Morning Report: Amazon buys into Fight for $15

Vital Statistics:


Last Change
S&P futures 2926.5 -3.75
Eurostoxx index 381.96 -1.98
Oil (WTI) 75.37 0.07
10 year government bond yield 3.07%
30 year fixed rate mortgage 4.71%


Stocks are lower this morning on no real news. Bonds and MBS are flat.


Home prices rose 0.1% MOM and 5.5% YOY during August, according to CoreLogic. This growth rate was the slowest pace in two years, and reflects the decline in affordability due to higher rates and prices.  The areas of undervaluation are concentrated primarily in the Midwest, parts of the South and parts of inland CA.  One thing to keep in mind is that overvaluation / undervaluation is based on incomes and is therefore a moving target.


Corelogic overvalued


Speaking of incomes, Amazon has just increased its minimum wage to $15 an hour and will lobby Washington to increase the Federal minimum wage as well. Amazon has been under relentless pressure from the left, and finally gave in. Lobbying for a hike in the Federal minimum wage is interesting. Perhaps that was the price Amazon had to pay to get the left to leave it alone, however Amazon probably can afford to pay its workers higher wages than the brick and mortar retailers with which it competes. So it might make business sense for them to do that. Amazon already punches well below its weight margin-wise, so the Street might not like it so much.


Bottom line for rates: we are seeing enough anecdotal evidence of increasing wages that it is going to start showing up in the numbers. The big question is whether it throws the Fed off their planned normalization policy. Janet Yellen (who probably is representative of most of the FOMC voting members) wanted to let the labor market run hot for a while. I don’t think Powell is any different. Until we see a move up in the core PCE inflation ratings, I don’t think the Fed will deviate from its plan to wrap up this tightening cycle next year. We have had a lot of hikes already in 2018, and rate hikes act with a 3 month to 1 year lag.


Aside from labor, rising oil prices are something to watch as well. The Fed generally focuses on core inflation (ex-food and energy) but eventually higher commodity prices become embedded into other prices. Oil is trading at $75 right now, and OPEC seems happy to let the price run. There is talk of $100 oil again.

44 Responses

  1. however Amazon probably can afford to pay its workers higher wages than the brick and mortar retailers with which it competes.

    Amazon can also afford to automate at levels nobody else does. Thus, eliminating more minimum wage jobs than even big box retailers can.


  2. And arguing for a federal $15 wage is a great way to eliminate a lot of their traditional competition, big and small.


  3. You notice they aren’t arguing for, say, federal mandatory severance packages or employment guarantees, for example.


  4. Progressives discover blue laws as an anti-capitalist exercise:


    • Progressivism is a religion…of course they are going to follow the Church playbook.


    • While this may seem like a back door to the establishment of religion

      If I’m not mistaken, the constitution doesn’t have anything to say about religious laws at the state level, and the establishment of religion clause specifically says the federal government can’t do it, not that the states may not. So states doing what they are constitutionally allowed to do isn’t a back door to anything.


      • “the constitution doesn’t have anything to say about religious laws at the state level,”

        Incorporation doctrine based on the due process clause of the 14th Amendment. Same reason the rest of the Bill of Rights applies to the states.

        Liked by 1 person

        • jnc:

          Incorporation doctrine based on the due process clause of the 14th Amendment.

          I think it would be more accurate to say incorporation doctrine based on SCOTUS’s re-writing of the 14th amendment. KW is right…the constitution itself has nothing to say about religious laws at the state level.


        • Sure, but that’s why it’s applied to the states now.


        • Ah. Gotcha.


    • And that being said, as Brent noted, it’s interesting that blue laws are a threat of “establishment of religion” when religious in nature, but viewed through a progressive secular prism where it’s about letting enlightened liberals decide when people can work and buy things THEY’RE AWESOME!!!

      Liked by 1 person

    • While I’m not aware of a specific law that led to my difficulty finding a place to eat in Little Rock, the cultural tradition of blue laws was strong enough that restaurants offering Sunday brunch appeared far less common than in more secularized places where I’ve lived.

      The poor hipster couldn’t find anything but Waffle House in Little Rock

      Liked by 1 person

    • “This compelling interest in togetherness is vital, as it suggests the state may have a valid legal interest in supporting the formation of strong communities and social bonds outside of taxpaying employment.”

      too bad progressives have spent the last 100 years undermining the very concept.

      Liked by 1 person

    • The social choice to protect a single day of the week for society to collectively step back from work and commerce and spend some time together should be endorsed across the political spectrum (except, perhaps, among totalitarians and libertarians; the former due to a distaste for robust private assembly, the latter due to an overzealous desire for the universal commercialization of humanity).

      the idea that my time is my own if and if want to spend it working just never occurs to them.

      Liked by 1 person

  5. AMZN’s next earnings call is gonna be lit AF…


  6. Amazon’s announcment:

    I am interested to see what % of profit this is gonna cost them. If Bernie is publicly praising this, you know this was a government-led negotiation.

    Liked by 1 person

  7. Trump pressures businesses to do what he wants:Authoritarianism

    Bernie pressures business to do what he wants: Doing the right thing

    Liked by 1 person

  8. This from Ace made me laugh. Hard.

    Update: This story had been a bus crash.

    Then it devolved into the crash of a bus filled with clowns.

    Now it has entered a new phase: A bus full of circus clowns crashing into a school for blind children and even worse the clowns were doing their “Gasoline Comedy” act that day and now all the blind children are on fire and the clowns are trying to squirt water on them with their stupid lapel-flowers but the flowers are just squirting out more gas and the children are crying tears of fire out of their Unseeing Dead Eyes and holy shit a couple of the clowns look like they have boners and they’re chasing around the fiery blind children trying to rub up on them with these bobbling clown-boners with big red bulbs on their tips.

    Damn near as funny as my butt-chugging / vodka douche crack earlier that you humorless bastards chose to ignore.

    Liked by 1 person

  9. Great comment from Douglas Murray:

    From this distance, it seems to me that it is not only Judge Kavanaugh who has been put in “zugzwang,” but the whole nation. Every which way it now turns — at the political and judicial level — will only make the situation worse. For instance, people might choose to sink even lower than the depths that their opponents are plumbing. Or people could try to take the moral high ground, which at this stage would be akin to allowing a political massacre.

    The only obvious upshots are an ever-increasing layer of public distrust and cynicism and an ever-greater dearth of sane people willing to volunteer for any role in public life. But as Kevin Myers showed, for a society not to spin its way down into any and every madness, it has to have at least some agreement on basic mores and facts. It is hard to find an area of American public life that does any longer. And that is a fact that should worry America’s friends as well as its citizens.

    Read the whole thing.


  10. Relax though, the climate change data is Rock. Fucking. Solid.

    Liked by 1 person

    • Listening to Good Calories, Bad Calories again. It’s basically a very long book about how the science on cholesterol and dietary fat is backwarda, especially in terms of what bs is and continue to be fed to public, and why, and how long we’ve had data that tells us it’s not right. Yet we still worry about cholesterol and say things that there is little evidence for and lots of evidence against, such as the correlation of high cholesterol and heart disease.

      Reminds me of climate science: don’t look for evidence, just listen to the “experts”: I.e., people of have gotten themselves into political positions of power.


Be kind, show respect, and all will be right with the world.

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: