Morning Report: Blowout ADP number 2/1/17

Vital Statistics:

Last Change
S&P Futures 2281.5 7.0
Eurostoxx Index 364.3 4.0
Oil (WTI) 53.3 0.5
US dollar index 90.7 0.2
10 Year Govt Bond Yield 2.49%
Current Coupon Fannie Mae TBA 102.1
Current Coupon Ginnie Mae TBA 103.2
30 Year Fixed Rate Mortgage 4.16

Stocks are higher this morning after a good ADP number. Bonds and MBS are down.

The private sector added 246,000 jobs in January, according to the ADP Employment Survey. This is the highest number since June 2016. We saw strong growth in construction jobs and manufacturing, while finance was flat and IT fell. The Street is looking for a 175k nonfarm payrolls in Friday’s report. The ADP number hasn’t been a great predictor of the BLS number for a while, so don’t read too much into it. While strong, this number will probably not change anything with respect to this afternoon’s Fed decision, which comes out at 2:00 pm EST.

Mortgage Applications fell 3.2% last week as purchases fell 6% and refis fell 1%, according to the MBA. The average rate for a 30 year fixed rate mortgage rose 4 basis points. Refis fell below 50% for the first time since 2015.

More evidence that the manufacturing sector is turning around: The ISM Manufacturing index hit a 2 year high in December. Input costs rose to a 5.5 year high, which is spooking the bond market a little this morning.

Construction spending fell 0.2% in December, missing expectations. It is up 4.2% YOY. Residential construction rose 0.4% and is up 3,6% YOY.

Donald Trump nominated Colorado federal appeals court judge Neil Gorsuch to the Supreme Court yesterday to replace Anonin Scalia who died last year. Democrats are vowing to filibuster in retaliation for the treatment of Obama’s nominee Merrick Garland.

Distressed sales fell in October, according to CoreLogic and are now at the lowest levels since 2007. Cash sales came in at 32%, which is still elevated compared to pre-crisis levels. Normalcy is around 25% or so.

The REO-to-Rental trade worked out for Blackstone, culminating in the IPO of Invitation Homes, which raised $1.54 billion in an IPO yesterday. The deal was priced at $20 a share, within the $18-$21 range. The stock begins trading today under the symbol INVH.

Should homebuyers wait until spring to purchase a home? It turns out the best months to purchase are January and February. Less competition means bigger discounts to the asking price.

49 Responses

  1. Worth a read:

    “Matt Taibbi on Donald Trump’s strange appeal
    “He’s what a lot of Americans would be if they had a billion dollars.”
    Updated by Sean Illing
    Feb 1, 2017, 9:30am EST ”

    http://www.vox.com/conversations/2017/2/1/14412450/donald-trump-matt-taibbi-elections-2016-hillary-clinton-media

    Liked by 1 person

    • Loose shoes, tight pussy and a warm place to shit?

      Like

    • jnc:

      Taibbi: Again, you have all these people on the progressive side asking themselves, “How can all these Trump voters not be thinking about the reality of what a Trump presidency would look like?” And it just reflects a total misunderstanding of the thought process on the other side. This is about living from second to second, and they just wanted that rush that they were going to get when they saw the looks on our faces when Trump got elected.

      The reality of what comes next is totally secondary.

      Taibbi is right that the left doesn’t understand the thinking on the other side, but I don’t think Taibbi understands it any better. He still suffers from the typical leftist condescension.

      Like

      • Well, I’d distinguish between Trump voters and conservatives as too.

        But I do agree with him that a large part of Trump’s appeal was the ability to send a Fuck You to the “establishment”, broadly defined.

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        • jnc:

          But I do agree with him that a large part of Trump’s appeal was the ability to send a Fuck You to the “establishment”, broadly defined.

          I agree, but I don't think that it was about living from second to second, ie the absence of any consideration for what comes next. I think a lot of the appeal to finally sending a Fuck You to the establishment was precisely what might come next.

          Liked by 1 person

        • the theme is that, well, they just wanted the fun of it. they don’t really want what his doing.

          the idea of turning around people form Yemen, etc. yeah, i think they do want that.

          Like

      • @scottc1: “Taibbi is right that the left doesn’t understand the thinking on the other side, but I don’t think Taibbi understands it any better. He still suffers from the typical leftist condescension.”

