Morning Report: Mediocre jobs report 9/1/17

Vital Statistics:

Last Change
S&P Futures 2475.8 5.8
Eurostoxx Index 375.9 2.0
Oil (WTI) 47.0 -0.3
US dollar index 85.3 -0.4
10 Year Govt Bond Yield 2.11%
Current Coupon Fannie Mae TBA 103.33
Current Coupon Ginnie Mae TBA 104.21
30 Year Fixed Rate Mortgage 3.86

Stocks are higher despite a mediocre jobs report. Bonds and MBS are up.

Jobs report data dump:

  • Payrolls up 156,000
  • Unemployment rate 4.4%
  • Hourly earnings up 0.1% MOM / 2.5% YOY
  • Labor force participation rate 62.9%
  • 2 month payroll revision down 41,000

Another month where the ADP number was way off of what BLS reported. For the markets, it is a Goldilocks report which is strong enough to keep the recovery going and weak enough to keep the Fed from tightening too aggressively. Construction, professional business services, and manufacturing were the biggest contributors to job growth. Manufacturing job growth was the highest in 5 years, which is encouraging.  2.5% annual wage growth is nothing to write home about, however with inflation around 1.5% or so, it is probably the best we can hope for at the moment. The Fed funds futures moved a touch more towards the Fed standing pat in December and September.

The strong manufacturing job growth was echoed in the latest ISM Manufacturing Survey, which improved in July. New Orders and Production drove the big increase, although employment was close behind. The reading of 58.8 is usually associated with 4.9% GDP growth. Given that strength, wage growth should be accelerating.

Construction spending fell in July by 0.6% and is up only 1.8% YOY. Residential construction improved however, which we need to see to alleviate the tight inventory issue.

Gasoline prices are up 25% in some places after Harvey affected about 10% of the US’s refining capacity. Higher gas prices have invariably tilted towards lower growth and a drop in the consumer confidence indices. Expect to see some hand-wringing over the mindset of the consumer going forward.

Bond strategists are flummoxed to explain the bond market’s rally over the past few months. At the beginning of the year, most were thinking the 10 year would yield closer to 3%, however yields have dropped by about 40 basis points instead. With GDP growth around 3%, you should expect to see investors dump Treasuries, but it hasn’t happened. IMO the Trump reflation trade was always a bit of a stretch, and pre-election yields were closer to reality than post-election yields. Still, there are a lot of bears that are having a tough year right now.

Almost half of all homes in the US have regained their bubble peaks, according to Zillow. The leading MSAs are Denver and Dallas, while the ones who still lag the most include Las Vegas and Riverside.

22 Responses

  1. It will be interesting to see if the coverage of the antifa is changed when they target the media themselves:

    https://newrepublic.com/article/144659/antifa-broke-camera

    Like

    • That article is full on Fisk/Baby, why you make me hit you.

      Astonishing.

      Like

      • McWing:

        That article is full on Fisk/Baby, why you make me hit you.

        Yup. That is exactly what it is. And it is a good example of why I think antifa is a much bigger threat to the US than any neo-nazis or white supremacists. The left tries to claim that the ideology of neo-nazis and white supremacists finds sympathy among the mainstream right. But the reality is that the mainstream left has far more sympathy for the likes of antifa.

        Neo-nazi fascists are and always will be shunned by the mainstream right, but the antifa fascists really are simpatico with the mainstream left.

        Like

        • The left tries to claim that the ideology of neo-nazis and white supremacists finds sympathy among the mainstream right

          Because they want support for tax cuts and individualism and self-determination and a love of the nuclear family to be naturally associated with genocide.

          “Neo-nazi fascists are and always will be shunned by the mainstream right,”

          Not quickly enough and not loudly enough. And you’ve got your Richard Spencers out there who try to work their way into the mainstream right by pretending to be mainstream right, in certain contexts. Those are the stealth-neo-Nazis that are a big pain in the ass. The right’s version of antifa, only with less violence.

          Like

    • The media believes in their cause.. They’ll always cover for them.

      The media has no left boundary.

      Liked by 1 person

      • I think some of the media will. There will be a time where they decide that antifa represents too much of a danger to either them, personally, or “the movement” because they are out of control. Which they are.

