Morning Report: How much does Trump change the Fed’s forecasts 12/12/16

Vital Statistics:

Last Change
S&P Futures 2260.0 0.0
Eurostoxx Index 354.0 -1.4
Oil (WTI) 53.5 2.0
US dollar index 91.6 -0.3
10 Year Govt Bond Yield 2.50%
Current Coupon Fannie Mae TBA 103
Current Coupon Ginnie Mae TBA 104
30 Year Fixed Rate Mortgage 4.08

 

Markets are flat this morning as oil rallies. Bonds and MBS are down,
Slow news day with no economic data this morning. The big event this week will be the FOMC meeting on Tuesday and Wednesday. A 25 basis point hike in the Fed Funds rate is baked in the cake – the market will however focus like a laser on the dot plot and how many hikes are expected for 2017.
In terms of economic forecasting, The Fed was almost certainly assigning a 100% probability of Hillary winning in their September forecasts. Trump’s expected policies (especially a big stimulus plan) would probably cause those forecasts to change. If anything, I would expect the Fed to begin moving the dot graph up, which would be bond bearish. That said, we have had a huge sell-off already, so the move has largely been made.
Overseas, Chinese markets got slammed overnight. The other elephant in the room for the Fed will be the fallout in global markets if China implodes. Luckily, with their capital controls, most of the carnage should be limited to China itself, however any big bust would still have major repercussions for the US dollar, US sovereign debt, and real estate.
Over the weekend, Donald Trump floated Exxon-Mobil CEO Rex Tillerson for Secretary of State, and Texas Governor Rick Perry for DOE. Wouldn’t those choices be better reversed? Donald Trump likes Tillerson because he wants “good negotiators” for the role of State. Separately, Goldman executive Gary Cohn is looking like the nominee for the National Economic Council.

67 Responses

  1. Can somebody explain to me how the Russians “interfered” with the election?

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  2. Vox decides that if Trump does it, that means that stimulus doesn’t work.

    http://www.vox.com/policy-and-politics/2016/12/12/13878864/donald-trump-stimulus

    Liked by 1 person

  3. Worth a read:

    “Anonymous Leaks to the WashPost About the CIA’s Russia Beliefs Are No Substitute for Evidence
    Glenn Greenwald

    December 10 2016, 7:11 a.m.”

    https://theintercept.com/2016/12/10/anonymous-leaks-to-the-washpost-about-the-cias-russia-beliefs-are-no-substitute-for-evidence/

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    • Sure they are. News is now post-truth. It’s a war between the small, independent fake news outlets and the much larger and fancier fake news outlets. Anonymous leaks—or heck, just saying you have anonymous leaks about stuff that you, as a smart reporter, know are true anyway even if you don’t have a source for it—that’s all you need! It’s 2016!

      I kind of feel that the MSM is trying far too hard to cater to 25% of the population, to the point of obliterating any actual journalistic mission they might have once sort of had. And half that 25% aren’t going to care because the MSM is too corporate and right-wing for them, and they go straight to AlterNet and DailyKos for the real scoop.

      We’ll see how it works out. I expect the next few sets of polling data on Trump’s favorable/unfavorables should be very revealing as to how this strategy is working for them.

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  4. Trump is going after obama’s “social cost of carbon” analysis which upends the cost-benefit analysis of regulation.

    http://www.slate.com/blogs/the_slatest/2016/12/09/trump_asks_energy_department_for_list_of_civil_service_employees_who_helped.html

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  5. watch trump somehow the exchanges, but somehow expand entitlements.

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  6. Focusing on things like this rather than on run off Senate races shows that the Democrats have learned nothing.

    “Hillary Clinton’s campaign wants the Electoral College briefed on Russian interference
    Updated by Jeff Stein
    Dec 12, 2016, 1:40pm EST ”

    http://www.vox.com/policy-and-politics/2016/12/12/13922454/hillary-clinton-electors-podesta

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  7. In reference to John “Effing” Kerry receiving France’s highest honor.

    Liked by 1 person

  8. The meltdown has gone way past 11.

    “Welcome to your deep-state future
    By Chris Ladd
    December 11, 2016”

    http://politicalorphans.com/welcome-to-your-deep-state-future/

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    • Snort. “Lethal standoff”

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    • The women of The View recently revealed that people are already getting letters from their doctors and/or insurance companies saying they are losing their insurance or can no longer be treated. Because Trump has made it happen, somehow. Even though Obama is still the president.

