Morning Report: Optimism in short supply 10/11/16

Posted on October 11, 2016 by Brent Nyitray

Vital Statistics:

Last Change
S&P Futures 2152.8 -6.0
Eurostoxx Index 342.3 0.3
Oil (WTI) 51.0 -0.3
US dollar index 87.9 0.3
10 Year Govt Bond Yield 1.77%
Current Coupon Fannie Mae TBA 103.3
Current Coupon Ginnie Mae TBA 104.2
30 Year Fixed Rate Mortgage 3.54

Stocks are up small on no real news. Bonds and MBS are down.

Alcoa kicked off Q3 earnings season with a miss. Earnings season gets into full swing next week when all the big banks announce.

While bond yields rose pretty dramatically during September, there are still $10.7 trillion worth of negative bond yields worldwide. Half of it is from Japan. The German Bund is now trading at a yield of 6 basis points.  A years’ interest on a 1 million euro Bund would cover one night at the Bayerische Hof hotel in Munich. Happy Oktoberfest.

Small business optimism dipped in September, according to the NFIB. Sentiment came in at 94.1, well below the historical 98 average. The bright spot was an improvement in economic expectations (basically improving to neutrality) while job openings and inventories fell. Small business is also firmly in maintenance capital expenditure mode, choosing not to deploy capital for expansion. The election is probably having a negative effect on sentiment as well.

Meanwhile, the US economic confidence index continues to languish in negative territory. Historically, you would see a jump in confidence around election times, as candidates promise to make things better. Not this time around, however. This also makes the Fed’s job more perilous, as they don’t want to depress what little animal spirits are out there at the moment.

Tim Duy argues that Friday’s jobs report is bad news for Fed hawks who want a December tightening. He sees November as a long shot, and December as not a foregone conclusion. Lots of wonky labor economics, but he does give you a good idea on how the Fed thinks.

Goldman is out with a “be cautious” call for the rest of the year. A vulnerable European economy, combined with high US stock prices means the market could be looking at a 2% decline over the next couple of months.

Filed under: Economy, Morning Report |

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33 Responses

  1. Kevin S. Willis, on October 11, 2016 at 8:43 am said:

    Frist!

    “Historically, you would see a jump in confidence around election times, as candidates promise to make things better. Not this time around, however.”

    I wonder if it has anything to do with the candidates we ended up with.

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    • Kevin S. Willis, on October 11, 2016 at 9:53 am said:

      “We fine citizens of the United States find ourselves playing some sort of sex abuse poker in which we have to assign value to various alleged sex crimes to see which alleged rapist/groper/enabler combination we want to inhabit the White House and represent our national brand. Let’s call that situation “not ideal.””

      I love Scott Adams.

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      • Kevin S. Willis, on October 11, 2016 at 9:58 am said:

        And stuff like this: “8. If the LGBTQ community wants to be a bit more inclusive, I don’t see why “polyamorous alpha male serial kisser” can’t be on the list. If you want to label Trump’s sexual behavior “abnormal” you’re on shaky ground.”

        It’s interesting that normal, aggressive male sexual behavior, which was pretty much the de facto standard for thousands of years and is deeply rooted in evolution, human nature, and other scienc-y stuff is not considered a legitimate sexual lifestyle choice.

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        • Brent Nyitray, on October 11, 2016 at 10:00 am said:

          It never ceases to amaze me that the left can distinguish between a hundred genders but can’t tell the difference between a legal and an illegal immigrant..

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        • Kevin S. Willis, on October 11, 2016 at 10:04 am said:

          They can’t tell the difference even when you say “illegal immigrant”—as Trump used that term, saying that illegal immigrants were often criminals and rapists. What the left heard, and quotes him as saying, is that all Mexicans are rapists.

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        • Brent Nyitray, on October 11, 2016 at 10:10 am said:

          It makes sense… They think all men (or at least all Republican men) are rapists..

          Liked by 1 person

        • novahockey, on October 11, 2016 at 10:16 am said:

          “It never ceases to amaze me that the left can distinguish between a hundred genders but can’t tell the difference between a legal and an illegal immigrant..”

          i’m stealing that.

