Morning Report: Goldilocks Jobs Report 3/9/18

Vital Statistics:

Last Change
S&P Futures 2762.3 17.0
Eurostoxx Index 376.8 0.2
Oil (WTI) 60.6 0.4
US dollar index 83.9 0.0
10 Year Govt Bond Yield 2.9%
Current Coupon Fannie Mae TBA 102.25
Current Coupon Ginnie Mae TBA 102.5
30 Year Fixed Rate Mortgage 4.4

Stocks are higher after the strong jobs report. Bonds and MBS are down.

Jobs report data dump:

  • Nonfarm payrolls up 313,000 vs expectations of 205,000
  • Unemployment rate 4.1% vs expectations of 4.0%
  • Labor Force Participation rate 63% vs expectations of 62.7%
  • Average Hourly Earnings up .1% / 2.6% vs expectations of .2% / 2.9%

Overall a great report for the stock market. Strong growth in payrolls, without a massive increase in wage growth. The civilian employment to population ratio increased from 60.1% to 60.4%, which matched the post-crisis record set in September. The labor force increased by 800k, while the population increased by 150k. The civilian employment to population ratio peaked in 2000 at 64.7% and bottomed in 2009 at 58.3%, and we are much closer to the low than we are to the high. Some of that is demographics, however there is undoubtedly still slack in the labor market that number bears it out. Which is why we still have the wage inflation typically associated with 6% unemployment and not 4% unemployment.

The Fed funds futures didn’t do much on the report – as we approach the March meeting, the probabilities of a hike continue to increase and are sitting at 89%, and the December futures are still coalescing around a prediction of 3 hikes this year. Chicago Fed President Charles Evans says he would argue against a March hike.

Home Depot is donating $50 million to train 20,000 construction workers over the next decade. “It’s important that we support the trades,” Home Depot CEO Craig Menear said in an interview. “Not only do we sell product to professionals like plumbers and electricians,” but the company also partners with service providers that install kitchen flooring, hot water heaters and other equipment in consumers’ homes. There are still 158,000 job openings in the construction sector that need to be filled.

Donald Trump announced tariffs of 25% on steel and 10% on aluminum yesterday, with temporary relief for Canada and Mexico while we renegotiate NAFTA. Senator Jeff Flake introduced legislation to overturn these tariffs. I would bet there are enough votes in both chambers to pass the bill, and there might be enough to override a veto.

File under “Only Nixon could go to China:” Donald Trump will meet North Korean President Kim Jong Un in May, to discuss the country abandoning its nuclear weapons program.

Mortgage credit decreased in February, according to the MBA’s Mortgage Credit Availability Index. Apparently the decrease was due to a single large investor in the conventional space. While we are close to post-crisis levels in the index, we are a long way from the go-go days of the bubble.

Soaring stock and real estate prices have sent net worth as a percent of disposable income to record levels.  I wouldn’t be surprised to see this number fall as the Fed pulls back support for the asset markets and we finally start seeing wage inflation.

31 Responses

  1. Only Trump could go to North Korea.

    If he pulls this off, the meltdown on the left will be crazy.

    Liked by 1 person

  2. For Mark,

    Kossack has now linked you’re preferred POTUS candidate, Lindsey Graham, to Russian collusion.


    Navy Vet Terp
    Mar 09 · 10:25:58 AM
    I have no evidence to prove this, but given Paul Manafort used to employ Graham’s campaign manager, and given Graham’s endless bellicosity, I would not be surprised that he’s somehow implicated in all this, hence his otherwise insane attempts to meddle / shut down the investigation.   Here he just seems to be bleating in unison to Trump.  I think HE is the one who’s scared.   Short leash on him now for sure with whatever kompromat there is.  Not unlike Ryan and McConnell, who KNEW where the money was coming fro

    https://www.dailykos.com/stories/2018/3/9/1747705/-Lindsey-Graham-issues-bizarre-warning-to-Kim-Jong-Un-Don-t-try-to-play-Donald-Trump#comments

    Like

    • HAH!

      This is what LG gets for trying to cajole DJT on comprehensive immigration reform. I think DJT is the worst POTUS of my lifetime but I want him to succeed with NK anyway. I think he is the worst President of my lifetime but I want him to sign a freaking comprehensive immigration bill.

      I also know that if LG had been the R nominee and HRC the D, they would have competed in bellicosity just to prove who was more manly.

      So what else is new?

      Liked by 1 person

  3. The Ministry of Propaganda has taken over duties as the thought police

    https://www.cnn.com/2018/03/08/politics/kfile-john-gibbs-hud/index.html

    Liked by 1 person

  4. What are the Democrats going to do with the Farakkhan issue? I think they have a victimhood totem pole problem… Does the Cultural Ministry permit lower medalists in the Victimhood Olympics to criticize those who medaled?

    Like

  5. This is actually pretty good:

    “Kim Jong Un Reveals He Is Just Using Trump to Meet Stormy Daniels

    By Andy Borowitz
    11:54 A.M.”

    https://www.newyorker.com/humor/borowitz-report/kim-jong-un-reveals-he-is-just-using-trump-to-meet-stormy-daniels

    Liked by 1 person

    • That has “Obama military” written all over it, but I do remember during the Gulf War maximizing mileage like a mofo with fuel conservation…

      Pre / Post fracking….

      Liked by 1 person

    • I have never gotten the Euro envy with choo choo trains… CA needs commuter trains paralleling every major expressway… Not a HSR train from LA to SF when you can fly there for 25% of the cost of a train ticket in less time….

      Liked by 1 person

  6. pretty funny

    Liked by 1 person

  7. Most Important News Story of All Time

    https://www.washingtonpost.com/outlook/the-military-keeps-encountering-ufos-why-doesnt-the-pentagon-care/2018/03/09/242c125c-22ee-11e8-94da-ebf9d112159c_story.html?utm_term=.010f659519eb

    I saw one once and so did everyone on my side of the plane. The pilot asked over the intercom if everyone on the right side saw it. He went on to say he had been told it was a mirage every time he had seen it.

    Liked by 1 person

    • It seems to me that the most obvious explanation for the Pentagon’s apparent lack of interest in investigating these events is that it already actually knows what they are because it is responsible for them. I would rate it more likely that the Pentagon has top secret technology that even most people in the military are unaware of than that someone else has it and the Pentagon just doesn’t care.

      Liked by 1 person

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