Morning Report: Consumer sentiment is falling 4/15/16

Markets are lower this morning as commodity prices fall. Bonds and MBS are up.

The Empire Manufacturing Index increased in April to the highest level in over a year. The bad news is that industrial production, manufacturing production and capacity utilization all fell in March. Some of that is going to be due to low oil prices, however global demand continues to fall. Economists are looking for weak Q1 GDP numbers, possibly below 1%.

Consumer Sentiment dipped in April, as increasing gasoline prices rose. Most consumers think the economy is getting worse. This was borne out in the Fannie Mae Housing sentiment index where consumers are the most pessimistic about the economy in two years.

Citigroup posted better than expected earnings this morning based on cost cutting. They launched a new round of layoffs, with up to 2,000 people being let go. Cost-cutting is the theme of banking right now, as Goldman is also calling for the deepest cuts in years.

Foreclosures are declining in importance in most markets – in fact foreclosure activity is below pre-recession levels in just over a third of metro areas, according to RealtyTrac. “Despite a seasonal bump higher in March, foreclosure activity in most markets continues to trend lower and back toward more healthy, stable levels,” said Daren Blomquist, senior vice president at RealtyTrac. “More than one-third of the 216 local markets we analyzed were below their pre-recession foreclosure activity averages in the first quarter, and we would expect a growing number of markets to move below that milestone the rest of this year — while the number of markets with a lingering low-grade fever of foreclosure activity continues to shrink.”

We are starting to see weakness at the very high end of the real estate market. A combination of fevered building of luxury urban properties and waning overseas demand has created a glut of property in places like Miami, where prices are sliding 6% – 8%. The top 10% of condos saw a 15% price decline. Ever since the bust, luxury has been the only place that has been consistently working for builders.

Economists are becoming less convinced we will see 2 more rate hikes this year. Given the fragile global economy and the complete absence of inflation, the risks of hiking are growing larger. Until you see wage inflation, it is hard to imagine any real inflation pushing through to consumers. Even then, the Fed has said they want to let the labor economy “run hot” for a while, which probably means they will accept moderate wage inflation for some period in order to get the labor force participation rate back up.

28 Responses

  1. Kevin Williamson responds to his conservative critics:

    Conservatives thought so highly of [Bill] Cosby for saying these things that when he was accused of rape, the New York Post protested that he was being “crucified for being conservative.” When the allegations first started coming out, Rush claimed that they were getting media play only because Cosby had enraged liberals by insisting that black men “start accepting responsibility.” Jerome Corsi, Trumpkin extraordinaire, fell over himself with praise for Cosby, whose speech had gone “against the grain of politically correct rhetoric that defines white racism as the cause and black inequality as the result.” (Conservatives of this stripe are big on being “politically incorrect” — about blacks.) Sean Hannity joined in.

    Black man tells black underclass to get its act together, he’s a hero to white conservatives. White man tells white underclass to get its act together, different story. If you wanted to know whether white identity politics inspired by Donald Trump is going to be as foolish and morally reprehensible as black identity politics inspired by Al Sharpton, there’s your answer.


    • jnc:

      Someone needs to apply this logic to Hamilton.

      I think someone needs to explain to these people that the whole craft of acting is about convincingly portraying something that the actor, in fact, is not.

      Liked by 1 person

    • I use all online mentions of “Hamilton” to brag that I recently did see “Hamilton”. In fact, I was at the same performance as Bernie Sanders. Arguably my second row mezzanine aisle seats which I bought six months ago were better than his guest of the house mid- to back-orchestra aisle seats. Presumably we both paid about the same price.

      Bernie did create quite a stir before and after the show just by being there. But we were more interested by the fact that it was the last weekend of Jonathan Groff’s performance as King George III, the only character played by a person of northern European heritage. His numbers are done in a British Invasion style, and not the good Beatles and Rolling Stones stuff but the Herman’s Hermits and Dave Clark Five schlock. Those numbers were real crowd pleasers as comic relief and more identifiable to the decidedly white upper-middle class audience.


