Morning Report: More inflation data

Vital Statistics:

 

Last Change
S&P futures 2660.75 19
Eurostoxx index 347.9 2.9
Oil (WTI) 52.57 0.91
10 year government bond yield 2.89%
30 year fixed rate mortgage 4.72%

 

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

 

Donald Trump got into it with Democrats on live TV yesterday over funding for the wall. He said he would be “proud” to do a partial government shutdown in order to obtain funds for border security. “Partial government shutdown” all but screams that this shutdown will be symbolic only – usually the only thing they shut down are the monuments around DC – but that doesn’t always happen. As a general rule, the mortgage market should not be affected, but things like tax transcripts etc could be delayed. This sounds like it is all for show as both parties play to their respective bases.

 

Inflation at the wholesale level came in a hair above expectations, with the headline producer price index rising 0.1% MOM /  2.5% YOY. Ex-food and energy, the number was 0.3% / 2.7%. The Fed doesn’t necessarily put a lot of stock in the PPI, but it does show that inflation is beginning to creep above the Fed’s target of 2%. Building labor costs (which not only show up in direct wages, but also inputs like transportation) are being offset somewhat by declining commodity prices and strength in the US dollar.

 

Home prices rose 5.4% YOY in October, according to CoreLogic. “Rising prices and interest rates have reduced home buyer activity and led to a gradual slowing in appreciation. October’s mortgage rates were the highest in seven and a half years, eroding buyer affordability. Despite higher interest rates, many renters view a home purchase as a way to build wealth through home-equity growth, especially in areas where rents are rising quickly. These include the Phoenix, Las Vegas and Orlando metro areas, where the CoreLogic Single-Family Rent Index rose 6 percent or more during the last 12 months.”

 

CoreLogic estimates that 35% of all MSAs are overvalued, including the NY-NJ-LI area. This is interesting given that this area has barely rebounded off the 2012 lows, and has massively underperformed the rest of the US. This is evidence of the lack of wage growth in this area, primarily driven by secular changes in the financial services industry. Some of this was undoubtedly being driven by 0% interest rates, but a lot of it is technology replacing people.

 

NYC MSAs

48 Responses

  1. Apparently Krugman thinks the USA is part of an Axis of Evil with Russia and Saudi.

    https://www.haaretz.com/us-news/russia-saudi-arabia-and-the-u-s-are-the-new-axis-of-evil-claims-paul-krugman-1.6740109

    Headline may be misleading but I do not intend to read the story or to dig into it. I am comfortable thinking Krugman has lost it.

    If any of you study this deeply and report on it I will read your analysis, of course, but don’t put yourself out on my account.

    Liked by 1 person

  2. Stupid Congressmen Part I-have-lost-count:

    http://reason.com/blog/2018/12/11/sundar-pichai-google-ceo-house-tech

    Like

    • I’ve always considered the “unlawful campaign contribution theory” to be pure BS because WikiLeaks didn’t give the the E-mails to the Trump campaign, they released them to the general public.

      This is still just as valid a point now as it was right after the election:

      “Though Mr. Assange did not say so, WikiLeaks’ best defense may be the conduct of the mainstream American media. Every major publication, including The Times, published multiple stories citing the D.N.C. and Podesta emails posted by WikiLeaks, becoming a de facto instrument of Russian intelligence.”

      https://www.nytimes.com/2016/12/13/us/politics/russia-hack-election-dnc.html

      Under the theory being offered, every time a media outlet writes a negative story about one candidate, they are making an unlawful campaign contribution to the other one. And if the The Economic Espionage Act is going to be used to go after Trump for making use of the released material, then what’s the legal distinction between his campaign and the NYT for using the same stuff?

      And of course, HRC was doing the same thing with the Ukrainians vis-a-vis trying to get dirt on Trump:

      https://www.politico.com/story/2017/01/ukraine-sabotage-trump-backfire-233446

      Liked by 1 person

      • I have no reason to think unlawful campaign contribs would be treated as anything that required more than civil fines nor do I think that paying off women is any easier to deal with as a contribution-and-cover-up in a criminal court. See John Edwards.

        What is most interesting to me about that back-and-forth is the insistence by I-1’s defenders to focus on whether it was a criminal matter which is a distraction because the Special Counsel’s brief is to find Russian interference if any and detail it, wherever it may lead.

        If a crime involving I-1 is going to be pursued it will be a financial one – I have always said that here. Manafort is a bona fide big time crook. That is the sort of thing that may well concern I-1. Also Cohen is in $$$ a big time crook but his water carrying for I-1 is not at or near the core of that, AFAIK.

