Morning Report: Housing starts disappoint 8/16/17

Vital Statistics:

Last Change
S&P Futures 2468.0 4.3
Eurostoxx Index 379.3 2.8
Oil (WTI) 47.7 0.2
US dollar index 86.7 0.1
10 Year Govt Bond Yield 2.28%
Current Coupon Fannie Mae TBA 103.09
Current Coupon Ginnie Mae TBA 103.97
30 Year Fixed Rate Mortgage 3.88

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

The big event of the day will be the release of the FOMC minutes at 2:00 pm EST. The Street will be looking for more info on how the Fed plans to wind down its QE portfolio. Investors will also be parsing the statement for clues regarding the Fed’s stance on the current status of low inflation. While inflation remains low if measured against the Fed’s inflation target, we are starting to see wage inflation. The hawks on the Committee will push to get ahead of that, while the doves (like Yellen) will prefer to let the labor market “run hot” for a while. The minutes will probably not be market-moving, but just be aware if you are locking around that time.

The minutes will be interesting given the recent GDP forecasts out of the Atlanta Fed, which have Q3 growth coming in at 3.7%, and are predicting a much stronger second half to the year. You could really start to see a battle between the hawks and the doves. The Fed Funds futures contracts are still predicting no move in September and a 50-50 chance of a hike in December.

Mortgage Applications fell 0.1% last week as purchases fell 2% and refis increased 2%. Mortgage rates continue to tick lower, with the 30 year fixed rate mortgage down to 4.14%, the lowest since November.

Housing starts disappointed last month, coming in at 1.15 million, down 4.8% MOM and 5.8% YOY. The notoriously volatile multi-family segment drove the decrease, as single family starts were more or less unchanged. The Street was looking for 1.22 million units. Building permits came in at 1.22 million, lower than estimates as well. They were down 4% on a MOM  basis but were up 4% on a YOY basis.

Where is the growth in housing construction? Texas. Of course Texas didn’t really experience the bubble type behavior the way states like California, Arizona, and Florida did. This may be because Texas has more restrictions on cash-out refinances than other states. Here is a chart of where the action is (and is not)

28 Responses

  1. Frist!

    Apropos of the topic in the last thread, more evidence that you can’t ever throw out the human garbage:


  2. Worth a read.

    “The Curse Of Identity Politics
    By Rod Dreher • August 13, 2017, 2:12 PM”

    This seems spot on:

    “And there’s this:

    ‘”Sheryl Gay Stolberg‏Verified account @SherylNYT

    Rethinking this. Should have said violent, not hate-filled. They were standing up to hate.’

    Wrong, wrong, wrong. This is where ordinary liberals go off the rails. This attitude justifies violence as long as it’s being committed by people whose cause they agree with, against people whose cause they hate. It is exactly at this point — construing left-wing hate as a virtue — that conservatives are tempted to stop caring what kind of violence the fascists visit on leftists. People on the Right who don’t sympathize with the those thugs get so sick of this double standard by the media and other left-wing institutions that they may cease giving a damn what kind of damage the extremists do.”


    • These aren’t young men who have been downtrodden by society; that would at least give some sort of social and economic rationale for their race radicalism. These are relatively privileged young men. Why do they find no anchor in the church? Why is the god of racial nationalism more appealing to them than the God of the Bible?

      I would argue that it’s because they perceive it as having all the same responsibilities, or more, of being a white male in, say, the 19th century, but believing they have had all the benefits stripped away, and then some.

      Good luck to the church in anchoring millenials and iGen to God.

      That being said, I’d need more evidence that these young white men are being seduced by racial nationalism in significant numbers. If they are, I think it’s got to be similar to the appeal of the antifa: fight club for alienated millenials and iGen-ers.


      • I’d bet my left nut that more white males identify as Antifa than identify as neonazi/kkk.