      Sounds legit.

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      • KW:

        The women of The View recently revealed that people are already getting letters from their doctors and/or insurance companies saying they are losing their insurance or can no longer be treated.

        I heard that same clip on No Agenda. I am convinced that the only reason Whoopi Goldberg is on the show is to make sure Joy Behar can’t be labelled the dumbest person on television.

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        • Yup. I depend on NA to get the scoop on what’s going on on The View. Even when I get to the gym when it’s on, there’s no subtitling and I don’t listen to the TV audio, so I can’t tell what they are saying.

          What I will say about The View is I expect them to be detached from reality, like I expect most celebrities to be detached from reality. I don’t expect Kim Kardashian to come up with an accurate policy critique of Paul Ryan’s medicare voucher plan . . . or anything else. Similarly, I expect whatever they say to have almost nothing to do with reality.

          What’s going on in so much of the MSM right now so resembles what’s being said on The View, however, that it’s almost shocking to me. And you don’t have to be a brainiac to pick up on the contradictions and logical fallacies. It’s becoming as easy to identify as the WTF that comes out of the people on The View. If I was going to craft a strategy to make almost the whole of the mainstream media alienate all but a small core audience so they can get ratings and circulation rates that match that of Air America, apparently I could not come up with a better one than the election of Trump.

          I’ve never been a “this is the end of the Democrats” or “this is the end of the Republicans” are “this is the end of liberalism” . . . because it never is. Although liberalism is practically dead, IMHO, supplanted in the political and activism (and now media) spheres with pure “history is dead” progressivism. The remaining classical liberals and small-government conservatives should be given an exhibit somewhere, to commemorate their historical role.

          But the media is in such a frenzy of self-immolation I think it’s going to do itself a lot of damage. In terms of revenue and influence, it’s going to come out the other end of this significantly smaller and less powerful and more fractured. And not because Trump did anything . . . well, anything other than drive them crazy.

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    • If the Electoral College performs its constitutional role and denies Trump the Presidency

      Yeah. A regular constitutional expert, there.

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  9. “Wouldn’t those choices be better reversed?”

    No. If Tillerson can get by Congress, he is smart, tough, and capable. I don’t know if he is a diplomat, or has that in him, but someone else can do the diplomacy if Tillerson is calling the plays, which he would be doing, the next POTUS notwithstanding.

    Perry could be a figurehead Cabinet member, but he offers nothing in the way of independence or management ability. He is good at retail politics.

    If going outside the political/diplomatic/military box for SecState would ever work I think it could with someone as capable as Tillerson. But he will have to get by the perception that he would act as if “what’s good for Exxon is good for America.”

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  10. The left seems to have no qualms with using the Russians to influence an election:

    http://www.forbes.com/2009/08/27/ted-kennedy-soviet-union-ronald-reagan-opinions-columnists-peter-robinson.html

    Liked by 1 person

  11. A few random questions to ponder:

    With regard to Russia “influencing” the US election, who here believes that this would be the first time a foreign government has taken an interest in a US election, and taken steps to assist the side that it prefers?

    Should Britons be troubled that Obama tried to “influence” the Brexit vote back in April? Should Germans be troubled hat he basically endorsed Angela Merkel in her re-election bid?

    Is troubling information about a candidate less troubling if it gets uncovered and publicized by Russian spies rather than NYT reporters?

    Should we be concerned about illegal Russian hacking of a US institution for its own sake, or primarily because of the motivation for the hacking, and the use to which the information gleaned was put?

    Does it matter whether Russia did this to aid Trump (as the NYT claims in the lede to its article on the issue) or if it did this simply to “disrupt the campaign and undercut confidence in the integrity of the vote” (as the NYT claims in the 9th paragraph of its article)?

    If undercutting confidence in the integrity of the vote is a troublesome activity, should be we troubled now by the current efforts of HRC, through her surrogates (John Podesta, the NYT, and the WaPo) to do exactly that?

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    • Another question:

      Which is more troubling: When a US election in influenced by a foreign player revealing truths about a candidate, or when a US election is influenced by a domestic player propagating lies about a candidate?

