August 1, 1966

UT map

I had just walked out of the Law School.

A chunk of limestone chipped off Townes Hall 30’ over my right shoulder and then I heard the c-r-a-c-k. Bullet had beaten the sound.

I had no idea what was happening. Went to my junkie little ‘62 Falcon, turned on the radio, got an earful. Drove out of range to a girlfriend’s apartment where we listened for more than an hour.

Later I learned that folks I knew had been under direct fire – nobody got hit when he shot to the northeast, where I had exited Townes Hall, only on the Mall and on Guadalupe {the Drag].

An acquaintance who later became a friend was then a grad student and a USAF Captain at Bergstrom. He walked out of the then grad library in the Tower and immediately realized what was happening. He ducked back into the doorway and listened to the shots and figured out the timing as Whitman moved around the parapet. He ran out, and pulled someone who was alive into the bushes in front of the plaza. He stayed down. I think he pulled four living victims into the shrubs over the 90 minutes. Later he was stationed in Germany and got his PhD in German military history at Heidelberg, came back to UT and went to law school, and became a lawyer in Austin as a civilian.

My later law partner’s wife was shopping on the Drag when the shooting and the panic ensued. She thought it was “The Revolution”. They owned an old black ’51 Mercedes which looked like a limo. It was 98F or so, typical August 1 in Austin. It was parked on the Drag. She got in and lay down on the floor board for more than an hour. Scared and dehydrated.

That night, at Scholz’s, the famous biergarten a few blocks south of campus, our group of law students drank under the oak tree. She downed a pitcher by herself in half an hour, and couldn’t stop shaking. Rifle shots. People running, screaming, some obviously in pain, and she too scared to get up from the floorboard, unable to help, not actually knowing if it would ever end, or what was actually happening.

Morning Report: The refinanceable population grows 8/2/16

Stocks are lower this morning on no real news. Bonds and MBS are down.

Construction spending fell 0.6% last month as both private and public spending fell. Homebuilding was down 0.1% MOM and is up 2.4% YOY. The prior 3 months were revised downward as well. This at least partially explains why the Q2 GDP print was so low.

Personal Incomes rose 0.2% in June while personal spending rose 0.4%. Just more evidence that the consumer is holding this economy together. The core PCE rate (the inflation measure preferred by the Fed) rose 1.6% YOY.

The Fed Funds futures have been slowly taking down the probability of a September rate hike – it is now below 20%. Between the weak GDP numbers, the weakness in manufacturing, etc it is hard to make a case that the Fed needs to move in September.

Governments worldwide are looking at policies intended to inflict capital punishment on investor portfolios. Whether the result is protectionism, Keynsian spending, or expropriation, look to own real assets (like real estate) versus financial assets. In terms of relative value, real assets are at their lowest ever. The world’s central banks are on a mission to create inflation, and eventually they will succeed. Note that policies that attack corporate profitability are also inflationary – in fact that is the end the line for socialist economies like Venezuela: everyone has money in their pockets, but there is nothing to buy.

Brexit has created a massive opportunity for lenders. According to Black Knight Financial Services, the refinanceable population is the highest since 2012. Below are charts of the number of candidates that are refinanceable, and the other is a histogram of mortgage rates.

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