Morning Report: Corporate tax reform 12/9/16

Vital Statistics:

Last Change
S&P Futures 2250.0 2.0
Eurostoxx Index 354.2 2.0
Oil (WTI) 51.3 0.4
US dollar index 91.8 0.4
10 Year Govt Bond Yield 2.41%
Current Coupon Fannie Mae TBA 103
Current Coupon Ginnie Mae TBA 104
30 Year Fixed Rate Mortgage 4.08


Stocks are higher this morning on no real news. Bonds and MBS are flat.
Slow news day.
Consumer sentiment jumped in November from 94 to 98.
Negative equity fell 0.8% from Q2 to Q3, according to CoreLogic. Currently, 8.4% of all mortgaged homes have negative equity, and another 1.6% are near negative equity. In total, 14.6% of all mortgaged homes in the US have less than 20% equity. Home price appreciation has been one driver of this, as well as borrowers who have been switching to 15 year mortgages which pay down principal faster. Over the past year, the average homeowner has picked up $12,500 in home equity.
One of the best chances for bipartisanship next year is corporate tax reform. While Republicans and Democrats disagree on how much revenue corporate taxes should bring in, most everyone agrees that our current system isn’t working. Over the past 16 years, virtually all of our competitors cut corporate taxes, however the US has maintained its 35% rate. You can see how much the market has shifted over the past 16 years in the chart below. The new plan would eliminate the incentives that companies use to shift revenues and costs to various jurisdictions in order to minimize taxes. Rates would fall, however interest would no longer be deductible.

A notable bond bear believes the tipping point in the bond market is 3% yields on the 10-year. At yields above that, he believes the stock market and the bond market would suffer a vicious sell-off.

40 Responses

  1. Day 31

    their despair reminds me of this:

    Liked by 1 person

  2. If Black People Said Things White People So Often Do . . .

    It’s funny. Something it doesn’t make clear but is pretty obvious to me is that the white people they are making fun of are almost certainly northern liberals. I kind of know what they are referring to, but when you grow up in a majority African-American city, you kinda know: don’t do that. Don’t do any of that.

    Also from Salon, more left-of-center delusion:

    There is no sign this is happening. Not in any remotely meaningful way. There’s no indication Trumpgrets are any bigger that Obamagrets or Bushgrets or even Clintongrets, back in the day. Every president starts picking people or doing or saying things the people who just voted for them don’t like. Now, with social media, it’s easy to find those people. But it doesn’t make it remotely significant.


    Recent polls have his favorables going up and his unfavorables going down.

    Bloomberg has his favorables at 50 and a +7 spread, Reuters at 52 and a +4 spread. Polls from around election day and previous have his favorables at numbers like 33 and a -26 spread (NCB News/Wash Post) and 35 with a -27 spread (Gallup).

    But because they want to believe that the people who voted for Trump are feeling sorry they didn’t vote for Clinton, they just, you know, say it. They want a narrative where the entire country is watching, appalled, as Trump destroys the country.

    Even though the trends thus far (though a small sample) would say the exact opposite.



    • A facebook friend, who voted for Trump, was really unhappy with his choice of Linda McMahon. Because she considers McMahon an unserious choice for the SBA and also because McMahon kicked a guy in the nuts as part of one of those wrestling scenarios (which I doubt she had a hand in writing) as some sort of grrrl power thing, and the facebook friends feels that that means McMahon is too hostile to men, to willing to play into the “man hater” narrative.

      These are the things Trump voters are regretting, by and large. Which is not exactly a “man, I wish I had voted for Hillary” thing.


  3. Yep.

    “But for now the citizens of the United States live in two separate realities.”


  4. @brentnyitray: Go Army!!!! 😀


  5. Liked by 1 person

  6. I don’t get Tillerson for State and Perry for DOE… Should be the other way around…

    Liked by 1 person

    • He’s better than a lot of them out there, but he’s out of his gourd if he thinks Warren’s message is primarily populist, or that she’d ever be a good standard bearer for the Democrats.


