Morning Report: Weak retail sales and inflation 5/12/17

Vital Statistics:

Last Change
S&P Futures 2386.0 -5.0
Eurostoxx Index 394.7 0.3
Oil (WTI) 47.9 0.1
US dollar index 90.2 -0.2
10 Year Govt Bond Yield 2.36%
Current Coupon Fannie Mae TBA 102.33
Current Coupon Ginnie Mae TBA 103.78
30 Year Fixed Rate Mortgage 4.08

Stocks are lower this morning as retailer earnings disappoint. Bonds and MBS are up on weak inflation data.

Inflation remains tame according to the Consumer Price Index which rose 0.2% MOM and is up 2.2% YOY. Stripping out food and energy, it is up 0.1% MOM and 1.9% YOY. This 1.9% YOY print in the core CPI is the lowest in almost 2 years.

Retail sales came in lower than expected at 0.4% for April. The control group, which strips out volatile elements like autos, gasoline and building products rose 0.2%. Note that retail sales only captures a part of consumer spending – services are largely ignored. Overall it points to steady consumer demand – nothing great. The mall based retailers have been getting crushed however as Q1 numbers were pretty much abysmal.

Wells Fargo is contemplating doing a private label MBS deal this year. Private label MBS are backed by mortgages without government insurance, and have been mainly limited to the jumbo market since the crisis.

Rising wages helped ease affordability concerns in the first quarter. A total of 60.3% of all homes were affordable to someone earning the median income of 68,000, up from 59.9% in the fourth quarter, according to NAHB / Wells Fargo Housing Opportunity Index.

Good news for the first time homebuyer: entry level salaries for college grads are the highest in a decade.

55 Responses

  1. My Alma-fucking-Mater.

    https://heatst.com/culture-wars/u-of-arizona-is-hiring-social-justice-advocates-to-police-fellow-students-for-bias-incidents/

    When I went there they hired students (Students!!!) to write parking lot tickets. That was a job that even I wouldn’t stoop to.

    And I had a job where I literally picked feathers out of chicken shit.

    Like

    • McWing:

      My Alma-fucking-Mater.

      According to the link back to the UoA website, “This position is currently closed. We are in the process of reviewing the title and responsibilities.”

      Translation: Maybe this was the dumbest idea in the history of dumb ideas.

      Liked by 1 person

  2. “What We’re Losing in James Comey
    By BENJAMIN WITTES
    MAY 13, 2017 ”

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    • I did not read the article although I was tempted.

      These are early days. Investigations will be ongoing. A President would not be impeached by his own party unless there were more national security implications uncovered then have been made public to date.

      That he is an awful person is not grounds for impeachment and I don’t think the emoluments clause would be used for anything but a makeweight. It will have to be obstruction of justice on a massive cover-up scale.

      Suppose for the sake of argument that the cover up is of money laundering complicity with Russian oligarchs. Would Rs impeach? Maybe not. Suppose for the sake of argument that the cover up is of a shaky financial empire. No impeachment. Suppose the cover up is of Flynn brokering a campaign collusion deal with Russian government entities without direct proof of Trump’s involvement, but smell factor. I don’t know what happens then. Suppose the previous but Flynn rolls on Trump. That could do it.

      In any case, Trump’s odd behavior and the weird firing of Comey will cause the FBI to double up, I’m sure, and cause the Rs in the Senate, especially, to think they are pushed to be thorough in their investigations and in vetting the next FBI chief.

      The guy has no impulse control, and spirals. He’s the sort of witness you just let run his mouth and twitter account.

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      • That’s interesting, thank you.

        Like

      • I think it will have to be direct collusion with the Russians by Trump campaign members on coordinating the hacks and/or the leaks.

        But if that is proven, I don’t think it will matter if Trump actually knew beforehand or not. He’ll go down too.

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        • jnc:

          I think it will have to be direct collusion with the Russians by Trump campaign members on coordinating the hacks and/or the leaks.

          What are the odds that such coordination actually took place, do you think?

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        • Cannot make the odds on that one.

          There should be a laydown case against Flynn and against Manafort for failure to register timely as foreign agents.

