Morning Report: New Home Sales fall 2/24/16

Markets are getting pounded on the new worry du jour: Brexit. Bonds and MBS are rallying..

Brexit is the threat of the UK leaving the EU. It has implications mainly in the foreign exchange markets, but if the markets need something to worry about, well there you go.

Mortgage Applications fell 4.3% last week as purchases rose 2.2% and refis fell 7.7%. The spike in rates last week killed the refis.

New Home Sales continue to disappoint. Sales fell in January to 494k from 544k in December. For whatever reason, homebuilders continue to hold back production and rely in price hikes to move the top line.

Regardless, people are still optimistic about the housing sector going forward. Toll Brothers mentioned that a dearth of skilled labor is an issue. Interestingly, average selling prices on signed contracts are falling for them in some areas of the country (the Mid-Atlantic and the South) and are flat in the West. Their urban luxury apartment sector was where all the ASP growth was. Perhaps the builders have pushed price hikes about as far as they can and now buyers are beginning to balk.

39 Responses

  1. Obama is trolling the Senate Judiciary Committee by dangling Nevada moderate Barry Sandoval in front of the them. What’s the next move here?

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    • Won’t the joke be on him? If Clinton wins and D’s take the Senate, does he withdraw for a more Liberal Judge? How will that look? What’s anyone’s incentive to do anything?

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    • I don’t think the D base would be happy with that.

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    • It is as exactly as I predicted. No win situation for Senate Republicans. I thought the folks arguing he was going to nominate someone super hard left were off their nut. A moderate Republican! Perfect.

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    • Call me when he actually nominates him. He’s the wrong gender and race for the Democrats.

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      • Agreed, there is no advantage to anyone in doing this.

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        • It would be great to break the current Ivy League monopoly on the Court. Sandoval preferred being a Judge to being Governor, that was acknowledged in legal circles. If it is not a trial balloon, Sandoval would be an interesting Justice for the next 30 years.

          Could the Kentucky Wonder hold out against giving the R Gov of NV a hearing?

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        • Mark:

          Could the Kentucky Wonder hold out against giving the R Gov of NV a hearing?

          I think the R Senate should give a hearing to any nominee who asserts that Roe and Obergefell were wrongly decided and affirms that he would vote to overturn them if given the opportunity. Anyone who will not do so should not get a hearing.

          Those are two iconic cases an understanding of which should give us a good idea whether the nominee is prepared to apply the constitution (ie fulfill his oath) or if he will be reasoning backwards in an attempt to achieve pre-determined, preferred results.

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        • You would pre-apply your Obama test before the hearings? It seems to me that question is better asked in a public hearing, where, just as in private, no nominee will agree to prejudge a case. But then the entire Senate will infer whatever it wants from the non-answer.

          Of course, I see your point, from a R view. The Rs will not accept anyone with Sandoval’s views on those topics. But he would be a likely bulwark against erosion of the expansive view of the Second Amendment, which scares liberals, who are already attacking BHO for the Sandoval suggestion.

          There is no rule that forces the Senate to hold hearings, and it is not unprecedented, although I do not think it has happened since the 19th Century.

          The politics of refusing hearings seems weak to me.

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        • Mark:

          You would pre-apply your Obama test before the hearings?

          Sure, why not?

          It seems to me that question is better asked in a public hearing, where, just as in private, no nominee will agree to prejudge a case.

          Both Roe and Obergefell are old cases, and so in declaring that they were either rightly or wrongly decided, one would not be “prejudging” anything. It simply provides an indication of how they go about understanding and applying the constitution. But that aside, I think it is naive to think that the D’s haven’t had assurances that it’s nominees will uphold Roe and the like, that it is just pure coincidence that they happen to vote in lockstep on politcal issue after political issue. R’s should get their own assurances. The debacles of Kennedy and Souter prove that they have been delinquent on this front.

          The politics of refusing hearings seems weak to me.

          It seems to me the politics of refusing hearings even on someone who might, to some degree, be amenable to R’s, are actually quite strong. It shows the application of a principle (let the voters have their say) rather than pure partisan politics (we’ll have hearings for a guy we like but not one we don’t like).

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        • (let the voters have their say)

          The voters elected both BHO and the current Senate. Insofar as the Constitution is concerned, the voters will have their say no matter what either BHO or McConnell do. That is whom they have elected. Thus:

          not nominationg anyone would be weak, and refusing to Advise would be weak, IMHO.

          Another group that will be so sorely pissed at the NV Gov. is organized labor. And that means BHO probably couldn’t get Consent for Sandoval even if a dozen Rs broke ranks.

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        • After the Senate rebukes Sandoval, BHO can nominate SDO’C. She still rides Circuit. Then after SDO’C is rebuffed he can nominate Souter. They were R appointees, of course, and SDO’C was a Goldwater R.

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        • Mark:

          They were R appointees, of course…

          Yes, back before R’s had cottoned on the the new politicized method of nominating justices.

          …and SDO’C was a Goldwater R.

          So was Hillary Clinton. Should R’s be embarrassed to oppose that hypothetical nomination?

