Morning Report: Comey Day 6/8/17

Vital Statistics:

Last Change
S&P Futures 2434.5 2.5
Eurostoxx Index 389.4 0.2
Oil (WTI) 45.5 -0.3
US dollar index 88.2 0.2
10 Year Govt Bond Yield 2.19%
Current Coupon Fannie Mae TBA 103.47
Current Coupon Ginnie Mae TBA 104.33
30 Year Fixed Rate Mortgage 3.92

Stocks are up small after the ECB decision. Bonds and MBS are down.

James Comey testifies today at 12:30 pm EST. Here are his prepared remarks. Punch line: Nobody looks good in this situation, but nothing impeachable. There is a small chance that something could come out in questioning, but this should be a non market-moving event.

Initial Jobless Claims fell to 245k last week. Jobless claims are hovering around lows not seen for 45 years.

Bill Gross sees the bond market as fraught with risk – the worst since 2008 – but he says he feels required to stay invested. His concern is not necessarily risk within the financial system, but simply the prices people are willing to pay for risk. As he says, people are not buying low and selling high – they are buying high and crossing their fingers. His view is that central banks are behind this mindset, which has been a common objection for decades (remember the “Greenspan put?”). That said, the Fed is systematically removing that support, which should help risky asset prices normalize. Any sort of pullback in asset prices will inevitably be Treasury bullish, which means lower mortgage rates.

Meanwhile, Paul Singer of Elliott fame is very concerned about the current state of the market. He notes that the leverage in the system is higher than 2008. Yes, that is true, however the assets being leveraged today are much higher quality than they were a decade ago. Think of it this way: You borrow 95 cents on the dollar to buy a Treasury bond. Yes, you are leveraged, but the asset you hold is pretty low risk. Can you lose 5% on that asset? Maybe, but you probably won’t. In 2008, people were borrowing 90 cents on the dollar to buy MBS backed by no-doc pick-a-pay loans. Can you lose more than 10% on that asset? Easily. Which is a more risky trade? Yes, the leverage today is higher (95 cents on the dollar versus 90 cents on the dollar), however the underlying assets being leveraged are much safer. Note that Paul is a bit of a perma-bear who has hated the stock market since 1982.

Case in point: Over 9 million borrowers have regained equity in their homes since the 2008 crisis. Negative equity fell to 3.1 million homes, or about 6% of mortgaged properties. The biggest markets with negative equity? Miami, Las Vegas, and Chicago.

Higher home prices have begun to temper homebuyer bullishness, according to Fannie Mae’s Homebuyer Sentiment Index. The net number of people who believe now is a good time to buy fell 8 percentage points to a record low, while the number of people who believe now is a good time to sell hit a record as well.

The House is looking to reform the National Flood Insurance Program, which is heavily subsidized and currently running a $25 billion deficit. Reforming it will be tough without imposing sticker shock on many homeowners.

50 Responses

  1. Frist!

    BTW, Just had this exchance on Plumline:

    Me: While I strongly suspect cutting the food stamp program is ultimately a bad idea, and will do nothing to help the deficit, I have no problem with charging a fee to accept food stamps. I could see a waiver for independent grocers or those that do less that x dollars in EBT card benefits.

    c–Kid: Charging a fee from independent grocery stores will make them not participate in the program, increasing the problems of the most vulnerable.
    GOP wants to literally kill the poor.

    DemocratsAnd3OYears0fSubmission: You’re talking to a complete dick, c.

    c–Kid: Weldor?

    DemocratsAnd3OYears0fSubmission: No, just some wishy-washy, halffass libertarian. You don’t have a discussion with these people; you chase mirages of words and meaning.

    And, in summation, that is why we don’t presently live in a socialist paradise where the most progressive Democratic candidate wins every election by 80%. That’s my theory, anyway.

    Like

    • why do you want to literally kill the poor?

      Liked by 1 person

      • It would solve a lot of problems.

        Just saying.

