Morning Report: Janet soothes the markets 3/30/16

Markets are higher following dovish comments from Janet Yellen yesterday. Bonds and MBS are down.

Janet Yellen spoke yesterday in NY and reiterated the dovish statements from the last FOMC meeting. Stocks and bonds rallied on the announcement, with both going out on their highs, although bonds have given back their gains this morning. Fed Funds futures now assign a 0% probability of an April hike. It is very much a Goldilocks moment for stocks, not so much for the economy. For the time being, economic weakness is good news for stocks because it keeps the Fed on the sidelines. As if on cue, Boeing announces it is cutting 4.500 jobs.

Overseas yields are still heading lower, with the German Bund trading at 16 basis points. As long as bond yields throughout the world trade at such low levels, the 10 year will have relative-value trading support. This means that as rates in Europe fall and go negative, investors will swap out of Bunds, which really have nowhere to go but down and buy Treasuries. The world is trading as if inflation is never, ever, ever coming back. There are a lot of “this time is different” stories going around about technology and inflation. It may turn out that the best possible trade is borrowing money for 30 years at 3.375%.

Mortgage Applications fell 1% last week as purchases rose 2.1% and refis fell 3.3%. Refis fell to 52.4% of total loans, compared to 58.6% a month ago.

Payrolls increased by 200,000 according to outplacement firm ADP. The Street is looking for an increase of 210,000 on Friday.

In the Webster’s dictionary under real estate bubble, people should place China. Here is an example of the sort of stuff that is getting built these days. It reminds me of the height of the US property bubble when a thief supposedly broke into a McMansion with a boxcutter. Builders were cutting every corner just to make houses big. I have said this before: China is going to be an epic battle between Mr. Market and Big Communist Government. Compare property prices to stock prices.

30 Responses

  1. Like

  2. During Morning Edition they were doing a story on some of the other central banks and the effect of negative interest rates on loans (and other things). They interviewed a woman in Copenhagen who was paid $30 by the bank to take out a loan.

    Crazy stuff!

    Like

  3. http://www.supremecourt.gov/opinions/15pdf/14-419_nmip.pdf

    The Supremes just struck down part of pretrial taking of D’s stuff. Very thorough opinion, on the 6thA issue: that is, taking untainted assets and freezing them so the D cannot afford counsel t’aint right.

    But I am struck by how much more I agree with the reasoning in Thomas’s concurrence than with the reasoning in the Opinion. Thomas agrees with the result, but on what seem to me to be stronger historical Constitutional grounds.

    I recommend that you read this, as it partly rolls back the Justice Department’s seizure policy announced just yesterday.

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    • Mark:

      Thomas agrees with the result, but on what seem to me to be stronger historical Constitutional grounds.

      I haven’t read the opinions yet, but the above doesn’t surprise me. Thomas is generally much more rooted in historical constitutionalism than any of his colleagues.

      Like

    • KEN- NEDY, J., filed a dissenting opinion, in which ALITO, J., joined. KAGAN, J., filed a dissenting opinion.

      Kagan is the one that Obama’s most recent nominee supposedly most closely resembles?

      http://www.vox.com/2016/3/16/11250100/merrick-garland-judicial-ideology

      What is Alito’s position, exactly?

      … I’m sure there’s worse out there, but Garland is not a conservative.

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      • FWIW, Garland on criminal cases would probably align with Alito.

        There are no judges a D would appoint who would be anything like Scalia. A D might appoint a judge one click to the left of Roberts if he were trying for a unanimous Senate. Ergo, Garland. Loved by lawyers on both sides of the docket and regardless of political persuasion, respected by other judges. Same stuff that was true of Roberts.

        On criminal law Garland is a staunch law and order ex prosecutor, like Alito. On regulatory law he would be pro Chevron test. He would in fact be likely to align with Roberts on even contentious cases; he hardly ever dissented on the DC Court.

        He is not like Scalia in any way, he is like Alito in one way, he is like Breyer in one way, and he is like Roberts in many ways. On purely social/sex issues, he has little track record, but would likely be like Kennedy.

        Got it?

        Like

        • “Got it?”

          I think so, yeah! (there’s a Popeye Reference in there if you happened to have memorized the lyrics to Robert Altman’s 1980s Popeye movie).

          Interesting. So Garland is not a particularly conservative choice, per se, but more conservative than RBG. And as good as Republicans are likely to get if they wait on the nomination (whose to say a president Trump wouldn’t nominate someone as liberal as a president Hillary?) …

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        • KW, if the RNConv nominates Cruz, Rs should wait as a political decision. but if the RNConv nominates DJT, then, as a political decision, moving forward with Garland makes good sense.