  2. That’s what happens when you make a deal with the devil


    • Wasn’t that a known known? It should be obvious that uninsured people are going to have higher medical costs simply because many of them were uninsured because they were uninsurable. Also, these costs would settle down somewhat as acute untreated conditions were resolved. There was a lot of pent-up demand for services, but once everybody got their new hip, they wouldn’t be need another quite so soon.


      • yello:

        Also, these costs would settle down somewhat as acute untreated conditions were resolved.

        No, because the existence of acute conditions across the population doesn’t disappear simply by granting people insurance coverage. New cases will arise with the same frequency as they always did, even as old ones are resolved.


    • They should have known not to acquiesce to the government. Lesson learned.


    • Fuck those colluder’s. May they go bankrupt, their investors lose everything and their CEO’s prosecuted for being malfeasance.


  3. Because being a “victim” absolves anyone from any responsibility for anything.


    • The only people who still use the word ‘coed’ are just using it as a keyword in porn searches.

      Liked by 1 person

    • Kasich was asked:

      “What are you going to do in office as president to help me feel safer and more secure regarding sexual violence, harassment, and rape?”

      The correct answer (which was not, of course, Kasich’s):

      “Nothing. The president is not a hall monitor or an RA or a university cop. He is not in charge of university security nor local town policing. And he is most definitely not your parent or guardian, responsible for making you “feel” safe. I could run through what the responsibilities of the president are, but it would probably be easier if you simply Google “US Constitution” and read the document yourself. It is quite short and, as a university student, it ought not be beyond your comprehension. In it you will find what the president is responsible for, and what you will not find is any references to making university students “feel” safe. In fact, not only is it not the responsibility of the president to make you feel safe from sexual assault on campus, it isn’t even his prerogative. The president doesn’t have the authority to police campuses, establish university policy, or monitor campus activity. I couldn’t do anything to make you feel safe on campus even if I wanted to. And believe me, I don’t want to. If I did, I’d be running for president of your university, not president of the US.”


      • Bitch has daddy issues.

        Liked by 1 person

      • “What are you going to do in office as president to help me feel safer and more secure regarding sexual violence, harassment, and rape?”

        Your cause is worthy and just. Please address your concern to your student government. Become active in it and learn how it works.



        • “What are you going to do in office as president to help me feel safer and more secure regarding sexual violence, harassment, and rape?”

          Are you a student at a service academy or in ROTC?




  4. Or that he would cease using Title IX policy to try and cajole universities into treating accusations of sexual assualt as a student discipline problem, and instead have them treated as a criminal justice issue that requires police involvement, a trial in the court system, and the associated due process protections for the accused.


    • but that requires victim cooperation. and that’s somehow wrong? i never did understand that. there’s no shame in what happened if you are a victim.


  5. The Contemporary Times section of this boggles the mind. Such a perversion of language.

    I think these people are so fucking stupid that it’s not done intentionally.


  6. The climate science stuff is Rock. Fucking.Solid though, trust me.


  7. NR’s Mark Krikorian, on oral arguments in the amnesty case in front of SCOTUS yesterday:

    I’m sure that as a general rule it’s true you can’t know what the court will do from the justices’ questions. But it was pretty obvious (here’s the transcript) that the four Democratic justices will rule for their administration. I had hoped at least one of the liberals would be sufficiently sobered by the words “I, Donald J. Trump, do solemnly swear…” that they would flinch from approving Obama’s power grab, since it would set a precedent for his successors. But there seems little chance of that.

    His “hope” is premised on the notion that the lockstep libs actually value both logical consistency and adherence to precedent. With regard to politically charged cases, it is pretty obvious that they don’t care about either. Or, at least, that they care much more about policy outcome.

    There is no reason to think that the reasoning used to come to a decision favorable to progressive policy would be applied in equal measure to a decision regarding a policy opposed by progressives. Indeed, given what we know about progressive judicial philosophy, there is every reason to expect that it would not be used.

    The Court is a partisan political body, not an impartial legal body. The sooner the right accepts this, the better off it will be.


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