Morning Report: Construction Spending Falls 11/2/16

Vital Statistics:

Last Change
S&P Futures 2102.0 -2.0
Eurostoxx Index 333.6 -2.0
Oil (WTI) 46.0 -0.6
US dollar index 88.6 0.0
10 Year Govt Bond Yield 1.82%
Current Coupon Fannie Mae TBA 103.3
Current Coupon Ginnie Mae TBA 104.2
30 Year Fixed Rate Mortgage 3.62

Stocks are mixed ahead of the FOMC decision today. Bonds and MBS are up.

At 2:00 pm we will get the FOMC rate decision. Given the sensitivity around the election, I would imagine the Fed wants to be as far in the background as possible. I would be looking for a statement that is pretty much identical to the Sep statement.

Mortgage Applications fell 1.2% last week as purchases fell 0.4% and refis fell 2%. The 30 year fixed rate mortgage increased 4 basis points.

The ADP jobs report is forecasting a lousy jobs report on Friday. Payrolls increased 147k versus the 170k expectation. The Street is looking for 178k jobs to be reported on Friday.

The Atlanta Fed has lowered its forecast for Q4 GDP to 2.3%. They were previously looking for 2.7%. They are looking for softer consumer spending and business investment.

Construction spending fell 0.4% MOM and 0.2% YOY in September. Total construction spending was $1.15 trillion. Private construction fell 0.2% while public construction fell 0.9%. Residential construction was the bright spot however, as it increased 0.4%. Construction spending as a percent of GDP is still rather depressed compared to historical numbers. Yet another example of how housing continues to punch below its weight.


One thing that has been a partisan bone of contention has been public construction. The Obama administration has been pounding the table that we need to spend money on public construction in order to “rebuild our crumbling infrastructure” and put people to work in order to stimulate the economy. Let’s set aside the argument over whether there is a multiplier effect for government stimulus plans (there isn’t). Have we been spending on public construction (infrastructure)? Ultimately, it looks like there is merit to the argument that we have let things slide. Aside from the early Obama administration stimulus bump, it is sliding to new lows as a percentage of GDP. Note that both Hillary and Trump are in favor of a big push for public works spending. Note however that private construction is over 3x the amount of public construction. So if you want the economy to really grow, the juice is in private construction, not public construction. Unfortunately, the lack of private construction is simply not on the radar in Washington. Politicians and regulators should be asking themselves whether they are an impediment to private construction spending. The answer to that question will undoubtedly fall along partisan lines.


Banks are no longer the biggest mortgage lenders in the US. Nonbanks like PennyMac and Quicken are making the loans that banks no longer want to make. We have seen the banks back away from FHA loans after being slugged too many times by the regulators. “It’s becoming the perfect storm—when you punish banks, [they] don’t lend out money,” said Paul Miller, an analyst at FBR Capital Markets. “Banks are becoming utilities that are unable or unwilling to play with risk.” Of course that is exactly the vision of the Elizabeth Warrens of the world: to turn banks into public utilities that earn a nominal rate of return and are effectively controlled by the government. The biggest worry is that if times get tough, nonbanks have less access to capital than banks which could severely restrict credit.

62 Responses

  1. Sigh. Media tries to attack Trump and instead gives me a reason to reconsider voting for him.

    “Trump’s Health Plan: Pay Your Own Medical Bills Using Money You Saved”

    Because paying for things yourself is crazy talk.

    Liked by 1 person

  2. Worth a read:

    “Don’t Let the FBI Decide the Election

    The question of who becomes the president of the United States should be answered by voters, not federal agents.

    Adam Serwer

    The Watergate Scandal was a high point of American journalism. Two dedicated young reporters from The Washington Post, Bob Woodward and Carl Bernstein, brought down President Richard Nixon for his role in the coverup of the 1972 attempted break in of the Democratic Party headquarters by Republican operatives.

    But the Watergate scandal also exemplifies another Washington tradition: cutthroat bureaucratic infighting.”


