Morning Report: Job openings flat 8/10/16

Vital Statistics:

Last Change
S&P Futures 2180.0 3.0
Eurostoxx Index 344.3 4.0
Oil (WTI) 42.6 -0.2
US dollar index 86.0 -0.2
10 Year Govt Bond Yield 1.51%
Current Coupon Fannie Mae TBA 103.8
Current Coupon Ginnie Mae TBA 105.2
30 Year Fixed Rate Mortgage 3.52

Markets are up this morning on no real news. Bonds and MBS are rallying

Bond markets worldwide are rallying after the Bank of England tried to buy Gilts as part of its QE program and had a tough time finding sellers.

Mortgage applications rose 7% last week as purchases rose 3% and refis rose 10%.

Job openings were unchanged in June, at 5.6 million. The quits rate at 2% was more or less unchanged. This number is the tell for a strengthening labor market.

The bond market has given back the losses from the strong payrolls report last Friday. The Fed Funds futures markets are pricing in a 45% chance of another rate hike this year. Meanwhile, global bond yields continue to fall, with the German Bund at -9 basis points.

Affordable starter homes are becoming scarce in many parts of the country. We are seeing bidding wars in the hotter markets. Low housing starts are playing a factor here, and government regulation is a big driver of that. Mandates that increase the cost of construction make starter homes too expensive for an entry-level income.

Technology is helping drive down realtor commissions, according to Redfin. Of course Redfin is talking its own book, however many sellers are foregoing the use of an agent, especially at the higher price points, which makes sense.

28 Responses

  1. And Trump has lost Scott Adams now.

    “My prediction from last year – that Trump would win the general election in a landslide – was based on his persuasion advantage. That advantage is largely gone now because Clinton has evidently hired some weapons-grade Master Persuaders and moved to a purely emotional appeal, specifically fear. And it is working.

    If nothing changes, Clinton will win in November.”

    http://blog.dilbert.com/post/148740944816/trump-prediction-update

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    • Trump is throwing the race.. There is no way anyone who actually wants to win says the shit he says..

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      • Way to go. let’s add NC and VA to the Blue Wall and make it impossible to compete at the federal level.

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      • https://www.washingtonpost.com/blogs/post-partisan/wp/2016/08/09/the-gop-must-dump-trump/?hpid=hp_no-name_opinion-card-d%3Ahomepage%2Fstory

        Time is short, but if the RNC and the Congressional leadership renounced Trump, then the RNC, without a Convention, could still nominate someone else, as I once upon a time understood RP rules. I do not know if the new nominee could get on every state ballot, but I am betting “yes”, if done by Labor Day.

        Not being a D or an R, but wanting the best voices arguing for both limited government and government as your big buddy, so that there can be an actual competition of ideas, I would hope the RNC could get this done and make Ryan their nominee August 31.

        Of course, no one is suggesting this for the Ds, as well, but I would. Assuming she were exposed as having sold favors as SecState to Foundation donors [a real possibility], then they could simply run Kaine. He is a better human than she as Ryan is a better human than DJT.

        I wouldn’t have to vote for Johnson, then, although I still might. There would be a reason for me to pay attention again.

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        • Mark:

          but wanting the best voices arguing for both limited government and government as your big buddy, so that there can be an actual competition of ideas

          Do you really not have a view on which of those ideas is superior?

          My view is that it is the competition of ideas, specifically between government as your big buddy and government as your oppressor, that recommends the the far superior idea of limited government in the first place.

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        • Scott – I know which theory of government I like better – limited government over unlimited government.

          I know that in fact there are issues that a party of limited government might ignore, that it should not – like road, bridge, and port maintenance, national security, and before WW2, isolationism vs. collective defense.

          I know that in fact the big buddy party is more likely to keep faith with veterans, pass a GI Bill, and maintain the highways.

          I know that either a limited government party [as opposed to a classical liberal Burkean theory] or a big buddy party [as opposed to a socialist theory] can be bought and paid for by special interests. So yes, I want the smorgasbord of political parties, for some balance of bought interests, cynical as that may sound at first blush.

