Morning Report: Unemployment and wages fall 12/2/16

Vital Statistics:

Last Change
S&P Futures 2190.0 -2.0
Eurostoxx Index 338.2 -3.0
Oil (WTI) 51.1 0.0
US dollar index 91.5 -0.2
10 Year Govt Bond Yield 2.41%
Current Coupon Fannie Mae TBA 103
Current Coupon Ginnie Mae TBA 104
30 Year Fixed Rate Mortgage 4.14

Markets are flattish as investors digest the jobs report. Bonds and MBS are flat as well.

Jobs report data dump:

  • Payrolls up 178k vs 170 expected
  • Unemployment rate 4.6% vs. 4.9% expected
  • Labor force participation rate 62.7% vs 62.8% expected
  • Average hourly earnings down .1% vs expectations of a .2% increase

On balance, the report was mixed. While the drop in the unemployment rate was encouraging, the drop in wages was a disappointment. The drop in the labor force participation rate didn’t help things either. This probably doesn’t change the Fed’s thinking for the FOMC meeting in a couple of weeks.

The bright spot in the report: the big drop in the unemployment rate for the age 25-34 cohort. Good news for the mortgage and real estate industry. Anecdotally, college applications are falling markedly, which indicates people are getting jobs as opposed to going back to school. Overall, it means the first time homebuyer is in better shape.

Bonds initially rallied on the report, but have given back their gains.

Bill Gross isn’t buying the big rally in stocks lately. “An investor should move to cash and cash alternatives, such as high probability equity arbitrage situations,” Gross, who runs the $1.7 billion Janus Global Unconstrained Bond Fund, said. “Bond durations should be far below benchmarks.” The bond duration comment means he sees interest rates continuing to rise. In his view, equity investors are putting too much stock in things like regulatory reform and fiscal stimulus, as demographics and low productivity are likely to remain the more dominant forces in the market, which is ultimately bearish for stocks. Separately, investors pulled $4.1 billion out of taxable bond funds last week.

HUD has raised the FHA loan limit to $424,100. following the increase from Fannie Mae.

67 Responses

    • The President-Elect, in his current role as Tweetmeister, has kicked up a storm with China about a call between him and the President of Taiwan.

      Is there a Trump Tower in Taipei?

      DJT made good on a campaign pledge about Carrier, and I applaud him for it. I remember when JFK and LBJ jawboned every company that produced both civilian goods and military stuff. I think this is a first for a President-elect. I think it led to rent seeking then, so i wonder if it will not do so now. “We will move production to Singapore unless we get a tax break”. And eventually, a breeding ground for graft as companies compete for bennies.

      Neither the rent seeking nor the graft MUST happen, but I hope there is Congressional oversight and even press coverage that will act as a prophylactic, just in case.


  1. On Facebook, Trump’s latest speech (and the Carrier deal) is being praised to high heaven by the folks who supported Trump, enthusiastically or tepidly.

    It amazes me that anybody on the left or in the MSM thinks the folks who voted for Trump are going to be disappointed, or “in for a rude awakening”. They are literally detached from reality.

    Trump’s enthusiastic supporters have been waiting forever for a guy like this. The more tepid supporters are still won over by things like the Carrier deal. And unimpressed when the left attacks it as being a bad thing. There is not a single Trump supporter than I’ve seen that’s walking it back, deeply discouraged about the changes in his campaign promises.


    • The left and the MSM still think this election was a rejection of elitism / Wall Street instead of a rejection of them.

      Liked by 1 person

      • It can be both. There are few more elite groups than the urban left and the MSM. Recall the MSMs outrage that Trump dared to go to dinner without notifying them. I could not have scripted a more narcissistic, elitist response if I had tried.

        And Trump obviously beat out the elite candidates in the Republican primaries. Perhaps the problem is the left and the MSM don’t consider themselves part of the out-of-touch elite?


        • There are few more elite groups than the urban left and the MSM.

          Of course, Trump is a spiffy mega-example of an insider elite. This is all part of the con.

