Morning Report: Inflation remains below the Fed’s target 10/31/16

Posted on October 31, 2016 by Brent Nyitray

Vital Statistics:

Last Change
S&P Futures 2126.3 2.5
Eurostoxx Index 339.5 -1.3
Oil (WTI) 48.2 -0.6
US dollar index 88.8 0.1
10 Year Govt Bond Yield 1.84%
Current Coupon Fannie Mae TBA 103
Current Coupon Ginnie Mae TBA 104
30 Year Fixed Rate Mortgage 3.62

Markets are up on earnings and merger mania. Bonds and MBS are down.

Personal Incomes rose 0.3% in September, which was a little below expectations. Consumer spending rose 0.5%, which was in line with expectations. Core PCE inflation – the number the Fed uses to measure inflation – rose 1.7% YOY, so we are still below the 2% target.

The Chicago PMI Index fell to 50.6 from 54.3.

The FBI re-opened the email investigation on Hillary late Friday night. Democrats are attacking Comey (who just went from hero to goat). This will take until mid-week to be fully reflected in the polls, and the pundits will be watching polls in VA and NC closely.

IMO, regardless of who wins, gridlock will be the result, unless Democrats sweep. So more of the same. I don’t see much of an effect happening in either interest rates or stock prices. The Fed is much more influential than who occupies the WH.

Home prices are up 0.3% MOM and 5.3% YOY, according to Black Knight Financial Services. The index now stands at $266k, which is 0.7% below the 2006 peak of $268. The report has good state-by-state info, so check it out.

Banks continue to hoard Treasuries, and are tightening credit to business. Deposit growth is outstripping loan demand, which is the biggest reason. As the US savings rate increases, consumer spending is affected. Part of this is demographics: The baby boom is retiring and will inevitably cut spending, while the Millennials have yet to make any real money and start spending.

Filed under: Economy, Morning Report |

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31 Responses

  1. Michigoose, on October 31, 2016 at 10:17 am said:

    Frist!!

    That is all.

    Liked by 1 person

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    • Brent Nyitray, on October 31, 2016 at 12:14 pm said:

      The media is corporation owned and therefore conservative, you teahadist alt-right dunce, you!

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    • ScottC, on October 31, 2016 at 12:32 pm said:

      McWing:

      This is a classic, from CNN on Brazile:

      “We are completely uncomfortable with what we have learned about her interactions with the Clinton campaign while she was a CNN contributor.”

      Yeah, right. More likely what they are actually “uncomfortable” with is having this kind of interaction being revealed to the public at large. If they were “uncomfortable’ with that kind of interaction, they shouldn’t have maintained the Chair of the DNC as a “CNN contributor” in the first place.

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      • Kevin S. Willis, on October 31, 2016 at 2:34 pm said:

        You are correct. Not only are you correct, this seems obvious. If we discovered at some point that Fox news had been feeding Trump questions, and then they dismissed Michael Steele from his position at the network (because that would have to be the arrangement, right?) and gave a similar message, the conclusion would have to be the same. They are not doing it because they are uncomfortable with the fact of it, only that it went public.

        Trying to get the moral high ground after the news comes out.

        The recent Wikileaks thing is reminding me of being a college liberal and having to reconsider that position, not based on the eloquent arguments of conservatives but rather the actions and behaviors of the liberals around me. The Wikileaks releases are, ultimately, a deep dive in the machinations of what public servants are doing while on the tax payers dime. There may be technical legal reasons that it’s bad this stuff is coming out, but from a practical standpoint it’s just revealing information, making the folks who claimed to want transparency actually transparent. A lot of it isn’t nearly as damning, as far as I can tell, as some right wing blogs want to make it, but it is revealing and interesting and informational.

        I thought information wanted to be free. But, again, it’s a tragedy that we get to see the sausage making of politics in action because it might potentially help a Republican candidate.

        I like it when the stuff the government is doing and that people in government are doing gets out. If it isn’t a real, honest-to-god threat to national security—and nothing here seems to be—then I like it. Wikileaks is unaccountable and that’s not so good, but still. Fascinating stuff. Future historians owe Wikileaks a gigantic debt of gratitude. If it were up the folks doing it, all this stuff would be permanently memory-holed by the time the real history books get written.

        Don’t get me started on how the folks on the left, who are supposed to be the “smart” ones, are uncritically buying the highly questionable argument that this is Putin/The Russian Government trying to engineer the election in favor of Donald Trump. There is so much wrong with this it’s hard to find a place to start, so I won’t, right now. But it’s not the rational, intelligent position to accept just because pundits are yelling it really loudly on Sunday talk shows.

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        • ScottC, on October 31, 2016 at 3:20 pm said:

          KW:

          Not only are you correct, this seems obvious.

          You don’t hire someone who has been a partisan political operative for pretty much their entire adult life, and has worked – and continues to work – for the last 15 years for the organization tasked with getting Democrats elected to the White House, and not expect them to pass whatever information they glean from your network on to that organization. Not, anyway, unless you are a fucking imbecile. And I don’t think the powers that be at CNN are imbeciles.

          But, again, it’s a tragedy that we get to see the sausage making of politics in action because it might potentially help a Republican candidate.

          In this case we are seeing the sausage making of journalism in action.

