Morning Report: FOMC week 4/25/16

Stocks are down this morning on lower commodity prices. Bonds and MBS are flat.

We have a lot of data this week, with new home sales, Case-Shiller, and GDP. The FOMC will meet Tuesday and Wednesday, although the market is predicting that the Fed won’t hike rates. Given the posture of traders, the risk is probably on the hawkish side. Here is an analysis of what the markets will be looking for.

New home sales fell to an annualized pace of 511k in March.

Why did interest rates rise so suddenly and dramatically last week? Many market participants were scratching their heads wondering what was going on. One theory: The European Central Bank’s decision to adopt a “wait and see” attitude towards future stimulus gives the Fed the opportunity to raise rates at the June FOMC meeting.

Republicans John Kasich and Ted Cruz came to an agreement to split their delegates in order to deny Donald Trump the 1,237 delegates he needs to claim the nomination. Bernie Sanders is pretty much down to his last 48 hours or so and should exit this week sometime. In other news, Charles Koch (who took the Darth Vader of the left mantle from Dick Cheney) said he could vote for Hillary over the Republican nominees. Does that mean he will give money to her campaign? Probably not, however he will probably put money to work down-ticket.

Former Fed Head Narayana Kocherlakota says the Fed must be more aggressive in combating deflationary expectations.

The bond market is as dangerous as it has ever been, according to many bond managers. A small uptick in rates can wipe out a year’s worth of return. The flip side: borrowing is as attractive as it has ever been. The trade is to get out of ARMs, which will have their rates determined by LIBOR and into a 30 year fixed.

Freddie Mac makes some predictions for 2016: Mortgage origination will be $1.7 trillion (an increase of $50 billion from their last estimate), Q1 GDP of 1.1%, and an average fixed rate mortgage of 4% for 2016.

54 Responses

  1. Frist on a Monday. . .


  2. C. Koch is secretly supporting Bernie Sanders; what other impact could his possible support for HRC have among liberals?


  3. @markinaustin: Carryover:

    You may be interested in this, from the American College of Pediatricians:
    Human sexuality is an objective biological binary trait: “XY” and “XX” are genetic markers of health – not genetic markers of a disorder. The norm for human design is to be conceived either male or female. Human sexuality is binary by design with the obvious purpose being the reproduction and flourishing of our species…”

    I saw you posted that link on PL, and it was immediately discredited as being from a right wing think tank. The American College of Pediatricians is a right wing think tank?


    • re: RW think tanks – Who knew?

      I only wanted Shrink’s input as to whether there was a psychiatric position paper as well.

      In my experience, the most liberal subgroup of MDs is pediatricians. Not “lefties”, but probably close to 50% Ds where overall MDs are about 65% Rs.


    • The American College of Pediatricians is an astro-turf anti-gay group. The genuine professional organization for pediatricians is the American Academy of Pediatrics. Here is their position paper:

      Transgender adolescents need to be supported and affirmed; they need education and referral for the process of transition and about avoiding the pitfalls of using treatments that were not prescribed by a licensed physician

      Where do you even find stuff like what the ACP is putting out? Talk about confirmation bias in evaluating the credentials of an organization.

      Liked by 1 person

      • “The American College of Pediatricians (ACPeds) is a national organization of pediatricians and other healthcare professionals dedicated to the health and well-being of children. Formed in 2002”

        2002? Well, that’s convenient.

        Liked by 1 person

        • The ACP is also against same sex marriage and abortion.


        • My God!

          Truly shocking! I’m sure they’re pro-polluted air and water as well!

          Plus I bet they support Citizens United!

          They should be banned.


        • They should be banned.

          No, their true agenda should be examined. They are a right-wing (not that there is anything wrong with that) advocacy group about as medically valid as Rand Paul’s ophthalmology association.

          Liked by 1 person

        • yello:

          They are a right-wing (not that there is anything wrong with that) advocacy group about as medically valid as Rand Paul’s ophthalmology association.

