Morning Report: Mark Calabria to testify in front of the Senate today.

Vital Statistics:

 

Last Change
S&P futures 2757 7
Eurostoxx index 366.36 1.6
Oil (WTI) 54.46 0.56
10 year government bond yield 2.65%
30 year fixed rate mortgage 4.43%

 

Stocks are higher this morning as earnings continue to come in. Bonds and MBS are up.

 

We have some inflation data, with the consumer price index flat MOM and up only 1.6% YOY. Ex-food and energy, the index rose 0.2% MOM and 2.2% YOY. At the wholesale level, the producer price index fell 0.1% and 2% YOY. Ex-food and energy, the index rose 0.2% MOM and 2.5% YOY. Inflation remains under control, despite rising wage pressures which is a bit of a Goldilocks scenario, especially with respect to the Fed.

 

December retail sales were disappointing, falling 1.2%. The control group, which excludes volatile sectors like autos and building materials, fell 1.7%. This data was delayed by the government shutdown – we should be getting Jan numbers tomorrow.

 

Initial Jobless Claims rose to 239,000 last week.

 

It looks like Trump is going to sign the spending deal hashed out in Congress that provides some of the money he requested for the southern wall. He will continue to look for other options to get funding as well. Whether that includes declaring a national emergency to siphon fund from DOD is anyone’s guess.

 

Mark Calabria is set to testify before the Senate today as it considers his nomination to run FHFA, the housing regulator that oversees Fannie and Freddie. Calabria is a libertarian, and has questioned the government’s role in the mortgage market – particularly the support it gives the 30 year fixed rate mortgage, which is a distinctly American product which wouldn’t exist without government subsidies. Calabria has also been critical of the whole mortgage securitization market in general, believing that banks should hold (and service) more of their loans. The vote is expected to fall along party lines, with Republicans voting in favor and Democrats voting against.

 

The 30 year fixed rate mortgage is an anomaly that doesn’t exist anywhere else in the world that I am aware of. In most other countries, mortgages are adjustable rate, and banks hold them without government backstopping the credit. In other words, the borrower bears the interest rate risk, and the bank bears the credit risk. In the US, the lender bears the interest rate risk and the taxpayer bears the credit risk. Calabria has been critical of this product, arguing that it artificially inflates housing values which is a valid criticism. Of course the 30 year fixed rate mortgage isn’t the only subsidy out there – the tax treatment of mortgage interest is another, and flood insurance is another. These programs makes housing more affordable relative to incomes, which means it will be vulnerable to shocks. Does that mean these programs cause bubbles?  Not necessarily, since we have seen housing bubbles in several countries that don’t have these supports.

 

Mortgage delinquencies continue to fall, as the 30 day DQ rate hits the lowest level in 10 years. 30 day DQs fell from 5.2% to 4.1% over the past year, while foreclosures fell from 0.6% to 0.4%. CoreLogic CEO Frank Martell said, “On a national basis, we continue to see strong loan performance. Areas that were impacted by hurricanes or wildfires in 2018 are now seeing relatively large annual gains in the share of mortgages moving into 30-day delinquency. As with previous disasters, this is to be expected and we will see the impacts dissipate over time.”

80 Responses

  1. Guess Trump wasn’t being paranoid about the “Deep State” after all.

    https://www.vox.com/2019/2/14/18224783/trump-60-minutes-andrew-mccabe-fbi-25th

    Like

    • jnc:

      Guess Trump wasn’t being paranoid about the “Deep State” after all.

      Interesting that Justice department officials “deliberated” invoking a power that was possessed by the VP and cabinet members. In other words, a power not possessed by them. Deep state indeed.

      Liked by 2 people

      • WWHD?

        (What Would Hoover Do?)

        Liked by 1 person

      • The AG is a Cabinet member.

        Like

        • Yes, but I don’t believe that Sessions was involved in the discussions. This was at a lower level and McCabe was in the FBI.

          Liked by 1 person

        • Corked me.

          Liked by 1 person

        • Mark:

          The AG is a Cabinet member.

          You think McCabe was “deliberating” with Sessions? The article doesn’t suggest that and I find it highly improbable.

          Liked by 1 person

        • Under many circumstances, I think the initial impetus for a 25th Amendment inquiry would come from a professional rather than a political calculation, something along the lines of repeated security breaches by the POTUS or a medical exam revealing tertiary syphilis or criminal misconduct like taking bribes.

          No, I am not suggesting that is all that was going on here. But I am suggesting that FBI is a likely source for initial discussions within Justice which would lead to involving the AG, if fruitful. On criminal matters that would be the route.

          McCabe is to me an example of why a guy bred in counter-terrorism investigations is out of his lane on the law enforcement side, but that is my forever down in the weeds analysis of the dichotomous world that is FBI.