          Now, having said that, this con artist will soon be my President. WTF can I expect from him?

          My gut says he will personally capitalize on the show of being President. Will he actually negotiate with Congress or just be the Tweetmeister? Will he get us into another war in the Middle East? Inquiring minds want to know.


        • Mark:

          Of course, Trump is a spiffy mega-example of an insider elite. This is all part of the con.

          Trump may be putting on a con, but I don’t think it is the one you are suggesting here. During the campaign he actually played up his elite, insider status as an asset. The narrative was that, as an elite insider who not only knows the game but was an avid player of it, he is perfectly positioned to take it down, or, at the very least, play it for the benefit of those that can’t play themselves.

          This morning I listened to part of Harvard’s quadrennial School of Government election-postmortem forum, where all the campaign managers are invited to discuss what happened, both during the primaries and the general campaigns. One of Trump’s guys (I think it was Corey Lewandowski) spoke about how they deliberately took the opposite approach from Romney’s in 2012 when making campaign stops in the Midwest. Apparently before arriving at any stop, Romney would get out of his luxury limo and get into a Ford, in an attempt to present himself as an ordinary guy. Trump’s strategy was consciously the opposite…flaunt his wealth. Arrive in luxury cars, make the campaign jet with TRUMP on the side visible as much as possible, etc.

          I don’t think Trump is trying to con anyone into thinking he isn’t an elite insider. In fact, if anything, the con is that he is more elite than he actually is. (Still haven’t seen those tax returns!)


        • Makes sense. And I kinda had that in mind, although I wasn’t clear about it.


        • @markinaustin: “Now, having said that, this con artist will soon be my President. WTF can I expect from him?”

          Who knows? A lot of Tweeting, a lot of direct speeches made via the Interwebz, not a lot of catering to the press, probably.

          That being said, I think Donald Trump presents to the average working class stiff as: “Look, I’m you, made good. I’m Archie Bunker if he had a big mansion and servants. I drive a limo just like you could drive a limo, if the system was working for you. I’m a regular guy who just happens to be a billionaire. But except for being wealthy, I’m you.”

          As far as starting a war in the middle east, I hope he turns out to be interested in limiting our international entanglements and highly opposed to starting new ones.


        • Hope he doesn’t start any new ones like Obama did.

          Liked by 1 person

  2. As a child, my high school German teacher crawled through a mine field to escape East Germany. This whole Trump is a fascist nonsense is just ignorant and disgusting. Controlling immigration and taking a hard look at who poses a threat does not make one fascist.

    Liked by 1 person

  3. BTW, I thought Cao was blocking me on Plumline, but apparently not.

    @scottc1: He suggested I leave PlumLine and return to ATiM, and “continue performing on Scott”.

    I can’t figure out what he was implying.

    I thanked him for keeping up with me, however. I’m definitely glad to find out he stops by to see what we’re talking about. Hey, Cao! How’s it going?


    • ATiM, living rent free inside Cao’s head.

      Liked by 1 person

    • We could have some fun with cao over here.


      • Or almost anyone from PL. They are all turning into Cao:

        anonymous sooner
        12:27 PM CST
        I for one will give Trump, and any Trump supporter I might encounter until the end of my days, the exact same amount of respect as they have shown Obama.

        Had a more sane and traditional republican won I would’ve let bygones be bygones. I didn’t like Bush or his voters back in the day but was generally OK with giving their motivations the benefit of the doubt. Not so anymore. You vote for Trump your motivations are clear as day.

        I look forward to the first time I stop on the highway to help someone with their car and it has a Trump sticker on it. I’ll make sure to let them know why I’m leaving them stranded instead of firing up the air tank for a 2 minute tire change.

        12:30 PM CST
        That’s some restraint. I’m taking a knife to the remaining tires. Will tell them to be glad it’s the tires and not the neck.

        anonymous sooner
        12:32 PM CST
        Still. The look on their faces when a guy pulls up with an aircompressor, floor jack, tire plugs, fluid for their radiator, gas, and all the other crap I keep in the truck to help stranded motorists, will be priceless as I drive away giving them the bird.

