Morning Report: New downpayment assistance programs 6/29/18

Vital Statistics:

Last Change
S&P futures 2728.75 9.5
Eurostoxx index 379.91 3.04
Oil (WTI) 73.39 -0.06
10 Year Government Bond Yield 2.84%
30 Year fixed rate mortgage 4.52%

Stocks are higher this morning on end-of-quarter window dressing. Bonds and MBS are flat.

Personal incomes rose 0.4% in May while personal spending rose 0.2%. Incomes were in line with estimates, while spending was lower. The June FOMC statement said that consumer spending was accelerating – no evidence of that in this report. Services spending drove the decline, and we could be seeing evidence that higher gasoline prices is affecting discretionary expenditures. Inflation was in line with expectations at the MOM level, and a hair above expectations on an annual basis. The core PCE index ex-food and energy came in at 2%, which is right where the Fed wants it. April’s income and spending numbers were revised downward. Don’t be surprised if strategists take down some of their Q2 GDP forecasts on these numbers.

The Chicago PMI improved to 64 from 62, which is a 5 month high. New Orders and order backlog drove the increase. We are seeing some signs of inflation brewing, with extended lead times, and a 7 year high on the prices paid index. Businesses were asked about how trade was affecting their operations. About 25% said they were having a significant impact, 40% said there was a minimal impact, and the rest were either unsure or insulated from trade issues.

KB Home reported strong numbers, with a 170 basis point increase in gross margins, 10% revenue growth, and a 50% increase in operating income. ASPs were up 4% to 401,800, and order growth was 3%. Backlog was the second highest on record. The stock is up 7% pre-open.

Interesting theory about the lack of construction workers: opiods. Between users and those that have been convicted of crimes related to usage, many workers are shut out of the work force. 80% of homebuilders report shortages in subcontractors.

The Senate will hold hearings on July 12 and 19th for Kathy Kraninger’s nomination to run the CFPB. The conventional wisdom is that she is not intended to be confirmed, but is to be an excuse to keep Mick Mulvaney in charge of the agency.

Deutsche Bank failed its stress test, while State Street, Goldman and Morgan Stanley got dinged.

Many Millennials are struggling to get a down payment for a home, and now some companies are working to help them get it. One company will supply up to a $50,000 downpayment if the borrower rents out a room on Air B&B and shares the income with the company. These loans are appealing to borrowers who might qualify for a FHA or 3% down Fannie loan but don’t want to pay the MI and other costs. While there are fears that we are bringing back the bad old days of the real estate bubble, here is the MBA’s mortgage credit availability index. We are a long way away from the days of the pick-a-pay mortgage.

43 Responses

  1. This will be significant and lasting:

    https://www.vox.com/policy-and-politics/2018/6/29/17514590/asylum-illegal-central-american-immigration-trump

    It would have more credibility if Trump was simultaneously increasing staffing at the ports of entry to handle the legitimate asylum seekers.

    Like

    • jnc:

      It would have more credibility if Trump was simultaneously increasing staffing at the ports of entry to handle the legitimate asylum seekers.

      My assumption is that the vast majority of people effected by this are not, in fact, legitimate asylum seekers. They try to sneak in, and then simply use asylum as an excuse not to get kicked out when they get caught. Is there really not enough staff currently to handle legitimate asylum seekers at ports of entry?

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      • Apparently not.

        https://theintercept.com/2018/06/16/immigration-border-asylum-central-america/

        Even if their claims ultimately aren’t established, they still have to be reviewed and processed.

        I also don’t believe Trump is operating in good faith. He doesn’t care if they have a legitimate claim because he doesn’t feel obligated to faithfully execute that part of the law.

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        • Aren’t BP’s able to do the first screen?

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        • jnc:

          I also don’t believe Trump is operating in good faith. He doesn’t care if they have a legitimate claim because he doesn’t feel obligated to faithfully execute that part of the law.

          That could very well be true. Although, as is typical, the law is actually pretty ambiguous (presumably deliberately so) giving the executive a lot of discretion to decide what is a “legitimate” case. Using that discretion to limit rather than expand asylum cases is not necessarily bad faith. For example, it is probably fair to construe a blanket refusal to consider for asylum those who have traveled through several countries in order to get to the US as an aversion to asylum in general, but I don’t think it is fair to call that a bad faith effort to enforce asylum laws. (I know, you didn’t say that…just using that as an example.)