      • I love his unquestioning, rock-solid belief here.

        “and while he ran a campaign with blatantly racist tones, struggling non-racist whites could justify their vote on other grounds.”

        I’m fascinated by morons who accept this.


        • It’s these people:

          At the more reasonable end of the “Trump is Hitler” spectrum.

          But it also has to do with what people in his strata define as “blatantly racist tones”. That is, being opposed to illegal immigration and pointing out that illegal immigrants are often prone to criminality (I mean, they’re already breaking one law) is blatant racism. Suggesting that we should focus our domestic War on Terror on Muslims is blatantly racist, in their view.

          Also, I expect the fact that his readers will automatically dismiss him as a Hitler-apologist and a racist himself, and start attacking him in social media, if he doesn’t adequately explain that yes, he understand Trump and his voters are racist and, yes, he doesn’t like it . . . I think that enters into it, too.


    • George, I read your link and I think Hunt is correct. HRC played ID politics and missed out on even campaigning hard in PA, OH, MI, and WI, while DJT concentrated on those states and made the fears of lost jobs and lost opportunity the centerpiece of his promises.

      Also, Hunt implies the Ds would be better served by not veering into Warrenland.

      Which is the part he doesn’t get?

      Liked by 1 person

      • I was, once again, a donor to McCain’s campaign. I really have always thought well of him, even when he was sticking his foot in his mouth. Much as I have always thought well of Joe Biden, who has often stuck both feet in his mouth at once. I liked D. P. Moynihan even better, although he wasn’t always sober. I guess I have always put more stock in character than in ideology. I truly thought better of Gary Johnson than of the other nominees.

        So this may be a weakness on my part, if ideology turns out to be more important than character. I imagine Kissinger would think me incredibly naive, but he probably thinks that of everyone.

        I told all of you I would vote for Graham in the R primary if he were still active when Texas voted. And I considered Graham “too hawkish”, but that was outweighed for me by my opinion that he is a man of good character. I think I am just gonna stick with the whole character thing awhile longer.


        • Trump should be rock solid in favor of the congressional investigations into Russian cyberfucking. First, because we want to try to limit or eliminate future intrusions. Second, because opposing them plays into the hands of those of us [including me] who think he is too damned cozy with Russia.


        • mark:

          I guess I have always put more stock in character than in ideology.

          I think it is notable that your “good character” guys tend to be ideologically “moderate”. Is it possible that your judgment of character is a function of the ideological inclinations of the person you are judging? Are there any ideological hardliners that you have considered to be of “good character” and hence supported for that reason?

          I also wonder what makes a guy like John McCain of higher character in your eyes than, for example, Mitt Romney.

          (BTW, I thought you voted for Obama in 2008. Is that wrong?)


        • Scott, I had given more than $500 to McCain in 2008 and I gave nothing to BHO. Further, I thought that Sarah Palin was going to be a good VP candidate – until I didn’t. So three things happened late in the campaign. Palin seemed too dumb to be a heartbeat away, McCain seemed not to understand Paulsen and Geithner, and McCain was seemingly blinding himself to any diplomatic strategy other than intervention on a few fronts. I voted for BHO.

          I voted for him again in 2012. I did not consider him to be a clearly “better” choice than WMR, all else considered, but I did think he had helped the nation weather the financial crisis and had conducted a careful FP, with the help of Robert Gates.

          I did not think character issues entered into the races of 2000, 2004, 2008, or 2012. unfortunately, I thought 2016 pitted a woman who to me exhibited bad character from her days as a lawyer in Little Rock against a con artist of long standing. It was very clear to me that the candidate who was the only one who had climbed Mt. Everest, as one of my 7YO granddaughters told me after doing web based research in Second Grade, was superior.