        12:32 PM CST
        Nope, you’re not going to do anything of the sort either.

        Just sit back, relax, and enjoy it.

        12:34 PM CST [Edited]
        I probably wouldn’t vandalize a car, but I have turned away one potential patient who came in with a MAGA hat on. I’m under no obligation to take on a particular patient and I’m not going to treat someone who would spit on me if I were anyone else other than a cancer doctor. These people need to learn that what they did isn’t ok and I’m perfectly ok with them dying. I know if the positions were reversed, they’d do the same to me.

        12:35 PM CST
        Make sure to have a big “Proud Democrat” sticker on the back of your rig.

        12:30 PM CST
        Sure, we believe you. Keyboard Warriors aren’t as rude in public as they are hiding on the internet.

        12:34 PM CST
        True. Nobody but DT supporters are as rude in public as they are hiding on the internet.


      • The less that PL is dragged over here, the better.

        Liked by 1 person

    • If you base your whole appeal on identity politics, you can’t be surprised when your opponents do the same…

      I wonder what percentage of the tax burden is borne by white men in the US… Funny, it seems like the government has sliced and diced every piece of demographic data except that one…

      Liked by 1 person

      • Brent, do you think wages fell because of holiday hiring? Or perhaps because some first time workers are hitting the market?

        I got nothing.


        • Wage inflation has been steadily increasing. I am thinking this is going to be revised upward in the next report.


      • Brent:

        I wonder what percentage of the tax burden is borne by white men in the US… Funny, it seems like the government has sliced and diced every piece of demographic data except that one…

        You are right…can’t find any info on it anywhere. There are lots of breakdowns on the sources of tax revenues, but none by race/sex. Surely that isn’t just an oversight.


        • If it doesn’t support the Progressive narrative, this government isn’t about to publish it.


        • From the federal government?

          There is absolutely no way that is an oversight. Race, ethnicity, and gender is tracked in pretty much ever category that involves a human being.


        • What do you think the actual number is? I am thinking 75%-ish


        • Brent:

          What do you think the actual number is? I am thinking 75%-ish

          I suspect it is higher. According to this:

          …the top 1% of income earners pays about 45% of all income taxes, and the top 20% pays 85% of all income taxes. And if this site is correct:

          …apparently 96% of the top 1% of income earners is white. I couldn’t find a figure for the top 20%, but whites make up 64% of the total population, so assuming a straight line interpolation between the top 1% and the entire population (which is probably conservative), let’s say that whites make up about 90% of the top 20%. That would suggest that roughly 76% of all income taxes are paid by the white portion of the top 20%. Even if whites only accounted for 50% of the income taxes collected from the remaining 80%, which would be 7.5% of all taxes collected, they would still account for over 83% of all income taxes paid.


      • Yes there is.

        Edit: This piece seems to make a similar point that you do, from the opposite ideological perspective.

        “On Race and Taxes, Both Parties Insist Upon Speaking No Evil

        The debate over taxes is and has always been a proxy for one about racial inequity. And we’ve never been able to admit it.
        Imara Jones
        Nov 30, 2012 9:33AM EST”


        • That seems to be a racial breakdown of who doesn’t pay taxes. I can’t find anything that shows who does pay taxes, or how much they pay.


        • I’d think it would have to come from the same data set.


        • @scottc1: “That seems to be a racial breakdown of who doesn’t pay taxes. I can’t find anything that shows who does pay taxes, or how much they pay.”

          I’m sure it’s there but would take a FoIA request to get it. If then.

          Eh, I’ll keep looking.


  4. How to create a backlash and discredit yourself at the same time:

    “News organizations are telling writers to be clear that the alt-right is a racist movement
    The movement rose in prominence as it pushed for Donald Trump’s election.
    Updated by German Lopez
    Dec 2, 2016, 12:10pm EST”

    Liked by 1 person

    • Why don’t they come right out and say that every right wing group is racist..


