Morning Report: Homebuilder Sentiment Flat 3/15/16

Markets are lower this morning as the dollar rallies and commodities fall. Bonds and MBS are up.

The FOMC meeting begins today. The decision will come out at 2:00 pm EST tomorrow, along with the new economic and Fed Funds forecasts. Here is Tim Duy’s take on the state of play. His take: while you could make an argument to tighten, the Fed still considers the bigger risks to be to the downside. The doves are ascendant on the Board.

Retail Sales fell 0.1% in February, although declining gasoline prices had a lot to do with it. Ex-autos and gas, they were up 0.3%. The control group, which also strips out building products was flat. The downward revisions to January got everyone’s attention however as the initial 0.2% estimate was revised downward to -0.4%.

Inflation at the wholesale level remains well below the Fed’s target. The Producer Price Index fell 0.2% in February as well. Ex-food and energy, it was flat on a month-over-month basis and is up 1.2% YOY.

The Empire Manufacturing Index rebounded smartly to .62 after a heavily negative start to the year.

The NAHB Homebuilder Sentiment Index was unchanged at 58 in March. This is a 9 month low. A shortage of lots and labor continue to be the biggest headaches facing the sector. The builders have been able to drive the top line by raising prices, not by pushing volume. You can see below how the index has tracked versus housing starts. The divergence is as big as it has ever been.

Voters go to the polls in several states today, including Florida and Ohio, which are do-or-die races for Marco Rubio and John Kasich respectively. The Democratic side seems pretty much set at this point, unless Bernie Sanders pulls a free rabbit out of a hat.

20 Responses

  1. Frist!

    Uh-huh! I’m back, baby!


  2. Another good Molly Ball piece. She’s written some of the best coverage of the campaign.


    • it seems like everyone from the left views Trump through the prism of race.


      • I don’t think this is an inaccurate characterization of Trump voters views:

        “They don’t understand why Democrats can campaign on overt appeals to the interests of blacks and women and Latinos, but Republicans are deemed offensive if they offer to represent the interests of whites and men.”

        It dovetails with an observation that Connor Freidoff made a while back about the left’s obsession with “white privilege”:

        “The academic left casts all proponents of color-blindness as naive. Perhaps they’re correct that the ideal of colorblindness alone will never bring about an America where anti-black racism is no more prevalent than anti-Irish racism is today. But isn’t it more naive to imagine that masses of white people will identify more strongly with their racial tribe and then sacrifice the interests of that tribe?

        There is no precedent for such a trajectory.”


        • I don’t think this is all about race – it is about government in general. They view obama as the classic big government liberal, and the Republican establishment as a bunch of pussies who talk a good game, but knuckle under whenever obama says boo.

          I think they hate the national debt, they think illegal immigrants are taking their jobs and their tax dollars, and they believe radical Islam is a grave threat that obama is playing footsie with and Republicans are too cowed to discuss openly.


        • jnc/Brent:

          I think it is all of the above. They are just plain mad as hell (about all kinds of things, including the racial BS) and not going to take it anymore. Unfortunately their solution isn’t in fact any such thing.


        • @scottc1: “Unfortunately their solution isn’t in fact any such thing.”

          In the absence of an actual solution, which is where I kind of think we are, Donald Trump is what we get. Put another way, if there is no cure for the disease at present, you’ll get excited by the snake oil salesman and buy yourself a case.

          @brentnyitray: I agree that it’s not *all* about race but it’s a lot of about race. Just not remotely in the way the left generally characterizes it. It’s about a certain nationalism, and a sense of national ethnic identity (rather than being white people vs. the minorities, it would be more “an abstract notion of American-ness against multiculturalism”. But I think for a lot of them it’s about race in the way that it isn’t about race, for them. A shorthand way of expressing is: I’m voting for the guy (or one of the guys) whose not calling me a Nazi and a racist. Trump is a solution to that.

          Also, a lesson to be learned here that won’t be, I don’t think, by center-rightists and liberals a like, is that calling Trump (and his supporters, directly or implicitly) racists isn’t an effective criticism. He will win or lose on a variety of factors, but calling him and his supporters racists is not one of them.

          The “Trump is a Nazi” and the tragically ahistorical “this is just how Hitler came to power” stuff seems likely to backfire. Trump asked for a stupid pledge in the style of someone swearing an oath on a bible and the media turned it into “Heil Hitler!” Clever self-plants who show up as ostensible Trump “supporters” with homemade Trump armbands so they can be tweeted and Facebooked out . . . I think that stuff fires up the angry white people out there tired of being called racists for failing to conform to the expectations of the left. Trump may well lose either the nomination or the national election, but it won’t be because they managed to come up with so many excellent ways to compare him to Hitler.

          I am reminded of the last minute effort to make Schwarzenegger (about as liberal a Republican as you can imagine . . . well, unless you imagine Bloomberg) in a Nazi, with claims he praised Hitler and would goose-step around the gym listening to “old Nazi anthems”. And he became governor.


        • KW:

          Put another way, if there is no cure for the disease at present, you’ll get excited by the snake oil salesman and buy yourself a case.

          If the disease is liver disease, and the snake oil salesman is pretty much advertising that his product is 90 proof alcohol, the only people who get excited by the snake oil salesman are people who do not have a clue about either 1) what the disease is or 2) what causes it.


      • They also view him through the prism of Hitler.


  3. OT: Interesting piece advocating for universal basic income.

    “Ending the era of the “job”


    • UBI is one of those positions that people on the far extremes of spectrum come together on. The big advantage of it is that it rolls all other income support programs into just one check. Writing checks is the one thing government is very, very efficient at.


      • At the school district I work at it, it became more cost effective to provide free school lunch and breakfast to everybody in the entire district than to keep track of (and report on) free and reduced lunch. I think UBI might be something like that, actually, although the consolidation of government bureaucracy it might entail would not be popular at the various administrations currently responsible for justifying their jobs.


        • There was an NPR story recently about just that (that it was more cost effective and efficient to just provide the meals for everyone). It was just serendipitous that it turned out to be better for the kids, too.


        • Mich:

          There was an NPR story recently about just that (that it was more cost effective and efficient to just provide the meals for everyone).

          I wonder if and how they measured the long term costs of a culture which encourages rather stigmatizes a sense of entitlement to government handouts.


    • Another major consideration is whether you accept the premise that technological and other economic changes have resulted in an economy that will no longer naturally produce full employment.


  4. “The longer that we allow the political rhetoric of late to continue and the longer that we tacitly accept it, we create a permission structure

    What a motherfucking hypocrite.


    • yep… i hope i live long enough to throw a raging party when he takes a dirt nap…


    • McWing (from the link):

      Obama also emphasized that efforts to shut down free speech were “misguided.”

      So the obvious follow up – Obama is criticizing left wing protesters like blacklivesmatters for attempting to shut down Trump’s speech?

      Obama is a total scumbag. I am with Brent on this one.


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