          Like

  2. Live by identity politics, die by identity politics

    Liked by 1 person

  3. Damn, people weren’t kidding about people dying from net neutrality repeal..

    Liked by 1 person

  4. Brent and Scott, did Larry Kudlow have any particular credibility in market or financial analysis circles?

    Like

    • Academic circles, no. He doesn’t have a phd. He is largely known as an economic pundit in the Jared Bernstein mold.

      Liked by 1 person

    • mark:

      did Larry Kudlow have any particular credibility in market or financial analysis circles?

      He was a pretty standard fare, ex-banker CNBC TV pundit. No special credibility, I wouldn’t say.

      Like

  5. That’s right fuckers!

    Don’t. Even. Think. It.

    Liked by 1 person

    • “It was in elementary school, when I first starting to wear the hijab, that I realized — without quite having the words for it — that my sexuality as a visibly Muslim woman would be decided for me”

      isn’t that the point of such garb?

      “Every once in a while, someone will ask me if I am married. I am automatically held to a different standard, assumed to be deeply religious rather than secular — an assumption that works the opposite way for just about everyone else.”

      Nun shocked that habit send a signal that she’s devoted to Christ.

      Liked by 1 person

  6. What do you guys think?

    Liked by 1 person

  7. Like

    • I got into an argument with someone who thought the living breathing Constitution thing was not a lefty thing… It is amazing that the two sides have such fundamentally different views of the world.

      “Racist, authoritarian war-mongering is a right-wing fascist phenomenon!!”

      Really, sounds like you just described Woodrow Wilson, the patron saint of Progressivism.

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      • My desire is an amicable, or at least minimally acrimonious divorce. Their answer is a boot on my throat aparantly.

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      • Well, among lawyers there are many political liberals who are originalists and political conservatives who are not.

        This comes from the wiggle room inherent in trying to divine original intent. Setting aside “textualism” as a mere statutory interpretation device, originalism leaves wiggle room because the FFs did not agree with each other and did not write bright line language intentionally, to permit compromise.

        The Common Law is part of original intent, unanimously among the FFs, so that Supreme Court decisions have the kind of weight that House of Lords decisions had in London. That was also a given. It should be possible to overturn bad precedents without it being easy. And that has motivated many Justices to be minimalists, many to be restrainists, and many to be activists, which is a split determined by willingness to chip away at precedent or overturn a statute. As I have said here many times, practicing lawyers love minimalism, because it gives them the ability to generally tell their clients the likelihood that a legal position will be maintained. Thus you see lawyers who really were civil litigators like SDO’C and Roberts still inclined to minimalism on the bench, which often looks conservative to political liberals and liberal to political conservatives.

        I suggest daily perusal of Volokh for the libertarian lawyer views which are very highly regarded by the Courts – even by “living constitutionalists” with whom the libertarians do not agree in concept but with whom they may agree on a particular result – perhaps because the libertarians make very clear arguments about what is bright line clear and what is muddy about original intent.

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        • Mark:

          Well, among lawyers there are many political liberals who are originalists and political conservatives who are not.

          I suppose it is possible for a political liberal to be an originalist, but I wonder what it could even mean to be a political conservative who believes is a “living constitution”. The two notions seem completely contradictory to me.

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        • Anthony Kennedy?

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        • Is he a political conservative? I am skeptical.

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        • AK neither was interested in original intent nor stare decisis when it suited him. He was the archetype of the self assumed “moral arbiter”. Certainly an economic conservative and a social libertarian who often messed up perfectly simple libertarian arguments with his own moralizing.

          I won’t miss him as a voice on the Court.

          Liked by 1 person

        • Mark:

          Certainly an economic conservative and a social libertarian who often messed up perfectly simple libertarian arguments with his own moralizing.

          My view is that Kennedy employed essentially the same corrupt judicial philosophy as the lockstep four, but in pursuit of a politics that was not quite as consistently or radically left as theirs.

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        • I think John Harlan was one. To the extent that hewing hard to stare decisis is a restrainist principle that many politically conservative judges and justices have followed religiously even when they would not have decided the authoritative case the same way they are open to criticism from hard line originalists as being for “living constitutions”.

          Of course, conservative jurists who rely on stare decisis and precedent do not believe that they are actually in favor of changing the Constitution from the bench. So in that regard they would probably take issue with much of the “living constitution” field of arguments.

