Morning Report: Awaiting the FOMC minutes 4/5/17

Vital Statistics:

Last Change
S&P Futures 2361.0 4.5
Eurostoxx Index 380.8 0.7
Oil (WTI) 51.7 0.7
US dollar index 90.5  
10 Year Govt Bond Yield 2.37%
Current Coupon Fannie Mae TBA 102.53
Current Coupon Ginnie Mae TBA 103.813
30 Year Fixed Rate Mortgage 4.07

Stocks are higher this morning on no real news. Bonds and MBS are down small.

The minutes from the FOMC meeting are coming out at 2:00 pm EST today. Investors will be focused on plans to shrink the balance sheet and also any sort of discussion about DC. Be careful locking around that time – we could see some volatility.

Richmond Fed President Jeffrey Lacker resigned yesterday for making unauthorized disclosures to a consulting firm owned by the Financial Times. Lacker was a non-voter, so it should make no difference to monetary policy.

Mortgage applications fell 1.6% last week as purchases rose 1% and refis fell 4%. Refis fell to 42.8%, the lowest since October 2008.

The ADP jobs number came in at 263,000 which means we should expect a strong employment situation report this Friday. The Street is predicting 178,000 jobs were added in March. Construction added 49k jobs while IT lost 10k. This is the third month in a row with more than 240k jobs added:

The Gallup US Job Creation index also hit a new high. The US PMI Services index fell however. The ISM Services index fell as well.

Don’t forget, we are exiting Q1, which for some reason has been a weak quarter for over a decade. If past trends hold, we should be seeing a pickup during the spring and summer.

Jamie Dimon weighed in on banking regulation in JP Morgan’s annual letter to shareholders. The system is much safer today than it was in 2008, however he argues that many of the regulations put in place were hastily drawn up and should be reviewed. He mentioned that new regulations surrounding mortgage lending have raised costs to consumers and restricted lending to people with low credit scores needlessly. Interesting comment since JP Morgan pretty much got out of the FHA business years ago.

26 Responses

  1. Mark:

    I read your link to the Georgetown Law Review article. It was very interesting, so thanks for directing me to it.

    The first thing I would note is that even the author of that article warns against attributing Bingham’s expressed understanding of the 14th to Congress as a whole. As the author points out, Bingham had a very idiosyncratic view of the Constitution to start with, one that stood in stark contrast to antebellum case law and was shared by virtually no one else, and so much of what he said needs to be read in light of that idiosyncratic view.

    I’d also say that this seems to be a case study in support of Scalia’s disdain for the notion of searching for “intent”, particularly in the congressional record. Not only were different congressmen claiming entirely different things about what the proposed amendment would do, even Bingham himself seemed at various times to claim it would do different things. Although, again, because of his rather idiosyncratic views on the Constitution as it already existed, it is sometimes difficult to flesh out just was he was saying. For instance at least some of the time Bingham was clearly including Article IV’s Comity clause when he referred to the “bill of rights”, and not the actual bill of rights as we understand them.

    Further, I think we need to distinguish between what the P&I clause does, and what the 14th as a whole does. When Bingham speaks about enforcing the bill of rights against the states, I still think the most sensible understanding is that he is speaking about the effect of the 14th taken as a whole, not simply the P&I clause standing alone. As I think I asked earlier, if he thought that incorporation was the effect of his P&I language alone, why would he then go on to redundantly incorporate the 5th amendment explicitly?

    Anyway, even assuming the most expansive understanding of Bingham’s intent with regard to the 14th, and generously reading his understanding to be that of the ratifier’s more generally, it seems to me that the most we can say is that it authorizes Congress, not the Courts, to enforce the bill of rights through legislation. Which still leaves the Court’s current doctrine out in the cold.


  2. I’d say the level of self delusion that this book represents rivals anything that the Republicans have come up with to explain their past losses:

    “The Deification of Hillary Clinton
    Susan Bordo’s new book asks us to accept a version of Clinton that doesn’t exist.
    By Sarah Jones
    April 5, 2017”


    • jnc:

      I’d say the level of self delusion that this book represents…

      One line, about halfway through, tells us everything we need to know.

      Bordo, who teaches gender studies…


  3. I view this as one of the truly great features of capitalism:

    “If only everyone would first identify as a consumer, reasons Pepsi, then they wouldn’t have to see one another as black and white, man or woman, citizen or immigrant.”


  4. With all this talk about The Americans, this is your periodic reminder that I’m a Ruskie spy.


  5. The judiciary is dispensing with the pretense:

    “I would prefer to see us acknowledge openly that today we, who are judges rather than members of Congress, are imposing on a half-century-old statute a meaning of “sex discrimination” that the Congress that enacted it would not have accepted. This is something courts do fairly frequently to avoid statutory obsolescence and concomitantly to avoid placing the entire burden of updating old statutes on the legislative branch. We should not leave the impression that we are merely the obedient servants of the 88th Congress (1963–1965), carrying out their wishes. We are not. We are taking advantage of what the last half century has taught.”


    • jnc:

      The judiciary is dispensing with the pretense:

      Richard Posner is the author. He openly dispensed with the pretense of actually following the law quite some time ago, I think. Exactly the kind of judge that is bringing well-earned contempt upon the judiciary.


      • The ones that lie about and pretend that they aren’t doing exactly that are worse in my opinion.


        • jnc:

          The ones that lie about and pretend that they aren’t doing exactly that are worse in my opinion.

          That’s a fair point, and I have probably even said similar things in the past, but I sometimes wonder. I am reminded of the old adage that hypocrisy is a tribute that vice pays to virtue. At least the hypocrite actually recognizes what is in fact virtuous, and might on occasion feel pangs of guilt driving him to do the right thing. The guy who openly promotes disdain for virtue could be more dangerous.

          Who is worse, the secret smoker who says that smoking is bad for you, or the open smoker who tells you smoking will improve your health?


        • ” At least the hypocrite actually recognizes what is in fact virtuous, and might on occasion feel pangs of guilt driving him to do the right thing. ”

          No, in this case they simply add insulting your intelligence to injury.


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