Morning Report: Janet Yellen speaks at 10:00 am EST 8/26/16

Vital Statistics:

Last Change
S&P Futures 2173.0 0.0
Eurostoxx Index 342.0 0.0
Oil (WTI) 47.4 0.1
US dollar index 85.6 0.1
10 Year Govt Bond Yield 1.56%
Current Coupon Fannie Mae TBA 103.3
Current Coupon Ginnie Mae TBA 104.2
30 Year Fixed Rate Mortgage 3.5

Markets are in a holding pattern ahead of Janet Yellen’s speech in Jackson Hole today. Bonds and MBS are flat

Janet Yellen will give a speech today at 10:00 am, discussing the tools in the Fed’s monetary policy toolkit. Speeches at Jackson Hole are generally not market-moving, however the markets have been adjusting ahead of this one. Expect to hear Yellen push for fiscal policy to improve the economy.

The markets are now assigning a 33% chance of a rate hike in September. Somewhat hawkish Fed-speak out of different Fed heads largely accounts for the increase. The Fed Funds futures markets are also assigning a 58% chance of a hike through December.

Fed funds probability.PNG

GDP came in at 1.1% in the second quarter, which was a downward revision from the first estimate of 1.2%. The price index was up 2.3% on a year-over-year basis, which was a little hotter than expected.

Corporate profits fell 2.2% in the second quarter. Tough to reconcile a near-record stock market with falling profits. Something has to give.

corporate profits

For all the talk in Washington about the need for more infrastructure spending, states are beginning to take advantage of low interest rates to issue bonds to raise money for infrastructure spending. When municipalities can borrow money for 30 years at 2.23%, it is kind of a no-brainer. Both Donald Trump and Hillary Clinton are talking about increasing infrastructure spending, so it looks like we will probably have something out of DC next year as well.

14 Responses

    • Liked by 1 person

    • That is a pretty masterful job of trolling on Mr Quigg’s part. 😀

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    • Who in the media is standing by with the stopwatch timing how long it takes for her campaign to respond… “The Clinton campaign took some time to disavow the endorsement from the KKK, could it mean she winks at the organization?”

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      • I’m waiting to be told it’s a non-scandal.

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        • They aren’t going to treat it seriously. They will think he’s trolling, which he almost certainly is. Didn’t the original endorsement happen in March? They were never going to pay attention to it, or treat it seriously, while the same sort of endorsement for Trump is a Very Serious Problem that tells us Exactly The Kind Of Person Trump Is.

          That Trump doesn’t disavow such endorsements with “look, I don’t want endorsements from racists, that’s not what this is about” seems like an odd omission. He doesn’t attack any group or person in particular, but says he’s not interested in endorsements from racists, now back to talking about Crooked Hillary’s health . . . I think it works. Nobody whose a white rights of “racial realist” or whatever it is will consider themselves a racist, anyway, no matter how many other people do.

          Frankly, I’m amazed how much it seems to matter to folks. If I were going to vote for Trump, it would make no difference to me what horrible people endorsed him. If I was not going to vote for him, and I’m not, it wouldn’t make a difference to me what wonderful people endorsed him.

          And it wouldn’t to them. If Obama endorsed Trump tomorrow, the HRC supporters and liberals and the media would all decide he’s lost his mind and ponder his inexplicable endorsement, sure he was trolling or had gone crazy or Trump had kidnapped his children. It wouldn’t change their mind about who to vote for. Just as an endorsement from the KKK or Rush Limbaugh wouldn’t convince them to abandon support for HRC, if she got them. Well, she did get the KKK endorsement, but you know what I mean.

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    • I suppose they buy into the Scott Adams persuasion argument, and so are scrubbing what the identify as Trump persuasion/branding tactics in order not to give free advertising to Trump . . . or at least his persuasion tactics.

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    • “President Barack Obama and his allies spent eight years sandbagged by the birth certificate/Bill Ayers/his-middle-name’s-Hussein”

      His middle name is Hussein. He did spend time with Bill Ayers. How are those “corrosive conspiracy theories”?

      ““We are already seeing an effort by the Trumpsters to undermine Hillary’s presidency before she has even been coronated it has even begun,” said longtime Clinton confidant Paul Begala”

      I may have added something to that quote. While I agree that HRC is almost assured a win, that’s an arrogant strategy for them to take publicly. But may work.

      “That’s what happened with Obama eight years ago, to the detriment of Obama and Democrats along the way, she said.
      “He ran on the message of hope and change,” Stabenow said. “Mitch McConnell and Republicans knew that if nothing changes for working people, they would lose hope. It’s as simple as that. They wanted to create a scenario where people would lose hope. And they’ve done a pretty good job of it.””

      While not a fan of the Republican’s particular brand of obstructionism with Obama (I’ve long believed they could have twisted his arm to get a lot of conservative-er legislation passed in return for nominal wins on things he got anyway, like the ACA, if it weren’t all about building their personal political fiefdoms, but that’s another issue). But the subtext of the comment above seems to me that, when Democrats win the presidency, they are entitled to rule like kings (or queens). Republicans, not so much.

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