          I think there is room for another whole area of disagreement among those of us who look to original intent first, if we can find it. Take the phrase “cruel and unusual”. Within the framework of known punishments many were considered cruel and unusual but they were not delineated, AFAIK, by the founders either in the Federalist Papers or the notes of debate that some of them kept. So it was up to legislators then to “know” what was cruel and unusual without a checklist and up to courts to limit the legislatures – but based on what? Based on evidence that there was a more humane or less painful way readily available to achieve the same end, or based on a notion that the punishment devised “shocked the conscience”, and always based on proportionality. But some originalists only will accept the meaning of cruel and unusual as it developed in the first generation of court cases – cases where the courts and legislatures were composed of FFs and sons of the American Revolution. Today the Supremes mainly take note of what most states do allow and generally will call a punishment most states have thoroughly abandoned cruel and unusual.

          I think the debate about “original intent” on “cruel and unusual” is just a big circle thingie. I like the somewhat deferential standard of Trop, although that 1958(?) case was fresh when I was in LS it may not still be good authority. Whatever.

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        • Mark:

          Of course, conservative jurists who rely on stare decisis and precedent do not believe that they are actually in favor of changing the Constitution from the bench.

          I don’t think relying on stare decisis, in and of itself, is grounds for labeling someone a “living constitutionalist”. The notions of stare decisis and original intent can be at odds at times, and I don’t think choosing the former over the latter when they are makes one a “living constitutionalist”.

          I think there is room for another whole area of disagreement among those of us who look to original intent first, if we can find it.

          There is plenty of space for disagreement, of course. The idea of a “living constitution” never even occurred to the Founders, yet they still implemented a Court of more than one judge, knowing that disagreements in reading the law and Constitution would exist. The reason original intent doctrine is better than “living constitution” doctrine is not because it always produces clear and indisputable results, but rather because it establishes the primacy of the law rather than a judge’s own political preferences. Sure, judges who seek to apply original intent might reach different conclusions, but those who do not seek to apply original intent are basically eschewing the rule of law altogether.

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        • Eh, I could see how you might be a living constitutionalist and a political conservative, depending on how you framed your decisions. I can see it as possible to decide cases based on what would be best for the conservative movement or most popular with conservatives without reference to original intent or textual interpretation. Particularly in terms of dismissing stare decisis and overturning precedent based on what conservatives would prefer. It seems to be a conservative would tend to align almost always with an originalist view, though, even if ultimately their concern was not originalism. It would be much harder for a left-winger to just align with originalism in their “living constitution” decisions, though.

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        • KW:

          Eh, I could see how you might be a living constitutionalist and a political conservative…

          The "living constitution" theory holds that the Constitution should be read to be ever and always changing and adapting to the "requirements" of existing circumstances. Conservatives, by definition, seek to conserve things as they exist, and are generally resistant to constant and rapid change. Therefore it is hard for me to view someone who adheres to the former as being characterized as the latter.

          Particularly in terms of dismissing stare decisis and overturning precedent based on what conservatives would prefer.

          I don’t see stare decisis as a matter of “originalism”, nor do I see a rejection of it in a particular case as an application of the “living constitution” theory. As I said to Mark, it is easy to see how stare decisis and originalism can be at odds.

          Like

        • I’m just saying that I grant that it is theoretically possible. I can’t think of an example, but I have to expect it would be possible for a conservative political movement to at some point benefit from something not originalist at some level. Or some lawsuit to be settled in a way that benefits the right in the political environment that’s not strictly originalist.

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        • It is definitely true that a corruption of the Constitution could result in the imposition of policy preferred by conservatives. An easy one would be if the Court deemed fetuses to be protected by Constitutional rights, thus outlawing abortion nationwide in one swipe. But it is difficult for me to imagine a conservative judge doing so, because such an obvious misreading of the Constitution would be a very unconservative thing to do.

          The contest between the two factions on the Court has never been between those who want to impose conservative policies and those who want to impose liberal policies. It has always been between those who think the substance of the Constitution should take precedence over preferred results, and those who think preferred results should take precedence over the substance of the Constitution. It should not be that surprising that conservatives, ie those who want to conserve culture, traditions, and existing institutions, tend to gravitate to the former, while progressives, ie those who are constantly seeking to change existing culture and institutions, would gravitate towards the latter.

          I really don’t think there is any reason to be averse to saying that the idea of a “living constitution” is a thoroughly left-wing phenomenon.