          In a two party system, neither party actually stands for much but its own electability and the power it brings; thus it must compete for votes, and one way or another make stupid false promises. This may be true in multi-party nations, too – I think it is true in Canada, for example.

          For me limited government means first, limited federal government. If I want my state to have first rate state universities and first rate rural roads I want that to be on the State Lege, and if I want Austin to have rapid transit, that should be on the City Council and/or the regional transport authority.

          The reality of party politics is that to get effective local government requires having competition among or between parties, and with the two party system that may mean trickle down as much as it means ground up.

          What I dislike most about the D national party is the blithe assumption that everything could be run better from DC, which any person who has ever engaged in business knows is a crock of spit. Which directly contrasts with what I liked best about the TX D Party when we had one – it was ardent about not shipping off state responsibility to DC, but was willing to tax and pay for it inside TX.

          What I like best about the R Party nationally is that it sometimes doesn’t want to federalize everything [although it loves to do block grants to the states, which is a huge issue]*. What I like least about the R Party in TX as one party ruler is that it won’t take care of state responsibilities, increasing the hue and cry to federalize them.

          *The harm of block grants is that it divorces the pain of taxation from the joy of spending. The state doesn’t have to tax, but it gets to spend. This was Nixon’s idea first, IIRC, and somehow it has become R policy over the years. As the states become dependent, they lose their ability to respond when the drug is withdrawn, as well.

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        • Mark:

          Happy b’day. August is a big month. My wife’s b’day was two days ago, my mother’s was yesterday, and my grandmother’s is tomorrow.

          I know which theory of government I like better – limited government over unlimited government.

          How do you distinguish between unlimited government and government is your buddy? I think each of those characterization would be a reasonable description of the political left in the US.

          To me the idea of “unlimited” government does not mean that the government is necessarily involved in everything. It means only that there is no principled restriction on what the government should get involved in. The only limit to government action is the perception that the government is “helping” someone, somewhere, in some way. Or, in other words, the government is your buddy. Hence, to me, unlimited government and the government is your buddy are really one and the same thing.

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        • Mark:

          I know that in fact the big buddy party is more likely to keep faith with veterans, pass a GI Bill, and maintain the highways.

          What makes you think that? I think the exact opposite. Especially with regard to road maintenance, go to any city in the US run by “government is your buddy” leftism and you will find the infrastructure in utter disrepair, because individual needs are always rated as more important than public goods. New York City raises plenty of money in taxes to keep its streets and bridges and tunnels in good shape, but it prioritizes its spending elsewhere. So the roads suck and the place is falling apart.

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        • Local view, Scott, IMO. Probably those NYC Ds need a competitive R Party to get off their couches. In Texas, we had the best rural roads in America; maybe we still do, but they were pushed by Ds more than Rs. More disrepair in recent years than I ever saw before. Still better than Okie, NM, and LA, so you know when you leave TX.

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        • Mark:

          More disrepair in recent years than I ever saw before.

          Is that because of a change in ideology, i.e. people in government no longer think it is their job to maintain roads, or is because a change in priorities, i.e. people in government have what they consider to be more pressing priorities for limited resources?

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        • Scott – I think the history was that when there were two parties in TX the state legislators had to keep those Farm-to-Market Roads wide and clean to stay in office. When there is only one party it gets lazy. I don’t think it has much to do with ideology. I should have said that the roads remained great during the first years of R leadership when the Ds were still viable, and the Rs had to promise and keep good roads. It was only after the demise of the TX DP that we started to see inattention to roads and schools as well.

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        • Mark:

          I think the history was that when there were two parties in TX the state legislators had to keep those Farm-to-Market Roads wide and clean to stay in office. When there is only one party it gets lazy.

          Is the money that used to get spent on roads just not getting spent because the legislators are too lazy to bother spending it, or is it getting spent on things other than roads? If Texas is like most other states, it probably collects more tax money today ever before, but has increased the number of things it is involved in, and as a result has deprioritized traditional public goods like roads.