          Perfectly professional investigators in the field report suspicious pilot training of Arabs who do not want to know how to land the aircraft and that news doesn’t get to counter-terrorism but languishes in someone’s in basket.

          Counter terrorism guy thinks his boss was fired to stifle an ongoing intelligence investigation and BOOM! Let’s record POTUS surreptitiously and get intelligence, not evidence, that would support cornering Sessions into raising Article 25.

          Like

        • George, I think it supports what I wrote. I agree with it completely.

          Addendum: Law enforcement guys are suspicious but the intelligence guys I have met are way beyond that, as a matter of conditioning.

          Except for one friend of mine who was CIA and claimed never to have done anything at all but cut news stories from eastern European newspapers.

          Like

  2. Looks like McConnell is right after all:

    “Does Washington Know the Difference Between Dissent and Disinformation?

    If not, we should be troubled by a passage buried in H.R. 1, the Democrats’ first House bill
    By Matt Taibbi”

    https://www.rollingstone.com/politics/politics-news/hr1-democrats-house-of-representatives-794254/

    Liked by 1 person

    • the totalitarian left in action..

      Like

      • A “political influence campaign” by an American in America is so close to the heart of the First Amendment protections that whoever inserted that clause is a freaking fool, on top of having an authoritarian [left] mindset. I can imagine someone on the right inserting the same stupid language of course, although not a libertarian. Not the sort of black hole into which the Volokh team would ever fall.

        Like

        • Well, what should be an obvious problem for anyone is that anyone could and probably use it to fight dissent they didn’t like, based on who was currently problem. So a nationalist or right-of-center populist could use it just as easily as anyone on the left … if they wanted to risk it. The suppression of dissent via such a tool would light social media on fire, and suppressing every social media account unhappy with the authoritarian tactics would be hard. First they deplatform and then those people start speaking in code or start congregating on reddit or in the comments sections of obscure blogs and …. it’s a bad idea on every level. And would cost any one who used it as much politically as they gained in the modern era.

          Like

  3. If California can’t even build a high speed rail line between San Francisco and Los Angeles, what chance does the Green New Deal have?

    https://www.vox.com/policy-and-politics/2019/2/15/18224717/california-high-speed-rail-canceled

    Interesting change in priorities:

    “To the surprise of hardened cynics, myself included, Newsom has moved swiftly since his inauguration to address the state’s housing crisis, championing initiatives that have the potential to transform the face of urban California. Between now and 2025, he has called for the construction of 3.5 million new housing units, or an average of 500,000 a year. Considering that California has built an average of 80,000 new homes per year over the past decade, this is a pretty lofty goal. Newsom is envisioning a building boom that would surpass that of the postwar era, and that is exactly what the state would need to make up for lost time. This effort will require every ounce of his political capital, and it made the choice before him clear. Newsom could either fight tooth and nail for a bullet train for the classes, or devote his energies to building housing for the masses. So far, he seems to have made the right call.”

    https://www.theatlantic.com/ideas/archive/2019/02/governor-newsom-addresses-californias-housing-crisis/582892/

    Like

  4. Worth noting:

    “Mel Watt attempted to ‘coerce’ relationship with employee while FHFA director, IG report says”

    https://www.washingtonpost.com/business/2019/02/15/ig-report-former-congressman-attempted-coerce-relationship-with-employee/

    Like

  5. Horrorific.

    Liked by 1 person

    • it never dawns on them that all of these supposed hate crimes seem to happen in places that aren’t known for being real white supremacist hotbeds like Brooklyn, Portland, and Chicago.

      Liked by 1 person

      • And of course uber leftist college campuses. They can’t even bothered to, you know, go somewhere where it might be believable to anybody other than the press.

        When was the last right wing hate crime hoax? Wasn’t it the woman who carved the backwards B on her forehead back in 2008? And said it was Obama supporters?

        I know this because there was a ton of press coverage over the fact that it was a hoax after the obvious hoax was confirmed as a hoax by the police. I guarantee you there are all sorts of paying-attention folks who know that was a hoax that have no idea about the dozens of supposed right wing, Trump-supporter, white-people hate crimes that turned out to be hoaxes. Because mostly those just seem to become “non-news” once the hoax part comes to light.

        Like

    • Oh, and “Republicans Pounce”

      Like

    • I think this is orchestrated by the DNC or other old New Democrats or groups to head off the gaggle of communists competing for the nomination in 2020. Because any good middle-of-the-roader should be highly electable against Trump . . . but Kamala Harris or other “free everything for everybody” candidates are going to have a much harder time beating Trump .

      Like

    • “There aren’t many people out there clamoring for outdated light bulbs that use four or five times as much energy,” said Alliance to Save Energy President Jason Hartke. “Consumers have moved on and embraced high-efficiency bulbs like LEDs because prices are plummeting and because they’re getting a better-performing, longer-lasting product that saves them money.”

