Morning Report: Consumers are becoming less bullish on home price appreciation 3/9/16

Stocks are higher this morning as commodities rally and the market anticipates more stimulus from the European Central Bank tomorrow. Bonds and MBS are down small.

Mortgage Applications edged up 0.2% last week as purchases increased 4.2% and refis fell 2.3%. The 30 year fixed rate mortgage rose 6 basis points. We saw a big move up in ARM rates from 3.02% to 3.2%. In an environment where the yield curve is flattening, switching from an ARM to a 30 year fixed is the trade to make.

Wholesale sales fell 1.3% last month while inventories built up 0.3%. The inventory-to-sales ratio is 1.35 month’s worth, which is the highest since April of 2009. This is a negative sign for the economy going forward, as inventory build adds to GDP, and a buildup essentially “borrows” growth from future quarters. While this number doesn’t carry the same weight it did 20 years ago, it still matters.

Marco Rubio had a tough day yesterday. John Kasich is looking more and more like he could be the “establishment candidate.” Bernie Sanders beat Hillary in Michigan, as anti-trade populism resonates deeply in the hard-hit rust belt.

Consumers are becoming a touch less bullish on future home price appreciation, according to the latest Fannie Mae National Housing Survey. They anticipate that home prices will appreciate 1.7% next year, as opposed to 2.2% last month. We are certainly seeing some signs of softness in the oil states as well as the high end. Their view on the economy is about the most negative it has been since the big equity sell-off in August. 56% believe the economy is on the wrong track, and only 37% believe the economy is on the right track. This statistic explains the appeal of Sanders and Trump these days, two candidates who would ordinarily get zero traction.

Global financial markets are forecasting that the age of ZIRP will be with us for 10 years or more. Sound far-fetched? Japan has been at 0% interest rates for over 20 years. Interest rate cycles are long. While the US may not be in the sort of deflationary trap that Europe and Japan are in, relative value trading will help keep a lid on rates going forward. In fact, the US may be more at risk of future asset bubbles than deflation.

With rates so low, consumers are happy to rack up the credit card debt. The average credit card debt level for a US consumer is $7,879, closing in on the unsustainable levels we saw early in the Great Recession.

21 Responses

  1. Love the benefit of the doubt here.

    “In 1984, Jackson won 19 percent of the popular vote, but received only 10 percentof the delegate count. The facts are indisputable: whatever the motivation, superdelegates had a chilling effect on the first viable African American presidential candidate, re-routing and suppressing the will of the voters in favor of the establishment choice.”

    View story at

    Why do they derserve it?


    • There is something fundamentally un-democratic about the party that insists on being called the Democratic party. They should be renamed the Superdelegate party and be done with it. The GOP can be renamed the AHNC party (All Hat Not Cattle) and we’ll see some truth in party descriptions. People will understand what they are in for. At the primary voters can be thanks for pretending to participate.


  2. A good example of the folly engendered by the left’s kooky constitutional theory.

    A constitutional right to an “hospitable” climate.

    On Wednesday, a judge in US District Court in Oregon will consider whether a constitutional challenge to federal actions that underwrite fossil fuel emissions may proceed. Brought by youth plaintiffs, and by me, on behalf of future generations, the lawsuit alleges that by permitting, authorizing, and subsidizing the exploitation, production, transport, and burning of fossil fuels, our government has caused or substantially contributed to the present emergency in which the very viability of a hospitable climate system is at stake. We argue that such federal actions infringe upon the fundamental guarantees of the Fifth Amendment, including the rights to life, liberty, property, and equal protection of the law…

    …Congress and the president manifestly lack the requisite resolve. Accordingly, the court should immediately order the government to develop and implement a climate recovery plan. Effective measures should include a rising fee on carbon emissions to ensure that fossil fuel industry costs now imposed on our health and our children’s future are accounted for in energy purchase and investment decisions. Such a plan could pave the way for deep decarbonization of our industrial system, and guide effective international action.

    It will take such a court order to extricate our nation from the looming danger that our government’s actions have done so much to bring about. Our children’s lives, their prospects, and the blessings of liberty we are obliged to secure for them, hang in the balance.

    Does anyone honestly think that the theory of the constitution that produced such results as Roe and Obergefell, and which is enthusiastically embraced by the lockstep liberal wing of the court, could not produce a win for these plaintiffs?


    • This lawsuit will succeed and SCOTUS will uphold it.


    • No standing. Blown out on Rule 12. Watch.