          Addendum: Yes, there have been some very conservative and very liberal candidates I have thought were straight shooters. Barry Goldwater – and he was preferable on character than LBJ. It was my first election, and I was in Texas, and I voted for LBJ. I did not see LBJ’s warts then. I only saw the Civil Rights movement which I actively supported. Former Senator from Wyoming Alan Simpson. Current Senator from Oregon Ron Wyden. Orrin Hatch.

          Politically I was more inclined to moderates, of course.
          Warren Rudman. Dick Lugar. Sam Nunn. Bob Kerrey [not to be confused with John Kerry]. John Warner. Mark Warner.

          And I consider McCain and Graham to be conservatives, btw.


      • Reflexive R’s engage in blatant racism, for example, also that Hunt (and presumably most Democrats) believe that there is an overarching “best interest” argument to be made economically by people (the breathtakingly idiotic “What’s the matter with Kansas” argument). Another thing is the belief that HRC was physically capable of campaigning more than she did, I see no evidence for that. Then one has to consider the “otherizing” ways that Hunt (and most D’s) think. For example, Jesus Freak’s shouldn’t vote for Trump cause he likes pussy.

        If I recall, Reagan was divorced, had at least one gay son and prolly cheated on Jane Wyman with Nancy Davis. Again, it’s the belief that people acted out of his warped view of what motivates people.

        Liked by 1 person

    • McWing:

      Finally got around to reading the Hunt piece. This made me laugh:

      It’s easy to forget that Clinton won the popular vote

      Seems impossible to forget to me. The fact is mentioned, if not dwelt upon, prominently in nearly every post-mortem on the election that exists.


      • That is good. I didn’t focus on that (it’s not the first time I’ve seen this assertion). But who doesn’t know that Clinton won the popular vote? I hear it every day. It’s brought up, in some context, every day. The disparity was so large, I don’t think we will ever hear the end of it.

        Kind of like Krugman here:

        Another course of action, which you’ll see many in the news media taking, is to normalize the incoming administration, basically to pretend that everything is O.K.

        Yes, that’s a been a big problem, the news media “normalizing” the Trump administration.


  7. Liked by 1 person

  8. The New York Times reports today that CIA analysts based their explosive conclusion that Russia tried to swing the election to Donald Trump on “overwhelming circumstantial evidence.”

    Would this be remote acceptable if the leak was, about, say, Hillary’s ties to the Saudi’s and other dictators and their use of huge donations to the Clinton Foundation to buy influence or something?

    In such a case as this, what does “overwhelming circumstantial evidence” even mean? If true, there should be no need for “circumstantial evidence”. Forensics should be fairly conclusive. I’m not saying it’s impossible—America, usually via the CIA, as worked to manipulate election results abroad almost since it’s inception. But the disclosure with no corroborating evidence whatsoever, except the word of unnamed sources in the CIA is being accepted with a remarkable lack of skepticism by all the journalists who so desperately want it to be true.


    • Intelligence, KW, is always based on circumstantial evidence, first. Until one can find documents or gain admissions from principals it is all on the analysis of the professionals in the agencies. I don’t understand the resistance to investigating further the analysis that has been reported.


      • I imagine there will be further investigation. Resistance in the political arena is, I imagine, because for them it’s all war, all the time. Everything is a battle, and you never give an inch.

        In this case, if the case is based on circumstantial evidence, that seems a little weak to me because the nature of the accusation is one that should provide hard evidence, if it exists. Which tends to indicate the need to base it on circumstantial evidence means the hard evidence, which should be there, is missing. The anonymous leaking also strikes me as odd. If there was a compelling case there, why advance it with anonymous leaks to the press?

        Not to be skeptical of the CIAs honesty and good intentions, but I totally am. The whole thing smells fishy to me. Which is not to say it’s not right, just that the handling of it throws up red flags for me, personally.


    • ““overwhelming circumstantial evidence.””

      Sort of like WMD’s in Iraq.

      Liked by 1 person

      • I’d love to hear Nancy Pelosi’s take on the veracity of CIA intelligence re Ruskie hacking. Didn’t she once say “they lie to us all the time/”

        When did they stop lying?