      Love it when the leftist nannies purport to speak for “consumers.” These people are merely projecting. Tropes like “people want small, fuel efficient cars” – well yes, some (i.e. you) do. Others don’t. Don’t pretend to be giving consumers what they want by imposing your preferences and restricting options you don’t approve of.

      My environmentally-conscious wife hates the light from anything but incandescent bulbs. I have managed to get LED lights in the garage and storage areas. That’s it.

      Also love the rhetorical trick of saying it will increase electricity bills, as if the government is taking away LED and CFC lighting, instead of allowing people to make aesthetic choices that may increase their electricity bill.

      Good for Trump on this.

      Liked by 1 person

      • “The move would also add 540 million added tons of greenhouse gases into the atmosphere by 2030, according to the Lawrence Berkeley National Laboratory.”

        Bulbs don’t produce greenhouse gases. That’s a function of how the electricity is generated regardless of what it’s used for.

        They want rationing and control for it’s own sake.

        Liked by 1 person

        • Yeah, and I think it’s because they believe the government actual makes everything good that happens happen. Thus, why they claim the government is responsible for LED prices and adoption rates, not . . . you know, market pricing, competition, economies of scale, offering better products, etc.

          Like

      • Also, if consumers aren’t clamoring for outdated lightbulbs (and why would they be if the bulbs are illegal?), and have moved on and embraced high-efficiency bulbs like LEDs (which I totally have, myself, I’m all for the bulbs, must not the government mandating them) … then what does it matter? Consumers are clearly up to making the right decisions and the government doesn’t have to micromanage the market for them to do so.

        Like

    • Goddamnit! I may have to vote for this freak!

      Liked by 1 person

    • Since the beginning of the Obama administration, the number of homes with LED bulbs installed has skyrocketed from under 400,000 homes in 2009 to 78 million homes in 2014, according to the Energy Department. During that time, the prices of LED bulbs fell by 90 percent.

      I love how they act like the government made that happen, and not the market, which is way more likely. Some of it had to do with availability (purchasers just buying the same old thing will buy the new thing if the old thing isn’t available, it’s true) but a lot has to do with people wanting to buy LED bulbs once they were at a reasonable price, and manufacturers exploiting economies of scale and responding to market competition to make them cheaper. In other words: 80% of this would be happening without any “government picks your lightbulbs act of 2007” in the first place.

      I love the idea that this repeal “will cost consumers billions” . . . consumers can still buy cheap LEDs. Why is making it so they can also buy traditional tungsten bulbs for some uses going to cost them billions?

      Like

    • jnc:

      Trump keeps giving me more reasons to support him:

      I hadn’t seen this. Yes, three cheers for Trump.

      Liked by 1 person

  6. Interesting retrospective on LBJ:

    “From the outset he issued the sternest orders to his staff that the press was to be totally off limits. “I’ve served my time with that bunch,” he said, “and I give up on them. There’s no objectivity left anymore. The new style is advocacy reporting—send some snotty-nosed reporter down here to act like a district attorney and ask me where I was on the night of the twenty-third. I’m always guilty unless I can prove otherwise. So to hell with it.”

    There was fresh bitterness over a series of hour-long interviews, with Walter Cronkite for which Johnson had contracted with CBS before leaving the White House. The first show, on Vietnam, had been a fiasco. “I did lousy,” Johnson admitted, and raised hell over what he claimed had been an unfair CBS editing practice—Cronkite refilming new questions to answers he had originally given during the interview at the ranch. “Cronkite came down here all sweetness and light, telling me how he’d love to teach journalism at Texas someday, then he does this to me,” he fumed.”

    https://www.theatlantic.com/magazine/archive/1973/07/the-last-days-of-the-president/376281/

    Liked by 1 person

  7. Interesting read:

    “Why Are These Professional War Peddlers Still Around?
    Pundits like Max Boot and Bill Kristol got everything after 9/11 wrong but are still considered “experts.”
    By Tucker Carlson • February 15, 2019″

    https://www.theamericanconservative.com/articles/why-are-these-professional-war-peddlers-still-around-tucker-carlson-max-boot-bill-kristol/

    Liked by 1 person

  8. Something has gone wrong at the NYT.

    Like

    • The press may not like this comment, but Smollett IS part of the media. He is a Hollywood actor and is part of the whole media – cultural apparatus.

      This is not some 16 year old kid. He is a professional – a part of the media, which is apparently no longer content with merely repeating fake news. It seems they are in the business of staging fake news now.

      Liked by 1 person

      • The rush to judgment and utter lack of deference to evidence by commentators and politicians is the worst part.

