Morning Report: New Home Sales highest since 2007 1/27/16

Stocks are lower this morning on lower oil prices and disappointing numbers out of Apple last night. Bonds and MBS are down small.

The FOMC will announce their decision at 2:00 PM EST today. No change in the Fed Funds rate is expected. Bond bulls are going to be looking for a mention of the recent market volatility or oil prices and the path of future inflation. Bond bears will be looking for no mention of oil / volatility and / or language that characterizes these effects as transitory.

New Home Sales increased to 544k in December from 491k the month before. The Spring Selling season is just around the corner. For the full year, new home sales increased 14.6% to 501,000, the highest level since 2007. Interestingly, the median sales price fell 4.3% to $288,900. D.R. Horton’s product mix has mirrored that somewhat, with the Horton Express (starter homes) becoming a bigger share of revenues while Emerald (McMansions) has fallen.

Mortgage Applications rose 8.8% last week as purchases rose 4.6% and refis rose 11.3%.

Weakness in the overall economy depressed sales for Apple. They are seeing it especially in Asia between China and Hong Kong. China is going to be exporting deflation, which is going to make the Fed’s job tougher.

28 Responses

    • That was interesting. It certainly doesn’t paint Mr Trump’s followers in the most flattering light, though.


      • Sure it does:

        “But most of the Trump supporters I encountered were people struggling to get by in an economy they no longer understand.

        “We’re just tired of the actions of the government nowadays,” Karon Stewart, who is fifty-nine years old, told me after a rally in Mississippi. “The simple people pretty much have been forgotten.”

        She said that she has followed Trump’s tabloid life on TV, and last year, when she heard him speak about politics, she registered to vote for the first time. She was not persuaded by arguments that Trump has been disrespectful to women and would have trouble running against Hillary Clinton. “I am a woman,” she said. “I wouldn’t vote for Hillary Clinton if she was the last person on the face of the earth. She is a disgrace to womankind.”

        Stewart said that Trump supporters were misunderstood. “We’re not racist,” she told me. “We’re not prejudiced. We just love everybody. But we’re tired of being run over.”

        She added, “My husband is in his fifties. He’s got one leg. But he gets out there and works two almost-full-time jobs, seventeen hours every day, Monday through Friday. And he works on the weekends. But there are people out there that we’re paying welfare who’ve got two perfectly good legs, and they just won’t get up off of their tushies to get a job.”

        “That’s pitiful,” her husband, Bob, who lost his leg in a construction accident, said. “I think Trump will change that.””

        He should run an ad with those people saying exactly what has been attributed to them in the article.


      • Yeah–you left the sentences before that out:

        The racism of some Trump supporters has been well documented. At one rally in Las Vegas in mid-December, attendees punched a black protester while others yelled, “Shoot him,” “Kick his ass,” “Light the motherfucker on fire,” and “Sieg heil.”


      • Correct. I went with “most” vs “some”.


      • “Sieg heil.”

        This is documented with video or something, I assume? That seems, uh, awfully convenient for Trump’s critics.

        I still think, if deconstructed, Trump’s support comes from as much a resentment of establishment politicians and their supporters as from anything. They like the way Trump gives the finger to the establishment. I don’t think it’s all “oh, I’m too stupid to understand this economy, and I’m so confused, and also a racist”. I think there’s a lot of: I’m tired established, privileged, entitled politicians. Since my only plausible option is an established, privileged, previously non-politician who seems to hate the established political crony’s as much as I do, I’m voting for him!


        • Prolly like the supposed pejoratives aimed at black House members when they were walking to vote on Obamacare. It obviously never happened, it was constructed by Pelosi to discredit us Baggers.

          I’m a racist and I know, those in DC at the time weren’t in the club.


  1. If the choice is ignorant racist or insufferable schoolmarm that’s easy.

    But progressives blew the doors off gate decades ago. And now they’re shocked that the uncouth want a seat at the table.


  2. This is a good one too:

    “It is easy to poke fun at many of Trump’s foreign-policy notions—the promises to “take” Iraq’s oil, to extract a kind of imperial “tribute” from U.S. military allies like South Korea, his eagerness to emulate the Great Wall of China along the border with Mexico, and his embrace of old-style strongmen like Vladimir Putin. But many of these views would have found favor in pre-World War II—and even, in some cases, 19th century—America.

    In sum, Trump believes that America gets a raw deal from the liberal international order it helped to create and has led since World War II. He has three key arguments that he returns to time and again over the past 30 years. He is deeply unhappy with America’s military alliances and feels the United States is overcommitted around the world. He feels that America is disadvantaged by the global economy. And he is sympathetic to authoritarian strongmen. Trump seeks nothing less than ending the U.S.-led liberal order and freeing America from its international commitments.”


    • jnc:

      Trump seeks nothing less than ending the U.S.-led liberal order and freeing America from its international commitments.