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        • Efficiency and progress is ours once more
          Now that we have the Neutron bomb
          It’s nice and quick and clean and gets things done
          Away with excess enemy
          But no less value to property
          No sense in war but perfect sense at home
          The sun beams down on a brand new day
          No more welfare tax to pay
          Unsightly slums gone up in flashing light
          Jobless millions whisked away
          At last we have more room to play
          All systems go to kill the poor tonight
          Gonna kill kill kill kill kill the poor
          Kill kill kill kill kill the poor
          Kill kill kill kill kill the poor tonight
          Behold the sparkle of champagne
          The crime rate’s gone, feel free again
          Oh, life’s a breeze with you, Miss Lily White
          Jane Fonda on the screen today
          Convinced the liberals it’s okay
          So let’s…

          Liked by 1 person

        • Governmental Theory by esteemed professor Jello Biafra. 😉

          Liked by 1 person

      • I just love processing fees. If a small processing fee kills all the poor people, so be it.

        Like

    • I have both of those idiots on IL.

      And I assume that you knew that D30 is the poster formerly known as ReaganAnd30YearsOfWrong. jnc likes him for some reason.

      Liked by 1 person

      • I try to dialog. Although I debate semantics with Cons for a little light trolling. Gotta keep my skills up.

        Also, I get why you’ve got Democrats on IL, but I’ve either missed or forgotten c-Kid’s transgressions, but I just pop on occasionally, when I’m nostalgic. Easy to miss the Jekyl-and-hyde personalities which you just occasionally dip your toe in.

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        • I don’t remember off the top of my head, either, but I have a low tolerance for stupidity in general. I completely emptied my IL list around the end of 2016 (except for Weldor, brigade, and Orlagh) and c-Kidd ended up back on it within a couple of days.

          Liked by 1 person

      • He shares my assessment of a lot of what’s wrong with the Democratic party, especially at a messaging level.

        But like everyone else there, the longer he stays engaged with PL, the more the quality of his commentary degenerates. His best comments were right after the election as a smack upside the head to certain progressives making excuses for the loss.

        The Russia investigation is pulling him off into unhinged conspiracy theories and he’s becoming another Cons.

        Liked by 2 people

  2. I have a feeling the Comey testimony will be the biggest MSM and Democrat let-down since Ollie North…

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  3. Is Trump impeached yet?

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  4. Someone gets it:

    “Working-class Americans pulled back from Democrats in this last period of Democratic governance because of President Obama’s insistence on heralding economic progress and the bailout of the irresponsible elites, while ordinary people’s incomes crashed and they continued to struggle financially. They also pulled back because of the Democrats’ seeming embrace of multinational trade agreements that have cost American jobs. The Democrats have moved from seeking to manage and champion the nation’s growing immigrant diversity to seeming to champion immigrant rights over American citizens’. Instinctively and not surprisingly, the Democrats embraced the liberal values of America’s dynamic and best-educated metropolitan areas, seeming not to respect the values or economic stress of older voters in small-town and rural America. Finally, the Democrats also missed the economic stress and social problems in the cities themselves and in working-class suburbs.”

    http://prospect.org/article/democrats%E2%80%99-%E2%80%98working-class-problem%E2%80%99

    Liked by 1 person

  5. I notice a lot of gushing about Comey from the left after the testimony. Patriot! True American Hero!

    I’m sure his note-taking with Trump and his testimony now wasn’t/isn’t some cynical attempt to get feted by a grateful left and media.

    Liked by 1 person

    • I don’t think the Democrats are going to run him for office. It was about protecting his and the FBI’s reputation.

      Like

      • I don’t think it’s the Dems so much as the warm embrace he’s going to get, forever, from the DC intelligentsia. Possibly feted by Hollywood-types? It’s a much better deal than being popular with Trump’s friends or getting invited to some dude’s mega-church. The cocktail party invites alone are going to be staggering.

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        • No, it’s a conditional tolerance. He still has the unforgivable sin of denying Hillary Clinton what was rightfully hers.

          Liked by 1 person

        • Maybe. It’s what I’d do but it’s not what I’m seeing from the hoi polloi. Presumably the D.C. Cocktail circuit is a little less forgiving. All I seemed to get off Plum Line and Facebook was: yes, well, that was bad but he’s going against Trump! He made a mistake, but now he’s being a grave patriot!

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    • I actually missed about an hour of his testimony this morning. Did anyone ask Comey why, if he truly believed that Trump was telling him to stop the investigation, he didn’t report it to anyone?

