Morning Report: Inflation comes in hotter than expected 9/16/16

Vital Statistics:

Last Change
S&P Futures 2117.0 3.0
Eurostoxx Index 338.7 0.3
Oil (WTI) 43.8 0.2
US dollar index 86.7 0.0
10 Year Govt Bond Yield 1.71%
Current Coupon Fannie Mae TBA 103.3
Current Coupon Ginnie Mae TBA 104.2
30 Year Fixed Rate Mortgage 3.54

Markets are up as the Bank of England maintained policy. Bonds and MBS are down.

Mortgage applications rose 4.2% last week as purchases rose 9% and refis rose 2%. The increase was driven due to a favorable comparison to the Labor Day shortened week before.

Initial Jobless Claims came in at 260k last week. Consumer comfort slipped.

Inflation remains tough to find at the wholesale level, according to the Producer Price Index. The PPI was flat month over month and year over year. Ex-food and energy it rose 0.1% last month and is up 1% YOY. The Fed prefers to use the Personal Consumption Expenditure index versus the CPI and PPI, but the Fed’s measures are in the ballpark with CPI / PPI. Neither indicator is suggesting the Fed has to hike in order to stop inflation.

Retail Sales fell 0.3% in August. Less autos and gas they fell 0.1%. While the latest GDP numbers show an increase in consumption, you aren’t seeing that in these numbers. Online shopping explains it to some extent, however August and September are the back to school shopping season, which is usually a good predictor for the holidays.

Manufacturing continues to disappoint, as industrial and manufacturing production fell 0.4% in August. Capacity Utilization slipped from 75.9% to 75.5%. Meanwhile, the Philly Fed Business Outlook rose to 12.8 while the Empire State improved to -2. July’s improvement in manufacturing looks more like a blip than a trend reversal.

21 Responses

  1. lol after a day of breathless fact checks that the Clinton campaign had nothing to do with birtherism.


    • It’s been well-established that the Clinton campaign came up with the birther stuff early in the primaries (not HRC herself, but campaign staff) and almost certain that her campaign just “put it out there” without making it an official issue (as was done in similar forms against Cheney and McCain, but it wasn’t racist then).

      Hillary was not a birther. The campaign didn’t want to be the one’s advancing birtherism, they wanted it to be “in the ether” and pushed by Republicans. They didn’t want their fingerprints on it.

      But, anyway, never forget Trump is a jingoistic, misogynistic racist. Remember, remember!

      Because, you know, I forgot for a minute.


  2. Sorry, MrsNoVA. Woo hoo!!!!!!!!!


  3. Last week the radio/internet podcast “Freakonomics” did an entire episode on libertarians misleadingly entitled “Ten Signs You Might Be A Libertarian” (link includes the audio and a full transcript) but really should have been called “The Three Types of Libertarians You Meet In Hell”.

    It has three segments: an interview with goofy Gary Johnson; an examination of the Free State movement where they are trying to turn New Hampshire into an anarcho-capitalist paradise; and an interview with a guy I’ve never heard of, Jerry Taylor of the Niskanen Center which tries to incorporate libertarian ideals into the existing two-party structure.

    Liked by 1 person

  4. Goddamn, this is impressive!

    Bill Clinton defended his wife and the Clinton Foundation in an interview that aired Monday, saying he trusted the State Department to make sure there wasn’t a conflict of interest between the foundation’s donors and Hillary Clinton’s work at State.

    It gets better:

    “I trusted the State Department wouldn’t do anything they shouldn’t do, from a meeting to a favor,” the former president said in an interview with NPR.

    He said some donors may have given to the foundation to build a relationship with the Clintons, but most contributed because they supported the work of the foundation.


  5. Campaign books ghost written for candidates are always bad, and this one, for the Ds, is apparently brutally so.

    From the WaPo’s reviewer:

    The message here is that, in contrast with Donald Trump and his vague, outlandish and ever-shifting positions, Clinton and Kaine know what they’re doing. They have a plan. And that’s great, except, if “Stronger Together” is any indication, that plan reflects an unwillingness to grapple with trade-offs, an inability to set priorities and an obsession with checking boxes for every possible issue, even when they have nothing new to say about it. Imagine a State of the Union address where nothing is cut, and every interest group gets not just a couple of sentences, but a couple of pages. That is “Stronger Together.”

    This blueprint for America’s future, as the subtitle promises, is divided into three main sections, “Growing Together,” on the economy; “Safer Together,” on national security; and “Standing Together,” on domestic policy. (Branding, people!) Each section is divided into six bullet points outlining policy goals; each bullet point into three to six sub-points, and each of those sub-points in turn is divided into further bullet points. It’s a PowerPoint approach that makes for absolutely brutal reading, and one quickly gets lost in the thicket of proposals and 10-year plans, unable to remember what particular problem is being fixed or promise fulfilled. Somehow within the “make the boldest investment in good-paying jobs since World War II within the first 100 days” portion of the economy section, for example, we’re exploring Mars. I’m still not sure why.

    Liked by 1 person

  6. It seems the Fed has no exit strategy. They are going to have to raise rates in order to have rates to cut to counter the recession increased rates cause.

    Liked by 1 person

  7. Am I the only one who thinks something was off with HRC when she gave her Saturday evening statement on the bombings?


    • McWing:

      Am I the only one who thinks something was off with HRC when she gave her Saturday evening statement on the bombings?

      I didn’t see it, so I can’t say.

      But I did see her speech this morning in which she accused Trump of treason:

      The kinds of rhetoric and language Mr. Trump has used is giving aid and comfort to our adversaries.


    • McWing:

      Am I the only one who thinks something was off with HRC when she gave her Saturday evening statement on the bombings?

      Finally watched it. She was definitely lacking in energy. Possibly doped up sleeping pills?


  8. isn’t Stronger Together the same slogan the Remain side used during the Brexit campaign?

    Liked by 1 person

  9. Andrea Mitchell noted that it was a Clinton supporter that started the first real birther attack in 2015:

    Black Pastor notes the birther campaign was a political maneuver, not racism, and gets promptly cut off on CNN:

    Former Clinton campaign manager Patty Doyle admits a volunteer coordinator started the birther stuff back in 2008:

    More on the origination of the birther stuff, talking about the lawsuit started by a Clinton supporter questioning Obama’s citizenship (but blaming Donald Trump):

    (you don’t have to listen to the whole thing, first part covers the birther thing)

    Morning Joe and Mika on birtherism starting with Clinton in May of 2016:

    Liked by 1 person

    • A lot of PUMAs in 2008 were false flag Republicans. Just sayin’.

      Liked by 1 person

      • Lots of Trump brown shirts are false flag lefties. It’s a psychology that mystifies me, honestly. Can’t know for sure unless you’ve got time and resources to search their backgrounds generally.

        The one clear lesson is that Hillary didn’t do it, and Trump and certain right wing partisans were the engine of birtherism. Accusing of HRC being to blame for birtherism seems unlikely to make a lot of headway. Except for the Trump faithful, I guess.


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