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    • I used to ask over at PL if Mark Felt’s motivations for talking to the WaPo should have been revealed to their readers and was roundly mocked.

      I guess motivations do matter.

      Liked by 1 person

    • who here believes that this would be the first time a foreign government has taken an interest in a US election, and taken steps to assist the side that it prefers?

      This is not the first time Russia has done it. Or the 23rd. Assuming what is being discussed was actually the Russian state, which I remain dubious about. Which is not to say Russia hasn’t tried to influence elections, but since the Soviet era Russia has had a far superior strategy and there’s no reason to think it’s abandoned it: get people in the government. In the agencies, in the bureaucracy, in the house and senate. Likely something much more like this strategy continues. There are lots of other explanations for WikiLeaks, which most of the press covering this continues to obfuscate, not the least of which is contractors in Russia or independent actors (like those in Macedonia) who have financial goals as well as a vendetta against HRC.

      It’s suddenly a huge problem because it’s Trump. From what I can tell (it’s not always clear) the leaked consensus of “17 intelligence agencies” (why do we need 17?) seems to be that Russia has a long history of attempting to hack us (like, really hack us) and of attempting to influence elections and the US government. Due mostly to the email release—which, let’s be clear, is hardly a hack that requires a well-resources state actor to pull off—all this is being thrown at Trump.

      They want to delegitimize because they are under what I suspect is a very wrong impression: that they can delegitimize this guy with stuff that would destroy a normal politician. The Russian “hack”, his joke about urging Russia to hack her emails, that huge gap between electoral and popular vote, his seemingly impulsive tweeting . . . I think the “hack” story is shaping up to be a big piece of the delegitimization strategy, but I also think that strategy is going to fail. This dude is truly made of Teflon and the way they are making the case is not going to be compelling except to people who already hate Trump.

      But the media still can’t accept how distrusted they are and how biased they are perceived by everybody except partisan Democrats (while I expect they are all in on the Russia story, hardcore leftists don’t trust the media any more than right wingers—they’ve basically got the people who feel themselves to primarily be Democrats in their corner). So their approach to the story is pretty much doomed.

      Does it matter whether Russia did this to aid Trump (as the NYT claims in the lede to its article on the issue) or if it did this simply to “disrupt the campaign and undercut confidence in the integrity of the vote” (as the NYT claims in the 9th paragraph of its article)?

      I’m still dubious it’s the Russian state. If it wasn’t being propagandized the way it has been by the press, I’d be more open to the idea. But if this is a legitimate story, the way they’ve been pushing it simply wouldn’t be necessary. They may release compelling forensic data that suggests it was the Russian government, but there are hundreds of thousands if not millions of independent hackers in Russia who will not ever get in trouble for hacking the US . . . so trying to suggest what has, thus far, been hacking of a nature that almost anyone can do (Podesta’s email was hacked with a lame phishing scheme) is totally, definitely the Russian government is a stretch.

      But assuming it’s the Russian government, it could have been a tit-for-tat, revenge, a message to incoming president HRC, a gift to Trump, just to show they could do it . . . who knows. For posterity? This stuff that might otherwise be lost to the sands of time is now part of the permanent record, and it’s very informative as to how government and campaigns work in the modern era.

      Should Britons be troubled that Obama tried to “influence” the Brexit vote back in April? Should Germans be troubled hat he basically endorsed Angela Merkel in her re-election bid?

      I think implied endorsements are different. It would be more like North Korea’s endorsement of Trump. Meme-fodder, but not much more. If it came out we hacked Merkel’s opponents email, then it would be different. But domestically we’d have plausible deniability, I assume, and insist that we had nothing to do with it.

      More comparable would be the time that a “vacationing couple” just happened to be tuning their analog cell phone transceiver while visiting DC (and had it hooked up to to a tape recorder, like you do) and eavesdropped on a Newt Gingrich phone call, recorded it, and then released it to the press, who then in turn published it.

      As you might recall, the press didn’t seem to be concerned about random people recording the phone conversations of politicians in DC.

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  12. Ameicans should have cared more about Mark Felt’s Motivation (pissed at Nixon for not giving him the FBI Directorship) than the substance of what he said about Nixon’s activities.

    http://hotair.com/archives/2016/12/13/obama-america-should-have-cared-more-about-russian-meddling-than-the-substance-of-the-democrats-hacked-emails/

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    • Alternatively, America is held hostage by the ocean coastal states.