          What makes the ACP any less “medically valid” than the AAP (which, BTW, is also an advocacy group)?


        • Google “nuance” and “correct thinking” bagger!


        • What makes the ACP any less “medically valid” than the AAP?

          If you can’t tell the difference, they’ve accomplished their goal.


        • yello:

          If you can’t tell the difference, they’ve accomplished their goal.

          I am largely unfamiliar with both, and since you already profess to know why one is less “medically valid” than the other, I figured it would be easier for you to just tell me. But obviously I didn’t take into account just who it was I was asking.


        • From the link in my first comment:

          It’s also because the ACP is not a legitimate medical organization; its name is designed to be mistaken for the American Academy of Pediatrics, which is a national organization with some 60,000 members. The ACP, by contrast, is estimated to have no more than 200 members, and it has been designated a hate group by the Southern Poverty Law Center for its anti-LGBT positions.

          I’m sure this information only burnishes their credentials in your eyes.


        • yello:

          I’m sure this information only burnishes their credentials in your eyes.

          It neither discredits nor burnishes their credentials as far as I am concerned.

          I don’t think the term “hate group” these days means much more than, rather ironically, “groups that I hate”. As for the SPLC, well….

          Liked by 1 person

        • Gasp! The SLPC? I’m designated a hate group by Morris Dees for fuck’s sake, try harder.


        • doesn’t the SPLC pretty much hand out “hate group” designations like candy to anyone who doesn’t hew to the hardcore leftist line?

          Isn’t the “hate group” designation so watered down that it is meaningless?


        • See? I knew you’d take it as an endorsement.


        • yello:

          See? I knew you’d take it as an endorsement.

          Ah, the nuance and shades of gray in the leftist worldview is always so surprising.


        • Which of organizations is being unfairly tarnished?


        • “and it has been designated a hate group by the Southern Poverty Law Center”

          They have a lot of company!

          “In its 2014 report, published in March 2015, the SPLC counted 784 “active hate groups in the United States”.[1][10]

          The groups included:

          72 separate Ku Klux Klan (KKK) groups
          142 Neo-Nazi groups
          115 White nationalist groups
          119 Racist skinhead groups
          113 Black separatist groups
          37 Neo-Confederate groups
          21 Christian Identity groups
          165 “General hate” groups (subdivided into anti-LGBT, anti-immigrant, Holocaust denial, racist music, radical traditionalist Catholic, anti-Muslim, and “other”)[10][1]”

          The ACP is apparently a conservative pediatric association. And why should conservative pediatricians have an associations? In terms the “medical” relevance of same sex marriage, abortion, and transgendered folks . . . I don’t know that there is any. It’s clear the consensus would be with the American Academy of Pediatrics.

          Liked by 1 person

        • SPLC targets conservatives, not just hate groups, critics say:

          They track black separatists. Trying to find out if they track any Muslim hate groups, or if there just aren’t any . . . because, you know, Muslims don’t target any whole groups of people because of their identity.


      • so i guess any organization that doesn’t uncritically support every leftist cause is suspect?


        • How could it not be? In world where progressives find nuance in everything, “right-wing” must be EXPOSED because there can be no doubt of their AGNEDA.

          BURN THE WITCHES!!!


        • Brent:

          so i guess any organization that doesn’t uncritically support every leftist cause is suspect?

          That is the general way of things, isn’t it?

          Although in a certain way you have to admire the strategy the left has employed in this regard. They target what were, at one time, largely a-political professional organizations, infuse them with politics (politics being, to those on the left, the ultimate means of achieving anything), and then use the reputation of the organizations as a-political to lend the gloss of objectivity to what is little more than leftist propaganda for preferred leftist policy. Of course, since they now control the organization, any political opposition must create its own, new organization in order to voice anything contrary, which the left then dismisses as little more than a partisan political voice.

