Morning Report: Possible deal on funding the government 1/17/18

Posted on January 17, 2018 by Brent Nyitray

Vital Statistics:

Last Change
S&P Futures 2791.8 9.5
Eurostoxx Index 398.3 0.0
Oil (WTI) 63.6 -0.2
US dollar index 84.6 0.0
10 Year Govt Bond Yield 2.55%
Current Coupon Fannie Mae TBA 102.375
Current Coupon Ginnie Mae TBA 103.25
30 Year Fixed Rate Mortgage 4.03

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

Slow news day.

Builder sentiment fell somewhat last month, but is still strong, according to the NAHB.

Mortgage Applications increased 4% last week as purchases rose 3% and refis rose 4%. This is a bit of a surprise given that bond yields moved up aggressively on stronger economic data and speculation that China would reduce its Treasury purchases. The 30 year fixed rate mortgage rose 10 basis points to 4.33%.

The deadline to fund the government is fast approaching, and it looks like we will only get another temporary (one-month) deal. The deal won’t include anything on immigration, however it will fund the Children’s Health Insurance Program for 6 years, and delays some Obamacare taxes. Bond Traders are not so sanguine on a deal, and are selling Treasuries maturing in early March.

Rising input costs are the biggest challenges to homebuilding. 84% of all builders surveyed said that rising labor costs and rising material costs are going to be a problem this year. High land prices are also an issue. Affordable housing is one of the nation’s biggest problems right now, and it is extremely difficult to build at price points that are affordable for the entry-level homebuyer.

Industrial Production rose 0.9% in December and manufacturing production rose 0.1%. Capacity Utilization jumped to 77.9% from 77.3%. Utilization is still relatively low, and indicates that we still have plenty of unused capacity. High utilization rates (85%-ish+) are usually associated with increasing inflation.

Bitcoin is now trading below $10,000. Easy come, easy go.

Filed under: Economy, Morning Report |

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31 Responses

    • Kevin S. Willis, on January 17, 2018 at 10:54 am said:

      If you add $25 every hour to your employer’s revenue by soldering engine parts, then you should earn about $25 an hour.

      That would be a recipe for bankruptcy.

      Dude is an economic genius. F*cking Slate.

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      • Kevin S. Willis, on January 17, 2018 at 10:57 am said:

        Sorry, he later explains his logic: (The company’s cut of revenue, for reference, is supposed to come from the value added by its capital investments in things like machinery.)

        Karl Marx here has all the answers.

        And where does the money come for future capital investments? How do you pay off your loans or lines of credit? What about the fargin’ taxes? Advertising?

        That’s like saying if a marketing campaign sells $100k worth of goods, then you should pay about $100k for that marketing campaign. The company’s profits would come from the value added by its capital investments in things like office furniture and copiers.

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    • Kevin S. Willis, on January 17, 2018 at 11:03 am said:

      Economic theory shows that firms with monopsony power have an incentive to employ fewer workers at a lower wage than they would in a competitive labor market. What the monopsonistic firm loses in reduced output and revenue, it more than makes up in reduced costs by paying lower wages.

      There’s counter-inuitive, and then there’s just stupid.

      There’s *no f***ing way that would work. If true, a company with 10 people should fire 9 of them and just pay one of them super low wages and then just rake in all the profit!

      F*cking Slate.

      The real problem isn’t a skills shortage, it’s that you aren’t offering market wages, because the market isn’t functioning.

      The marketing is functioning fine. The hypothetical employer is a dumbass, or has insufficient funds to increase wages, or whatever. It’s not “artificially low wages”. You really need that carpenter and you can pay more, you’ll pay more. You don’t put the wage in the want ad. You talk about it with them in private. Otherwise, you don’t actually need that carpenter. And you’re not going to pay your carpenter $500 an hour. That’s not artificial, that’s the market functioning.

      I don’t disagree that more companies can be good for the job market, and that consolidation of businesses can cost jobs . . . the guy who wrote that article still seems to have no idea how business works. Or markets. Or much of anything. Yay, Slate!

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    • Brent Nyitray, on January 17, 2018 at 11:56 am said:

      my favorite was the mis-use of the term “monopsony.” Monopsonies are markets dominated by a single customer. The market for ICBMs is a monopsony – If Raytheon makes a nuke, there is one buyer – the US government. They can’t just tell the US government that their price sucks and they got a better deal from some Arab Prince so they’re selling it to some dude in Yemen…

      The idea that sluggish wage growth means there is a monopsony for labor (who is this sole employer?) is mind-numbingly dumb.

      Liked by 1 person

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    • novahockey, on January 17, 2018 at 12:11 pm said:

      behold. the chair of President Sanders economic advisory council.

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      • jnc4p, on January 17, 2018 at 12:21 pm said:

        “Jordan Weissmann

        Jordan Weissmann is Slate’s senior business and economics correspondent.”

        Apparently Slate is an example of the very phenomenon he writes about. They could pay the requisite salary get an actual business and economics correspondent, but apparently because they choose profits over hiring talent, they’ve artificially depressed the market on competent business writers and are stuck with him.