      • & interesting choice of photos to illustrate the alt-right with:


        • jnc:

          & interesting choice of photos to illustrate the alt-right with:

          Indeed. Very ambiguous. Not really sure what the intention was.


        • One guy was holding a Pepe sign, the frog that for some unclear reason has become the mascot of “racial realists” on the 4chan.


        • Can you explain this Pepe the frog thing? I’ve read references to it, but have literally no idea what they are talking about.


        • same. i’m behind on my memes.


        • It’s hard to explain. He was an inexplicably popular meme, like many memes, and then a bunch of 4channers started making him into some kind of white nationalist, manosphere, anti-feminist, anti-immigrant icon. Yada yada.

          I’m not sure the article clarifies anything but it will lower your opinion of humanity and depress you.

          But Pepe’s twisted transformation wouldn’t be complete until a few hours after White’s foray down the froghole, when Margarita Noriega, an executive editor at Newsweek, tweeted a Pepe at Marco Rubio.

          Benny Polatseck, who runs the public relations firm Colossal PR, accused Noriega of employing an image “used by racists to make fun of latinos.” Noriega deleted the Pepe.


        • I totally missed the Pepe sign. I thought it was simply associating standing for the pledge respectfully with the alt-right.

          Liked by 1 person

        • The left is hyper-aware of Pepe. Basically, it’s them and the “racial realist” neo-Nazi right who know much of anything about Pepe. Left-wing pundits and Facebookers are how I learned about Pepe. Not a single conservative I’m friends with on Facebook as ever referenced it in any way.

          My guess is most regular conservatives don’t know about it, don’t know what it is, and don’t care.

          But, yeah, Pepe is totally why they (NYT) picked the sign. They see it (probably not inaccurately) as a way to bring in a sign of racial solidarity with his fellow Aryans to a Trump rally without getting kicked out, the way he would had he brought a Nazi flag. It’s a picture of a dogwhistle, basically.


        • KW:

          It’s a picture of a dogwhistle, basically.

          I love that. It is so derivative.

          Liked by 1 person

        • The whole source for the story is basically some guy on Twitter? I suspect the Daily Beast got trolled and the MSM didn’t know any better…


    • An interesting strategy. Given how easy it will be for people they are trying to paint as “alt-right” to distance themselves from the definition.

      With Donald Trump’s victory, news organizations are increasingly finding themselves writing more about the so-called alt-right, a racist, far-right fringe movement that heavily supported Trump’s election.

      They are “finding themselves writing more”, as if it just happened by accident, totally event driven. Nope, no trying to construct a narrative here.


      • The media probably thinks they are the last vanguard against Adolph Hitler II. They are going to be insufferable for the next four years…

        Liked by 1 person

  5. Apparently, Taylor Swift is also something of a Pepe:

    Nazis and members of the “alt-right” consider Taylor Swift an Aryan pop queen who is “red pilling” America into a race war through her pop hits.

    These people have serious, serious mental problems.


  6. Question (and this is from the Taylor Swift piece), when real “racial realists” and neo-Nazi types publicly talk like this:

    “Being Aryan is not simply a matter of blood, but it is also a matter of spirit,” the community manager writes in an email to Broadly. “Take Kim Kardashian or Miley Cyrus as examples of this: both began their lives with the same Nordic blood that Swift did, but what makes these two degenerates unfit for consideration as fascist icons? It is because, although Aryan in blood, the two are not Aryan in spirit. To be Aryan in spirit is what completes the fascist.”

    So why is the left so sure there are so many secret fascists out there amongst those who disagree with them? They seem to be pretty proud that they are certifiable lunatics.

    Another thing that got me thinking was that Richard Spencer meeting where he blew multiple dogwhistles in a speech that was winkingly anti-semitic and all white-powery.

    I’m always told that everything any conservative or Republican politician says is full of racist, sexist, homophobic, and anti-Immigrant dogwhistles (“because they can’t say it out loud, even though they all believe it”). Yet when I watched the Spencer speech, the dog whistles are obvious, and would be to almost anybody over 30. Wondering the the media is populated by soulless golems, and underlining the proper words verbally, is a dogwhistle. Obvious.