        Media propaganda aside, antifa is on its way to being conflated with Nazis with most people right of, say, Maxine Waters.

        The Democrats should recognize than the antifa people don’t give a crap what happens to them electorally, and aren’t their friends. As such, Democratic politicians will be far better off denouncing and distancing themselves from antifa. Who are primarily violent bernie bros, non-voters, or stein supporters, anyway.

        Even as affectionate as that article is, I think there’s an implied warning. Keep attacking journalists, and this will get harder and harder on you. He basically said the antifa were fascists, towards the end there.

        Like

      • Vox sure is trying.

        https://www.vox.com/2017/9/1/16202908/antifa-charlottesville-alt-right-white-nationalist-protest

        Note not a word about AntiFa attacks on the press.

        Liked by 1 person

    • When I arrived, the smell of tear gas and pepper spray—cops and antifa were reportedly using both—hung in the air. All too quickly, I found myself confronted by the mob, the beat-down of the photographer, and the two angry masked youths who jacked my camera and phone. I whipped around to get a look at my attackers, making eye contact with one of them. I was miffed, but I felt sorry for him. I could see real pain in his eyes, and knew he was angry for a litany of legitimate reasons, from the president’s response to Charlottesville to the pardoning of Joe Arpaio to the Trump-fueled rise of white supremacists.

      I think dude is mistaken if he thinks that’s going to get him a pass for accurately reporting what happened to him. A real fellow traveler would completely ignore the violence, and say it didn’t happen, in order to avoid giving the FAR RIGHT fuel for HATE.

      Conflating the two groups is a way for whataboutist conservatives to play down the racist rot that is spreading on the right, and to trap everyone on the left in a crooked debate: Do you condemn the antifas’ violent tactics? If not, then you’re just as bad. This is the definition of an argument made in bad faith.

      So, what about conflating right wingers with Nazis? Or the demand that you condemn mentally ill LARPers who dress up like Nazis fast enough and hard enough, or you are just as bad as a Nazi. The lack of self-aware irony in that particular statement is astounding.

      Still, the reality is that not all antifa actions can be justified on anti-racist/anti-fascist grounds. And fairly or not, antifa violence feeds the “many sides” narrative, makes martyrs out of barbarians, and gives Fox News and friends the opportunity to further stoke far-right fanaticism.

      The guy really wants antifa to just be overly-exuberant, not a bunch of violent thugs looking for an excuse to beat the crap out of people and get away with it. Gonna be hard.

      Like

    • McWing:

      Thanks for linking to that article. Nice to get a second version….with video.

      I love the contrasting narratives. From the New Republic link:

      After officials warned Patriot Prayer organizer Joey Gibson that firearms weren’t allowed in Crissy Field, where his group’s rally was slated to take place, the event was canceled.

      From the Weekly Standard:

      Joey, for his part, wasn’t worried about menacing clowns or dog droppings. He was worried that his rallies would come to resemble Altamont, a hellscape of dark and eruptive violence. Since rally-goers would likely be outnumbered by hecklers and antifa ninjas by about 10-to-1 in one of the most aggressively liberal enclaves in the world, Joey was growing increasingly uneasy with the security arrangements, or lack thereof, by Park Service and law-enforcement officials.

      Convinced the security situation would resemble an antifa turkey shoot for his attendees, Joey canceled Liberty Weekend.

      Liked by 1 person

    • Speaking of contrasting narratives:

      For his late August “Liberty Weekend” in the Bay Area, which was to include a free speech rally in San Francisco followed by a “No to Marxism” rally in Berkeley (headed by a local “transsexual patriot”), Joey advertised that “no extremists will be allowed in. No Nazis, Communists, KKK, Antifa, white supremacists .  .  . or white nationalists.” (So much for free speech.) Likewise, the advertised docket of speakers was to include “three blacks, two Hispanics, one Asian, one Samoan, one Muslim, two women, and one white male.” If becoming a liberty movement fixture doesn’t work out for Gibson, he has a promising future as a UC Berkeley admissions officer.