      These descriptions are incredibly stupid and divisive, and in the case of Boston-Hollywood liberal prejudices, dismissive of all others as the hoi polloi.

      I am so much more interested in issues/problems, and creative/cheap solutions, than in “the trouble with liberals” or “the trouble with conservatives” that I get tired of whining “social commentary”.

      I think I am going to write the Congressional delegation of Texas about how they should expand the size of Congress. We have talked about this here before and I think Scott wanted to get very small population CDs, like the levels of 1796 [50K per District?] I was thinking along the lines of 500K per district.
      Ideas?

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      • @markinaustin: “I am so much more interested in issues/problems, and creative/cheap solutions, than in “the trouble with liberals” or “the trouble with conservatives” that I get tired of whining “social commentary”.”

        You and me both, sister. I can find no value in that style of analysis. It’s purely tribal partisanship that puts you in the good group and those others in the bad group. Ergo, anything they like is bad, and anything your side likes is good. I also think it biases us towards misunderstanding causes—thus, why so many people behave as if the president single-handedly controls the economy, and their personal happiness.

        Anyone who cries because of who gets elected president in the US has no understanding of civics, and has no idea how the country functions, politically or economically. Ah, well. I don’t think it’s going to change.

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        • We may have the first recommended solution for foreign hacking in sensitive areas. Apparently the FBI called the DNC very early on to tell them there were telltale signs they had been hacked, and probably by Russkies. But when the IT guy got the phone message from the receptionist he pretty much blew it off, because fake phone calls.

          Pay freaking attention when the FBI warns you and at least call them back to verify, Idiot.

          Fewer idiots is always a good solution.

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        • mark:

          But when the IT guy got the phone message from the receptionist he pretty much blew it off, because fake phone calls.

          I read that they dismissed the FBI’s offer to help them because it would have required allowing the FBI to see some of their e-mails, and they didn’t want the FBI to have access to sensitive information.

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        • Was the RNC hacked? Priebus denies it.

          Edit: I mean hacked beyond routine US Government snooping.

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        • McWing:

          Was the RNC hacked? Priebus denies it.

          I don’t know, but I would like to. Priebus says that certain individuals were hacked, but not the RNC as an organization. The NYT article says different, based on anonymous CIA sources.

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        • I love how the left is now citing the CIA as an unimpeachable source.

          The CIA.

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        • A good example of how the media turns speculation into accepted fact. In its report on the FBI informing the DNC that it had been hacked, the NYT reports in the 5th paragraph:

          It was the cryptic first sign of a cyberespionage and information-warfare campaign devised to disrupt the 2016 presidential election, the first such attempt by a foreign power in American history. What started as an information-gathering operation, intelligence officials believe, ultimately morphed into an effort to harm one candidate, Hillary Clinton, and tip the election to her opponent, Donald J. Trump.

          First, there is no way that it can be asserted with certainty that this is the first ever attempt by a foreign power to “disrupt” a US election. For all we know they have been “attempting” to do so for years, and have simply failed.

          But more importantly, note how what began in a previous article as nothing but an unverified assertion of an anonymous source within the CIA has now been repeated as known and uncontested fact, with none of the caveats or qualifications: the Russians were trying to “tip” the election to Trump.

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        • Because they are saying what everyone on the left knows is true. Anything that points to Donald Trump being illegitimate is inherently true.

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        • Not to be overly critical, but how do we know those anonymous CIA sources are actually sources? Or with the CIA? Or revealing facts, rather than acting as a source of disinformation, as the CIA frequently has? I would think both groups have been hacked at consistently, and neither group seems collectively technologically-aware enough to fully avoid being compromised.

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  13. Uh…

    Yeah, back before that cocksucker cheated on his taxes, before then is when I respected him.

    No more though.

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  14. This is why I love DailyKos and Progressivism.

    http://m.dailykos.com/story/2016/12/12/1610198/-Be-happy-for-coal-miners-losing-their-health-insurance-They-re-getting-exactly-what-they-voted-for

    I do share the sentiment of wanting colluders to pay for their actions however.

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  15. Of interest.

    Like

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