Morning Report: Obamacare repeal and Trump reflation trade dead 7/18/17

Vital Statistics:

Last Change
S&P Futures 2456.5 -2.0
Eurostoxx Index 383.9 -3.0
Oil (WTI) 46.0 0.0
US dollar index 87.0 -0.4
10 Year Govt Bond Yield 2.31%
Current Coupon Fannie Mae TBA 103.31
Current Coupon Ginnie Mae TBA 104.375
30 Year Fixed Rate Mortgage 3.96

Stocks are lower this morning after healthcare reform fails. Bonds and MBS are up small.

We are in the summer doldrums, with not much in the way of news or movement. Monday was so dull it felt like a 3 day weekend in the markets.

Obamacare repeal (and the lower spending that ensued) was going to be the source of funds for infrastructure spend and tax reform. So that pretty much sticks a fork in the Trump reflation trade. This should send rates lower, at the margin. Don’t forget the 10 year was trading below 1.9% before the election. Economists now see an even risk of overshooting and undershooting their GDP forecasts, the highest since the election.

The Fed Funds futures aren’t really reacting to the news yet, with September futures pricing in only an 8% chance of a hike and the Dec futures pricing in a 47% chance of a hike.

The Senate is considering a last-ditch attempt to simply repeal Obamacare without a replacement and then try and create a healthcare plan from scratch.

Import prices fell 0.2% in June and are up 1.5% YOY. Export prices are down 0.2% as well and up 0.6% YOY.

Homebuilder confidence slipped in July, according to the NAHB. “Our members are telling us they are growing increasingly concerned over rising material prices, particularly lumber,” said NAHB Chairman Granger MacDonald, a home builder and developer from Kerrville, Texas. “This is hurting housing affordability even as consumer interest in the new-home market remains strong.”

The House Appropriations Committee approved a bill to reform the CFPB. The biggest change will be to bring the agency under the normal appropriations umbrella, although there will be language regarding payday lending and mandatory arbitration.

27 Responses

  1. NoVA, lots of questions for our resident pro.

    I am assuming McConnell’s straight repeal bill is DOA window dressing for a constituency. In this, I think George agrees.

    1] How many R Senators have to call for regular order before McConnell allows it with regard to healthcare legislation? Does it take 12, so that 60 Senators want it? Or does it take an agreement from his inner circle – say, Thune and Cornyn?

    2] If regular order long term debate on the issue occurs, will the Ds follow Schumer’s lead or go off in multiple directions – perhaps following EW over the left cliff?

    3] To me, liberals sound utterly stupid claiming health care is a “right” and conservatives sound utterly stupid claiming it is a privilege, ostensibly of the healthy and well off. It either is a national economic and political priority, the way Germany and Japan view it, or it isn’t. Do you think the debate can get away from labels that characterize the other side as stupid, and in so doing expose the tin ears of both sides?

    4] Am I correct in thinking the big partisan fault lines are A] universal mandate, and B] the long term cost curve of Medicaid?

    Liked by 2 people

    • To pick a nit, what prominent elected Republicans are calling healthcare a privelage?

      Also a MTP vote for repeal should occur, get these Assholes on record.

      If R Senators want Regular order they’re going to have to remove McConnell. That he’s still there speaks volumes.



        Or that could be fake news, IDK.


        • That is obviously a parody.

          No conservatives (and Trump, BTW, is no conservative) that I know of call health care a “privilege”. They call it a good or service, just like any other good or service.


        • Agree. That is 100% a leftist framing. Like no Republican would ever say “tax cuts for the rich” or “trickle down economics.”


        • Mark, do you believe that article is accurately quoting Donald Trump?


        • Not any more. There was a R congressman who said this back in ’09, but I suspect that was the last time an R said it aloud. Except DJT might have said anything. Anything at all. So I googled it and got a parody website.

          Which I did not know was a parody site until Scott posted, below.

          Liked by 1 person

        • I believe you believe that.


        • “that” = DJT might have said anything? Yep.

          Liked by 1 person

        • I believe you are sincere.


        • This is from the “About” page for that website’s “author”:

          <R. Hobbus J.D. is an internationally acclaimed independent investigative journalist specializing in international politics, health, business, science, conflict resolution, history, geography, mathematics, social issues, feminism, space travel, civil rights, human rights, animal rights, fashion, film, astronomy, classic literature, religion, biology, paranormal activity, the occult, physics, psychology, and creative writing. He has appeared in countless publications including Time Magazine, Newsweek, Playboy, The Economist, The New York Times, Mad Magazine, Hustler, Guns & Ammo, People, Maxim Magazine, Highlights, The 9/11 Commission Report, The New Yorker, Bon Appetite, Rolling Stone, Car & Driver, Soldier of Fortune, Elle, Nintendo Power, National Geographic, and many more. He has received numerous awards for his work including the prestigious Stephen Glass Distinction in Journalistic Integrity (2011), The Oscar Mayer Award for Journalistic Excellence (2003), three Nobel Peace Prize nominations, one Pulitzer in Investigative Reporting (1998), and two Pulitzer Prizes in Commentary (1996, 2008). He resides comfortably in his modest home overlooking the coast of Nantucket surrounded by his wife and twelve cats.

          Obviously a parody site. Pretty funny, though…the Oscar Mayer Award for Journalism!

          Liked by 1 person

        • Hah!

          Liked by 1 person

        • McWing:

          Dude’s got a funny site, though.

          Yes. I thought this was good:

          Colin Kaepernick Under Fire After Refusing to Sit Down During Outdoor Concert

          Liked by 1 person

  2. 1. you’ll see some columns about how the rank and file can force it, but that’s not very realistic. it’s a leadership decision. a group could try to force the issue, but they would be taking on their leadership publicly for an internal matter than nobody understands or cares about.
    2.Not sure. somehow losing at every level as given the Ds the sense they actually won.
    3. My opinion. Nope. Dare to be stupid.
    4. The vast majority of members of congress don’t even know what those mean. This is purely a political exercise that blew up in McConnell’s face. those who are probably most upset are House Rs who took a tough vote for nothing. they hate that.

    i’ll add — i’ve been told and i’ve heard that the Rs simply did not have a plan for winning. they expected clinton to win and for the Senate to likely flip. winning all 3 was simply not a contingency they planned for.


  3. Common Sense finally prevails. HUD finally admits that single family zoning is not exclusionary.

    HUD finally drops the case against Westchester County. Ding Ding Ding the witch is dead!

    Liked by 1 person

  4. Data point for everyone:

    Our group health insurance plan estimate just came back for next year.
    20% price increase over last year.

    Liked by 1 person

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