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        • Mark:

          The voters elected both BHO and the current Senate.

          Sure, but they didn’t know they were voting for Scalia’s replacement.

          Insofar as the Constitution is concerned…

          If concern for the Constitution prevailed, we wouldn’t even be having this discussion at all because the Court would not be the politicized mess that it has become. We are at the point we are at precisely because the Constitution has been ignored and the Court has been turned into a legislating branch of the government.

          My entire approach now to the Court is premised upon the fact that what the Constitution demands is no longer a main priority. Preferred results, not objective process, is what is important.

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        • SCOTUS nominations are just raw political power now and should be treated as such, it’s a return back to norm. Fully 25% of SCOTUS nominees were rejected in this country’s first 100 years. This concept of Objectivity has got to end, it’s infected and diminished if not ruined institution after institution.

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        • McWing:

          SCOTUS nominations are just raw political power now and should be treated as such

          Agreed. Or, more accurately, R’s should join the game and start treating them as such.

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        • Why can’t they say “based on what I know, I’d decide X”? If pressed they could state a time where they thought x about a case but when presented with the facts at trial, or appeal or whatever, changed their mind?

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        • Not Scott, but they can say anything they want as long as they point out they will not prejudge any case.

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        • What’s wrong with prejudging a case based on what you know? When facts change it can change a decision. We all know that, what does claiming you don’t do it (an obvious lie) add to the discussion other than proving you’re a liar?

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        • Can we please include Wickard v Filburn?

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        • Heck, roll it back to Plessy v. Ferguson. That’s a states’ rights issue.

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        • So, in you mind, a desire to legally grow a crop on you own land for your own use, say, marijuana, is the same as racial discrimination?

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        • How is Wickard v Filburn a states rights issue?

          I think you have your two- dimensional caricature of me fucked up. You can stereotype better than this, I’ve seen it!

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        • yello:

          Heck, roll it back to Plessy v. Ferguson. That’s a states’ rights issue.

          Ah, the race card.

          Of course the Supreme Court should define marriage, determine abortion policy, and allow the feds to prevent individuals from growing food for themselves. Because racism.

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        • McWing:

          Can we please include Wickard v Filburn?

          Sure. Although I wonder how many people in the Senate are actually familiar enough with it to make it a litmus test.

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    • It’s fine for them to panic but just how do they think they can do it at this point? For Rubio and Cruz it’s a collective action problem. The two are splitting the non-Trump vote and neither are the type to take one for the team.

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      • Assuming of course that in fact they would have a majority in a head to head contest.

        The media should poll on that question after the Houston debate.

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  2. The Washington Post Editorial Page endorses Donald Trump:

    “GOP leaders, you must do everything in your power to stop Trump
    By Editorial Board February 24 at 3:08 PM”

    https://www.washingtonpost.com/opinions/gop-leaders-you-must-do-everything-in-your-power-to-stop-trump/2016/02/24/d993b548-db0e-11e5-891a-4ed04f4213e8_story.html

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    • Hilarious. We’re in Goldwater hysteria territory now. Next you’ll tell me Romney will pull a Ried and tell me Trump hasn’t paid taxes in 10 years!

      Er, wait.

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      • I was thinking of an observation that Ezra Klein made recently:

        “The party doesn’t have any magic powers. All it has is its credibility with its voters. Because, in the end, parties can only influence — it’s voters who actually decide. And the Republican Party has, for whatever reason, lost its ability to influence its voters. Donald Trump is winning this thing, and so far, Ted Cruz, the only guy elite Republicans hate more than Trump, is vying for second place.

        Parties are vehicles for structuring information. Their role is literally to help voters decide by helping them choose whom to trust. The fact that Republican voters seem to prefer candidates whom their party is screaming not to trust reveals a profound failure in the GOP’s core role. The Republican Party is broken.”

        http://www.vox.com/2016/2/24/11103704/the-republican-party-is-broken

        The credibility argument applies to other institutions too, especially the media.

        The Washington Post Editorial page telling Republicans to do everything possible to stop Trump guarantees he’ll get more Republican votes.

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  3. Mark:

    This is Obama’s self-proclaimed criteria for selecting a nominee to SCOTUS:

    http://www.scotusblog.com/2016/02/a-responsibility-i-take-seriously/

    First and foremost, the person I appoint will be eminently qualified. He or she will have an independent mind, rigorous intellect, impeccable credentials, and a record of excellence and integrity. I’m looking for a mastery of the law, with an ability to hone in on the key issues before the Court, and provide clear answers to complex legal questions.

    Second, the person I appoint will be someone who recognizes the limits of the judiciary’s role; who understands that a judge’s job is to interpret the law, not make the law. I seek judges who approach decisions without any particular ideology or agenda, but rather a commitment to impartial justice, a respect for precedent, and a determination to faithfully apply the law to the facts at hand.