      I think this gives way too much credit to Trump’s thought process. It is a mistake to try to find coherence or a unifying theme in Trump’s positions. I doubt he has any political philosophy or governing principles that could explain the positions he takes on virtually anything.


      • Where do you think Trump ranks in terms of intelligence compared to past and present Potus’s?


        • McWing:

          Where do you think Trump ranks in terms of intelligence compared to past and present Potus’s?

          I have no idea. But to be clear, I am not saying he isn’t intelligent. I am just saying that I don’t think he has thought much, or even cares, about developing a coherent political or governing philosophy.


      • Or you are underestimating him. The piece has a fairly long history of Trump’s statements on foreign policy.


        • jnc:

          Or you are underestimating him

          As a political philosopher? Possibly, but I wouldn’t bet on it.


      • I think Trump is smart and is very big picture. This can be positive, actually, despite what all his detractors want to say, but it can also be dangerous to his supporters, as lots of devilish details can live in the actual policy crafted out of his big ideas. Ultimately, I agree with him when he’s expressing an interest in lowering our international commitments and getting more for America where we are engaged. That’s not enough to make him a great president, but it’s something. I’m just concerned that any positives I see will immediately evaporate (along with his Great Wall of Mexico) once he finds his top people to actually do the work of running the government.

        But a Trump win would be a finger in the eye of establishment DC politicians on both sides of the aisle, and I wouldn’t mind that. And, long term, you have to think the next Democratic candidate will practically be a conservative if Donald beats Hillary or Bernie.


        • KW:

          And, long term, you have to think the next Democratic candidate will practically be a conservative if Donald beats Hillary or Bernie.

          Why would losing an election to a non-conservative compel the D’s to run a more conservative candidate in the future?


      • @scottc1: “Why would losing an election to a non-conservative compel the D’s to run a more conservative candidate in the future?”

        Because Trump is a conservative as far as the left is concerned. He represents the stereotype of the jingoistic, wall-building, immigrant hating, rah-rah-America-is-great, tax-cuts-for-the-rich conservative. Nobody on the left is insulting him for having once been a registered Democrat or coming out as pro-choice in the past. The Democrats aren’t saying “He’s a madman! He praised European universal healthcare!”

        And when I say “more conservative”, I mean more conservative-appearing. But . . . we shall see. Many moons until November.


        • Would you you force to prevent mom from drinking alcohol excessively while pregnant?

          What if she successfully used a natural abortifacients?


        • McWing:

          Would you you force to prevent mom from drinking alcohol excessively while pregnant?

          No. I’m not sure how one would go about doing that even if one wanted to.

          What if she successfully used a natural abortifacients?

          I suppose it would depend on the details of the individual case, but I think that for practical reasons of prosecution most pre-Roe and existing laws against abortion are aimed at the provider of the abortion, not the mother.

          But in any event my point was simply to show that the rights of the unborn do not necessarily conflict with the rights of the mother, and so the logic of claiming that if the mother has rights the unborn must not fails. The right of the mother to be free of the baby growing inside of her does not require that the baby be killed before it is removed.


  3. ““We’re not running on any platform of raising taxes,” Pelosi said ”

    That’s awesome. It’s Reagan’s world and Sanders is just living in it.

    Starting to think that if Sanders wins, he would have the most dysfunctional relationship with the Congressional leadership of his own (nominally) party since Carter and Congressional Democrats in the 1970’s.


  4. Socialism tends to be tried to the exact level the capitalist economy it’s 100% based on can support without collapsing. So, if the Democrats win, we will get more socialism mixed in with our capitalism. Two tastes that taste great and soul-crushing together!


  5. Mark:

    Is it possible for a Grand Jury to issue an indictment on charges that the prosecutor was not seeking? I always thought that the way GJ’s worked was that the prosecutor presented to the GJ a positive case for charging someone with a specific crime, and the GJ’s job was to decide whether there was enough evidence to warrant issuing an indictment on that charge sought by the prosecutor. I didn’t think that a GJ could, of its own volition, indict someone on charges that the prosecutor had not even sought. Is my impression incorrect?


  6. This is great:

    “Sanders assumes $324 billion more per year in prescription drug savings than Thorpe does. Thorpe argues that this is wildly implausible. “In 2014 private health plans paid a TOTAL of $132 billion on prescription drugs and nationally we spent $305 billion,” he writes in an email. “With their savings drug spending nationally would be negative.” (Emphasis mine.) The Sanders camp revised the number down to $241 billion when I pointed this out.”


    • The Sanders camp is including all the money they’ll get from the giant money tree they’re going to plant in the White House rose garden. From their, they’ll be able to harvest all the cash they’ll need to pay for everything.

      Finally, a politician with the good sense to plant giant money trees (and encourage the breeding of unicorns, to ween us off our dependence on fossil fuels).


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