    This may be a dogwhistle:

    But it’s too subtle. And is often used as a starburst on packaging and other things:

    I used to do package design. I usually used starbursts with more points but have used a 5 pointed one from time to time. There’s a tool to do them with in most graphic design programs.

    … I dunno. I just feel like too much is called a dog whistle, when there’s stuff that’s obviously a dog whistle one can point to.

    Yet try to compare your average liberal to the murderous regimes of Stalin and Mao, and they get all defensive. It’s a double standard is what I’m saying.


  7. How to normalize Trump:

    “In fact, if you took part in any Republican presidential campaign since 1964, you helped run a campaign in which white supremacists had some kind of platform or another. There were some candidates—Gerald Ford, John McCain, and George W. Bush—who were less direct about it than were Richard Nixon with the Southern Strategy, Ronald Reagan at the Neshoba County Fair, or Poppa Bush with Lee Atwater, but it still percolated within the party apparatus beneath them. El Caudillo del Mar-A-Lago just took away the party’s Inside Voice on such matters.”

    See, his campaign is really no different than any Republican presidential campaign since 1964.

    Liked by 1 person

    • So, since Trump is basically like Reagan, we can expect his performance to match Reagan’s 1984 performance in 2020?

      Or maybe Nixon’s performance in 1972?

      Or maybe they are hoping for a George H. W. Bush style 1988 performance:

      So that’s what they’re trying to replicate?


  8. OT: Great documentary on Full Metal Jacket. Definitely worth it for the NSFW first 11 minutes that covers R. Lee Ermey.


    • KW:

      OT: Great documentary on Full Metal Jacket.

      I had no idea that it was filmed in east London.

      Liked by 1 person

    • I know Kubrick is a stickler for details and I’ll give you some examples, the marching in the squad bay? We did that, exactly that. The sitting on footlockers cleaning your already, virtually sterile weapon? We did that. When Ermy dumps out a footlocker? I had every item in that footlocker. Its called a hurricane by the way, you’re supposed to mark every item in your possession, from your underwear to each.individual.sock, to the can of Brasso with your name, you’re given a black and a white ink pad and you make a stamp with your last name. After the Hurricane everything that is not marked gets thrown away.

      Had a dude who was only left with a pair of boxers and one uniform. they issued him new stuff after 3 days and docked his pay. I suspect the D.I.’s pulled the uniforms our of the garbage and sold them to a local military surplus off base.

      This was all a couple of years before the movie came out.

      I saw the movie while I was in the Crotch and stationed at Pendleton and the audience (along with myself) howled during the first have of the movie.

      Liked by 1 person

      • That’s awesome. Never having been in the military, I had no idea how reflective the movie was of real life. But when I first saw it in college, it certainly felt legit to me. Love how R. Lee Ermy was hired as a consultant and got the role by just stopping by the costume department, picking up the sergeant’s uniform and putting it on, then making all the tapes of the prep work he knew Kubrick would see of him essentially just being the character. Very smart dude. The guy who was actually cast in the role became basically a cameo.

        Love the fact that Ermy also was one of the only actors to do much improvisation on a Kubrick set. Huge swaths of dialog were nothing but him.

        I could watch the first part of that movie over and over. Once Ermy gets shot, it’s still good but not as rewatchable.


  9. I finally figured it out.

    Trump had a laser pointer and the progressives and the press are going to catch that light. Look! 3 million illegals voted. Dammit. MISSED IT!

    Meanwhile Trump is going to implement his agenda.

    Liked by 1 person

  10. Anyone interested in the dog-race aspect of the election should definitely listen to the post election forums sponsored by the Harvard School of Government. You can find them all here:

    I’ve listened to the first and last sessions so far. The last one is the one with all the fireworks that got reported in the press the other day. I’m interested in the Nate Silver section next.


  11. Have a drink today. It’s the anniversary of the end of Prohibition.

    Liked by 1 person

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