        Liked by 1 person

        • Skepticism about CIA conclusions is the best reason to investigate them. All of you who are suggesting that because there is reason to be skeptical of the CIA or the other 16 intelligence services it is reasonable to ignore them are missing the point. All of you who think that the CIA has it in for DJT should welcome the investigation of these matters. All of you think the Russians might be trying to fuck with us should welcome the investigation.

          Any of you who think Putin is our friend should have your heads examined.

          I should point out that the extensive investigations of intelligence briefings by Congress before the Iraq War resulted in a split of opinions that did not deter the executive from acting on the faulty intelligence. I do not think Congressional investigations are a panacea. But they are all we have, because no one else has an opportunity to look behind the curtain.


        • What does your gut tell you they will find?


        • @markinaustin: “All of you who are suggesting that because there is reason to be skeptical of the CIA or the other 16 intelligence services it is reasonable to ignore them are missing the point.”

          I think it’s fine to investigate. I’m just saying that the press and the Democrats are presently misrepresenting the available facts, and, I think, getting their hopes up way to high. I’m not saying it should be ignored . . . at the same time, I’m not sure how these leaks actually help do anything but create a lot of white noise. And cast doubts on the conclusions, whatever they might be, whenever they might reach them.

          If there’s a clear chain of evidence, or a very likely case to be made, why start anonymous leaking that seems calibrated to create a narrative?

          I find it entirely credible that Russia tried to interfere with our elections, for whatever reasons, and sure, that should be investigated. The very low standards for reporting on this as fact is what I’m commenting on, and well as suggesting a completely circumstantial case is a red flag. There should be hard evidence.

          So far, all the evidence that is being reported on is essentially hearsay, and we rely on the credibility of the media (such as the WaPo, that recently got nailed for passing on the completely worthless blacklist of with no vetting) who tells us, with no evidence, that these anonymous sources are people who know what they are talking about.


  9. The Krug-man needs to check his privilege. Seriously, he needs to check it.

    Compare that with affluent liberals — say, my neighbors on the Upper West Side. They aren’t nearly as rich as the plutocrats that will stuff the Trump cabinet. What’s more, they vote for things that will raise their taxes and cost of living, while improving the lives of the very people who disdain them. Objectively, they’re on white workers’ side.

    But they don’t eat much fast food, because they believe it’s unhealthy and they’re watching their weight. They don’t watch much reality TV, and do listen to a lot of books on tape — or even read books the old-fashioned way. if they’re rich enough to have a second home, it’s a shabby-chic country place, not Mar-a-Lago.

    So there is a sense in which there’s a bigger cultural gulf between affluent liberals and the white working class than there is between Trumpkins and the WWC. Do the liberals sneer at the Joe Sixpacks? Actually, I’ve never heard it

    I mean, the entire piece is an exercise in absurd self-delusion and self-congratulation, but holy-moly . . . he’s never heard liberals sneer at Joe Sixpacks? What frootloopin’ planet does he live on?

    He’s worried that open-minded, if admittedly wise than the average Joe affluent liberals, might have to stoop to eating fast food to be accepted by the common man.

    Another sacrifice they have to make, of themselves, to continue to help the white working man who, for mysterious reasons that are impossible to ever comprehend, hold the Krug and his friends in such disdain. I mean, it’s like all those white working people don’t appreciate the taxes they (the affluent—never “rich” or “wealthy”—environment Krugman occupies) agree to, purely to help those yokels . . . the injustice of it.


    • “he’s never heard liberals sneer at Joe Sixpacks”

      While he’s actively doing it himself in the course of his piece.


    • The phrase “Joe SixPack” was probably a limousine liberal sneer to begin with. Does anyone know the history?


      • William Safire traced Joe Six-pack to a 1977 column in the LA Times. He also says the term six-pack itself was coined in 1952, so presumably it can’t be earlier. Although you can probably attest to the validity of that claim.


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