        And it’s not hard. Make some conservative “friends” on Facebook and read their posts. They think government is corrupt, that DC needs an enema (in this case, in the form of Trump) that terrorism, specifically radical Islam, is a serious threat, that the globalist don’t care about domestic jobs and barely about the domestic economy, that Obama almost destroyed the economy, and that Trump is a no-nonsense guy who gets things done and doesn’t do any sort of politically correct pandering, and ultimate that their side is write and the other side is wrong.

        This isn’t about “seeing the looks on liberals faces” (jeeze, the narcissism). That was just gravy.

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    • More Taibbi:

      If he’s just a tool for an evil racist revolutionary like Bannon…

      It’s stuff like that which just totally discredits Taibbi in my mind.

      Like

      • I don’t expect Taibbi to be objective, In fact, I like it better when bias is clearly stated.

        But I do appreciate that he said that his opinion changed about Trump’s chances when he went out and talked to actual people vs wallowing in the Putin/Comey BS that’s still the general wisdom for explaining the loss on the left.

        Like

        • jnc:

          I don’t expect Taibbi to be objective, In fact, I like it better when bias is clearly stated.

          I don’t expect him to be objective, but that he buys into and advances this caricature of Bannon discredits his judgment.

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        • One man’s caricature is another man’s unwanted realism.

          Like

        • Mich:

          One man’s caricature is another man’s unwanted realism

          Yeah, we’ve been through this already. Still waiting for you to provide any evidence that suggests the characterizations of him have any basis in reality.

          Like

        • Some one had to replace Ted Cruz as the new boggy-man.

          Also follows a loooooooooong tradition that Republican POTUS’s are stoopidand merely puppets. See:

          Rove, Karl
          Sununu, John
          Baker, Howard
          kissinger, Henry

          Like

        • Who didn’t like Howard Baker? I urged him to run for POTUS [by letter, not in person].

          I thought everyone liked him. That may have been short sighted on my part…

          Addendum: Then again, I was such an early donor to Pete Wilson for POTUS that when he got out of the R race for the nomination he refunded my $100.

          Like

        • It’s not that he wasn’t liked, it’s that the dominant media narrative is that ALL Republican POTUS’s are stupid.

          As for Hank, he gets “tarred” by the left for the Southern Strategy. Complete bullshit.

          I forgot how to add Jim Baker.

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        • Dang, meant Lee Atwater.

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        • I’m just taking him at his own words. He’s a hateful, hateful person.

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        • ‘Goose, I agree with you that Bannon is no good.

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        • Mark:

          ‘Goose, I agree with you that Bannon is no good.

          Why do you think so?

          Like

        • Why do you think so?

          Do you think he is good? Do you think Michael Moore would be “good” as a close advisor to the POTUS and a member of the National Security Council? I don’t. That’s not a good place for a polemicist.

          Beyond that, I read articles in Foreign Policy and The Economist and in other places that suggests he is infected with hubris and an inability to compromise. See for example:

          http://foreignpolicy.com/2017/01/30/steve-bannon-is-making-sure-theres-no-white-house-paper-trail-trump-president/

          https://www.theatlantic.com/politics/archive/2016/08/the-radical-anti-conservatism-of-stephen-bannon/496796/

          Do you think he is a good choice for the NSC?

          Like

        • I would not be surprised if ‘Goose doesn’t like the words linked to in this USA Today story.

          In dozens of hours of audio recordings reviewed by USA TODAY of his Breitbart News Daily radio show in 2015 and 2016, Bannon told his listeners that the United States and the Western world are engaged in a “global existential war”
          and he entertained claims that a “fifth column” of Islamist sympathizers had infiltrated the U.S. government and news media. Those recordings, preserved online, offer an often unfiltered window into the thinking of Trump’s interview-averse senior adviser.

          link: https://soundcloud.com/breitbart/breitbart-news-daily-frank-gaffney-june-29-2016

          Sounds like misguided paranoia about Islam.

          There is an issue – which is Saudi funded fundamentalist Muslim schools around the world, including in North America. However it is not close to real to think Islamic terrorists are an existential threat to the west.

          Like

        • George, when your friends say

          Bannon is a deeply thoughtful pugilist who does not care what you think.

          You probably have more sycophants than friends.

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        • I understand, thank you.

          Given today’s prevalence of fake news, when the MSM’s narrative labels a prominent member of a regime they’ve decided to be opposition to as, say, an anti-Semite and authoritarian, you should assume the opposite is true.