    • That’s a great article. A great insight into the reality on the ground, rather than the typical Arthurian legend of knights Woodward and Bernstein slaying the Nixonian dragon.

      I highly recommend everyone read it. But I love historical politics stuff more than present-day politics, which, by definition, can have very little historical perspective applied to it.


    • And this line just sums up political reality for me: “The latter part of the story is typically elided in retellings, precisely because of its disturbing implication that Nixon’s corrupt presidency might have survived had he read the politics of the FBI better.”

      I mean, that says everything about government, and how the media presents government, right there.


    • I think Comey was right to inform the Congressional oversight committees of the new E-mails that were discovered (which, if they were intentionally withheld by Abedin constitutes obstruction of justice, something that’s being overlooked in all the reporting), but I do have a problem with the anonymous leaking by the FBI and recognize that the leakers are pursuing an agenda.

      Of course the same people on PL who are whining now about 60 days and all that would be the first to cheer if this had happened to say Trump or even better George W Bush during his reelection campaign.


      • “Of course the same people on PL who are whining now about 60 days and all that would be the first to cheer if this had happened to say Trump or even better George W Bush during his reelection campaign.”

        With the justification that “this is different because (self-serving- bullshït-excuse-here)”.


    • I think this is the real issue that’s driving a lot of the leaking:

      “In meetings, the Justice Department and senior F.B.I. officials agreed that making the Clinton Foundation investigation public could influence the presidential race and suggest they were favoring Mr. Trump. But waiting, they acknowledged, could open them up to criticism from Republicans, who were demanding an investigation.

      They agreed to keep the case open but wait until after the election to determine their next steps. The move infuriated some agents, who thought that the F.B.I.’s leaders were reining them in because of politics.”


      • “They agreed to keep the case open but wait until after the election to determine their next steps”

        that’s no different than going public. not influencing the election isn’t an option.

        Liked by 1 person

        • It’s very telling that Comey’s grievous offense was telling the truth to Congress.


        • “It’s very telling that Comey’s grievous offense was telling the truth to Congress.”

          Hah! And a very mundane truth. “Hey, there’s something else over here we didn’t see. We’re going to check that out, too. Just fyi.”

          Traitor to liberty! Secret police!

          I can’t help but think that if the liberal media and pundits (and all the commenters on everything out there) had immediately blown this up into WWIII, it would have almost no impact on Clinton. People looking to the Daily Caller and Brietbart weren’t going to vote for Clinton anyway, so if so many prominent liberals and “mainstream” folks had suddenly thrown a hissy fit I think this whole thing would have been a big yawn. Comey didn’t do this to them, they did it to themselves.


        • nova:

          that’s no different than going public. not influencing the election isn’t an option.

          That’s exactly what I said yesterday to a colleague. Whether withholding or submitting information, the election is effected on way or the other.

          Liked by 1 person

        • “Comey didn’t do this to them, they did it to themselves.”

          That and the leaked Weiner angle was impossible for the MSM to resist. But none of that was in Comey’s (leaked) letter to Congress.

          Presumably under the no disclosures 60 days prior standard, if Clinton shoots someone this week (say Weiner) the police shouldn’t disclose the arrest as it could influence the election.

          Liked by 1 person

  3. @jnc4p: BTW, here’s my current theory on Westworld. See what you think.

    Logan (of William and Logan) is Man In Black, 30 years before. Something that happens that softens Logan in the real world, if not in Westworld, probably the “death” or disappearance of William.

    William is in the center of/involved in the maze. He’s living somewhere in Westworld. Has perhaps even provided intentional clues to now 30 year old Man In Black as to where to find him. 30 year older William is in some sense continuing the cause of Arnold. Scenes are being staged to intentionally suggest things are happening in a linear fashion, when in fact they are taking place 30 years apart.

    I suspect Bernard is a sentient android, given Arnold’s consciousness and memories in many ways, if not his name and awareness that he’s Arnold. This is more iffy.

    If Bernard is Arnold, any scene with Bernard could be a scene with Arnold, 30 years previously, if any of the “present day” players aren’t in the scene. Dolores interviews, his phone call to his presumably ex-wife, etc. I need to review some of those scenes to listen and find out if anyone speaks Bernard’s name.