    But I’m also mindful that there will be cases that reach the Supreme Court in which the law is not clear. There will be cases in which a judge’s analysis necessarily will be shaped by his or her own perspective, ethics, and judgment. That’s why the third quality I seek in a judge is a keen understanding that justice is not about abstract legal theory, nor some footnote in a dusty casebook. It’s the kind of life experience earned outside the classroom and the courtroom; experience that suggests he or she views the law not only as an intellectual exercise, but also grasps the way it affects the daily reality of people’s lives in a big, complicated democracy, and in rapidly changing times. That, I believe, is an essential element for arriving at just decisions and fair outcomes.

    The second and third paragraphs are obviously contradictory. One cannot be committed to “impartial justice” and a “determination to faithfully apply the laws at hand” while at the same time shaping one’s analysis with one’s own “perspective” and “life experience” with a focus on how it effects “daily reality of people’s lives” in a “rapidly changing time”.

    The third paragraph is pure, unadulterated nonsense, at odds with the role a judge is supposed to play (and yet is undoubtedly the operative part of his alleged selection process). Legislatures, not courts, are the bodies who are supposed to be concerned with what does and does not represent “justice”, as they are accountable to the electorate if they enact laws that do not produce “justice” in the eyes of the people. Judges are supposed to operate under the premise that the law, with the Constitution acting as the ultimate law, does represent justice and apply it accordingly…even if as individuals they disagree with it.

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    • Scott, there really and truly are cases where the law is not clear. When that is the case, we try to apply principles from seeming analogous scenarios, but sometimes that just doesn’t make any sense, either.

      There is an entire body of Anglo-American jurisprudence called “the common law”. The common law is, in fact, court made. It was ingrained in the Founders and it is alive today. It does not apply to statutory cases, but it does apply to cases and controversies arising out of the many areas of the law that are not controlled by statute.

      Even in statutory construction cases, different maxims or guidelines of interpretation, all well regarded and many having been cataloged by Scalia, among others, may apply.

      In these cases, which may be as much as 5% of a Supreme Court docket, there is much leeway. Sometimes it comes down to what the judge thinks is fair or right, at any level. It’s still calling balls and strikes, except there is no plate and you have to guess where the strike zone is.

      Additionally, there is the whole area of equitable remedies. Injunctions, Mandamuses, specific performance, and many more, are not usually written into a statute. A breach of a contract, for example, can lead to monetary damages or to an order to do something. The order to do something is a judicial remedy, only.

      Then there are statutes that are internally inconsistent. And new technology. Negligence could cost you if you knocked down someone with your buggy, but what about when your airplane fell out of the sky? A neighboring landowner cannot drain his sewage onto your land by common law. What about a neighboring power plant? What if the statutes that regulate the power plant’s conduct conveniently overlooked being a nuisance neighbor? Does the common law still apply?

      And so forth.

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      • Mark:

        Scott, there really and truly are cases where the law is not clear.

        I am sure that is true. But the fact that there exists cases in which the law isn’t clear doesn’t mean that every claim that the law is unclear, or even most of them, should be credited. After all, isn’t that exactly the excuse one would expect to hear from a politicized judge issuing a politicized opinion? And besides, one would imagine that if the law really were unclear in any given case, it would actually be difficult to predict how the individual judges would rule. But of course in the most controversial cases, it is actually incredibly easy to predict how most of them will rule. What are the chances that, in case after case of “unclear” law, the same 4 judges will inevitably end up agreeing with each, and disagreeing with the other same 4 judges, over and over again?

        I think you have agreed in the past with the notion that there exists 2 courts, one that rules on the actual legal merits for low profile, non-political cases, and one that rules politically in high-profile, politicized cases. If we can agree that this is a reality (can we?), then for the purposes of the nomination process we can ignore all of those cases that fall into the former category. For those cases, it doesn’t matter which side of the aisle you are on, there is no particular reason to prefer a Scalia over a Wise Latina or vice versa. But for the latter cases, it makes all the difference in the world. And these are the cases for which Obama is making a very thinly veiled call for nominating partisan ideologues who will rule politically.

        Kevin Williamson noted and commented on the same Obama remarks that I noted. His entire post is worth reading, but this is especially on point here:

        http://www.nationalreview.com/corner/431919/barack-obamas-supreme-court-nomination-blogpost-shows-disdain-rule-law

        Our courts and law-enforcement institutions are imperfect, of course, and the law already is imperfectly applied. But we should not make a virtue out of those defects, or attempt to make a virtue out of them. Any president or judicial nominee who makes an argument from empathy – that it should matter to a judge who you are and what demographic characteristics you bear — should be understood as an enemy of the rule of law. Barack Obama has proven himself that time and again. Republicans are right not to give him the opportunity to do more damage.

        Williamson is 100% correct.

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        • We agree that the Supreme Court handles the two types of cases differently, and that it shows. They are all good lawyers [very good, in fact] and on non-political cases, which are the great majority, Roberts will fashion unanimous or nearly unanimous decisions. But in the political decisions we often see a predictable split, but not always.

          BTW, I have thought recent political cases have been decided incorrectly about half the time. for example, I thought the majority was wrong on not tolling the statute of limitations based on non-disclosure, and that Kennedy’s SSM ruling was inane.

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