      • The average credit card debt level for a US consumer is $7,879

        That seems to me to be very bad, indeed.


      • Mark:

        No standing.

        Because the alleged harm is a future event?


        • Because the alleged harm is a future event?

          In large part.

          These are persons who can show no imminent threat to any of their protected rights. Thus another part, beside speculative future event, is “wrong plaintiffs”.

          A third standing related problem is “wrong defendant”. If the event were not speculative, as plaintiffs insist, the defendants should be the climate polluters, who can be enjoined under common law, not the governing branches for failure to have legislated against climate pollution [for want of another shorthand description], an alleged failure that can be remedied at the ballot box and thus is not justiciable.

          A fourth standing related problem is the limited nature of a mandamus proceeding. Courts cannot order the governing branches to write law. They can only order the other branches to follow the law, essentially.

          To invent a “real” case:

          if TX abandoned its barrier island program, and insurers cancelled coastal policies in response, a complex state case or controversy could arise and be litigated in a state court. The state would surely attempt to prohibit the retreating insurers from selling anywhere in the state and the insurers could come back and claim a taking, etc. I do not think a federal court would ever hear it, of course, because insurance is regulated by the state. But the duties and obligations of the state and of the insurer with respect to an aspect of climate change that both parties’ actuaries were predicting [that would be why the State abandoned the program and why the insurers pulled out – both would be predicting rising water] would take it out of the realm of speculative event and make it a current one measurable in dollars.


        • Mark:

          Thanks. On this:

          Courts cannot order the governing branches to write law.

          I seem to remember a case from some time ago that had something to do with low income housing, I believe in Westchester County, where there was some controversy about the ruling precisely because it somehow directed the local legislature to do something. I may have it wrong though. I will see if I can find it out there on the google.

          edit: The controversy may have been that the court itself imposed court-invented standards/requirements, which seems more likely, now that I think about it.


        • Scott, there are many state cases that are analogous to this recurring scenario in TX and KS.

          In the 80s, both state’s Supremes ruled that because education is a state constitutional right a basic education must be paid for out of the state budget, and localities were free to “enrich”. Periodically since then, both states have failed to produce the required educational budgets, all the school districts have sued, and the state Supremes have temporarily taken over the schools and the budget process by Special Master until the leges have rectified their budgets.

          I think that is a typical exception to the general rule, in states and localities.

          Another might come out of bankruptcy proceedings for a governmental entity.


        • Mark:

          A Posner article on the political court.

          Tough to see Posner as serious voice after his dishonest hatchet job on Scalia in the NYT. It is interesting that Alito, Roberts and Thomas are all “very conservative” while the lockstep four are only “liberal”. Also, the implication that his religion influenced Scalia and the other conservatives but not the liberals in just BS.


    • It needs to be blown out. It shouldn’t even be considered. In the complaint, it basically describes to job of the SCOTUS as to rule the country by fiat. Which is not its constitutional role. Ergo, it can do it . . . but your suit can’t actually say that’s what you’re asking for.


  3. This is a dog and not a wolf, right?Shiftless bum


  4. A group of law professors have sent a letter to the Senate claiming that the Senate is failing to fulfill its constitutional requirements by delaying the consideration of any nominee to the Supreme Court until after the election.

    Ed Whelan explains why these law professors are “beclowning themselves” while also noting that some of them even publicly supported Democratic filibusters of Bush’s judicial nominees, a position diametrically opposed to the one they now take.

    But he also says this:

    It’s entirely legitimate for folks to present their political arguments against the Senate’s not acting on a nominee, but for law professors to miscast a political argument as a constitutional claim is an act either of dishonesty or of deep confusion.

    Well shocker, that. Isn’t that pretty much what the liberal view of constitutional law centers around, miscasting political argument as constitutional requirements? I mean, if it wasn’t for the fact that doing so is exactly what defines a leftist legal scholar, we wouldn’t have to worry about Obama appointing yet another one to the court.


    • I dunno. I think the Senate is required to advise and consent on a judicial nominee, in a timely manner, in the same manner I am required to sort my recyclables. Yes, they should do it, but . . .


  5. The second question in the article, about deportations, amuses me. It’s taken as a given the Obama has deported the most people ever. That’s true if you consider border turn-backs as deportations. Obama’s administration was the first to reclassify it. So, when Ramos is asking if they’d end deportations and they agree, it literally means our borders will be open.

    Is that worthy of discussion?


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

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: