Morning Report: Apple fuels global growth concerns

Vital Statistics:

 

Last Change
S&P futures 2474.5 -35.25
Eurostoxx index 335 -2.14
Oil (WTI) 46.64 0.1
10 year government bond yield 2.64%
30 year fixed rate mortgage 4.43%

 

Stocks are lower this morning after Apple cut guidance. Bonds and MBS are up.

 

Apple cut its profit forecast last night after the close, which added fuel to the “risk off” trade. Declining iPhone sales in China were the issue, which is adding to the slowing global growth story. Tesla also cut its forecast, so some of the darlings of the 2018 stock market are beginning 2019 in the hole. The 10 year bond yield is at 2.64% the lowest level in almost a year.

 

The economy added 271,000 jobs in December, according to the latest ADP jobs report. This is the strongest reading over the past year, and indicates that 2018 finished on a strong note, despite the turmoil in the markets. This print is also well above the Street estimate for payrolls (177k) in tomorrow’s jobs report.

 

ADP report

 

Speaking of labor data, initial jobless claims came in at 231k last week. This is a touch higher than the previous numbers we have been seeing, but there probably is some seasonal noise in the number. Challenger and Gray noted 43,884 job cuts in December, and said that total job cuts in 2018 were 29% higher than 2017, largely driven by retail bankruptcies.

 

Mortgage applications were down about 10% last week as purchases fell 12% and refis fell 8%. The number includes an adjustment for the Christmas holiday, so there probably is some noise baked in, however it shows that (so far) mortgage applications aren’t really reacting much to the drop in rates. Again, this is the seasonally slow period so it is hard to read too much into it. The spring selling season begins in about a month.

 

Realtor.com sees continued tough sledding for the luxury end of the market, as excess supply, higher rates and tax changes all contribute to weakness. FWIW, the luxury end of the market had been outperforming for years, and supply has finally caught up with demand.

21 Responses

    • I think China is headed for a 1929 (US) and 1989 (Japan) style collapse. At the height of a real estate bubble they have a 20% vacancy rate.

      Which means that fears of inflation in the US are overblown.

      Like

  1. Proof positive that there exists literally no Constitutional argument or claim that is so over-the-top stupid and manifestly wrong that it won’t be made by some progressive lawyer somewhere.

    https://www.theatlantic.com/ideas/archive/2019/01/heres-how-fix-senate/579172/

    The obvious reply is, “This is impossible! The Constitution plainly says that each state gets two senators. There’s even a provision in the Constitution that says this rule cannot be amended.” Indeed, Article V, in describing the amendment process, stipulates that “no State, without its Consent, shall be deprived of its equal Suffrage in the Senate.”

    This seems like a showstopper, and some scholars say it’s “unthinkable” that the one-state, two-senators rule can ever be changed. But, look, when conservative lawyers first argued that the Affordable Care Act violated the Commerce Clause, that seemed unthinkable, too. Our Constitution is more malleable than many imagine.

    First, consider that Article V applies only to amendments. Congress would adopt the Rule of One Hundred scheme as a statute; let’s call it the Senate Reform Act. Because it’s legislation rather than an amendment, Article V would—arguably—not apply.

    Second, the states, through the various voting-rights amendments—the Fourteenth, Fifteenth, Nineteenth, Twenty-Fourth, and Twenty-Sixth—have already given their “consent” by directing Congress to adopt legislation to protect equal voting rights, and this delegated power explicitly applies to “the United States” as well as the states. The Senate Reform Act would simply shift seats according to population. No state or its citizens would lose the franchise.

    Like

    • why do you hate democracy?

      Like

    • “that it won’t be made by some progressive lawyer somewhere.”

      And treated seriously and published in what’s considered the “mainstream media”.

      Like

    • “But, look, when conservative lawyers first argued that the Affordable Care Act violated the Commerce Clause, that seemed unthinkable, too.”
      No it didn’t.

      Like

      • nova:

        No it didn’t.

        Indeed, quite the opposite. It seemed…and still is…inconceivable that the ACA doesn’t violate the Commerce Clause.

        Like

    • Clearly it’s just misogyny.

      https://www.theatlantic.com/ideas/archive/2019/01/elizabeth-warren-unpopular-it-depends-who-you-ask/579247/

      Edit: It’s kind of funny that the Guardian article is just a rehash of Peter Beinart’s article in The Atlantic from the previous day.

      This is some class A trolling though.

      https://www.vox.com/2018/10/16/17983250/elizabeth-warren-dna-test-cherokee-nation-trump

      Like

      • Gotta love Vox

        “It’s both a reference to Warren’s campaign and an (inaccurate) dig at her heritage”

        She is 1/1024th. fRump is LYING

        Like

        • The best part is their long explanation that basically explains why he’s right.

          They can’t address the core issue which is no one can claim with a straight face that she should have benefited from affirmative action to make up for past discrimination against her due to her being Native American and/or that she significantly added to “diversity” at Harvard on account of her being a Native American.

          Every time she brings it up, she goes further down the road to Rachel Dolezal.

          Relatedly, this was pretty funny even if not real:

          “Diversity On-Demand

          Rent-A-Minority is a revolutionary new service designed for those oh-shit moments where you’ve realized your award show, corporate brochure, conference panel is entirely composed of white men. For, like, the fifth year in a row. Suddenly you’re being called out on Twitter and you need to look not-racist and not-misogynist fast. Actually doing something meaningful to disrupt institutional inequality would be way too much work; so why not just Rent-A-Minority instead?”

          http://rentaminority.com/

          Like

        • The fact that it is just a rehash of Beinart makes me believe they really do still coordinate their talking points a la Journ0list.

          Like

        • I think it’s just lazily not giving him an attribution. But she does call the media out where he doesn’t so it’s sort of a synthesis between Beinart and Taibbi.

          Like

    • Who wants to elect their first wife?

      Like

  2. Wow:

    “White House Mulls Jim Webb, Ex-Democratic Senator, as Next Defense Secretary”

    Like

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