Morning Report: DC focuses on Equifax 9/15/17

Posted on September 15, 2017 by Brent Nyitray

Vital Statistics:

Last Change
S&P Futures 2491.5 -2.8
Eurostoxx Index 380.8 -1.0
Oil (WTI) 50.0 0.1
US dollar index 85.0 -0.2
10 Year Govt Bond Yield 2.20%
Current Coupon Fannie Mae TBA 103.33
Current Coupon Ginnie Mae TBA 104.21
30 Year Fixed Rate Mortgage 3.83

Stocks are lower this morning as September options and futures expire. Bonds and MBS are flat.

Retail Sales fell 0.2% last month, and prior months were revised downward. The control group which excludes autos, gas, and building materials fell 0.2% as well. August retail sales included some early hurricane effects, but overall it points to a lousy back-to-school shopping season. I wouldn’t be surprised to see strategists start to cheat down their Q3 GDP estimates. Separately, business inventories rose 0.2%.

Consumer confidence slipped slightly in August, but is still reasonably robust. Consumer confidence is often an inverse of gasoline prices, so this number should fall going forward as gas prices have been increasing.

Hurricane Harvey affected industrial production and manufacturing production, both of which fell in August. Industrial production fell 0.9%, while manufacturing production fell 0.3%. Utilities and mining (really energy production) drove the decrease. September should also come in depressed as well due to Irma. Capacity Utilization fell 0.8% to 76.1%. The national industrial numbers have been exhibiting a bit of volatility over the past few months. Interestingly, the regional Fed indices (like the Empire State Manufacturing Index, which improved to a strong 24.4 reading this morning) have not been confirming the overall weakness.

Bond yields have been rising over the past week as Hurricane Irma had less damage than expected. Inflation numbers have come in slightly strong as well, and Goldman has upped its probability of a rate hike to 60% in December. The Fed Funds futures echo that sentiment right now: over the past week or so, we have gone from a 40% chance of a hike to a 53% chance of a hike.

The FTC announced an investigation into Equifax’s security breach. This is pretty unusual for the agency to comment on ongoing investigations, which demonstrates how seriously the government is taking it. Elizabeth Warren introduced a bill to require credit reporting agencies to freeze a person’s credit for free and would restrict their ability to profitably use that data during the freeze. Chuck Schumer called the security breach “one of the most egregious cases of corporate malfeasance since Enron.” He further said that “the company’s chief executive and board of directors should step down unless they take five steps to correct their mishandling: notify affected consumers; provide free credit monitoring to them for at least 10 years, offer to freeze their credit for up to 10 years; remove forced arbitration clauses from their terms of use; and comply with fines or new standards that come out of investigations.” Here are some tips if you were affected.

North Korea fired a missile last night that flew over Japan before crashing in the Pacific. The missile had a long enough range to hit Guam. US Secretary of State Rex Tillerson called on China and Russia to do more to contain NK. China supplies most of North Korea’s oil and Russia is the biggest employer of their forced labor. Both Russia and China have veto power for any UN sanctions.

Filed under: Economy, Morning Report |

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26 Responses

  1. markinaustin, on September 15, 2017 at 1:22 pm said:

    Does anyone here think Kim is doing anything but rattling to keep the world at bay? If we don’t think he actually intends to start a war, then perhaps we ought to pay less attention to him. Maybe relax all sanctions for awhile, trade everything but military stuff with him, offer to feed his people, overwhelm him with kindness, and THEN kill him, after his people have been eating well for awhile from food labeled FROM YOUR FRIENDS IN THE USA [or Canada, Australia, etc.]

    Just brainstorming aloud here.

    Liked by 1 person

    Reply
    • Let the mutherfuker burn!, on September 15, 2017 at 1:37 pm said:

      Pull out troops from South Korea and arm the Japs and Koreans with nukes.

      Let them deal with it.

      Like

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    • ScottC, on September 15, 2017 at 1:40 pm said:

      Mark:

      If we don’t think he actually intends to start a war, then perhaps we ought to pay less attention to him.

      I think we should do whatever South Korea and Japan recommend. They have the most at stake.

      Maybe relax all sanctions for awhile, trade everything but military stuff with him, offer to feed his people, overwhelm him with kindness, and THEN kill him, after his people have been eating well for awhile from food labeled FROM YOUR FRIENDS IN THE USA [or Canada, Australia, etc.]

      If the plan is to kill him anyway, why wait? And are there any historical examples of such a strategy being implemented?

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      • markinaustin, on September 15, 2017 at 1:48 pm said:

        The reason to wait in my off the wall plan is to get his people out of the mode of thinking he is a demigod, first. It might take years, but if the peasants/serfs in NK get some reality based information it will be easier to get rid of him then rather than now, when they seem to think he is the Glorious Leader.

        I think we should do whatever South Korea and Japan recommend. They have the most at stake.

        Well, that is the sensible response. I am trying for outside the box.

        Liked by 1 person

        Reply
  3. Brent Nyitray, on September 15, 2017 at 2:54 pm said:

    Don’t know if this is fake or not, but if it is true…

    Like

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  4. markinaustin, on September 16, 2017 at 1:56 pm said:

    NEW QUOTE IS UP – Very Important!

    Not really very important, just revealing.

    Liked by 1 person

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  5. Brent Nyitray, on September 16, 2017 at 5:51 pm said:

    At the end of the day, SCOTUS is consequential, Paris is just a big virtue-signalling exercise…

    Liked by 1 person

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    • Kevin S. Willis, on September 18, 2017 at 4:20 pm said:

      My list of things I liked about Trump so far are TPP, Paris Accord, and Gorsuch. Hopefully Paris Accord is still functionally “pulled out of” (i.e., we aren’t agreeing to unreasonable metrics, or writing checks, I don’t care about the rest) and TPP remains not a thing we’re going. Gorsuch can’t be rolled back. So that’s good.

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  7. Let the mutherfuker burn!, on September 16, 2017 at 10:13 pm said:

    Liked by 1 person

    Reply
  9. Brent Nyitray, on September 17, 2017 at 10:27 am said:

    Sigh

    Liked by 1 person

    Reply
  10. Brent Nyitray, on September 17, 2017 at 1:24 pm said:

    The overwrought left…

    Liked by 1 person

    Reply
    • Kevin S. Willis, on September 17, 2017 at 11:09 pm said:

      What I find is none of this actually addresses What Happened in a remotely serious ways. Such as flawed polling and last-minute deciders and slogan comparisons and flawed media models. Plus the human tendency to believe we are far better at predicting outcomes than we are.

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    • Kevin S. Willis, on September 18, 2017 at 7:29 am said:

      It stands to reason that THUD is less pervasive in parts of the country that supported Trump: rural areas, the South, the industrial Midwest. Americans here are probably suffering no deleterious effects on their health as a result of Trump’s election. Indeed, they may be feeling much better, collectively, as a recent epidemic of Obama Derangement Syndrome subsides.

      He identifies the same symptoms on the right as being Obama Derangement Syndrome. Why doesn’t he identify them as Trump Derangement Syndrome on the left, in his case? Hmmm.

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