    Bernard’s sessions with Delores could be happening anywhere in the timeline. They could be implanted memories, could have been happening 30 years ago. Not sure if Bernard’s name has been reference explicitly in these scenes scenes. I think he could be Arnold, even though the picture of Arnold, briefly seen, did not look like Bernard.

    Dolores is clearly experience two narratives: one somewhere in the past and one in the present. I think the past one is with William and Logan, the present one is largely by herself. They are a macro loop, one where she is off her loop, but echoing a previous deviation from the loop. The second one is mostly being done by herself. I think this second loop is where control observes her off her loop and cannot tell if she is with a guest, so the decision is made to bring her in. However, the scene where the sheriff grabs her is actually 30 years in the past, and not actually connected to the previous scene in time. Presumably, she found some way to handle being being “called back” that we don’t see.

    Other standard stuff. William and Logan work for Delos, and are at the park before Delos invests in Westworld. Man in Black (30 year older Logan) is given such leeway not just because he’s been coming for 30 years, but because his company is a huge financial investor.

    When Ford says someone from the Board is already in Westworld, the Man in Black is who he is referring to, while we are meant to suspect it is Logan and William from the timeline 30 years ago.

    What I currently have no theories about is the significance of the new narrative Ford is working on. Wondering if it is a narrative (despite his insistence that the androids weren’t human, and they aren’t conscious) is one of “android uprising”. Perhaps in some part meant to kill of the Board, or in some other form help consolidate his control of the park and his God-like status.

    Man, I love this show. Maybe it’s all the 3D printing of androids that got me hooked.


    • “Logan (of William and Logan) is Man In Black, 30 years before. Something that happens that softens Logan in the real world, if not in Westworld, probably the “death” or disappearance of William.”

      I read that theory was debunked because of the concurrent appearance of park staff with both Logan and Man in Black in certain scenes.


      • Damn. I didn’t catch that. I can’t think of a scene where that’s the case (only implied, by switch cutting to a staff scene, but that’s not the same thing in mystery box theater). But there may have been something I missed. The biggest thing working against the theory otherwise is that all the android technology seems identical to what would be “present day”, and presumably there would have been improvements over 30 years, and it wouldn’t have been all in the 5 years since approximately the park opening to William and Logan showing up (assuming the dual timeline theory).

        Researching the debunking. Here’s what I’ve got:

        “The Stray,” we learn that Dolores kills her attacker while going against her programming after seeing flashbacks of the Man in Black. She then runs off where she finds William and Logan’s campfire. This scene on the surface makes it seem like both killing her attacker and meeting up with William are both in present and thus makes the Man in Black theory impossible

        I don’t think you can assume that anything that happens with Dolores is linear. I don’t think this is just glitching, I think she’s on two loops, and one of them is the William and Logan loop and the other is present day, and they often merge seamlessly in her mind. I think it’s an intentional deception on the part of Nolan/Abrams and the writing team. Anything that depends on Dolores’s story operating sequentially is immediately disqualified for me.

        Yeah, all the debunking I can find involved Dolores. I don’t think that’s a coincidence, especially given she’s clearly experiencing a large macro loop (on the train with William and Lawrence, then on the same train alone; gun in the drawer then gun gone). So I’m sticking with it, only I believe the “twist” is that Logan is actually the Man in Black, not William. But I may be wrong about that.


  4. Interesting observation by Scott Adams:

    “Quite by accident, the Access Hollywood tape took the scare off of Trump. It made you think of Trump as an ordinary flawed human and not Hitler planning the Holocaust. Every minute you spent thinking of Trump as a horn-dog was a minute you weren’t worried about him blowing up the world.”


