Morning Report: Productivity flat 6/5/17

Vital Statistics:

Last Change
S&P Futures 2435.8 -2.0
Eurostoxx Index 391.8 -0.7
Oil (WTI) 47.1 -0.5
US dollar index 88.3  
10 Year Govt Bond Yield 2.18%
Current Coupon Fannie Mae TBA 102.6
Current Coupon Ginnie Mae TBA 103.81
30 Year Fixed Rate Mortgage 3.9

Stocks are lower this morning after we saw terror attacks in London. Bonds and MBS are down as well.

Four nations over the weekend cut diplomatic ties with Qatar, one of the Middle East’s biggest financial centers. The issue is over political interference, terrorism, and ties with Iran. Oil is selling off on the news.

The week after the jobs report is generally data-light and that is the case this week as well. We are entering the blackout period for the Fed ahead of the FOMC meeting, which means no Fed-speak either. Should be a relatively calm week.

Nonfarm productivity was flat in the first quarter as unit labor costs rose 2.2%. Productivity is the biggest driver of wage increases (because it is generally non-inflationary) and the lack of productivity has been a big reason why wages have been going nowhere for the past 10 years.

Factory orders fell 0.2% last month, despite strength from aircraft orders. The ISM services index came in at a strong 56.9, just missing Street expectations.

The Fed Funds futures are now pricing in a 96% chance of a rate hike next week. The implied probability of rate hikes continues to increase as the yield curve flattens. This means the long end of the curve (which is the biggest influence on mortgage rates) is sanguine about the economy and the risk of inflation.

How regulation is impacting the supply of starter homes by increasing the cost to build them. In the DC area, about $75 of the price of a new home is driven by government mandates. Meanwhile, D.R. Horton is in a bidding war for Austin Texas based Forestar.

19 Responses

  1. Thought this was a funny (but true) deconstruction of the Coexist bumper sticker:


    • I’d disagree with the last clause, but otherwise quite true.


      • which part? “directed against” or “no threat?”


      • Depends on how you define “threat”. Christianity in general, in the modern era, poses no existential threat to any of the others based on Christianity, not in the sense that radical Islam does, but it is important to distinguish that many Muslims are not radical Islamists, so the deconstruction would require further deconstruction to be accurate to the nth detail.

        Further, I would argue that the general thrust of the bumper sticker is that there is some way for individuals with high degrees of tribal identification to just “get along”, even with tribes they consider abominations, and it’s a nice thought but I don’t think there’s going to be any kind of coexistence of that nature any time soon.


        • aside from abortion clinic bombings, what other violence is done in the name of Christianity?


        • In the modern era, very little. There may be a few small churches that = a radical Imam in a ghettoized mosque, but I can’t think of one off the top of me head.

          And even the abortion clinic bombings are essentially self-radicalized lone wolves (though sometimes with pastors whose fire-and-brimstone sermonizing doesn’t help the unbalanced find a less violent way of expression their emotional problems). My point is there is kind of an implicit equivocation of radical Islamic terrorism and Christians saying stuff, boycotting things, and attempting to influence policy. The consequences of those policies–say, restrictions on abortion or birth control or whatever–is put in the same light as driving a van into a crowd of people and then jumping out and stabbing convenient survivors, or bombing a concert, or what have you. Also, some things, like the Oklahoma City bombing are attributed to Christianity, but such things simply aren’t in the same category. I mean, just in terms of the enabling infrastructure, they aren’t.

          And, let’s face it, people have long historical memories. Nobody is going to just forgive and forget the Spanish Inquisition or the Crusades.


        • IMO, it is a knee-jerk response from the left in order to accuse their opponents of racism. Remember, there is no bigger sin than racism to the left.

          Liked by 1 person

  2. I’m off to CA with family, including twin granddaughters, tomorrow. San Diego Zoo, Birch Aquarium, Sand Diego Zoo Safari Park, and Disneyland are the destinations.

    Yes, the trip was planned for the twins. Promised them Disney when they were 4 for the summer after they turned 8, but since 7 they have become far more interested in zoos and aquariums and caves and mountains and oceans then cartoon characters, which is a function of age, of course.

    The last two years we have done caves, mountains, and the Gulf, and always they wanted more. Zoos have been must see in Houston, San Antonio, and El Paso. Science/natural history museums in Austin and Dallas and San Antonio. The Planetarium in Killeen. Funny how Disney fades as reality beckons.

    So when I look in it’ll probably be late at night in my hotel room so I may not write anything all week. Maybe I’ll post a photo from Disneyland.


    • enjoy! i’m off to the other disney at the end of the month. but disagree on it fading. the mrs and I went down in Feburary just the 2 of us. lots of fun.

      Liked by 1 person

    • Looking at her shiny pug nose felt warm, like toast or wetting the bed, and I was happy alone, watching her through the glass.

      Now that’s some fine writing…


      • There is more where that came from, trust me.

        In this city where emergency vehicles wail like mothers, like the worst has already happened, I have learned not to live in the shadow of whiteness. I have learned that I am the sun, the object and the shadow. I have learned to bend over, to shake my arse, to put my fingers deep enough inside myself that at the age of 27 I finally put a tampon in right. Cleanliness is overrated, and I have always seen beauty in the city.

        That shit crackles.


  3. What’s worse for a Progressive parent, to have their kid(s) be a fundamentalist, proselytizing baptist liberal, or an atheist Conservative Republican?


  4. FYI…today is the anniversary of D-day.


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