          Like

        • @scottc1: There is plenty of space for disagreement, of course. The idea of a “living constitution” never even occurred to the Founders

          Arguably some wanted something like that. Jefferson was a big believer that “life was for the living”, and felt that it would be appropriate to essentially hold something like a constitutional convention every 20 years, to update and revise and amend, with the idea of using lessons learned and new information to create a better and more modern constitution.

          I don’t think he’s the only one that had no particular reverence for the constitution, but (back to original intent) it’s import to think about what Jefferson expected would come from regular revision of the constitution (which would have still, presumably, been done by male landowners and others with a vested stake in the union): he would have likely expected a growing restriction on government powers. That is, Jefferson’s idea of a living constitution would have been one that regularly closed loopholes that government had found to enlarge its powers, and shrink it once more.

          So, it’s a good thing we did not decide to follow Jefferson’s course of re-writing the constitution ever 20 years, as by now we would be filling it full of “positive” rights as to what the government must do for and to its citizenry (for their own good), and likely special provisions to help incumbents remain so indefinitely.

          Like

        • KW:

          Jefferson was a big believer that “life was for the living”, and felt that it would be appropriate to essentially hold something like a constitutional convention every 20 years, to update and revise and amend, with the idea of using lessons learned and new information to create a better and more modern constitution.

          That is the opposite of a “living constitution” philosophy, in which the Constitution supposedly changes naturally and organically to meet the needs of the times. No convention needed to change it. It just happens.

          I don’t think he’s the only one that had no particular reverence for the constitution…

          I think it is fair to say that he had no reverence for the Federal Government, and that he even may have had no reverence for the substance of the Constitution itself. But that is no indication of how he thought Constitutional issues should be approached as a judicial matter. I am not aware of any reason to attribute to him a belief in a “living constitution”, an idea that didn’t even exist until Woodrow Wilson, who presented it specifically as critique of and counter to the understanding of the Constitution held by pretty much everyone until that point.

          Liked by 1 person

        • You make a good point. Jefferson was more on the “routinely replaced” constitution, where top enlightenment men would essentially hold another constitutional convention. Which, while arguing for a much more dynamic constitution, is far different from having a majority of justices on the bench say the constitution now says this because we think it does.

          Although one has to expect they knew something like a living constitution was a possibility, at least as far as the court was concerned. Or that justices would attempt to legislate from the bench. Which is why the congress is supposed to act as a check on their powers, although they never actually do.

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      • They also have a very contemporary view of the world that always shifts them, wherever they are now, to the side of the angels. They may be whitewash Wilson and FDR but they can also blame “right-wingers” around them, or suggest they had to do certain things because of “right-wing” factions, or simply dismiss them as being right-wing in those respects at the time. Thus, “right-wing” becomes a synonym for “bad”, which is ultimately their position.

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    • I liike this comment: “A constitutional amendment that requires 67 votes for SCOTUS confirmation would be a major improvement.”

      Then there would never be another successful Supreme Court nominee, would there?

      That being said: of course fortunes will favor a lefty SCOTUS one day. It did while Obama was president. That’s why smarter presidents appoint younger nominees (let’s be honest: Clinton could have done the left a real favor by appointing someone younger than RBG; he had no way of knowing she’d make it even this long).

      Like

  8. Gasp!

    Like

  9. Kos Kid has blown the lid off the Trump election / Brexit / Putin nexus,

    We are at the point where we have a trans-Atlantic “treason that may be an epidemic, not a localized political illness”
    There are many central figures who took their betrayal to both sides of the Atlantic, in service to Putin and his $$$$’s.  In the US, not just Trump, but many of the powerful republicans in Congress have sold out to Putin’s dollars, and the investigations can only go so far, when the lawmakers charged with putting a check on the executive are themselves complicit in the treason:  
    What is happening now is far different (than Watergate). Republicans have been acting as if they are complicit. What we are seeing, and the threads of the Russian infiltration suggest, is that the United States Congress may not be fit to investigate the Russian infiltration because the Russians may have compromised far more than the White House.
    If the Republican Party has been breached to the point of this level of inaction and silence when the nation and its constitution are under attack, and our chief law enforcement officer may also be implicated, how do you prosecute a treason that may be an epidemic, not a localized political illness? 

    Please log in or sign up to continue.
    kurious July 02 · 09:01:07 AM

    See, it’s all connected.

    https://m.dailykos.com/stories/1777274

    Like

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