          Like

        • “Given today’s prevalence of fake news, when the MSM’s narrative labels a prominent member of a regime they’ve decided to be opposition to as, say, an anti-Semite and authoritarian, you should assume the opposite is true.”

          My advice would be to observe for yourself. The MSM cannot be trusted to be truthful, it’s true, but they can also not be trusted to be consistent. At best, they can be used as indicators that something is going on in the general category they are reporting on (unless, of course, it’s an effort to ignore something going on somewhere else).

          Like

        • There are hundreds of radio hours the Washington Post and others are scouring right now for more shocking things Bannon has said. They reported recently that he said something about going to war with China on the radio so now the Trump administration is supposed to be going to war with China.

          That quote from the article pretty much epitomizes the post-Trump news reporting.

          Like

        • Dunno. I don’t know if we’re really in a “global existential war” in the generally understood sense of the term, but “fifth column” as a metaphor for Islamist sympathizers interested in undermining the west seems like a credible threat to me. The Gulen schools potentially being an example, as well as most media events engineered by CAIR. The degree to which that poses an existential threat, I think, is overblown. But I also don’t think being concerned about such things makes him a Nazi, or crazy.

          Like

        • From the Atlantic piece:

          In that sense, Bannon is radically anti-conservative, with no apparent regard for custom or continuity or prudence or the need to fear and restrain populist passions.

          I have a hard time imagining that we’re under any kind of threat of “too much populism” at this point in time in history. I’m not sure populist passions are in any need of restraining, and I could think of lots of things, like worrying over the need to “restrain civil rights passions” or “social justice passions” that illustrate the problem with the voiced concern. It’s a kind of “we need to do something about these people who want jobs, want a decent paycheck, like their country, like their neighborhoods, and want local autonomy and the ability to run their own lives”.

          If this is a forward-moving strategy, I don’t think the BernieBros, for example, are going to be sold on the need to restrain populism.

          “He has allied with Donald Trump against Tea Party politicians he formerly lauded and conservative intellectuals like George Will and Charles Krauthammer, who he once praised, because for him, most on the right were never allies to engage in a cautious, constructive project”

          Who can blame him? What has engaging in “caution, constructive” projects actually accomplished for the right? I’m not saying it’s impossible, at all, but the GOP the movement conservatives thus far haven’t accomplished much. War in Iraq. Good job!

          Internally, he said, Breitbart calls itself “The Fight Club,” a reference to a novel-turned-Hollywood-blockbuster about a mentally disturbed white-collar worker. He comes to lead a group of unfulfilled men with aggression issues. They start out fighting each other in basements, morph into a cult, and carry off an act of domestic terrorism. The lead character, who ultimately realizes in horror that his split-personality delusions have led him to become a monster, decides to kill himself.

          This is an extrapolation fallacy. Just because someone refers to something by the name of the movie, doesn’t mean they consider the movie a Bible or are attempting to recreate the movie in toto. If you call someone “pooh bear”, it doesn’t mean they are literally a stuffed animal or eat nothing but honey.

          The best argument in the article against Bannon is his earlier complain that Obama wasn’t doing enough in the Ukraine and should be sending troops in to start a war with Russia. I’m guessing, given Trump is president, that isn’t going to come to pass, and thank god for that.

          But the Trumpist movement that Bannon fueled and later joined has been so thoughtless, in its zeal to wage war on its enemy, that it alienated libertarians; divided the Tea Party; stripped the principles that motivate limited government conservatives from the core of the Republican Party; and put America in the unenviable position of possibly handing off its foreign policy and nuclear arsenal to a geopolitically ignorant, erratic, thin-skinned man who picks needless fights and is manifestly unqualified to command a campaign staff, never mind a military.

          And yet, they somehow won the election. And Trump-regreters thus far seem to be easily replaced by NeverTrumpers thinking they should have voted for him. Or perhaps I’m elevating my own importance. 😉

          Like

        • That being said, I don’t know if he’s a good or bad choice. I’m sure I’ll be able to figure it out in retrospect.

          Like

        • Mark:

          Do you think he is good?

          I don’t know very much about him at all, and certainly not enough to know whether he is “good” or “bad”. I would like to know more, but every time I hear someone call him evil, or a racist or a white nationalist and I ask them why they think these things, they are unable to give any concrete reason. It is just something they just “know” and if I don’t just know it myself then I am not paying attention.