          Liked by 1 person

  5. jnc4p, on October 31, 2016 at 1:17 pm said:

    Kevin, another good piece on Westworld. Interesting argument that it’s a meta-commentary on HBO itself.

    https://newrepublic.com/article/138016/westworlds-trigger-warnings

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    • Kevin S. Willis, on October 31, 2016 at 2:14 pm said:

      Oh, I gotta read that then.

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    • Kevin S. Willis, on October 31, 2016 at 2:25 pm said:

      All right. Read. One geeky point:

      “I don’t pay all this money because I want it easy,” the man in black (Ed Harris) tells Dolores before dragging her into a shed to rape her. “I want you to fight.”

      You don’t see the rape happen. Which makes one wonder if, given the complexities of the Man in Black, it did . . . or if it wasn’t an evening of philosophical argument or the Man in Black trying to put Dolores into diagnostic mode. He clearly knows a lot about the park.

      When humans are forced to work longer hours for less pay while the 1 percent flourishes, we both see ourselves in our mechanized brethren, and dream of having them take our place.

      Lord. Frickin’ 1% are to blame for slave robot uprisings now. Is there anything that isn’t their fault? 😉

      “The guests don’t return for the obvious things we do,” he tells a corporate lackey. “They come back because they discover something they think no one had ever noticed before.” Westworld is not only a parable about creation, but also an HBO series that critiques the very audience it hopes to attract. “I know you think you have a handle on what this is going to be, guns and tits and all that,” a newcomer explains to his friend as they prepare to enter the park. “This places seduces everyone eventually.”

      Heh. That’s pretty good. Did not occur to me that Westworld might also be a parable for the show runners (who obviously had some starts and stops while getting Westworld off the ground).

      Still, nothing beats the Man in Black getting praised for the work his foundation does in the real world, and having him tell the guy to shut up or he’ll cut his throat. Will stick with the show to the bitter end because of that line, if nothing else.

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  6. jnc4p, on October 31, 2016 at 1:24 pm said:

    This piece has some pretty good observations:

    “Twenty-First Century Victorians

    The nineteenth-century bourgeoisie used morality to assert class dominance — something elites still do today.
    by Jason Tebbe
    …

    Yoga pants and running shoes display virtue just as clearly as the nineteenth-century wives’ corseted dresses did.”

    https://www.jacobinmag.com/2016/10/victorian-values-fitness-organic-wealth-parenthood/

    Liked by 1 person

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    • novahockey, on October 31, 2016 at 1:35 pm said:

      i clicked on “buy a subscription” (we’ll set the irony of that aside) and their pitch was pretty fun. predicting a HRC win, they write:

      President Hillary Clinton will likely suspend civil liberties in the wake of the Second Roomba Uprising, acid wash jeans will be back in style, and you’ll spend most days hunkered in your libertarian neighbor’s climate-controlled bunker.

      if those reds can make it past the security system, i guess they can join me in my bunker.

      Liked by 1 person

      Reply
  8. jnc4p, on October 31, 2016 at 2:28 pm said:

    Here’s a hypothetical for everyone vis-a-vis the current situation and Watergate:

    Should this not have been reported at the time?

    http://www.washingtonpost.com/wp-srv/national/longterm/watergate/articles/101072-1.htm

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    • Kevin S. Willis, on October 31, 2016 at 11:19 pm said:

      What is stupid is that was at time.com. But then Time once picked Hitler as the Man of the Year, so I guess it makes sense.

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    • ScottC, on November 1, 2016 at 6:26 am said:

      McWing:

      Jesus, womyn are stupid.

      That article was….quite remarkable.

      Liked by 1 person

      Reply
    • Brent Nyitray, on November 1, 2016 at 9:17 am said:

      If she thinks a Republican male would skate on this stuff, she has been huffing paint thinner…

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      • ScottC, on November 1, 2016 at 9:45 am said:

        Brent:

        If she thinks a Republican male would skate on this stuff, she has been huffing paint thinner…

        Look at where she is a professor, and the subject of her book. I think the paint thinner is a given.

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    • novahockey, on November 1, 2016 at 9:22 am said:

      the idea that a former first lady (2x gov and WH), senator, sec state, and major party nominee is some sort of victim or is being treated unfairly just doesn’t pass the laugh test. this is what presidential politics is. full pads and tackle.

      also, i’m in self-imposed exile from the PL. the polls are tightening and that group doesn’t exactly take well to bad news. i don’t need the aggregation.

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      • jnc4p, on November 1, 2016 at 9:39 am said:

        aggravation?

        I think I finally put my finger on what bothers me about the reaction to the whole Comey notification to Congress.

        It’s the chutzpah inherent in arguing that HRC should get the benefit from political norms that she herself flagrantly disregards.

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        • novahockey, on November 1, 2016 at 9:47 am said:

          whoops. typo. yes. aggravation.

          it’s the “we’re not partisans, but reality based. it’s just that everything i say is partisan.” just own it already.

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        • Brent Nyitray, on November 1, 2016 at 10:46 am said:

          “we’re not partisans, but reality based. it’s just that everything i say is partisan.” just own it already.”

          But reality has a liberal bias! John Stewart said so!

          Like

    • jnc4p, on November 1, 2016 at 9:38 am said:

      “But then Time once picked Hitler as the Man of the Year”

      And they were right to do so. Back then it was about the most significant person for that year, not a admiration contest.

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