        Liked by 1 person

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        • Kevin S. Willis, on January 18, 2018 at 11:11 am said:

          This is true, and it wouldn’t just apply to Slate. It’s pretty much universal across the news media except for the very biggest players, and certainly all web journalism pays little or nothing and attempts to minimize all paid positions.

          This is market-driven . . . which they understand for their market, I’m sure, because that’s different. They aren’t making widgets, after all!

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  2. jnc4p, on January 17, 2018 at 12:26 pm said:

    The left’s is quickly catching up to the far right in terms of enthusiasm for conspiracy theories.

    “Foreign spies could be manipulating Trump through Fox News
    An ex-CIA analyst on the dangers of Trump’s Fox News obsession.

    By Sean Illing
    Jan 17, 2018, 11:10am EST”

    https://www.vox.com/world/2018/1/17/16878406/donald-trump-fox-news-russia-cia-foreign-spies

    I’m still waiting for someone to slip up and reveal the existence of the orbital mind control lasers.

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  3. Let the mutherfuker burn!, on January 17, 2018 at 2:17 pm said:

    I got this link off Instapundit and it’s absolutely fantastic. It’ about a half hour long and worth every minute.

    https://blogs.spectator.co.uk/2018/01/watch-cathy-newmans-catastrophic-interview-with-jordan-peterson/

    It’s hard to believe she could be that stupid.

    Liked by 1 person

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    • Brent Nyitray, on January 18, 2018 at 8:36 am said:

      She certainly lacked the ability to think outside the media narrative.

      She completely did not grasp the point about Mao, the left, and identity politics.

      Liked by 1 person

      Reply
  5. ScottC, on January 17, 2018 at 7:40 pm said:

    I can’t overstate how much I would live to see this happen:

    https://hotair.com/archives/2018/01/16/hey-whos-new-california/

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    • Kevin S. Willis, on January 18, 2018 at 10:50 am said:

      It won’t. But it’s fun to dream!

      Is the state districted so those areas can’t vote a majority Republican for congresscritter? That probably is also not addressable, but might be with lawsuits.

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    • novahockey, on January 18, 2018 at 8:32 am said:

      Ha. check out the home page and the caterwauling over the NYT’s audacity to run letters from Trump voters. The solution, of course, is to shut down the Times. you know, we need to censor it, to fight fascists.

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      • Let the mutherfuker burn!, on January 18, 2018 at 8:45 am said:

        This one is particularly funny,

        If anything, it’s evidence for what I kept saying in 2016 and 2017: Trump supporters were middle to upper middle class suburban whites. That’s who sent him money, that’s who canvassed and phone banked for him, and that’s who is sticking by him. They love the tax cuts and the stock market, they hate Hillary Clinton and “obstructionist Democrats,” and they are about as far from the angry steelworkers and white working class men that so many people think are Trump’s core as it’s possible to get.

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        • Kevin S. Willis, on January 18, 2018 at 10:47 am said:

          It’s hard to believe how smart these people think they are. While being so brain-dead and stupid and also counter-factual–the data is out there. Trump won with working class whites, with non-college educated whites, with rural whites (basically won the entire rural population).

          Check the data? No! Just vomit up my opinion, because I want it to be true so I know I’m right so why check data because I’m SMARTER THAN YOU!!

          All right, I’m done. Voting for Trump. Don’t like him, but I’m growing to hate these m*fers and why shouldn’t I get to hate-vote occasionally?

          Like

      • Brent Nyitray, on January 18, 2018 at 10:02 am said:

        This one is good. She has a long thread about this…

        https://twitter.com/ChristineEmba/status/953879746148012034

        Hey, how about some liberal identity politics articles? Cause THAT is underrepresented….

        Liked by 1 person

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        • Kevin S. Willis, on January 18, 2018 at 10:43 am said:

          Fascinating.

          “Will there be a counter on Friday? They represent a dwindling part of the population. Very odd decision.”

          They represent a dwindling part of the population . . . so they are a minority? I know “minority in thought” counts for nothing, but still.

          “They seem to actively be trying to present Trump supporters as a larger group than they are.”

          He won the fucking election. People are . . . not logical creatures.

          “I guess on the plus side, if we on the left overestimate them we’ll fight harder?”

          Fighting Harder on the left generally means “be more insane”. This does not play to their strengths, which is feeling people’s pain and promising to solve problems and cut checks.

          “People tell them constantly how much they don’t want to read or hear it and newsrooms/newspapers just decide to double down.”

          People tell them how they want to stay in their bubble, and for once (supposedly) NYT wants to take them out of their bubble, and it’s the worst thing ever.

          Also, newspapers should essentially be popularity polls? No one in the media is going to like hearing that they aren’t telling people what to think and feel.

          Reading the links, it’s hard to tell sometimes where the commentor hates the NYT because the commentor is conservative, or if they hate it because they are progressive and the NYT is “too conservative” for them. I find it interesting that it is difficult to distinguish between the two, when it comes to their hatred of the media not supporting their personal bubble-narrative.

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