    • Could be. I know it seemed like: yeah, this is bad, but not objectively as bad as it could be, and, frankly, made him seem a little more Bill Clinton-esque (who, if someone had taped Clinton speaking like that at times when I have no doubt he did, would have been pilloried by the right at the time for such heathen horn-doggedness, while the left and the MSM would have tsk-tsk’ed such inappropriate “locker room” talk, but shrugged and wondered if the real issues facing the nation weren’t more important than what Bill Clinton had said in his “down time”.

      It’s all partisanship, which why it always exasperates me with clear partisans complain about “party over country”. Dedicated partisans feel that their party is the pro-country party, no matter what, so there is no “party over country” for the true partisan. And none of them are ever going to feel they are putting party over country, so it’s such a pointless, self-flattering thing to say. “By voting for the same party I’ve voted for for the last 20 years, I’m putting country over party. When you do the same for a candidate I find distasteful, you are putting party over country. Shame on you! Shame on you!”

      The critical mass of these things is ultimately not great for Trump, and I think Trump is going to lose even with the apparent recent poll-shift (aside from random chance he would nominate someone really good for the supreme court, he has nothing to recommend him to me). But Jon Stewart recently said that when the tape came out, it should have been over for Trump. Frankly, I’m a lot more concerned with the “I alone can fix it” autocracy and telling the opposing candidate they’d be in jail if he were president and, well, this stuff:

      Assuming a black supporter (probably) was a “paid thug” and throwing out an Indian supporter (again, supposedly, but given Trump’s track record I can totally believe he’d get confused and think supporters were traitors and needed to be purged).

      I don’t presently have an opinion about any of the lawsuits against Trump, as I really don’t have any sense of how true they are, but if some of the accusations have merit then, yeah, they’d be an issue, too. But at present, being a fratboy dooshbag with Billy Bush does not strike me as the fatal blow that some people think it should be/should have been. Don’t know if it helped a lot, but maybe.


  5. What do you think the odds are that Obama is using a non-governmental email account along with pseudonyms?


  6. Obama’s hypocrisy is too much even for the NYT:

    “The president did not mention the F.B.I. director, James B. Comey, by name, but it was clear Mr. Obama was referring to him.

    Declaring that he had “made a very deliberate effort to make sure that I don’t look like I’m meddling in what are supposed to be independent processes for making these assessments,” Mr. Obama nonetheless expressed confidence in Mrs. Clinton and her integrity.

    Mr. Obama’s comments were somewhat surprising since he weighed in on the investigation last year before the F.B.I. had determined that neither Mrs. Clinton nor her aides would face charges for mishandling classified information that was found on the secretary of state’s private email server. The president’s comments angered F.B.I. agents.

    “I don’t think it posed a national security problem,” Mr. Obama said on “60 Minutes” on CBS in October 2015. He said it had been a mistake for Mrs. Clinton to use a private email account when she was secretary of state, but his conclusion was unmistakable: “This is not a situation in which America’s national security was endangered.””


  7. Haven’t heard a lot about how a President Trump would embarrass us in front of the Europeans recently. I wonder if that’s because there’s been polling that suggests telling people not vote for a guy because the French might look down on you is not compelling to independents and undecideds. It always seemed like an awful argument to me.

    Or if complaining about Russia “meddling” in our election meant that suggesting we should vote for Clinton because she’d be more palatable to foreign leaders was a bad ida.



    Scott Adams suggest Hillary is the riskiest choice because she’s a drinker.

    I’m dubious. I don’t give a tin fart if HRC is a lush.


  9. McWing, you might like this:

    “Amoral masculinity”: a theory for understanding Trump from feminist contrarian Christina Hoff Sommers
    “Trump is a reminder of what masculinity can be like outside of conventions.”
    Sean Illing
    Nov 2, 2016, 10:40am”


    • I encountered these hypersensitive fainting couchers at Oberlin College and Georgetown University last year. I visited both campuses to give talks on the need to reform feminism and correct exaggerated victim statistics. In the past, activist students who disagreed with me came to my lectures to spar and debate.

      Today they issue trigger warnings and accuse me of giving them PTSD. At both Oberlin and Georgetown, activists organized safe spaces where students could flee if they were panicked by my arguments. At Oberlin, 35 students and a therapy dog sought refuge in a safe room.