          Do you think Michael Moore would be “good” as a close advisor to the POTUS and a member of the National Security Council?

          The question isn’t simply whether he would be a good advisor to the president. This thread began with Taibbi’s characterization of Brannon as an “evil racist revolutionary” and Mich’s suggestion that this characterization represents an “unwanted reality”. And in the very comment of Mich’s that you were agreeing with she claimed that he is a “hateful, hateful person.”

          So the question isn’t why you think he is isn’t a good advisor the the president, it is what reason do you have to think he is a “hateful, hateful person?”

          Do you think he is a good choice for the NSC?

          I have literally no idea.

          Liked by 1 person

        • Mich:

          I’m just taking him at his own words.

          Which words are those?

          Liked by 1 person

        • @michigoose: “One man’s caricature is another man’s unwanted realism.”

          I’m going to go with “it’s mostly caricature” based on Occam’s razor. None of the evidence available would likely be considered untainted in a court of law (or some controlled environment where we try to objective parse fact).

          People are emotionally invested in there being an Evil Svengali behind the presidential puppet. It’s a long-established and deeply held belief. He made Breitbart into a successful right-wing version of HuffPo (or, some days, WaPo). He looks like he could have walked off the street. He’s definitely a nationalist in an era of globalism. So, lots of motivation and reasons to caricature. When there are so many people out their anxious to vilify someone, while not surprising that it turns out the someone is a villain (in the opposition’s analysis), one should be suspicious of the accuracy of the assertion. It could potentially be biased.

          Context matters. Missing data matters. Whether or not the reportage or spin is embellished or complete fictionalized matters, and it’s often hard to tell without devoting a lot more time to it than most people do.I know a lot of people who rely primarily on Vox and Facebook memes.

          I don’t know Bannon, and he hasn’t spent a lot of time in the spotlight. What I’ve read is a mixed bag that suggests he can be offensive or rude. He may be arrogant, and his being a raging a$$h0le is certainly a possibility. But I’m going to keep what I think based on facts, as are verifiable.

          From what I’ve seen, there’s zero evidence he’s a white supremacist or a Nazi. I ask for evidence, nothing is presented. I had one guy send me 8 links, some of which called him a white supremacist but none of which presented any evidence that conclusion might have been based on, which seems like an odd omission.

          Part of the problem, too, I think, is that he dresses and grooms like a porno director. That really doesn’t help.

          Like

      • @scottc1: “If he’s just a tool for an evil racist revolutionary like Bannon…
        It’s stuff like that which just totally discredits Taibbi in my mind.”

        Because Brietbart did a flattering piece of Richard Spencer once upon a time, most folks on the left have completely conflated Richard Spencer and Bannon, and emotionally feel he’s the same person.

        Like

  2. Good piece. All the media should take this advice.

    “Covering Trump the Reuters Way
    In a message to staff today, Reuters Editor-in-Chief Steve Adler wrote about covering President Trump the Reuters way:”

    http://www.reuters.com/article/rpb-adlertrump-idUSKBN15F276

    Liked by 1 person

    • “–Don’t pick unnecessary fights or make the story about us. We may care about the inside baseball but the public generally doesn’t and might not be on our side even if it did.

      pay the man. this is so obvious to me, but what i do i know. [looks a BA Journalism degree] oh right, something.

      Liked by 1 person

  3. Really good Supreme Court nominee, potentially a better proponent of originalism than Scalia.

    You know that I would not be an “originalist” were I on the Court, but I would look to the strength of the originalist argument on any issue. Sometimes originalist arguments seem far stronger to me than others – it’s fact dependent, based on how close we can imagine the facts of the case fit what was apparent intent. However, “originalism” can suffer when it is over-relied upon, because the framers were deeply divided on many philosophical fronts and left a lot of doors open, and because there are circumstances that the framers could not have foreseen. That’s my opinion, anyway.

    Our next Justice has explained his opinions so well and so persuasively that when he uses original intent it doesn’t seems to be an excuse for his personal views, but rather a well reasoned argument about the clarity of the framing. As you know, I thought Scalia was far better on that front earlier in his career than he was for say the last ten years.

    I think it will be a mistake for the Ds to try to force the nuclear option on this one. They will, of course, lose, and while Garland, IMHO, deserved much better, tit-for-tat is not exactly policy genius.

    Liked by 1 person

  4. Feels a bit Strawmannish to me, but I still like it.

    Liked by 1 person

  5. Like

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