          Liked by 1 person

  3. novahockey, on October 11, 2016 at 1:19 pm said:

    Who thinks its over? I don’t. not yet.

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    • Brent Nyitray, on October 11, 2016 at 1:33 pm said:

      I do

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    • Michigoose, on October 11, 2016 at 1:43 pm said:

      I’m not going to consider it over until Ohio is called.

      Liked by 1 person

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    • ScottC, on October 11, 2016 at 2:09 pm said:

      nova:

      Who thinks its over?

      The election or the nation? Not sure about the former, but definitely yes on the latter.

      Liked by 1 person

      Reply
    • Let the mutherfuker burn!, on October 11, 2016 at 2:37 pm said:

      I’d argue it was over in 1992, 2004 was pure incumbency.

      Liked by 1 person

      Reply
    • Brent Nyitray, on October 11, 2016 at 2:45 pm said:

      Disagree that it is over for the country. We’ll never get another tax hike without a D president, house and filibuster proof senate..

      The left cannot really do max damage without funds.

      Liked by 1 person

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      • ScottC, on October 11, 2016 at 3:14 pm said:

        Brent:

        We’ll never get another tax hike without a D president, house and filibuster proof senate..

        Those conditions aren’t entirely implausible. The least likely portion of that triumvirate is a filibuster proof senate, and I can certainly imagine a D controlled Senate eliminating the filibuster in order to get around that particular problem. Besides which, the Courts and the regulatory state can do all kinds of damage even without control of Congress.

        I think we’ve reached a tipping point. We have one major party, a party that controls roughly a third of the electorate and has sizable influence over another third, that at best does not care about, and at worst is actively hostile to, our Constitutional order. We’re doomed.

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        • Brent Nyitray, on October 11, 2016 at 4:35 pm said:

          We survived FDR.. We survived obama… We will survive another liberal ideologue.

          I also think Hillary is a one-termer… One party has rarely held the Presidency 4 terms in a row..

          Liked by 1 person

        • ScottC, on October 12, 2016 at 5:17 am said:

          Brent:

          We survived FDR.. We survived obama… We will survive another liberal ideologue.

          I guess it depends on how one views survival. I would argue that we didn’t survive FDR. He transformed the nation in such a fundamental way that it is only a slight exaggeration (if at all) to say that the nation that existed when FDR took office no longer exists today. Sure, we are still a nation called the United States and we retain the same structural appearance of government, but the centers of power and the way that power is exercised are totally different. And much more nefarious.

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      • Let the mutherfuker burn!, on October 11, 2016 at 3:28 pm said:

        And hence the upcoming debt repudiation and consequences thereof.

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  4. Let the mutherfuker burn!, on October 11, 2016 at 7:06 pm said:

    He does have a history of grabbing pussies.

    Liked by 1 person

    Reply
  5. jnc4p, on October 11, 2016 at 10:27 pm said:

    CFPB found unconstitutional, but the court rewrote the statute to fix it.

    Liked by 1 person

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  6. ScottC, on October 12, 2016 at 5:27 am said:

    Voter fraud is definitely not a problem, right?

    http://hotair.com/archives/2016/10/11/wow-nyc-election-official-claims-voter-fraud-minority-neighborhoods-new-james-okeefe-video/

    Oh, but this can surely be dismissed out of hand since it was filmed by the same “discredited” guy that got arrested after exposing Planned Parenthood’s involvement in selling fetal parts for profit.

    (Yeah, the left would never use the law to punish its political foes. That’s Trump’s gig, right?)

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  7. novahockey, on October 12, 2016 at 10:37 am said:

    the goal now is 5% or better for Johnson and that, sigh, federal funding for future campaigns. oh, the irony.

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    • jnc4p, on October 12, 2016 at 10:51 am said:

      Hitting that goal would be less about the funding per se and more about the presumed credibility that attaches to it. I think it would distinguish the Libertarians from the other third parties.

      It’s always been ironic as well that the Libertarians have been the most organized of the third parties.

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      • novahockey, on October 12, 2016 at 10:58 am said:

        true. but that money can go a long way in state house races or even a house seat.

        i’d lay it out:
        5%
        seats state houses
        house seat
        enough seats in house to factor in speaker election.

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