          So I will speculate that these cases are in the FBI’s hip pocket or they already have sealed indictments, but neither of those cases will go forward until they have been used as leverage against Flynn and Manafort to tell more.

          What more? IDK.

          Old prosecutor saying: where there is smoke there is fire, except the fire may be something completely different than what you thought it was.

          Hitching a case on the anticipated fire from watching the smoke has caused many a case to go down in flames.

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        • With regards to the leaks, I’d actually say pretty high. My guess is that Roger Stone was informed beforehand and passed the info along.

          But this was also through intermediaries, not Putin calling Stone directly.

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        • jnc:

          With regards to the leaks, I’d actually say pretty high. My guess is that Roger Stone was informed beforehand and passed the info along.

          I wouldn’t count mere before-the-fact knowledge as “collaboration” or “coordination”, particularly if it was second or third hand knowledge. For any actual coordination or collaboration to have taken place, I think there would have had to have been actual discussions and planning between the two parties regarding the optimal timing of the release of information.

          And I think that if anyone had any evidence that such a thing occurred, it would have been leaked a long time ago, just like virtually everything else has been leaked.

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        • This is a good piece making your point.

          https://www.justsecurity.org/40870/misplaced-focus-collusion/

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        • “And I think that if anyone had any evidence that such a thing occurred, it would have been leaked a long time ago, just like virtually everything else has been leaked.”

          It did. Stone bragged about it at the time.

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        • Diarrhea mouth.

          https://www.washingtonpost.com/world/national-security/trump-revealed-highly-classified-information-to-russian-foreign-minister-and-ambassador/2017/05/15/530c172a-3960-11e7-9e48-c4f199710b69_story.html?hpid=hp_hp-top-table-high_trumpintel-0504pm%3Ahomepage%2Fstory&utm_term=.47373822be67

          If HRC had done this by directing an email to the Russians she would be in prison now. Right?

          And I really have a low regard for HRC. Think she was very careless. Not criminal because no intent to distribute classified info to unauthorized persons.
          But very careless – Comey nailed it.

          Is this POTUS simply going to make being a laughingstock the new norm? And will he be in any way punished for this breach of security?

          Like

        • Mark:

          And will he be in any way punished for this breach of security?

          So you dismiss any possibility that the WaPo story is either misleading or outright false? I don’t. I’d say that the chances that the WaPo is lying/deceiving are about equal to the chances that Trump did what they say.

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        • So you dismiss any possibility that the WaPo story is either misleading or outright false?

          I do not totally dismiss that possibility.

          I’d say that the chances that the WaPo is lying/deceiving are about equal to the chances that Trump did what they say.

          I wouldn’t. To be clear, after repeated listening to DJT I think he just impulsively blurts out crap and brags and spins his own narratives to please his audience.

          I am here with this:

          Like

        • Donald J. Trump‏Verified account @realDonaldTrump 2h2 hours ago

          As President I wanted to share with Russia (at an openly scheduled W.H. meeting) which I have the absolute right to do, facts pertaining….
          15,202 replies 7,087 retweets 21,918 likes
          Donald J. Trump‏Verified account @realDonaldTrump 1h1 hour ago

          …to terrorism and airline flight safety. Humanitarian reasons, plus I want Russia to greatly step up their fight against ISIS & terrorism.
          12,871 replies 6,242 retweets 21,207 likes

          From this morning’s twitterings.

          Not an admission of sharing classified info but the phrase “which I have an absolute right to do” is suggestive of seeking approval through rationalization. Or perhaps it is merely defensive. In any event, it is not reassuring.

          I hope that McMaster’s carefully worded response yesterday actually means that DJT did not say enough to put Russia and Syria on the scent of our sources.

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        • I think this an interesting point. Is their precedent for establishing what a president can’t or can share with whomever? To what degree does the executive have to abide by the aggressive classification of data?

          That being said, the hypocrisy can’t be denied. How is what he doing substantively different from what Clinton was doing? By the same token, is the criticism of Trump substantively different from the right’s criticism of Clinton in this regard?

          Like

        • mark:

          To be clear, after repeated listening to DJT I think he just impulsively blurts out crap and brags and spins his own narratives to please his audience.

          I definitely agree. But replace “DJT” with “the WaPo” or “the NYT” and I think the statement is equally true.

