tokyo: you are doing exactly what the Japanese want you to do… It will only fill them with more resolve and they’ll start using kamikaze attacks…

    Dr. Cowbell is a case in point:


  12. “I think it is funny the left considers fighting back to be playing into the terrorist’s hands…”

    I think it’s irritating they think terrorists are created by America’s military adventurism. It’s a completely misunderstanding of the motivations and the goals. I may disagree with the way we’ve conducted our military actions in the Middle East but the fact we’re there isn’t what creates terrorists.


  13. they don’t call them the blame america first crowd for nothing…


  14. spending time at the PL makes me want to vote for the most reactionary R.


  15. Or Trump. For a better take by someone on the left, now conveniently labeled a RWNJ on PL, see this:

    “We Need Clarity about ISIS, and the Democratic Candidates Didn’t Provide It
    Paul Starr
    November 15, 2015

    Although the Kurds have recently had some success in breaking ISIS’s supply lines in western Iraq, the basic assumptions behind Obama’s original strategy have now been shattered in two ways. First, the local ground forces are too weak to defeat ISIS on anything like a reasonable timetable. And second, as the downing of the Russian airliner and the attacks in Beirut and Paris show, we can no longer assume that ISIS is focused entirely on seizing and defending territory. It is a much more direct threat to us. No one should think that because ISIS murdered Russians and Parisians first, it won’t murder Americans next on a large scale.”


  16. i’ve noticed that Shrink and I will agree on something, but then there’s a shift when he realizes what he’s done.

    this issue of Islamist being one.


  17. Nice summation of the fundamental flaw in progressive/liberal thinking:

    “The rise of ISIS is only the most extreme example of the way in which liberal determinism—the notion that history moves with intent toward a more reasonable, secular future—has failed to explain the realities of the Middle East. ”


  18. I think the whole notion of an “arc of history” or “right side of history” is the root of almost all of the rest of the crap.


  19. Here’s a nice rephrasing of that sentiment.


  20. When Progs lie it’s just the White Man’s burden.


  21. The PL thinks he is too conservative…


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