        There is a lot of talk in conservative circles about “process crimes.” I consider false swearing – lying about something immaterial to the investigation – a process crime. I consider perjury – lying about a material issue – to be a really bad crime.

        Some of these guys – like Manafort and his buddy – committed perjury. I suspect Cohen did, too.

        Like

  3. This is my favorite comment on the thread.

    And to arrange for us to spend ourselves into destruction, sort of like the way Reagan did to the Soviet Union. Trump’s disregard  for deficits may be part of Vlad’s plan for revenge, besides his own idiotic ideas that debt and tariffs aren’t bad (I’m a Wharton grad ya know?).
    Please log in or sign up to continue.
    Charley27 December 12 · 10:39:1

    https://m.dailykos.com/stories/1818495

    Like

    • We need a class if immigrant and refugee that have to agree to ineligible for federal and state aid for the entirety of their lives. Then they get to come in.

      They will still be eligible for room and board in prison, should they commit a crime. Might be tough to avoid that.

      Like

  4. Yet another thing to complain about

    Like

  5. Fucking Ruskies!

    Like

    • All the king’s mouthpieces and all the king’s celebrities couldn’t make the yokels buy into their priorities.

      wonder where transgender issues fall on that priority list.

      Liked by 1 person

    • Polls show imaginary boogeyman that even if true seems to have no immediate bearing on anybody’s actual life, outside of potentially oppressive government regulation designed to fight imaginary boogeyman, is not that important to most people. Shocking.

      Like

    • Yeah, but he’s flat wrong in his opening thesis

      “Everyone has a religion. It is, in fact, impossible not to have a religion if you are a human being. It’s in our genes and has expressed itself in every culture, in every age, including our own secularized husk of a society.

      By religion, I mean something quite specific: a practice not a theory; a way of life that gives meaning, a meaning that cannot really be defended without recourse to some transcendent value, undying “Truth” or God (or gods).”

      and here:

      “Which is to say, even today’s atheists are expressing an attenuated form of religion. Their denial of any God is as absolute as others’ faith in God, and entails just as much a set of values to live by — including, for some, daily rituals like meditation, a form of prayer.”

      Sure that covers some of the obnoxious militant atheists, but the vast majority just don’t care about religion. You just don’t hear from them.

      Ezra Klein is actually exactly right in this observation:

      “What he has done is come up with a tribal explanation for political tribalism: The problem is not enough people like him, too many people unlike him.”

      https://www.vox.com/policy-and-politics/2018/12/11/18131370/andrew-sullivan-religion-tribalism-christianity-trump

      Like

      • jnc:

        Yeah, but he’s flat wrong in his opening thesis…

        I’m not so sure. I’ve been looking for a long time and I still don’t think I’ve come across any life ethos that can be defended without recourse to some transcendent values. Have you?

        Like

        • But so many people do not have a life ethos.

          Otherwise, I tend to agree with you.

          Like

        • Mark:

          But so many people do not have a life ethos.

          I’d argue that almost everyone does, although for a lot of people it is a default ethos acquired from the wider culture and largely lived out unconsciously, in the absence of much thought.

          Like

        • Do you count “whatever I have to do for day-to-day survival” as a life ethos? If so, then probably almost everyone does have one. I count it as less than an ethos.

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        • Mark:

          Do you count “whatever I have to do for day to day survival” as a life ethos?

          Not necessarily, but I do count “the things I do in order to survive in a social setting that includes other people”. Morality ultimately boils down to how people relate to and engage with each other, and unless you live on a deserted island alone or you are a psychopath, it’s something that you develop, whether you do so consciously and with thought or not.

          Like

        • re: “the things I do in order to survive in a social setting that includes other people”

          That could evolve either into an ethos or into unrelated reactive random actions entirely situationally specific.

          So while I may share your long view about a personal ethos I remain dubious about a significant portion of humanity having developed one.

          Criminal lawyers will tell you that one of every 25 or so criminals are sociopaths who do not distinguish right from wrong and act only in their momentary perceived self interest, without second thoughts or regrets unless they get caught. If they are correct, than 24/25 of criminals have some level of personal ethos, even if they are indisposed to follow it on occasion. I suspect a higher than 4% rate of sociopathy in the US Congress, however.

          “Don’t get caught” does not qualify, IMHO.

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        • Mark:

          That could evolve…into unrelated reactive random actions entirely situationally specific.

          It could, I suppose, but from what I can tell it almost never does.

          Criminal lawyers will tell you that one of every 25 or so criminals are sociopaths…

          That’s why I excepted psychopaths from my claim.