          The media keeps talking about the dangers of Trump trying to delegitimize the media. I think the danger is real, and this kind of situation is a good demonstration of that danger. Trump could be doing all kinds of nefarious things and get away with it because half the nation won’t believe it when the media tells them about it. But the fault for that lies with the media itself, not with Trump. The media has spent years delegitimizing itself by being a partisan political player, so I have just as much reason to be skeptical of the yarns spun by the WaPo and NYT as I have to be skeptical of Trump’s denials of those yarns.

          This is what comes from having such a blatantly partisan media.

          Like

        • I wonder who the WaPo’s sources are.

          Do we know how many people were in the room?

          Do we know who saw the unabridged transcript, if there was one?

          I have seen hints of a transcript from the WaPo:

          Thomas P. Bossert, assistant to the president for homeland security and counterterrorism, placed calls to the directors of the CIA and the NSA, the services most directly involved in the intelligence-sharing arrangement with the partner.

          One of Bossert’s subordinates also called for the problematic portion of Trump’s discussion to be stricken from internal memos and for the full transcript to be limited to a small circle of recipients, efforts to prevent sensitive details from being disseminated further or leaked.

          Thus I am guessing it was someone on Bossert’s staff and that his whole staff will be looking for work.

          Or else it was a source on the receiving end at CIA, or someone [God forbid] in the Russian delegation.

          Like

        • mark:

          I wonder who the WaPo’s sources are.

          Given its penchant for anonymous sources, this is a perennial question.

          Like

        • The source was a purported “John Miller”, who claimed to be very high in Trump’s secret inner circle.

          Like

        • The response of the media to Trump’s election has been to work even harder to delegitimize themselves. They have painted themselves as even more out-of-touch, arrogant, and entitled than even I had suspected. If what the report seems consistent with my observations and experiences, I may give them the benefit of the doubt, but otherwise, no. And I never consider their spin or coloration to be anything but the pure manufacture of opinion: they’ve long lost any credibility in terms of making qualitative judgements about what is good or bad, or in making any predictions about future consequences.

          I recently read a sci-fi novel called Master of Formalities by Scott Myer. It’s essentially about etiquette and protocol in some far future times, but the pretense of objectivity and non-interference of the Master of Formalities and the Arbiters who direct them and the utter lack of either thing, in reality, made me think that that part of the novel would act as a great metaphor for the contemporary news media.

          I think a partisan media is largely inevitable. What can be dispensed with, and should be, is the pretense of objectivity and reportage and non-interference.

          Like

        • KW:

          The response of the media to Trump’s election has been to work even harder to delegitimize themselves.

          I agree.

          Like

        • And it started the minute he won. When the media whined he didn’t tell them (before being sworn in, mind you) where we was going to dinner that night, and so they had to scramble when they found out where he was going to dinner so they could harass him at dinner . . . they were babbling about how awful it was that he wasn’t notifying them of their every move, because they are so important and it’s their job to harass him everywhere he goes, and the people expect them to tell the people where the president-elect eats dinner every night . . . The entitlement and self-importance was just breathtaking, and that they seem to think there is the broad swath of regular joes out their nodding their heads in agreement as they complain that the president isn’t organizing his life around their egos was just breathtaking. They do not, most of them, have any concept of how they are seen by the general public. And they continue to do themselves no favors.

          It’s interesting that they can see the problems with Fox News, and how Fox discredits themselves, and consider Fox’s “fair and balanced” statement absurd, but have no clue that not only to Fox News fans view the rest of the media the same way, so do most people who aren’t diehard partisans.

          There was no “they are so biased against conservatives” in my reaction to the whining about Trump not reporting his dinner plans. My reaction was entirely: “They are so insanely self-important and entitled, so solipsistic, and so insulated that they are shocked and appalled to find any place where the world doesn’t simultaneously revolve around them and worship them” . . . and then are confused as to why that doesn’t play well in Peoria.

          Like

        • I wouldn’t. To be clear, after repeated listening to DJT I think he just impulsively blurts out crap and brags and spins his own narratives to please his audience.