      I think she nails it, but I don’t see this getting better any time soon. I just want to get my kids through college before University of Memphis becomes infected.


    • Sean Illing
      He said: “I’m going to be a strong man supporting the first strong woman to be president of the United States. And as important as it is to normalize that a woman can be president, it’s also important to normalize that strong men can support a woman as president.”

      As Ezra Klein wrote, this is such an important model of masculinity to project right now.

      Christina Hoff Sommers
      I think there are a lot more men that are like Kaine than like Trump.

      Sean Illing
      I’ve no idea if that’s true, but I hope it is.

      One of these people in the interview is smart, the other one not so much. This country would not look like it does if it was filled with Trump-style masculinity. Obama would not be president. HRC would not be near to winning the presidency. Yada yada.

      While I don’t know that it’s the “important model of masculinity to project” right now, I do know my immediate manager is a woman, and I support her. I’m married, and I support my wife to an extent that, from my perspective, makes me the support structure in the relationship (although, to be clear, my wife believes that “supporting” me in days that I don’t feel help and have asked her not to is also “support”, because I just don’t know what’s good for me or something ). Facebook is nothing but memes about “a good man supports his woman” in some form or fashion. I see very little about what good women do for their men, but plenty about what good men do for their women, and so on.

      We live in a society dedicated to the thoughtful and respectful and sometimes subservient support of women, where you see exceptions to this rule routinely make the national news because they are considered so aberrant. I have no doubt that the Billy Bush tape is not the only time where Trump has been vulgar or used profanity, but I’ll bet you money it was seen as solid gold because it was disrespectful to women and suggested that it was okay for him to do stuff, to women, without their consent, implicitly because they were women. This might have been de riguer in the Mad Men era but is so alien now that of all the stuff they could have focused on during that two-week period, they picked that.

      It got 10 times the attention of Trump’s “I alone” statement, 5 times the attention of Trump’s “she oughta be in jail”, and 50 times more attention that Omarosa’s implication that all those who opposed Trump would be punished once Trump was elected.

      Because all of those things paled in comparison to Trump’s disrespectful and objectifying attitude towards women.

      He has no idea if it’s true. Then he must be blind, that’s all I gotta say.


      • That’s all well and good about Kaine supporting Clinton, but I don’t think it’s an example of “masculinity” at all. It does say a lot about Klein and Illing that they seem to think that it is.


        • How come no one mentions that men will parrot anything if they think it will help them get laid?


        • Concur. But, it’s their effort at working at redefining masculinity. And a dude can be supportive and masculine, but even masculine while being supportive, but just being a VP and suggesting you’re going to support the president, even though she’s a woman, is neither masculine or particularly feminist. 😉


        • “How come no one mentions that men will parrot anything if they think it will help them get laid?”

          Because it’s too obvious? They don’t like to admit it? They’re worried that saying it will make it harder to get laid?


        • “How come no one mentions that men will parrot anything if they think it will help them get laid?”

          Why even bother chatting up a SJW? Too many minefields..


        • Well, you don’t bang the SJW’s, that’s a rape charge waiting to happen, your goal is to bang the sympathetic but hot liberal chick, the broad that’s virtue signaling. That’s your target.


        • Sheesh. Too much toxic masculinity in here!


        • Subservience isn’t masculine. Klein, et. al’s attempts to make beta males the new hip thing are doomed.


        • Beta is the new alpha. When she’s yelling at you for being such a loser and you’re cringing in the corner, you know you’re doing it right. 🙂


        • “Subservience isn’t masculine”

          Go directly to friendzone. Do not pass Go, Do not collect $200


  10. All the people thinking that Comey is caving to pressure from Congressional Republicans ought to reread this:

    Click to access comey.transcript.pdf

    If he can stand up to Cheney, et. al. when they were arguing that he was going to effectively facilitate terrorist attacks on the US if he didn’t sign off on their program, then I doubt he’ll have much trouble standing up to Congressional Republicans, or the Democrats for that matter.

