Morning Report: Inflation comes in lower than expected 4/11/18

Vital Statistics:

Last Change
S&P futures 2632.25 -22.75
Eurostoxx index 375.86 -2.56
Oil (WTI) 66.25 0.74
10 Year Government Bond Yield 2.77%
30 Year fixed rate mortgage 4.43%

Stocks are lower this morning on tensions in the Middle East. Bonds are up on the risk-off trade.

In political news, House Speaker Paul Ryan will not run for re-election.

Inflation came in lower than expected in March, falling 0.1% MOM and rising 2.4% YOY. Ex-food and energy, the index rose 0.2% MOM and 2.1% YOY. Bonds are breathing a sigh of relief on the number.

We will get the minutes from the March FOMC meeting today at 2:00 pm. They usually aren’t market-moving, but just be aware. Since this is Jerome Powell’s first meeting as head of the FOMC, it might be parsed a little more closely than usual.

Mortgage applications fell 2% last week, as both refis and purchases fell by the same amount. This was in spite of a 3 basis point drop in the typical 30 year fixed mortgage rate. Refis are at their lowest level in a decade. Refi activity is going to be driven more by home price appreciation these days.

Luxury homes are taking longer and longer to sell, and are trading at bigger discounts to the asking price. This is especially acute in high tax states like New York, where there is an absolute glut of homes above $1 million. Part of it is simple over-pricing. The homes that sat on the market for over 180 days went for 71% of asking price, while homes that went in under 180 days got 93% of the asking price.

The CFPB released its annual review of consumer complaints, and credit / consumer reporting topped the list, which is unsurprising given the Equifax data breach last year. Debt collection was the next biggest issue, followed by mortgages. Richard Cordray’s bugaboo – payday lending – failed to garner even 1% of complaints. This is what Mick Mulvaney was referring to when he said “data will drive our decisions.”

Rising home prices relative to incomes are pushing up debt to income ratios, which is why this Spring Selling Season is shaping up to be the worst in years. Part of the problem was alluded to above – a dearth of inventory at the low end of the price scale and a glut at the high end.

City grind got you down and you are thinking of moving to the country? Here are some things to consider..

A record 64 million Americans (or about 20%) live in multi-generational households. This is largely driven by younger adults who continue to live with their parents. The ratio bottomed in 1980 and has been moving steadily upward ever since.

17 Responses

  1. Must give Mulvaney points for the data driven approach to regulation as opposed to either the social engineer knows better approach or the captured regulator approach. Hope it’s real, of course.

    Liked by 1 person

    • “Apple the company runs on 100 percent renewable energy. The subcontractors Apple works with throughout its supply chain do not.”

      The trolling click bait out there amazes me. They are willing to sound delusion and almost insane in order to make an absurd argument and garner attention, rather than think about things.

      OF COURSE Apples subcontracts don’t run 100% on solar, and it would be delusionally IDIOTIC to expect that they would. Christ on a cracker.

      News Flash: It might be possible in 2030 or 2040. Report on it then, when the article would have any actual meaning whatsoever.

      This goes beyond nothing ever being enough. It’s mentally unhinged. I blame Trump.

      Like

  2. Bingo:

    “The hearing goes on and on, with each Senator trying to get in a viral zinger.

    A subtext of the hearing was a vague sense that some of these politicians would rather shape Facebook’s power than decrease it. Lindsey Graham was the only Senator to really raise the possibility of antitrust action. Because the government itself has been engaged in vast and illegal data-mining operations for so long, the outrage expressed against Facebook today was not terribly convincing.”

    https://www.rollingstone.com/politics/features/zuckerberg-senate-testimony-w518920

    Liked by 1 person

    • I thought Cruz had a good line of questions. Is FB exercising its first amendment rights, or is it a neutral platform? It has to be the latter in order to avoid liability for the things people say and post on it, but pretty clearly it is banning people (shadow or otherwise) based on political content.

      Liked by 1 person

    • I like how people are just know realizing that politicians don’t know much about policy

      Liked by 1 person

    • Now all the tech nerds understand how us Wall Streeters feel listing to Elizabeth Warren lecture us about shit she doesn’t even remotely understand…

      Liked by 1 person

      • Brent:

        Now all the tech nerds understand how us Wall Streeters feel listing to Elizabeth Warren lecture us about shit she doesn’t even remotely understand…

        Bingo!

        Liked by 1 person

  3. Trump effect.

    Like

    • Next week in the NYT:
      Only the guilty plead the 5th
      Followed by a three part expose: what do you have to hide, why the 4th isn’t about being secure in your papers: quartering troops will diversify neighborhoods: is it really speech if we disagree

      Liked by 3 people

    • Eh, the NYT has always been a tool of progressive fascism.

      Like

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