          I agree with this, generally. However, I think it is easy to see certain comparisons (although, obviously, the media spins its own narratives purely to please themselves . . . although Trump does a lot of that, too). But I think one of the reasons Trump’s relationship with the media is so contentious is that they are so similar. Entitled, self-absorbed, insular, mercurial, arrogant, insistent that everyone else should tow the company line . . . They are more similar in many ways than they are different. Thus they will always be at war.

          Like

        • Mark:

          Think she was very careless. Not criminal because no intent to distribute classified info to unauthorized persons.

          I’m no lawyer, but it seems to me that the crime of “gross negligence” is defined by the absence of intent.

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        • Clearly not gross negligence, either.

          Like

        • Mark:

          Clearly not gross negligence, either.

          I’m unclear on the line between “very careless” and “gross negligence”.

          Regardless, absence of intent is irrelevant, no?

          Like

        • Intent is not an element of ordinary negligence. Intent is an inferential issue in gross negligence in criminal law – the “knew or should have known” formulation, the “reckless disregard” formulation, come to mind. Driving with one’s eyes closed, for example.

          So if a person breaks an employment rule by using a personal server, but does in fact take pains to hire an IT guy to keep it secure, it is negligent because it is less secure than the employer’s server, arguably – although some wags say that is not the case when the US is the employer.

          Potentially more careless, in IT language probably stupid, was using her personal devices in other countries, if anything classified was transmitted. Combing through the haystack found no compromised situations, thus indicating a level of some care not to just blurt out everything.

          Like

        • jnc:

          Stone bragged about it at the time.

          From what I have seen, Stone bragged about having before-the-fact knowledge of what Wikileaks had and was going to reveal. Again, that is not the same as actual collaboration or coordination with even Wikileaks, much less the Russians. As I said, if any evidence of such collaboration existed, I rate it a certainty that it would have already leaked.

          Like

        • Stone has said as much. Whether or true or not, I dunno, but he has done nothing like confess some sort of collaboration with the Russians. He actually comes off pretty good in interviews and seems to know what he’s talking about.

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        • KW:

          but he has done nothing like confess some sort of collaboration with the Russians.

          That is my understanding too.

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        • As the piece notes, he can declassify at will. Having read it, I’m not sure if the reporting in it about what Trump actually said justifies all the conclusions.

          I’d like to see McMaster testify about it.

          Edit: McMaster just said to the press that the story is false, but didn’t address the central allegation. He should probably testify on it.

          Like

        • I think McMaster is a reliable source. I am somewhat reassured.

          I realize that he might be doing damage control for security purposes as opposed to political ends, and I agree he should testify (in a closed hearing) under oath.

          I see what you mean – McMaster did not address the allegation but rather neatly side stepped it.

          Like

  3. This is interesting.

    http://www.npr.org/2017/05/13/528222995/the-shadowy-history-of-secret-white-house-tapes

    Jeebus did FDR destroy POTUS norms, it’s easy to forget how destructive he was, in that only Wilson rivals him.

    Also, Obama taped.

    Liked by 1 person

  4. Like

  5. Would a nuclear exchange satisfy Senator Graham?

    Liked by 1 person

  6. Is there evidence of any crime other than (Clapper/Rice/Comey’s) unmasking of Mike Flynn?

    Does Richard Armitage have an alibi?

    Like

  7. My guess is the counter narrative will be that this was a planned revelation and that only a small handful of people knew about to avoid leaks. When the meeting was transcribed then conclusions were drawn by those not on the inside but based on assumptions about Trump.

    Whether it was wise or not remains to be seen.

    Get back to me when he ships billions in cash to Iran.

    Like

    • What is the likelihood that Trump can reveal much of anything to the Russians that the Russians don’t or can’t already know?

      Especially given the great deal of hostility Trump enjoys in DC throughout all the agencies, I can’t imagine that there aren’t all sorts of folks for sell to the Ruskies cheap.

      The idea that something new and disastrous has happened because Trump runs his mouth seems, to me, at best, questionable.

      Like

      • Another possibility is that there was dissension within the Deep State on whether or not this should be revealed, the losing side is exacting it’s revenge.

        Like

      • In this case, it’s pretty high. Of course it’s worth noting that vis-a-vis ISIS itself, the press stories probably revealed more to them than the Russians would have.

        Like

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