    Liked by 1 person

  11. Anyone else find this suspiciously convenient?

    Viewed as Voter intimidation? Really? They must not spend much time with black people in Mississippi, I guess. Whatever this is, it’s not going to help Trump in any way. One would guess the people who spray painted “vote trump” on the side of the church knew it when they did it.

    I’m mystified that the same people who see a byzantine conspiracy that involves Comey being in the Russian payroll or something to explain his letter to congress just take things like this at face value, when the possibility of them being false flag operations is at least 50/50.

    I sorta suspect the same of the GOP headquarters firing bombing. Spray painting “This message comes from X”, essentially, should automatically make such crimes suspicious in terms of attribution.

    Timing is interesting, too. Generally, such investigations that reveal it’s a false flag or wag-the-dog are going to take longer than a week. By then, the election is over.


    • I believe 99% of these incidents are hoaxes by the left…


      • I believe 99.9% of these things, where the perps pretty much sign their supposed identity or affiliation, are hoaxes. Not necessarily collective, but of individual or very small groups of true believers who think burning a church or a campaign headquarters is a small price to pay for illustrating the violence and evil of their opposition . . . by perpetrating the same violence and evil on, generally, their own fellow travelers.

        I’d have a much easier time believing the church had been torched by angry racists if they hadn’t stopped to paint “vote Trump” on the wall. Really? I’m supposed to think this is seriously the work of Trump supporters?

        On behalf of Trump, who acknowledge the Crusader’s endorsement of him by calling the paper repulsive.


  12. When the Iranians start making sense:

    “Trump and Clinton are ‘catastrophic,’ says Iran’s supreme leader
    By Max Bearak November 2 at 1:20 PM

    Almost 37 years to the day that radical students overran the U.S. Embassy in Iran, the Islamic republic’s supreme leader sat with students Wednesday and delivered a blistering tirade against American society, politics and foreign policy. He reserved special condemnation for Hillary Clinton and Donald Trump, and said this year’s election was a symptom of America’s decline.

    “These two candidates show the catastrophic reality which goes beyond what even we were saying,” said Ayatollah Ali Khamenei, who regularly speaks out against perceived U.S. imperialism and double standards. He has been steadfast in refusing to negotiate directly with the United States, even during momentous deliberations leading to a nuclear deal signed last year.

    Khamenei said he had watched the presidential debates and found the two candidates’ comments to be “sufficient for the annihilation of the reputation of the United States.”

    “Their statements are proof of the destruction of human values in the United States,” he said.”


  13. And it all leaks out:

    “Secret Recordings Fueled FBI Feud in Clinton Probe
    Agents thought they had enough material to merit aggressively pursuing investigation into Clinton Foundation

    By Devlin Barrett and
    Christopher M. Matthews
    Updated Nov. 2, 2016 10:04 p.m. ET”

    Liked by 1 person

  14. Go, Cubs, Go!
    Go, Cubs, Go!
    Hey Chicago, what do you say?
    Cubs are gonna win today!


    • I like to think somewhere up in the sky, Harry Caray is finishing off his 12th Budweiser and shouting Cubsh Win! The Cubsh win the World Sheries!!


    • i’m a lefty and played 1st base as a little leaguer. pitched some too, but the less said about that that better.

      watching Rizzo this series has been awesome. some of those digs and stretches at first base? damn.


      • Digging the ball out at first on a LL or even most HS fields used to be an adventure in itself. I don’t suppose groundskeeping at that level has improved since 1959.

        I got victimized at first by throws in the dirt enough to curse the position. Victimized, I tell ya.


        • I couldn’t hit a curve at all, which is why i got cut from the HS tryouts. but I could play first. loved it.

          won a league championship one year. final out was a dribbler down the third base line that the player had to charge. almost threw in RF. nope. snagged it and game over. still have that glove and use it when i’m coaching my son’s team.


      • I had an arm but was slow as a dump truck… Pitcher and RF…


  15. Went to go vote early today. … and the early voting window isn’t open until 2:00.
    do’h. but it is open until 8.


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