          Pure genius, in a Dr. Evil sort of way.


      • yello:

        The genuine professional organization for pediatricians is the American Academy of Pediatrics. Here is their position paper…

        This organization seems to agree with me as well:

        Gender dysphoria refers to the emotional distress of having a gender identity that is different from natal sex. Many young children with gender dysphoria will resolve their dysphoria by adolescence, but others will maintain it and desire transition to the opposite gender. These teenagers are “transgender.”

        So, the AAP recognizes that “sex” is a distinct thing from “gender identity”, and that transgender people are defined by a conflict between their gender identity and their actual sex. Therefore, it is incoherent to say, as the Dept of Education has claimed and the Fourth Circuit has agreed, that with regard to Title IX, the sex of a transgender must be determined by his/her gender identity.

        Where do you even find stuff like what the ACP is putting out?

        The Google, of course.


      • Thanks, YJ, for the info about ACP v. AAP. I simply can’t know the players without a scorecard, it appears.

        Does each group have substantial numbers of pediatrician members? Do they publish research papers? Do they footnote or annotate their position papers?

        Subgroups in the bar often have different group political leanings because their members historically represented different groups in society. I was not prepared for the notion of more than one subgroup for a specialty in medicine.


        • Mark:

          Subgroups in the bar often have different group political leanings because their members historically represented different groups in society.

          Doesn’t the bar itself have a political leaning? I thought the ABA was notoriously liberal.


        • Why do you think the ABA is liberal? Just curious. I have never known it, or its organs, to take positions in political races, or to spend money or have a PAC. It generally does the Supreme Court’s bidding on reforming the judicial system and only ranks federal judiciary appointments as a “political” act. It has not taken into account the politics of a lawyer it evaluates for the bench.

          March 2009
          What is the role of the ABA Standing Committee on the Federal Judiciary in evaluating
          judicial candidates?

          At the request of the Obama Administration, the ABA Standing Committee will evaluate the
          professional qualifications of individuals being considered by the President for nomination to the
          lower federal courts. As a result, the Standing Committee is resuming its historical role of
          evaluating the professional qualifications of prospective nominees in advance of their nomination.
          The Standing Committee never proposes or endorses candidates for judicial nomination; its sole
          function is to evaluate those individuals whose names have been confidentially disclosed to the
          Standing Committee by the White House. In evaluating the professional qualifications of
          potential nominees, the Standing Committee considers only three criteria: professional
          competence, integrity and judicial temperament.

          The Committee does consider ideology or political philosophy in any evaluation.

          How did the ABA get involved in the process of evaluating candidates for the federal judiciary in the first place?

          In 1948, an independent committee of the ABA started to evaluate the professional qualifications of federal judicial nominees and to submit its evaluations to the Senate. In 1953, at the request of President Dwight D. Eisenhower, the ABA committee started to evaluate the professional qualifications of potential nominees to assist him in resisting growing pressures to repay political debts by appointing persons who might not have the professional qualifications to exercise the important responsibilities of the Third Branch. From 1953-2000, the ABA Standing Committee evaluated the professional qualifications of potential nominees for nine administrations, Democratic and Republican alike.

          How did the role of the Standing Committee change during President George W. Bush’s Administration?

          In March 2001, the Bush White House departed from long-standing practices and did not submit
          names of prospective nominees to the Standing Committee in advance of their nomination. Soon
          thereafter, members of the Senate Judiciary Committee asked the Standing Committee to
          continue to provide the Judiciary Committee with its evaluations of judicial nominees.
          Accordingly, from March 2001 through December 2008 (107th – 110th Congress), the Standing
          Committee undertook its evaluations of the professional qualifications of nominees after the
          President submitted the nominations to the Senate. At the conclusion of its evaluation, the
          Standing Committee conveyed its rating of the professional qualifications of each nominee to the
          White House, the Department of Justice, the Senate Judiciary Committee and the nominee.