          Like

        • @Scott –

          We are in general but by no means complete agreement here, as I have written. My sociopath remark was a prelude to getting in my dig at Congress.

          I don’t know current jargon but we used to think of “psychopaths” as delusional and “sociopaths” as rational.

          I suspect there are minimally developed qualities that you would consider an “ethos” that I would not. For example, valuing immediate family ties by itself would not constitute an “ethos” for me but it might for you. To be clear, most mammals seem to value immediate family ties at some discernible level. So that is too minimal for me to attribute to a human “ethos”.

          Joe, what do you think?

          Like

        • Mark:

          I don’t know current jargon but we used to think of “psychopaths” as delusional and “sociopaths” as rational.

          My understanding of the current thinking is that the difference, to the extent that there is any (there is definitely some dispute about whether there is), is fairly subtle. For example, people classed as psychopaths tend to be highly organized, while sociopaths tend to be disorganized. Another is that there is also some notion that psychopaths are born with the anti-social disorder, while sociopaths acquire is as the result of environment.

          In any event, I don’t think the difference lies in any tendency to delusion. What defines them both is the absence of any emotional or empathetic connection to other people.

          Like

        • Depends how you define “transcendent values”. Presumably, those values do not have to be religious.

          Like

        • If this is what is required:

          “a meaning that cannot really be defended without recourse to some transcendent value, undying “Truth” or God (or gods).”

          Then no. A large number of people just don’t give a shit about defending their morality at this level on a daily basis.

          Or as you put it:

          “and largely lived out unconsciously, in the absence of much thought.”

          Like

        • Jnc:

          If this is what is required:

          According to Sullivan’s explicitly stated use of the word “religion”, it is what is required.

          Then no.

          Then why do you thiink Sullivan is flat wrong?

          Like

        • Because most people don’t defend their way of life by recourse to “some transcendent value, undying “Truth” or God (or gods).”

          I suppose you could say they don’t have a life ethos at all, which would be fine except for the fact that Sullivan claims that “Everyone has a religion” too.

          Like

        • jnc:

          Because most people don’t defend their way of life by recourse to “some transcendent value, undying “Truth” or God (or gods).”

          Sure, but only because most people don’t bother to defend their way of life in any way at all. The mere fact that someone is not interested in defending their way of life in the first place doesn’t mean that their way of life isn’t in fact defensible only through recourse to some transcendental value. Again, I’m not aware of any system of morality that isn’t ultimately based on some transcendental value.

          I suppose you could say they don’t have a life ethos at all

          But I wouldn’t say that. I think think that virtually everyone does, even those who don’t consciously think about it in such terms.

          Like

        • If you think life is worth living or that it is an intrinsic good in some way, I would think you have an ethos. IMO. Believing human life has value because it does–or you because you are alive–has a transcendent quality to it, I think. In a “I am that I am” sort of way.

          Like

      • “Which is to say, even today’s atheists are expressing an attenuated form of religion. Their denial of any God is as absolute as others’ faith in God, and entails just as much a set of values to live by — including, for some, daily rituals like meditation, a form of prayer.”

        Sure that covers some of the obnoxious militant atheists, but the vast majority just don’t care about religion. You just don’t hear from them.

        He’s not talking just about militant atheists–who, yes, are super religious–but just people who have substituted a belief in God with a belief in social justice or the environment or progress or something, and have their own rituals like meditation or yoga, etc. The idea there is that people substitute their belief in a specific religious higher power with a belief in a more amorphous secular higher power with much more flexible worship and prayer rituals. There’s an argument for that.

        More to the point, I think *most* people have things that treat with a least a mild religious regard. If they aren’t particular theologically religious, they may be very into politics or social issues or “revealing the truth about X” or whatever. Veganism tends to be religious, the animal rights folks tend be pretty religious about their beliefs, etc.

        Like

        • environmentalists..

          FWIW, I think just about every flavor of leftism is more of a cult than a religion…

          Like

        • They tend to be culty in terms of who you get the most exposure to (on the news or via social media), but I think there’s a “regular religious guy, not making waves” for whom environmentalism fills the void where devoted religious belief might have filled it 50 or 100 years ago.

          Like

      • Re: Ezra:

        I knew when we launched Vox that there would be criticisms I didn’t anticipate, but I’ll admit, I never foresaw one of them being that writing explainers doesn’t satisfyingly replace the role of religion in people’s lives.

        If he knew there would be criticisms he wouldn’t anticipate, then why would he say he never foresaw this criticism. Doesn’t he mean: Welp, this is one of those criticisms I didn’t foresee!