      Vs:

      After officials warned Patriot Prayer organizer Joey Gibson that firearms weren’t allowed in Crissy Field, where his group’s rally was slated to take place, the event was canceled. Instead, Patriot Prayer, a far-right group from Oregon …

      The East Bay event, like the one scheduled for San Francisco, was technically a loss for white supremacists. Organizers of the gathering, which was marketed as an anti-Marxist rally, had been denied a permit. Nevertheless, a handful of them showed up, including a well-known right-wing provocateur named Johnny Benitez and Patriot Prayer’s Gibson.

      I’m not sure I’ve seen any evidence presented that supports the characterization of Patriot Prayer or the anti-Marxism rally as being “white supremacist” events. I feel like liberals just want everybody else to be a Nazi so bad, they are hallucinating it is so, despite the orgy of evidence that it’s just not true.

      Like

      • KW:

        I feel like liberals just want everybody else to be a Nazi so bad, they are hallucinating it is so…

        I think they are just plain old liars.

        It is the standard propaganda tactic of corrupting language in order to manipulate and alter thinking. It’s been around for ages. It’s the same thing Orwell wrote about in 1984. The author is either a practioner or a victim of the craft. Probably both.

        Like

        • Name a neonazi that actually wants less government? They want a bigger government to do things their way. Different side of the same coin.

          Both the neonazis and Antifa want me dead, their motives are irrelevant if that is their aim, no?

          Like

        • Also a perfectly reasonable interpretation. Although I think a lot of the hoi-ploi are sincere in their confusion, and are unable to distinguish between mutliple, entirely distinct groups, because their ability to think about things is . . . underdeveloped.

          Like

        • KW:

          Although I think a lot of the hoi-ploi are sincere in their confusion…

          There are definitely a lot of innocent victims of the confusion being sown. But one reason I say that the author of that New Republic piece actually knows the truth and is intentionally deceiving people is because of the care he takes to avoid directly labeling the Patriot Prayer group a “white supremacist” group. His association of the group with “white supremacy” is done entirely by implication.

          When he first introduces Joey Gibson and his group, he calls it simply a “far right group out of Oregon”. He never says what exactly it is that makes it “far right”. Only later does he indirectly allude to a “white supremacy” association:

          The East Bay event, like the one scheduled for San Francisco, was technically a loss for white supremacists. Organizers of the gathering, which was marketed as an anti-Marxist rally, had been denied a permit. Nevertheless, a handful of them showed up, including a well-known right-wing provocateur named Johnny Benitez and Patriot Prayer’s Gibson.

          Note, again, that he never actually specifies who exactly are the “white supremacists”. He simply says that the event was a “loss for white supremacists”, and then invites readers to themselves draw the conclusion by then immediately talking about how the organizers of the event were denied a permit. Oh, and in case you forgot, Joey Gibson was one of the organizers, and he showed up anyway. The implication is pretty clear.

          But, of course, if anyone were to call the reporter out and ask why in the world Joey Gibson, an Asian (a fact the reporter surely knows – he saw him at the event – but keeps from his readers), would be a “white supremacist”, he can correctly say that, hey, he never labeled Gibson or his group a “white supremacist” group. He simply called the a “far right group”.

          I have no doubt that the care the author takes to not directly call Gibson and his group “white supremacists”, while clearly implying that that is exactly what they are, was entirely intentional. He knew exactly what he was doing, leading people to believe a falsehood while being careful not to actually state the falsehood directly.

          Liked by 1 person

        • I agree with Scott… It is a tactic. Makes sense – the bar is, what, 85% liberal?

          Liked by 1 person

  2. JNC – I replaced the Stones song quotation I previously put up for you with a Zappa I like.

    Liked by 1 person

  3. Slow start but strong finish for Wiscy last night.

    Liked by 1 person

  4. McCain added that he believes bipartisan majorities of Americans are in favor of alliances, trade, investment, and globalization.

    Curious what he bases his belief in this on.

    “It may not look that way on Twitter, but that is what opinion polls clearly show, time after time after time,” he said.

    And yet Trump won, essentially running against it.

    http://www.washingtonexaminer.com/john-mccain-slams-trump-in-italy-recommits-to-americas-role-in-world/article/2633280

    Liked by 1 person

  5. I laughed.

    Liked by 1 person

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