          I am agreeing wit’ ya, in case it is not apparent.

          Liked by 1 person

        • Mark:

          KW, if the RNConv nominates Cruz, Rs should wait as a political decision. but if the RNConv nominates DJT, then, as a political decision, moving forward with Garland makes good sense.

          I disagree. We must assume that Garland, whatever it is that might make him a “moderate”, is going to be just as bad as any of the 4 lockstep liberals on any major politically controversial case, which is ultimately all that really matters. I think R’s should take their chances even with Trump, and only confirm Garland in the event of a Hillary victory.

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        • Scott, you are entitled to your view. Cruz would appoint judges you like, and I promise you they would be highly competent. Trump might appoint a judge you like, but I have no reason to believe that he respects competence and integrity in a judge. He has a soft spot for sycophants.

          Controversial cases are NOT all that really matters.

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        • Mark:

          Trump might appoint a judge you like, but I have no reason to believe that he respects competence and integrity in a judge. He has a soft spot for sycophants.

          I totally agree with everything you say. Which is a good indication of the complete and utter contempt I hold for the progressive view of what constitutes a good justice.

          Controversial cases are NOT all that really matters.

          At this point, given what the left has done to the court, I think it largely is. For the non-political cases, one incompetent Trump-appointed judge will not be able to do much if any damage on his own. He’d need to get 4 other judges to follow his lead. If he is truly incompetent or lacking in integrity, he wouldn’t be able to do that. Besides which, the Senate could always reject such a nominee in any event.

          But with regard to the political cases, we already have 4 politicized judges committed to enacting leftist policies via judicial fiat. One more and there is pretty much no limit to the damage they can do.

          Trump could conceivably do as much damage to the court as Obama/Hillary. But he can’t do more, and he could conceivably do less.

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  4. Funny, the big CFPB “consumer protection” law TRID has killed the jumbo securitization market. Big REITs like Redwood Trust frozen. Only banks who have the appetite to balance sheet the loans are doing them, further restricting credit.

    Gee, I thought the omniscient regulators at the CFPB were going to show us financial industry stooges how to do our jobs. Unintended conseqences, who’d a thunk.

    Funny thing is, I’ll bet Cordray doesn’t even know. He won’t talk to anyone in the industry except for obama lackey Stevens at the MBA.

    Muh Loanzz!!!

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    • That’s really gross. What’s wrong with people?

      Like

      • KW:

        What’s wrong with people?

        Ultimately it is the result of leftist ideology. Instead of politics being one small aspect of life, politics becomes central to all aspects of life. Even personal hygiene becomes the subject of, and an opportunity for, political statements. All politics, all the time.

        Like

        • @ScottC1: “Ultimately it is the result of leftist ideology.”

          This is where we half-way disagree. I think it tends to in some respects be an aspect of perhaps secular ideology, in that, barring a religious tribal affiliation, human beings pick a political one. Still, you must have a point as thought I have seen many things from the right that suggest an “everything is politics” mentality, I have yet to see Obama menstrual panties. Although there is, of course, Obama toilet paper:

          http://www.amazon.com/BigMouth-Inc-Fun…

          Hillary Clinton version is available, too! Can sell to Republicans and Bernie supporters! That’s some smart marketing.

          Like

        • KW:

          Although there is, of course, Obama toilet paper:

          My point about leftism wasn’t so much that leftists are more likely to engage in dehumanizing “the other” but rather that leftist ideology, particularly its authoritarian/centralizing ethos, create a lot more opportunities and reasons to see people as “the other”. The more things that are subject to government control, the more I have to care about the politics of other people.

          Like

        • @scottc1: I suppose that is true. Or, the more you have to care about it at a federal level, and the less you ultimately care about it at a local level. I imagine tribalism was alive and well in state and municipal politics back in the 1800s, when local politics mattered a lot more than federal politics on the whole.

          Ultimately, I consider the orientation towards seeing (and wanting to see) people as members of “scary other” groups as being something hardwired into human beings, though I admit I find it interesting that the tribe that considers itself egalitarian and universally accepting is just as tribal and focused on the “scary other” as anybody else. Their scare other is just Christians, Republicans, and stay-at-home-moms. 😉

          Like

        • KW:

          I imagine tribalism was alive and well in state and municipal politics back in the 1800s, when local politics mattered a lot more than federal politics on the whole.

          No doubt to some degree, but I suspect it was much less than that which is manifested in less local politics, because local communities tend to form around, and reinforce, shared values. The further away from that community the government is, the less likely it is to reflect those shared values and the more likely it is that it is unknown “others” that that is imposing alien values upon me.