        • I expect your right. While the vast majority of them identify as ideologically flexible, depending on the espoused politics of the girl they are currently interested into getting into bed.

          I think waaaay more identify as Married-to-their-Xbox than identify as antifa or white nationalist.

          Not consciously, necessarily. But practically.

          Put another way, I’m positive there are more professional vaping competitors amongst the ranks of young American men than there are aspiring white nationalists and antifa put together.


    • jnc (from Dreher):

      People on the Right who don’t sympathize with the those thugs get so sick of this double standard by the media and other left-wing institutions that they may cease giving a damn what kind of damage the extremists do.

      This. Very much, this.

      Liked by 1 person

      • I care about what kind of damage extremists do, but it is frustrating that you can’t will anybody else to care. 😉


      • Which I would argue is a tendency that should be guarded against.

        Yes, the progressives cry wolf over racism all the time. But sometimes the thugs really are Neo Nazi’s & racists.


        • And, apparently better rule followers than the Antifa thugs, the Nazi’s were permitted.


        • Oh, they definitely are. And while there is come crying wolf involved (if you aren’t as upset and focused on it as me, then you’re a Nazi, too!), I think it’s also using it as a distraction, or as a false choice: either you can have violence from Nazis or violence from antifa, but you have to pick one!

          Or that a lot of folks on the left see what is happening, and amongst the cultural elite take Jefferson’s attitude towards Paris: for enlightenment to reign, of course there must be a bloodbath, with the old power structure being guillotined at will. Which was seen by some of his contemporaries as insanely detached even then.

          Unfortunately, the existence of neo-Nazi’s and racists grant the anarchists a plausible rationale for initiating violence. And then the neo-Nazi’s and racists feel justified in returning the attack. Perhaps one side can be shamed into stopping, but I kind of doubt it.

          That being said: yes, there are totally racists and Neo Nazis. Trump should provide clarity and leadership, in an ideal world, but he is incapable of it.

          Eh, I’m not that worried. Antifa will go too far for even non-racists and non-Nazis in the not too distant future.

          I just don’t want to be in the middle of it when it happens.


    • that conservatives are tempted to stop caring what kind of violence the fascists visit on leftists. People on the Right who don’t sympathize with the those thugs get so sick of this double standard by the media and other left-wing institutions that they may cease giving a damn what kind of damage the extremists do.

      Agree that this is spot on, especially in regards to the alienated young men. As I noted in the previous thread, “it’s okay if they assault you, because you are hateful” is not an attitude that will ratchet down the violence. And there is an argument to be made that once you engage in hateful acts in order to stand up to hate, you’ve lost your way.

      And it’s one thing to torch the Starbucks where my brother works. I might be mad, I might think it’s cool. It’s an entirely other thing to physically assault my brother. Then I’m going to immediately assume you are in the wrong, whatever you think.

      But we’ve gotten to a point where a significant number on the left and the right don’t real care about alienating everybody outside of a relatively small group of largely agreeing folks, generally (not here, of course, but those others . . . you know who I’m talking about).

      Which both limits their message, and I think help leads to the next part . . . when it’s not the antifa assaulting Nazis and any nearby local businesses or vehicles, it’s the left turning in on and alienating its own members. While they may not find leftwing violence an issue worth fighting over seriously, there are many ongoing purity tests and affiliation tests that they will march into bloody battle, with themselves, over.


  3. Dreher has a whole series of pieces about Charlottesville and the reaction that are worth reading:

    Edit: This one in particular, which jibes well with PL vibe these days

    “The Left, Feeding The Alt-Right
    By Rod Dreher • August 13, 2017, 8:57 PM

    If progressives force conservative voters to choose, they’re not going to like the choice”

    Also spot on, and nothing has changed since Trump was actually elected:

    “The Lithwicks are living in a dangerous bubble. I’m serious. They are feeding a movement that they rightly loathe, but the potential appeal of which they do not understand.”