          How does the Standing Committee perform its evaluation and what does its evaluation contribute to the process?

          The Standing Committee makes a unique contribution to the vetting process by conducting an extensive, confidential peer review of each ppotential nominee’s professional competence, integrity and judicial temperament. Following a process that has evolved over more than 50 years and is structured to assure a fair and impartial evaluation, the Committee member (or members) assigned to do the evaluation conducts
          confidential interviews with a broad spectrum of lawyers, judges and others who are in a position to evaluate
          the potential nominee’s professional qualifications to serve as a federal judge. The candidate is interviewed and any adverse information that has been developed during the evaluation is discussed with the
          candidate, who is afforded a full opportunity to present additional information regarding those

          The Standing Committee’s extensive, unbiased peer-evaluation provides important information for the Administration, the Senate Judiciary Committee and the Senate to consider as they
          deliberate over who should be nominated and confirmed to a lifetime position on the federal

          Typically, in addition to conducting an extensive interview with the candidate, the evaluator
          interviews 40 or more colleagues of the candidate. A more complex investigation may result in
          over 100 interviews. At the conclusion of the evaluation, the evaluator submits to the Chair of
          the Standing Committee a detailed Informal Report, which includes a recommended rating for
          the nominee. After reviewing it for thoroughness, the chair discusses the findings of the
          Informal Report with the designated Administration official. If the White House requests the
          Standing Committee’s rating of the prospective nominee, a Formal Report is prepared by the
          evaluator and distributed to Committee members for their consideration. Each member then
          votes the prospective nominee “well qualified,” “qualified,” or “not qualified.” This rating is
          transmitted to the White House on a confidential basis. Once the President officially submits the
          nomination to the Senate, the Standing Committee’s rating is transmitted to the nominee and the
          Senate Judiciary Committee and is posted on the Standing Committee’s website. The rating is
          never publically released or discussed if the President declines to nominate the candidate.

          Does the Standing Committee look at the politics or ideology of judicial nominees?

          Absolutely not. The Standing Committee takes very seriously its responsibility to provide an
          impartial evaluation of a candidate’s professional competence, integrity, and judicialtemperament. The Committee’s practices and procedures are structured to achieve this goal and do not permit consideration of philosophy or political ideology in any aspect of its evaluation.

          Do ABA policy positions influence the Standing Committee’s evaluations?

          No, the Standing Committee never considers ABA policies in any aspect of its deliberations.
          Those policies are not relevant to the Committee’s investigation of a potential nominee’s
          professional qualifications. The only relevant questions are about the nominee’s professional
          competence, integrity and judicial temperament.

          Does the Standing Committee report to the ABA and its officers?

          No, the Committee’s work is entirely independent and is carried out entirely by its members.
          The Standing Committee is insulated from other ABA activities to ensure the integrity of the
          evaluations. The ABA and its officers do not participate in any of the Standing Committee’s
          interviews or deliberations and are not privy to the identity of potential nominees or the rating
          being issued by the Committee until the President officially submits the nomination to the Senate
          and the information is made public.

          What does the record show with regard to political affiliation and ratings?

          Since 1960, the ABA evaluated well over 2,000 individuals who were formally nominated by the past ten Presidents, from President Kennedy through President George W. Bush. All but 33 were rated either “qualified” or “well qualified.” Of the 33 nominees the Committee found “not qualified,” 23 were nominees of Democratic
          Presidents and 10 were nominees of Republican Presidents.

          How many potential candidates were never nominated because of the Standing Committee’s evaluation?

          No one knows, as this information has never been revealed by the respective administrations.


        • Mark:

          Why do you think the ABA is liberal?

          I’ve been hearing about the political leanings of the ABA from as far back as when several members of the evaluation committee rated Robert Bork “not qualified” once he got nominated to SCOTUS, after he had already been unanimously rated “well qualifed” for his previous appointment.

