Vital Statistics:
Last | Change | |
S&P futures | 2788 | -6.75 |
Eurostoxx index | 371.36 | -1.22 |
Oil (WTI) | 56.82 | -0.13 |
10 year government bond yield | 2.67% | |
30 year fixed rate mortgage | 4.34% |
Stocks are lower this morning on no real news. Bonds and MBS are down.
Fourth quarter GDP came in at 2.6%, a deceleration from the third quarter reading of 3.4%, but much higher than many in the political economic punditry were predicting. Consumer spending rose 2.8%, while inflation rose 1.6%. Inflation fell from 1.8% in the third quarter. For 2019, GDP came in at 2.9%, the highest reading since 2006.
Initial Jobless Claims rose to 225,000 continuing a string of extremely low readings.
One of the most politically explosive issues these days concerns wage growth – why it seems to be so low and what can be done about it. Many will misinterpret cherry-picked numbers to make the claim that wages have not increased for 40 years, which is preposterous. That said, wage growth has been running in the high 2s, and with inflation around 2%, that equates to under 1% real wage growth. Modest, but certainly not what you would expect, especially this far into a recovery, especially with unemployment running below 4%. If the numbers don’t appear to comport with common sense, often times there is an issue with the numbers. That seems to be the case here. It turns out that wage growth is quite a bit higher, and it is due to the measurement problems inherent in the Bureau of Labor Statistic’s calculations. The BLS basically adds up wages paid and divides it by hours worked. If higher paid older workers are exiting, and younger lower paid workers are entering it will depress the averages, and it won’t accurately measure the growth that someone who has stayed in the labor force for the entire year has seen. Take a look at the chart below, where the Fed imputed average wage growth from census data as opposed to the BLS. Wage inflation jumps from 3% to 5%, which makes a lot more sense given the current economic numbers.
Toll Brothers reported an increase in pretax earnings and sales for the first quarter of 2019. Orders declined in a big way however, falling 24% in units and 31% in dollars, driven primarily by weakness in California. Home price appreciation has been moderating in the hotter markets, and it is especially pronounced in the luxury segment, where Toll resides. The cancellation rate jumped to 9.6% from 5.3% a year ago. Tax reform limited the mortgage interest deduction, and the luxury segment is most prominent in high tax states, so those two effects are squeezing demand.
Realtor.com predicts this year’s Spring Selling Season could be the weakest in years despite rising inventory. While lower rates have improved conditions compared to late 2018, we are still weaker than early 2018.
Filed under: Economy, Morning Report |
sad trombone for the business press on the GDP print
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Interesting what Democrats now consider “an embarrassing setback” these days
So an illegal alien tries to buy a gun and the Democratic position is that ICE shouldn’t be alerted?
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It’s like they want to see Trump get a second term. And lose seats in the election to boot.
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The infighting over that vote continues:
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Always good to announce your intention to force out your colleagues. Way ahead of time. She’s sure to get a lot of stuff done now.
She’s really not very bright.
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Guarantee you it will be a replay of the Tea Party, where moderates are shunted aside by insurgents in the primaries and elections are lost that should have been won because the new blood is simply too daffy.
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I think it would be worse on the Dems, except I expect a non-trivial amount of the primary challenges to be bungled and fail spectacularly.
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Institutional investors are now pushing companies to genuflect to climate change issues.
https://www.wsj.com/articles/show-us-your-climate-risks-investors-tell-companies-11551349800?mod=hp_lead_pos6
These investors are Blackrock, State Street, Vanguard etc – in other words index funds and ETFs. Index funds are compensated on how tightly they track the relevant index. Theoretically, they could force a vote to make Smith and Wesson end the sale of firearms and go into non-farting cow research. If the stock goes to zero, so what? As long as they match what the index did, they couldn’t care less.
I smell the indexing rat behind a lot of corporate virtue-signalling behavior these days. Since these funds aren’t in the business of maximizing shareholder value, it makes an interesting fiduciary duty question. In many ways, it is a classic agency problem, where the incentives of managers an owners are different. Do index funds have a responsibility to maximize the value of the their funds even if they have to mimic the index? Investors should care about these sorts of shenanigans, but it is probably a touch too opaque to understand.
I do think that this sort of stuff will tip the performance difference back towards active management. Skin in the game should outperform no skin in the game every day of the week.
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In case you care how you placed in the Oppression Olympics
https://intersectionalityscore.com/?from=fbscore&fbclid=IwAR0_MSDxr3CCQ1avxbqVd2OdqBENZ1xnQpe1lK_U0XXXT_X3H5krJf74n8Q
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14 ya whitebred mofo’s!
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12
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9
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You’re so white you’re translucent.
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8.
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4!
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You’re even beyond white or translucent, you’re invisible!
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nova:
4!
I need to know how you beat me.
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behold the invisible hand!
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It’s problematic as far as really calculating privilege. Though I guess that’s true about the entire concept of privilege as applied in the contemporary way.
There’s no slider for class or caste membership. No slider for parental wealth or how much money your family already had when you were born, or how long you had it. No distinction in the education slider between public and private and Ivy League …. social status confers a great deal of privilege, and it doesn’t seem to be touched on. Yet except for great wealth nothing confers more privilege on an individual than social status.
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Those were the days.
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You could probably write 100,000 words on how problematic that photo is today…
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Yeah, sure.
https://poll.qu.edu/texas/release-detail?ReleaseID=2602
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Only poll that matters is on Election Day.
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a random sample of Austin voters..
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I don’t get why anyone cares at all about Beto O’Rourke. The guy lost his Senate campaign.
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The media loves him.
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Democrats love white candidates.
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Present company excepted.
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The left thinks Libertarians are people who like pot but hate the poor.
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well, sure, but there’s so much more to it.
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How dare you evil racist sociopaths call us socialists and baby killers
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So that’s a news article, not an op-ed?
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The fact that you have to ask tells you all you need to know about the NYT.
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It is a news article. Just the facts. The democrats are left-wing radicals on the economy, abortion and Israel. Except for those moderates about to get primaried. They are just normal left-wingers.
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Elizabeth Warren wrote a book on personal finance
https://www.washingtonpost.com/opinions/2019/03/01/elizabeth-warren-wrote-book-personal-finance-advice-how-does-it-hold-up/?utm_term=.4d5510c88561
All Your Worth Are Belong To Us
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Will our next president come from the third?
There’s no chance Warren will be our next president. Bernie I can see. But Beto has a better chance than Warren.
If she runs seriously, I bet there’s a lot more history of her cultural appropriation out there.
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Sadly, this decision was 30 years to late for the East German women’s teams.
https://www.dailymail.co.uk/news/article-3412969/Olympics-change-policies-allow-transgender-athletes-compete-without-having-gender-reassignment-surgery.html
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So humans with testes will be winning in every category. But it will be socially just. Uh-huh.
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http://reason.com/volokh/2019/02/28/cleaning-up-the-lemon-mess
This is the best [and most closely originalist] explication of the Establishment Clause I have read in years.
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Mark:
This is the best [and most closely originalist] explication of the Establishment Clause I have read in years.
It’s pretty good, I agree. But a better, and even more originalist, approach would be to stop pretending that incorporation is implied by the due process clause, at which point the issue becomes very simple.
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Imagine, pumping up your base’s enthusiasm to help with your reelection campaign! I mean, have you ever?
https://www.bloombergquint.com/politics/donald-trump-s-base-clings-tight-despite-rising-tide-of-troubles#gs.ualRO17E
All right thinking people know the proper way to ensure your reelection is to weaponize the IRS against your opponents.
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