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        • Mark,

          Take a look at this site:

          http://www.usgovernmentspending.com/year_spending_2010TXbs_17bs2n#usgs302

          In 1970, Texas spent 26% of its budget on education, 30% on health and welfare, and 26% on transportation. Last year it spent 25% on education, 42% on health and welfare, and only 8% on transportation.

          I doubt veery much that the huge drop in spending on transportation and huge increase in spending on health and welfare programs has anything to do with “laziness” as a result of Republican dominance of the political landscape. I think it is much more likely that it is the result of an ideological shift which has changed what people expect from government, resulting in a re-prioritization away from traditional public goods like roads and towards income redistribution through welfare and health subsidies. I also suspect that much of that ideological shift has come at the national rather than at the state level, resulting in federal mandates (like Medicaid/Medicare) that place immense burdens on state budgets, forcing them to deprioritize spending on traditional public goods like roads.

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        • @Scottc1: “In 1970, Texas spent 26% of its budget on education, 30% on health and welfare, and 26% on transportation. Last year it spent 25% on education, 42% on health and welfare, and only 8% on transportation.”

          Those are good numbers. Is that state budget including federal subsidies? I was wondering if the states have just been shifting the burden of transportation, to some extent, to the federal government. I hardly get to the travel the great 48 as much as I’d like (about 2% as much as I’d like), but where I go I usually see new road construction. But I spend a lot of that time on the highways and the Interstate. I see more new construction and re-paving and so on than I see crumbling roads and bridges (keeping in mind, of course, road construction tends to take about 10 times longer than it would if it were purely a commercial enterprise; we’ve got a big project going on in town, and (a) I usually only see small crews (relative to the size of the project) working sporadically and (b) I see new projects starting everywhere, all following the same pattern. Traffic is awful just about everywhere in Memphis right now because every major route is dotted with major construction projects. And almost all the ancillary routes have recently been subject to repavement (which, fortunately, only tends to last a few weeks to a month for a given segment—they move much faster of the repavement).

          Still, I’ve always questioned the “we’re a nation of crumbling roads and bridges”. I’m sure there are anecdotal cases where this is true, but I don’t see it. I see constant road construction. And while I’ll be glad to see the current project complete, and do understand traffic will flow more smoothly and slightly faster at the loop once the project is finished (although is it worth the 4 year wait? And 4 years of traffic running much, much slower? I dunno) none of it will be the kind of infrastructure that new exits are, or entire new roadways are, in terms of potential to provide general economic benefit.

          A road in my old neighborhood was filled with potholes, and a bad dip from settling after the road was originally paved. It seemed a little worse every year, though it was occasionally patched, it really needed to be repaved. About 3 years after it became obvious it needed to be repaved, it was. This, in a tiny independent municipality basically at war with the city and the city council that wanted to annex the area but was unable to after a citizen filed a lawsuit to prevent it. The road still eventually got paved. This is not a national of crumbling roads and bridges, unless the areas we are referring to are terribly mismanaged and poorly run. It’s a city where all roads are not all new all the time, where potholes form and then another and then another and sometimes, in different areas, it’s a year before the potholes are patched or the road is paved. Sometimes it takes a change in administration somewhere. But the idea that the entire nation has abandoned its infrastructure and were crumbling towards to apocalypse defies the evidence.

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        • @Scottc1: “In 1970, Texas spent 26% of its budget on education, 30% on health and welfare, and 26% on transportation. Last year it spent 25% on education, 42% on health and welfare, and only 8% on transportation.””

          Just checked. Tennessee spending on Transportation is 6%. I don’t believe for a second that portion of the state budget covers as much construction as I see. I assume repavement of more of a municipal thing, but the construction I’m seeing is expensive. Hundreds of millions of dollars, at least. And that’s just what I’m seeing. In Tennessee, extrapolation would put the dollar amount into the billions. Ah, $3 billion of federal money is going to the construction I’m seeing in Tennessee. Federal transportation spending in Texas, by contrast, is over $20 billion.