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    • This, from Comey’s opening statement, doesn’t make any sense in the context of the rest of his testimony:

      And on May the ninth, when I learned that I had been fired, for that reason I immediately came home as a private citizen. But then the explanations, the shifting explanations, confused me and increasingly concerned me. They confused me because the president and I had had multiple conversations about my job, both before and after he took office, and he had repeatedly told me I was doing a great job, and he hoped I would stay. And I had repeatedly assured him that I did intend to stay and serve out the years of my term. He told me repeatedly that he had talked to lots of people about me, including our current Attorney General, and had learned that I was doing a great job, and that I was extremely well-liked by the FBI workforce.

      So it confused me when I saw on television the president saying that he actually fired me because of the Russia investigation, and learned again from the media that he was telling privately other parties that my firing had relieved great pressure on the Russian investigation.

      If the rest of his testimony is true, he shouldn’t have been “confused” at all. He claims that he interpreted his repeated meetings with Trump as a request for “patronage” in exchange for keeping his job, a patronage he was not willing to engage in. He claims that he interpreted Trump’s “hope” that the Flynn matter would be put to rest as an order to stop the investigation, something he was not willing to do. He says specifically:

      On the Sunday after the inauguration. The next Friday I have dinner and the president begins by wanting to talk about my job and so I’m sitting there thinking wait a minute three times we’ve already, you’ve already asked me to stay or talked about me staying. My common sense, again I could be wrong but my common sense told me what’s going on here is, he’s looking to get something in exchange for granting my request to stay in the job.

      OK, so by February Comey already had the “sense” that Trump was “looking to get something” for keeping him on as director, something that Comey was not willing to give him, and did not give him. Yet three months later he is “confused” about getting fired because Trump, someone he thinks is so dishonest that he had to keep contemporaneous notes on each meeting he had with him in the event that Trump would “lie” about them, had repeatedly told him what a good job he was doing? Something doesn’t square here.

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      • I think he’s being generous/disingenuous with “confused”.

        Substitute “pissed me off” instead.

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      • My instinct would be to ask why Comey did not clarify what the president was saying and did not explicitly explain what he felt was inappropriate or undue influence. It seems like Comey intentionally made no effort to clarify, in order to leave the exchanges ambiguous and open to interpretation later on.

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  6. A parody mocking modern culture or a genuine article inadvertently demonstrating why modern culture deserves to be mocked? I defy anyone to be able to tell the difference these days.

    http://www.tandfonline.com/doi/full/10.1080/0969725X.2017.1322822?scroll=top&needAccess=true&

    Abstract

    This article explores the formation of a tranimal, hippopotamus alter-ego. Confronting transgender with transpecies, the author claims that his hippopotamus “identity” allowed him to (verbally) escape, all at once, several sets of categorization that govern human bodies (“gender,” “sexuality,” age). He starts with an account of how his metaphorical hippo-self is collectively produced and performed, distinguishing the subjective, the intersubjective and the social. The article then investigates the politics of equating transgender and transpecies, critically examining the question of the inclusion of “xenogenders” in the trans political movement. Finally, the author returns to the magical power of metaphors, arguing that metaphors do materialize insofar as the flesh does not remain unchanged by them. Analogizing his hippo-self to a “cut” as theorized by Eva Hayward – a regeneration of the boundaries of the self – he offers a final crossing to the world of fiction by showing how the His Dark Materials trilogy outlines an aesthetics of porosity, which suggests that the self is, as much as a novel, a work of fiction.

    Liked by 1 person

  7. Worth noting:

    “Bernie Sanders’s Religious Test for Christians in Public Office

    During a contentious confirmation hearing, the Vermont senator questioned the faith of the nominee for deputy director of the Office of Management and Budget.

    Emma Green
    Jun 8, 2017

    It was a remarkable moment: a Democratic senator lecturing a nominee for public office on the correct interpretation of Christianity in a confirmation hearing putatively about the Office of Management and Budget.”

    https://www.theatlantic.com/politics/archive/2017/06/bernie-sanders-chris-van-hollen-russell-vought/529614/

    Liked by 1 person

    • Sanders seems intent on violating Article VI, section 3 of the Constitution:

      no religious Test shall ever be required as a Qualification to any Office or public Trust under the United States.

      Liked by 1 person

      • It wasn’t just him. Van Hollen was just as bad.

        Like

      • Do you think they understood what they were getting at?