          There have been lots of articles suggesting the ABA leans to the left, including one in the NYT that cites studies showing D nominations tend to get better ratings than R nominations.

          As that NYT article points out, the ABA “takes public and generally liberal positions on all sorts of divisive issues.” For example, it filed an amicus brief claiming that the constitution guarantees the right to SSM. In 2006 it proclaimed that George Bush’s use of signing statements was unconstitutional. It has, on the other hand, supported Barack Obama’s use of executive actions to avoid enforcing immigration laws as “one step toward a better functioning, more realistic and humane system”.

          edit: final link fixed


        • As I linked and quoted, the ACP has about 200 members in comparison to the 60,000+ for the AAP. The ACP does no independent research or publishing other than it’s policy papers and does not have a continuing professional education program as the AAP does.

          Clearly the AAP is a legitimate professional organization and the ACP is a conservative advocacy group which couches evangelical Christian values (anti-abortion, anti-SSM, anti-LGBT rights) in medical parlance. As such, it gets broad uncritical coverage in outlets such as Breitbart relying on the name for a certain Argument From Authority cachet.


        • yello:

          …relying on the name for a certain Argument From Authority cachet.

          I guess you don’t have a monopoly on that, then.


        • Jesus, that’s worse than the Klan, no?


        • Do they footnote or annotate their position papers?

          They do footnote their position papers but some their sources dispute the interpretations used by the ACP.

          The ACP argues that schools shouldn’t support gay teens because they’re probably just confused. “Most adolescents who experience same-sex attraction…no longer experience such attractions at age 25,” the letter says, citing a 1992 study by Remafedi.

          Except that’s not what Remafedi’s research suggested at all. His work showed that kids who are confused about their sexuality eventually sort it out—meaning many of them accept being gay.

          “What was so troubling was that these were fellow doctors, fellow pediatricians,” Remafedi says. “They knew better, and they have the same ethical responsibilities to their patients that I do, but they deliberately distorted my research for malicious purposes.”


  4. Pity this won’t be a campaign issue.

    “Why Is the Obama Administration Trying to Keep 11,000 Documents Sealed?
    The “most transparent administration in history” has spent years trying to hide embarrassing financial secrets from the public

    By Matt Taibbi April 18, 2016″


    • @jnc4p:

      It got weirder. Despite the fact that the GSEs went on to pay the government $228 billion over the next three years, or $40 billion more than they owed, none of that money went to paying off Fannie and Freddie’s debt. When Sen. Chuck Grassley asked aloud how it was that the company and its shareholders were not yet square with the government, the Treasury Department testily answered, in essence, that the bailout had not been a loan, but an investment.”

      Isn’t Matt Taibbi going to get in trouble for writing stuff like that?


    • Many of the government officials who were involved in the decisions surrounding the GSE conservatorship are now in the private sector, working on proposals for much-anticipated GSE reform.

      Surprise, surprise, surprise!

      *Update: Ironically, one of the very first memoranda Barack Obama wrote as president was about the Freedom of Information Act, and contained language very similar to Judge Sweeney’s. “The Government should not keep information confidential merely because public officials might be embarrassed by disclosure, because errors and failures might be revealed, or because of speculative or abstract fears.”



    • He also leaves out a crucial point: The reason that the government only took 80% to begin with rather than all of it was to maintain the fiction that they were still independent companies and thus avoid having to put the potential losses on the Treasury’s balance sheet.

      So they tried to have it both ways from the start.


  5. Worth a note:

    “Uber is the victim of Judge Rakoff’s curiosity in antitrust case
    By Alison Frankel
    April 1, 2016”


    • Uber’s surge pricing is clearly price-fixing. Until customers can negotiate the multiplier with individual drivers on some sort of reverse auction basis, their practices are monopolistic.

      Liked by 1 person

      • Actually under the argument being presented, all of Uber’s pricing is price-fixing. Surge pricing itself has nothing to do with it.