        I think this is a problem that has always been with us, but it seems worse in the age of twitter.

        At least have the good graces to admit you were hoodwinked and that you will be more careful in the future. But no, rage stifles even a return to reason momentarily abandoned.

        Liked by 1 person

        • I think it is deliberate. The errors in judgement always occur in the same direction.

          Like

        • “but it seems worse in the age of twitter.”

          Yes. This.

          Liked by 1 person

        • Mark:

          I think this is a problem that has always been with us, but it seems worse in the age of twitter.

          I think the fact that we are in an age of an openly partisan media is more of a factor than is it being the age of twitter. If the media had any interest in maintaining even just the pretense of objectivity, as it used to, it would be less likely to fall for these obviously hoaxed “hate” crimes.

          Like

        • That doesn’t help, but I have been watching the media become ever more careless in the attempt to stay abreast of first 24/7 cable news and then the internet and then twitter, etc. I cannot watch 24/7 cable news. Any of it.

          As for politicians rushing to judgment, we have plenty of them and if they do not publicly back down but continue to run as megaphones for fabrications we must judge them for that.

          Like

        • Mark:

          That doesn’t help, but I have been watching the media become ever more careless in the attempt to stay abreast of first 24/7 cable news and then the internet and then twitter, etc.

          I agree that a rush to be first or to simply keep up, and the errors that ensue from that, are exacerbated in the new social media atmosphere. But this Smollet story is not an example of that. It wasn’t a rush to be first that prevented reporters from using the simple word “alleged”. It wasn’t the need to keep up that led reporters to report a literally incredible story with breathless credulity. These things happened for one simple reason….Smollet’s story reinforced political narratives that the vast majority in the media itself want to be true and want to tell.

          Liked by 1 person

        • It wasn’t a rush to be first that prevented reporters from using the simple word “alleged”

          As to any report that failed [and any reporter who failed] to use the word “alleged” or “purported” or a similar modifier, I must agree.

          Liked by 1 person

        • This is where I disagree, I don’t think there is anything wrong with an openly partisan media. I suppose I’d prefer them to identify that they’re partisan but I suspect most people know the jig is up and recognize them as such. Partisanship is the natural human condition and we as readers should always consume media with that in mind,doing so broadens our understanding of what news is out there and what angles there are to these news events. The concept of objective journalism has been disastrous as far as I can tell, both for the country and the world. I’m revelling in this fractured media landscape,I think information availability has never been better. I honestly don’t understand some (leftists usually, but I suspect some conservatives share the desire as well) peoples desire to return to a news landscape controlled by a handful of entities. The only plausible answer for this is a desire to control what people see and hear.

          Let a million flowers bloom.

          Like

        • McWing:

          This is where I disagree, I don’t think there is anything wrong with an openly partisan media.

          I didn’t pass judgement on it. I was simply pointing out that it is the only explanation for its treatment of the Smollet story.

          Like

        • Ah, sorry. Didn’t mean to cast aspersions.

          What do you think will happen re Brexit? Delay? New deal or hard Brexit?

          Like

        • McWing:

          What do you think will happen re Brexit?

          I think the most likely thing is delay. May isn’t talking about delay because she wants those who oppose her to think they have to choose between her deal and no deal, but I suspect that when it gets to d-day, even she will want delay over no deal.

          I just want it to be over with. It is such a tedious topic of never ending discussion here.

          Like


        • I think it is deliberate. The errors in judgement always occur in the same direction.

          They can go the other direction on Fox. But it’s interesting to me that the real right wing equivalent of pretty much the entire MSM is Sean Hannity.

          Like

        • Twitter and social media and YouTube and talk radio and FaceBook and comments sections and 24/7 news has played a role. But media generally—whatever their rationale—deserves a lot more blame for both pandering and fueling the identitarian tribalism. Twitter and Facebooks are mediums for tribalists to get together and reinforce their echo chambers. The media does have a potential gatekeeper role where they could be “cooler heads”. They make a choice to become active participants in distorting and providing disinformation and abuse the reputation they once had as objective purveyors of information and events with clear-ish dileneationa between editorial content and reportage.

          I suspect a completely rational, dispassionate, opinion-free news network would go bankrupt, though. And the comments sections of the WaPo suggest the kind of opinion-coverage the market wants. So … I dunno. Everybody is to blame, I guess. 😉

          Like

      • this is really no different than when dateline put explosives in a van to prove the fuel tanks were unsafe.

        Liked by 1 person

  9. Smollett apparently also sent himself a threatening letter with white powder that recquired a hazmat response. Dude is in so much trouble.

    https://chicago.cbslocal.com/2019/02/18/jussie-smollet-motive-staged-attack/

    Like

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

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

WordPress.com Logo

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

Google photo

You are commenting using your Google 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: