Morning Report: Conference Board sees strength ahead

Vital Statistics:


Last Change
S&P futures 2778.5 6.25
Eurostoxx index 360.61 -0.25
Oil (WTI) 69.1 0.5
10 year government bond yield 3.17%
30 year fixed rate mortgage 4.89%


Stocks are flattish on no real news. Bonds and MBS are flat.


Initial Jobless Claims fell to 210k last week, which means there is little (if any) evidence of the hurricanes affecting the employment numbers.


The index of leading economic indicators rose 0.5% in September, which is a strong reading. It points to economic strength through the end of the year and into 2019. The report noted capacity constraints, which is surprising given the capacity utilization numbers, which are still historically average at best. Note the high capacity utilization numbers in the 1970s – this was a big driver of inflation. Production generally goes from most efficient to least efficient (you use the best equipment first, and then go to more and more marginal equipment as you continue to expand). The less efficient equipment means higher costs and those get passed on to the consumer. The current capacity utilization levels are nowhere near what they were in the 70s.


capacity utilization


The Conference Board sees growth coming in at 3.5% for the second half of 2018, however we will need more help from housing to put up those types of numbers in 2019.


The CFPB is taking a closer look at the disparate impact theory of fair lending, presumably with an eye to limiting the more expansive use of the theory under the previous administration. The CFPB is looking to possibly codify this in a rule, which would be much more permanent than a more informal statement. The Obama Administration took an aggressive stance towards the use of disparate impact, which is a controversial idea – it basically means that intent is irrelevant. If your numbers don’t match the population, you are guilty of discrimination, no questions asked. Since discriminatory intent is notoriously hard to prove, this rule amounts to a waiver for the government from having to prove it. It is a plaintiff’s dream.


The MBA sees mortgage rates topping out soon. Their latest forecast has mortgage rates leveling out at 5.1% over the long term. In other word, regardless of what the Fed intends to do going forward, the Great Post Crisis Mortgage Rate Hike is largely done. Note the MBA sees even less volume in 2019 than 2018, although at a much shallower drop than 2017-2018.

19 Responses

  1. How is Beto O’Rourke not misappropriating a Spanish name?

    Fuckin’ racist if you ask me. It’s something I’d expect from a white woman, not a man.

    Liked by 1 person

  2. Happy 31st birthday to the Greenspan Put


  3. A salutary effect of the SCOTUS fights, progressives will have to learn originalist and textualist approaches to constitutional law.

    Liked by 1 person

    • From Slate:

      Similarly, as I explain in my book on Scalia, The Justice of Contradictions,…

      Quite literally the only reason Scalia can be judged to be guilty of contradictions is because the judicial philosophy that he espouses provides objectively knowable results, which is precisely what makes it the proper judicial philosophy. The reason that justices like Brennan, Breyer, and the Wise Latina can rarely if ever be said to be contradictory is because their judicial philosophy boils down to nothing more than the subjectivism of “it is right because I say it is right”.


  4. Interesting role reversal on immigration and refugees since the 1970’s.

    “A Lesson in History: Resettling Refugees of Vietnam
    January 14, 2007

    In 1975, President Gerald Ford set up an interagency task force that resettled 130,000 refugees from South Vietnam after the fall of Saigon. Julia Taft was the head of President Ford’s Inter-Agency Task Force on Indochinese Refugee resettlement.

    ELLIOTT: So politically, that was difficult for him?

    Ms. TAFT: At first, it was politically difficult. Our biggest problem came from California.

    ELLIOTT: Why?

    Ms. TAFT: Jerry Brown.

    ELLIOTT: Then the governor.

    Ms. TAFT: Then the governor. And Mario Obledo, who was the – I guess he was called the secretary of welfare or something. They were very difficult. They didn’t want any of these refugees, because they had also unemployment. They had already a large number of foreign-born people there. They had – they said they had too many Hispanics, too many people on welfare, they didn’t want these people. And we spent a lot of effort trying to ease their concern and really established for the whole country programs where the federal government would compensate states.

    But it was a moral blow to us that they were not supportive. So at one point, I had to tell the governor that I would be able to go on TV and to the media and to the voluntary agencies and announce that the governor did not want any church, synagogue, family, former military family in California to be able to help these people.”

    See also:


  5. “Many Top Donors to “Black Americans for the President’s Agenda” Are, In Fact, Wealthy White People

    By Aaron Mak
    Oct 19, 20184:24 PM”

    Maybe they identify as black? Maybe they are 1024th black?

    Liked by 1 person

    • So it was weird or racist when white people donated to Obama’s campaign?

      It seems odd that the article is spun from the top donors being white, as if thats more suspicious than anything that goes on with any other PAC, but never suggests anything about how much of the money actually comes from such donation, or what the likely racial makevup is if all fhe $10.00 donors.


    • Garden variety virtue signalling


  6. I don’t give a fuck about this freaky Kashoggi dude. I thought this issue is manufactured from the getgo. This is a good explainer.


    • Yup, that pretty much covers it.


    • He’s on the same level as Otto Warmbier for me. It’s unfortunate that he’s dead, but this isn’t shocking or particularly new behavior by Saudi Arabia.

      No one bats an eye when Saudi Arabia blows up a bus filled with kids in Yemen, but if they kill a dissident who happens to have a column in the MSM, then it’s WW III.

      I’m reminded of the Joker in the Dark Knight:

      “You know what I’ve noticed? Nobody panics when things go “according to plan.” Even if the plan is horrifying! If, tomorrow, I tell the press that, like, a gang banger will get shot, or a truckload of soldiers will be blown up, nobody panics, because it’s all “part of the plan”. But when I say that one little old mayor will die, well then everyone loses their minds!”

      If Saudi Arabia had been more effective at trolling, they would have claimed he died while resisting arrest and unfortunately the body cams were turned off at the time. And then ask the US to compare statistics on deaths while resisting arrest. Or compare it to the US hitting Anwar al-Awlaki with a drone strike.

      What I think may backfire here is the special status being accorded him by the media because he was a commentator for the Washington Post and somehow trying to blame it on Trump. The people yelling the loudest were the ones who a few months ago were hailing the Saudi prince as a moderate reformer. They have to point the finger at Trump to distract from their own embarrassment.


  7. The left making an ass of itself is somehow the Right’s “perfect weapon.”


    • “Otherwise, how are you not complicit?”

      They are such unrepentant bullies. And they just can’t hear themselves. “If you don’t do what I think you should do, that’s just the same as actively supporting the murder of black teenagers!”


    • “”I know it must sound like a privilege ass sacrifice but it’s all I got”

      Yes, Yes it is.


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