        You’d have to have each individual driver who chose to respond to a call place a “bid” which the hailer would then select from to probably address the issue.

        They can probably do this via the app easily enough showing the option to pay a higher fare for less wait time for example.


    • Interesting. At first, it seems like setting prices for independent contractors would ultimately make all franchisees co-conspirators in a price-fixing scheme, too, as I cannot negotiate the price of my Big Mac, and the individual franchisees all charge the same amount.


      • Difference being that they usually don’t try to categorize the burger flippers themselves as independent contractors, merely the owners of the franchise. But that’s a good observation.

        I suspect that the case may hinge on whether or not the argument that the Uber driver is closer to a franchisee makes sense.

        Liked by 1 person

  6. SLPC rational for defining these guys as a hate group seems a little thin:

    I think it’s because anyone who says something like this:

    Homosexuality is a behavior, not a fixed identity. It is similar to smoking or drug use, not an immutable characteristic like race or ethnicity. There are no ‘former’ Blacks, but there are ex-homosexuals. The existence of ex-homosexuals is clear evidence that homosexuality is behavior-based, not an unchangeable characteristic. It should not receive special minority rights protections in federal law.

    Gets defined as a hate group. However, in the list of hateful things being said, there is this as well:

    Shariah law is the worst form of license for its practitioners, and the vilest sort of tyranny for shariah’s victims. The rights of conscience, as they pertain to the preservation of liberty as understood in the context of the U.S. Constitution, stand in stark contrast…

    Which I find interesting, and might go some distance to explain why the only Muslim hate groups I could find were either some weird non-Muslim hybrid, or The Nation of Islam, which are black separatist groups, not folks advancing beheading and stoning to death as a great strategy for infidels.

    WorldNetDaily, which gets some far, far right stuff, is also a designated a hate group. For things like Ted Nugent suggesting at Al Sharpton and Jesse Jackson would be “lisping their ebonic mumbo-jumbo” and how the drone-strikes-on-Americans policy would be called racist and bigoted if it had been a Republican president who said it, and things like:

    “It’s important to understand – and this is hard for most of us – that crime and mayhem and lawlessness are actual goals of transformational socialists.”

    And this, from the SPLC itself:

    In addition to Corsi, WND columnists comprise a cross-section of reactionaries and fringe wingnuts, including arch-conservative Alan Keyes; actor and mud-slinger Chuck Norris; failed presidential candidate Rick Santorum; race-baiting and homophobic ex-Major Leaguer John Rocker; radio hothead Rush Limbaugh; and white nationalist writer Pat Buchanan, who was named WND’s 2012 Man of the Year. (Trumping that honor was libertarian U.S. Rep. Ron Paul (R-Texas), who was named WND’s Man of the Decade.)

    I think they might have a little bit of an ideological axe to grind.


    • KW:

      I think they might have a little bit of an ideological axe to grind.

      You mean “wingnut” isn’t an objectively neutral characterization of someone who questions the veracity of progressive orthodoxy? Peel the scales from my eyes!!

      Liked by 1 person

      • But I also note the extremist hate group exemplars listed: Rush Limbaugh, Pat Buchanan, Rick Santorum, Chuck Norris (!), and Alan Keyes. Along side the neo-Nazis and holocaust deniers. One gets the sense that SPLC’s definition of hate group gets just a little broader each year. I’m surprised the GOP is not classified as a hate group.


    • I think an “ex-homosexual” would be more properly termed a bisexual who is currently hooking up with the opposite sex.


      • Mich:

        I think an “ex-homosexual” would be more properly termed a bisexual who is currently hooking up with the opposite sex.

        Given the way the modern left treats language and concepts, I would imagine he should be called whatever he wants to be called. #nolabels


      • Being a celibate homosexual does not make you an ex-homosexual. Homosexuality is defined by the nature of your sexual attraction, not your behavior as a result of that attraction.


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