          If you start in fiscal year 1970 for Texas, real dollar spending has done nothing but go up. From 1970 to 1980 it probably did no more than track inflation (or maybe lss) but since the mid- to late-80s, it has to be outstripping inflation, perhaps way out-stripping inflation.

          http://www.usgovernmentspending.com/spending_chart_1970_2021TXb_17s2li111mcn_60t

          This suggests to me cases where roads are in worse repair than ever, it isn’t because of a lack of spending, but because of priorities and, often, incompetence. Or insufficient competence, at any rate.

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      • I don’t see anyone successfully “dumping Trump”.

        He’d have to decide to drop out on his own. I’d suggest raw bribery with both cash and a TV series where he gets to play the President on TV, which seems to be what he really would rather do anyway instead of the actual job.

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      • Trump is also doing an excellent job of giving HRC cover from stories like this:

        “The drip, drip, drip continues: The latest batch of State Department emails from Hillary Clinton’s tenure, released Tuesday, further highlights the occasionally overlapping interests between the agency and the Clinton Foundation.”

        http://www.slate.com/blogs/the_slatest/2016/08/10/new_state_department_emails_show_ties_to_clinton_foundation.html

        &

        http://www.nytimes.com/2016/08/10/us/politics/emails-renew-questions-about-clinton-foundation-and-state-dept-overlap.html

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        • Trump makes it easy but he election was ALWAYS going to be a referendum on the Republican candidate. I think it’s naive to think otherwise. I’m always surprised HRC gets any negative press at all.

          Also, most R nominees do not have a chunk of the RW media gunning for Trump either. Even McCain had a more united RW media than Trump.

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        • This story is what I was referring to below – I heard it on POTUS, so did not have a cite.

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      • Brent:

        Trump is throwing the race..

        Entirely possible. It’ll be interesting to see, in the years after the election, the insiders accounts of what was really going on behind the scenes.

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      • Throwing it, or just does not care. This may just be a thing he’s doing for the hell of it. Bucket list. “Run for President; Possibly Destroy a Major Political Party”. Check that off!

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  2. Scott, this seems to get at some of the criticism you have of Gary Johnson.

    “The Volokh Conspiracy

    Gary Johnson, libertarianism, and originalism
    By Ilya Somin August 10 at 11:00 AM”

    https://www.washingtonpost.com/news/volokh-conspiracy/wp/2016/08/10/gary-johnson-libertarianism-and-originalism

    Like

  3. And the ABA engages in social engineering:

    “The Volokh Conspiracy

    Banning lawyers from discriminating based on ‘socioeconomic status’ in choosing partners, employees or experts
    By Eugene Volokh
    August 10 at 9:15 AM”

    https://www.washingtonpost.com/news/volokh-conspiracy/wp/2016/08/10/banning-lawyers-from-discriminating-based-on-socioeconomic-status-in-choosing-partners-employees-or-experts-2

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  4. How is it possible for the POTUS that signed this into law be considered fit for office?

    http://healthpolicyandmarket.blogspot.com/2016/08/according-to-aetna-we-have-two-kinds-of.html?m=1

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    • Do you think Obama really had any idea of what he was signing? This was a political calculation, based on legacy, assuming (poorly, but naturally) that the quasi-liberal Democrats in congress knew what they were doing.

      If he were truly an earnest liberal wanting to expand medical coverage to the poor and needy, he would have expanded Medicare. He would have made Medicare available to children of families with a formula for income vs children, he would have made Medicare (or some limited version) available to younger seniors, made it available to the impoverished in some form, by some formula, or simply made a Medicare Part J or something that provided some sort of universal catastrophic coverage for the uninsured that covered proven medical treatments and care for catastrophic illnesses for everyone making less than $50k individual $85k families or something.

      But he didn’t want his signature legislation attached to LBJ. Oh, no. He wanted to supplant him. He wanted to be a modern technocrat. Yada yada. So, rather than push an incremental expansion of Medicare that either did as described above or pushed it in that direction, he had to make his own awesome thing that was doomed.

      On the plus side, Democrats can and will completely blame it’s failure on Republicans for not clapping hard enough and believing in fairies.

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  5. Good news if true.

    http://www.wsj.com/articles/iea-sees-oil-demand-easing-as-economic-outlook-dims-1470902402

    I have my doubts the Iranians have fully ramped up production however

    Like

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