          It is definitely true that local politics can be outrageously nasty, and often times over the most petty and innocuous issues. (The most contentious political issue in my own town over the last 15 years has been whether or not to install sidewalks in a certain part of town. People stopped talking to each other over it. Crazy.) But that is probably because on the big issues, most people actually agree. That’s why they live where they do, because of a commonality and goodwill that they share with other people there. And if I feel put upon by the politics of the town, it is fairly easy for me to leave and find somewhere else more to my liking.

          In a way, local politics allows for a market in political policies, and this market tends to ameliorate political tensions because if you really want to you can always find somewhere to your personal liking which will reflect your personal values. But as politics gets elevated to higher and higher levels, those tensions grow because it becomes harder and harder to maintain diversity of policy and hence harder and harder for everyone to find a place that reflects their own values. Once all these issues get elevated to the federal level, the market ceases to exist, because the Feds are a monopoly. So rather than political tensions being ameliorated, they get magnified, and resentment grows as more and more people have policies with which they disagree imposed upon them from afar.

          This is exactly why, I think, leftist ideology helps to create more demonization of “the other” than would otherwise exist. Because it has an authoritarian impulse which feels the need to nationalize all issues so that it can impose its values on everyone, whether they hold those values or not. And this raises the political stakes for everyone over everything.

          Liked by 1 person

      • Niche marketing, KW.

        Really gross appeals to 7 YOs, too.

        At a more serious level, de-humanizing the “other” seems to appeal across the political spectrum. GWB and BHO were both primates to their more extreme opposition. No longer people, they could be the butt of gross insults that disregarded any sense of the propriety of the office. Jews were mice to the Nazis. When I went to war movies with my dad, after WW2 in the 40s, Japanese soldiers were often depicted as having fang like buck teeth.

        I put crotch art in this de-humanizing category.

        Islamic extremists perverted the notion of the dhimmi into despicable underlings, to be converted or killed, preferably killed. Originally it meant non-Muslim neighbors who were permitted to live in peace in Muslim lands [although they paid more taxes].

        I place crotch art in the same category.

        Like

        • Mark:

          At a more serious level, de-humanizing the “other” seems to appeal across the political spectrum.

          That is undoubtedly true. But by inserting the federal government into so many aspects of life, the left creates many more instances and reasons for which there is an “other” to be dehumanized.

          GWB and BHO were both primates to their more extreme opposition.

          Perhaps, but depictions of W as a primate found much more mainstream acceptance on the left than those of BHO find on the right. Ted Rall is a syndicated political cartoonist and his routine depictions of W as an ape were published in hundreds of newspapers without incident. In contrast, when Rall depicted Obama as an ape, it immediately turned into a gigantic controversy.

          http://www.theblaze.com/stories/2013/12/03/the-ape-like-obama-depiction-that-landed-a-cartoonist-in-hot-water-but-its-not-about-what-you-think/

          Like

        • “GWB and BHO were both primates to their more extreme opposition. No longer people, they could be the butt of gross insults that disregarded any sense of the propriety of the office. Jews were mice to the Nazis. When I went to war movies with my dad, after WW2 in the 40s, Japanese soldiers were often depicted as having fang like buck teeth.”

          Tribalization! A constant complain and critique about humans, but we just will not stop it. There is always a dehumanized “other”. I love the old WB cartoons with the Krauts and the Japs getting their comeuppance from Bugs Bunny or Daffy Duck. Ah, those were the days. I suppose there might have been Hitler menstrual pads … still, gross!

          Like

        • @scottc1: “Perhaps, but depictions of W as a primate found much more mainstream acceptance on the left than those of BHO find on the right”

          I think that might be true of, say, the more popular publications and websites and bloggers on the left vs. those on the right. Less true, I think, of the rank-and-file tribalists, if I judge from the various Facebook memes (often from folks who I would have otherwise thought “wouldn’t go there”). But I have a general sense that National Review wouldn’t consider depicting Obama as a chimp while I’m pretty sure Mother Jones or, heck, the Huffington Post wouldn’t have a problem with depicting Dubya as one.

          “In contrast, when Rall depicted Obama as an ape, it immediately turned into a gigantic controversy.”

          It was anticipated on the right that anything and everything that could be deemed “racist” in regards to Obama would be. Rall, being a liberal who considers Obama a right-winger (mostly based on FP, as far as I can ascertain), he may not have anticipated it. As to why he chose to depict Obama as a gorilla in that context I’m not sure . . . it does not seem to add to the message. But whatever. Modern life requires that a lot of people be outraged about something every moment of their deeply offended lives.

          Like

    • Since I run Adblocker I only got the briefest glimpse. But from what I saw it’s just silly.

      Like

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