        But I definitely agree with this: This is a relentlessly ahistorical read of American politics. America’s political past was not more procedural and restrained than its present, and religion does not, in general, calm political divides. What Sullivan is missing in these sections is precisely the perspective of the groups he’s dismissing.

        But then there’s this, after accusing Sullivan missing the perspective of the groups he was dismissing:

        “A lot of what people nostalgically consider eras without tribalism are in fact moments in American history where people of color, particularly black people, have been deprived of political power, and so things like ethnic and racial lines became less salient.”

        Which seems to completely ignore the context and perspective of the time, where during those periods those weren’t remotely the big tribal issues. I’d agree their were tribal issues, but the equivalent of today’s identity politics was not really one of them. They also tended to be more regional and more local.

        I have written about this before, but politics was certainly not mere proceduralism in the country’s early years, when new arrivals from Europe drove out the Native Americans, brought over millions of enslaved Africans, and wrote laws making women second-class citizens.

        He such a pajama-boy. And not even a dismissive nod to the entirely different cultural perspective and context to which he refers, trying to make what we now see as obvious awful and appalling behavior as pretty much transparently as awful and abhorrent to everyone in the 18th century as it is to us now, only they were morally inferior to juiceboxers because, you know, reasons or something.

        And he continues his ahistorical slide. “When the Dixiercrats scrambled the parties ideologically” . . . Presuming by the parties he means “Strom Thurmond”. You still have Democrats elected in more conservative districts. You have blue dog demograts and liberal Republicans up until recently. The whole idea that the 60s hit and all the Democrats became lefties and all the Republicans became white supremacists “for reasons” makes Sullivan’s stuff seem nuanced.

        He looks back on American history and sees a politics of becalmed proceduralism, which was often — though certainly not always — true for white men.

        I wish I wasn’t a whiteman so I could roll my eyes, sigh, and ask him when he’s going to get out of his pajamas.

        That said, after practicing his identity politics (and I guess establishing his bonafides) he does demonstrate some understanding that identity politics is becoming more pronounced and problematic. So there’s that.

        Like

      • “What he has done is come up with a tribal explanation for political tribalism: The problem is not enough people like him, too many people unlike him.”

        Of course, this is the explanation for “the problem” by almost everybody. Because it’s how human beings work. If someone thinks they are “the problem”, they are likely to change in some way so they are not “the problem”. And then the problem is people that haven’t smartened up and changed, like they did.

        And on and on it goes.

        The problem is, most people don’t see this clearly. Not the way I do. 🙂

        Like

    • Interesting take:

      “Sullivan’s phrase “New Religions” has a direct and commonly-used Japanese translation: shinshūkyō. After the Meiji restoration and the defeat of Imperial Japan, the shinshūkyō began sprouting to replace Buddhism, Confucianism, and Shintoism, each of which in its own way had been discredited. Emperor Hirohito was not only a head of state but a god who renounced his divinity as a term of Japan’s surrender. Going to Japan often feels like a trip to the medium-term future; here the catastrophic inadequacy of Japan’s civil religion preceded by about 75 years the inadequacy Sullivan is diagnosing in America.”

      https://www.theatlantic.com/ideas/archive/2018/12/maga-is-americas-new-religion/578110/

      Like

      • The SJW left and Westboro Baptist Church are two peas in a pod. They are the opposite sides of the same coin…

        Like

      • He is older than I am, and no doubt remembers the thrill of the collapse of Communism, of the rapid metastasis of democracy across Europe and the rest of the world. These were thrills of liberalism, and I dare say they matched any ecstasies witnessed at a Trump rally.

        I don’t see how the collapse of communism equates to being “the thrills of liberalism”, or gives greater meeting to any given national political movement at a religious or tribal level, per se. I’m not following his argument here.

        It’s the follow up to this: Take, for example, Amy Chua, who writes that “the great Enlightenment principles of modernity—liberalism, secularism, rationality, equality, free markets—do not provide the kind of tribal group identity that human beings crave.”

        I’m not seeing how the the thrills of the collapse of Communism refutes that in any way.

        Trump officials call this attitude realism. It surely is not “religious,” even in Sullivan’s expansive use of the term. What makes the maga movement alarming is that it has rejected liberalism

        I’m assuming Wood is using the term liberalism to mean “classical liberalism” or “enlightenment thinking”, and certainly not the progressivism that liberalism is typically used to refer to today. That being said, you can call it “religiosity” or “tribalism” but surely the Trump reign is almost pure tribalism.

        Like

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