    Liked by 1 person

    • I wonder what they think will happen when they turn the people who own all the wealth and pay all the taxes in this country into an interest group…

      Liked by 1 person

      • They have a bigger problem. The are discounting the demographics of the police and the military, especially the officer corps.

        Why they think that those institutions will automatically side with progressives/antifa/BLM when push comes to shove escapes me.

        This is how coups happen in other countries – the political leadership becomes completely discredited and the military steps in to restore order as the only institution left with any respect or credibility.

        They don’t have a habit of handing power over to whomever the opposition is after deposing the current leader though.

        Liked by 1 person

    • they couldn’t even go a week before it was, you know every RW is basically a Nazi and there’s no equivalent on our side. none whatsoever.

      Liked by 1 person

  4. Interesting photo:

    “Who Were the Counterprotesters in Charlottesville?

    AUG. 14, 2017”


  5. I love the new meme that WWII soldiers invading Normandy were the same as Antifa…

    Oh, FFS. It isn’t even all that clever… Just stupid..


    • It resonates with a certain strand of the left who believe all good things are associated with their core ideology (so, thus, they embody all good things), and it’s nice to be reminded that they are the most heroic, brave, wonderful people who ever cracked a skull or spent all day vaping and Snapchatting.


      • “I’m shocked, in disbelief that there was traffic anywhere near that level of pedestrian activity,” Longo said. “That street is typically shut down on weekends for events that occur on the mall. I can only assume that it wasn’t in this case, and why, I simply can’t answer that question.”

        That’s a good question, tho.


    • Ferguson effect, writ large.

      Liked by 1 person

      • I have two theories on the police response (or lack thereof):

        1. The Banal Bureaucracy theory:

        The lack of a more robust police presence was a reaction to complaints they had from the counter protesters on the previous July 8 march where you had something like 30 KKK members vs 1000 counterprotesters.

        “The failure to maintain order is particularly surprising because, although the violence this weekend took much of the nation by surprise, Charlottesville had a dress rehearsal of sorts on July 8. That day, a Ku Klux Klan chapter from North Carolina held a rally that, like Saturday’s march, was billed as a protest of Charlottesville’s decision to remove a statue of Confederate General Robert E. Lee from a park in town. Around 30 Klan members marched, while about 1,000 counter-protesters showed up.

        Such a situation creates a dilemma for police: Few cops, especially in a progressive bastion like Charlottesville, are eager to defend the Klan or neo-Nazis, but if they don’t place themselves between the groups, they run the risk of fights breaking out. And at the July rally, that meant holding back the counter-protesters, who far outnumbered the Klan. Some of the counter-protesters scuffled with police, officers used pepper spray and tear gas to disperse them, and 22 people were arrested.

        After the rally, many anti-Klan protesters in Charlottesville harshly criticized the police approach. “The brutality enacted by the Charlottesville police on the Charlottesville community sits in stark contrast to the [patience] provided to the KKK,” activist Mimi Arbeit said.

        Another protester said police had been far too quick to fire tear gas. “Charlottesville residents can’t clear out of a Dave Matthews show in under an hour, yet the police declared a peaceful crowd to be an unlawful assembly within minutes of the KKK’s departure. This is an ineffective police strategy that only leads to escalation and the likelihood of violence,” said Emily Gorcenski.”

        2. The Conspiracy theory

        Police were ordered to hold back because the Democratic political leadership in both Charlottesville and the state government didn’t want the rally to happen at all, opposed it in court, and when they lost decided that they would manipulate things to give a pretext to shut the whole thing down under the guise of an emergency.

        This is supported by the timing, and subsequent lying of McAuliffe about things like weapon caches being found around the city where he’s being directly contradicted by the state police and their reported comments about being told not to intervene until ordered to do so.

        Liked by 1 person

  6. Imma need some tissue.

    Liked by 1 person

  7. Ok symbol now white Power symbol.

    This stupid country.


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