        “Your belief that Christ is the way is disqualifying because it requires an actual belief that Christ is the way.”

        and i think Van Hollen needs to go to remedial Sunday school

        ““I’m a Christian, but part of being a Christian, in my view, is recognizing that there are lots of ways that people can pursue their God,” Van Hollen said.”

        that’s perfectly fine. but it’s not any denomination of Christianity that i’m aware of.

        Liked by 1 person

        • I don’t think any of them believe in the actual theology to begin with, namely that there’s literally an afterlife and a path to obtaining it. They probably view religion as more like Aesop’s Fables that illustrate universal moral points in the good parts, and intolerance in the bad parts that can be discarded.

          There’s also the likely possibility, that they know, but don’t care because they can use it to attack an opponent as a bigot and by so doing help thwart Trump and the Republicans.

          Bad faith arguments are a small price to pay for that.

          Liked by 1 person

        • Would they ask a muzzie the same question?

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        • jnc:

          Bad faith arguments are a small price to pay for that.

          When you have no principles and the only thing that matters is outcome, bad faith arguments aren’t a cost, they are a tool.

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        • nova:

          that’s perfectly fine. but it’s not any denomination of Christianity that i’m aware of.

          Nor me.

          You’ve heard of the phrase “a la carte Catholic”, those Catholics that pick and choose those parts of Catholic doctrine which suit their desires, and ignore the rest. I think people like Van Holland should be called brown-bag Christians. They don’t even pick and choose from existing doctrine. They just make up their own and call it “Christian”.

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        • I’m an atheist and I have more respect for the guy’s religious liberty rights than Sanders and Van Hollen.

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        • I am right there with you, jnc.

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        • Back in Austin, I caught this one, NoVA. Methodists, Presbyterians, Quakers, Unitarians, and Congregationalists, at the very least, do not preach that theirs is the only true way. I can find you encyclicals. They are boring.

          Jews don’t preach theirs is the only way, and don’t preach salvation for anyone, thus don’t seek converts. Conservative Judaism in America has an encyclical that recognizes multiple possible revelations, because God knows more than people do, apparently. Jews are critical of religions that claim polytheism or pantheism, however – like Hinduism. But Jews would accept Sikhs and Christians, and Muslims, and Zoroastrians, and Confucian dominated Bhuddists as climbing the same mountain from different directions.

          I don’t know about Lutherans and Episcopalians. Could be they are more limited in their view of who has true religion, as are Roman Catholics and Greek Orthodox, and the evangelical faiths [Pentecostal, Assembly of God, Jehovah’s Witnesses, etc.].

          Most of the east Asian faiths accept multiple pathways. In fact, folks claim multiple religions at the same time in some of those parts.

          Mainstream Islam thinks Jews, Christians, and Zoroastrians are on a path to God, but are less worthy than Muslims. They think Hindus are pagans. Radical Islam doesn’t accept anyone else, including Muslims who disagree, because they are all infidels. While radical Orthodox Jews have no problem accepting Christians as believers in one God, they do have a problem with other Jews, because of the tribal bullshit. “Apostate” is the word, there.

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    • Like the typical leftist that he is, Sanders has no sense of self-awareness. He condemns Vought’s religious beliefs on the grounds that condemning the religious beliefs of others is objectionable. He really is a clown.

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  8. Some woke mf’ers in the picture.

    I stand in awe.

    Liked by 1 person

    • I saw that yesterday. i liked the line about the “unexpected support” that IJ was providing. not if you’re paying attention. this is right in their wheel house

      Like

  9. The Obama interrogation standards to replace Guantanamo. As long as you keep up the pretense, it’s all OK.

    “Although Abu Khattala’s captors told him he had a right to a lawyer, when he asked if one were present, he was told no, Clarke said.

    “He asked, ‘Is there a lawyer here?’ In my mind, I thought that meant on the ship, and I replied, ‘No, there was not,’ ” Clarke said.”

    https://www.washingtonpost.com/local/public-safety/thirteen-days-in-the-history-of-the-accused-leader-of-the-benghazi-attacks/2017/06/09/ed67170a-3ca5-11e7-8854-21f359183e8c_story.html

    Liked by 1 person

  10. Discovered this this morning, and thought others might be interested. It is the entire archive of all photos taken during the Apollo missions. Pretty neat.

    https://www.flickr.com/photos/projectapolloarchive/albums/with/72157657383647904

    Like

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