Morning Report: Final revision in fourth quarter GDP

Vital Statistics:


Last Change
S&P futures 2811.75 1.25
Eurostoxx index 375.78 -1.45
Oil (WTI) 59.49 -0.45
10 year government bond yield 2.38%
30 year fixed rate mortgage 4.08%


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


Fourth quarter GDP was revised downward to 2.2% in the third and final estimate. Inflation came in at 1.5%. This is more ammo for the Fed to possibly cut rates this year.




Initial Jobless Claims came in at 211k last week. Despite the slowdown in economic activity, employers are hanging on to their workers. Speaking of labor, McDonalds will no longer lobby against minimum wage hikes. It probably is safe for McDonalds – their franchisees bear the brunt of labor costs not corporate. At any rate, I’m not sure that Republicans really need a lobbyist to tell them to oppose minimum wage hikes, but companies seem more interested in placating the social justice mob these days than delivering shareholder returns.


Facebook has been charged with housing discrimination based on algorithms that target housing-related ads. “Facebook is discriminating against people based upon who they are and where they live,” HUD Secretary Ben Carson said in a statement announcing the charges of violating the Fair Housing Act. “Using a computer to limit a person’s housing choices can be just as discriminatory as slamming a door in someone’s face.”


The White House has released a memorandum on housing reform. There were no discernible policy changes in it – the government would like to decrease the GSE’s footprint in the mortgage market while maintain the 30 year fixed rate mortgage and affordable housing goals. They did mention the goal of getting more banks doing FHA loans, although the capital treatment of servicing rights probably makes that tough. Fannie Mae stock liked the release, rallying 9%.


The Washington Post has run something like 4 anti Steven Moore editorials in the past few days. The economics establishment really doesn’t like the nomination. Don’t forget one thing, though. While it is generally not a good thing when politicians criticize monetary policy (and Trump / Moore were pretty outspoken about it), the action in the Fed Funds futures and the change in the dot plot shows they were right.

58 Responses

    • She also claimed it was one of them who told Smollett to go out and get ‘eggs’ at 2am as part of his nutrition plan

      So the goal is to try and frame these guys who obviously had been brought into this by Smollett to stage and obviously staged hate crime (otherwise, why would he have still been wearing the noose, amongst other things, and he has a history apparently of trying to burnish his victim credentials with forgeries)? What a peach of a guy.

      While they shouldn’t have participated, there’s no way this wasn’t Smollett’s brainchild.

      Smollett wrote them a check for $3500 ahead of “the attack”–and we’re to believe two Nigerian brothers wanted to (and orchestrated) the attack the guy paying them $3500 for “training”?

      This guy is truly a piece of garbage. He’s ruined his life for the foreseeable future–and he definitely deserves it.

      She added that even though Smollett was telling the truth and had been genuinely attacked, the incident was not ‘that brutal’ and he would not be pushing for the brothers’ to face charges.

      ‘The attack pales in comparison to the attack on him by the mayor, the city and the press.

      ‘What he’s been through has really been much harsher than the attack. At this point, he has been victimized a lot more than what happened that night,’ she said.

      Uh-huh. That doesn’t sound suspicious or like total bullsh*t at all.


    • the bottom line is that the left demands the right play by rules they have no intention of following.

      i think the next time a Republican attracts the outrage mob over some real or imagined peccadillo, the thing to do is ignore the caterwauling. The left doesn’t operate in good faith and it is time the right acknowledged it and stopped trying.

      Liked by 1 person

      • I feel like the left and right both have significant contingents that consider rules and precedent and tradition entirely as political tools to use against the other side. They are interested in rules and precedent and procedure when it benefits them or is negative for their ideological opponents, but lose interest when it’s no longer advantageous for them politically.

        That being said, I think the left’s application of that principle–their left exceeds their grasp more often than it does on the right. You gotta know which rules you can break and how many precedents you can flout before it catches up with you.

        They should never have considered just letting Smollett off the hook. With such public attention, they should have never in a million years done it–especially after juicing him for the bond, making it basically: “Eh, he paid us $10k and we dropped the charges. Nothing to see here. Move on, rest of the world.”

        But I think they probably thought it wouldn’t explode on them, because their (the left’s) bubble is so much deeper and wider and broader than the right’s. I’m not saying every tribal side doesn’t have a bubble, but the left’s is so reinforced in the overall culture that I think they have trouble conceiving that arbitrarily abusing power could possibly end badly for them.

        *Edit: Where I wrote “their left exceeds their grasp” I meant, of course, their “reach”. Little Fruedian slip. Not inaccurate, tho.


        • One of the best things Trump has done is show the right that you can punch back against the outrage mob and win.

          Liked by 1 person

        • Very true. But some of this is also overreaching from the media, and Hollywood culture. They’ve gone to the “everyone is a victim of white men” well just a little too often.

          There’s a certain “boy who cried wolf” quality to it.


        • The way these people run culture is a perfect blueprint of how they will wield power if we are dumb enough to give it to them.

          they have enough double standards to make a Soviet era apparatchik blush.

          Liked by 1 person

        • The way these people run culture is a perfect blueprint of how they will wield power if we are dumb enough to give it to them.

          It’s why democracy beats totalitarianism and monarchy every time!

          They will get power again, and lose it. And again. At some point the smart progressive’s positions on any number of things will evolve. Where once they were nationalists, now they are globalists. Where once they were straight racists and eugenicists, they are now identitarians. They evolve.

          But I’m pretty sure they’ll always want to tax “the rich” and redistribute wealth. That seems to be a constant.


    • Colloquially speaking, of course.

      Chicago really is like a 3rd world country. They seem surprised that there’s any oversight at all, and that there’s actually laws and procedures they are supposed to be following.


  1. The Washington Post has run something like 4 anti Steven Moore editorials in the past few days.

    Democracy dies in darkness!

    If WaPo is opposed, then I support him!


    • Dr. Cowbell is miffed that he didn’t get the nod.

      Liked by 1 person

      • Given that he predicted that the stock market would crash because of Trump’s election and that the whole economy was going to tank because of Trump . . . can’t imagine why he didn’t get the nod!

        I like the idea of someone like Moore at the Fed. In fact, I’d love to see Krugman and Moore and maybe the Freakonomics guy on the Fed board. That would be awesome.


        • I love the fact that when Krugman was writing his column about how Trump’s election is the end of the economy, Carl icahn was buying S&P futures hand over fist in the overnight markets.

          Never ever invest based on ideology. Making money is hard enough without adding that noise

          Liked by 1 person

    • White people’s insistence on eating is a real problem.

      Potatoes, beef, apples, and milk were listed as examples of the worst environmental offenders.

      I get milk and beef–depending on how they are done–but potatoes? Apples? How are apples causing excessive carbon dioxide output? It almost sounds like they tried to figure out what white people’s favorite foods were and then blame whatever those foods turned out to be for global warming.

      I’m listening to Crichton’s State of Fear again. Love that book. Also a reminder of how little has really changed in the climate change debate. Same arguments. Same branding for the most part.


  2. Good observation. If there wasn’t a pee tape, then Trump wins.

    “The Steele Dossier Set the Stage for a Mueller Letdown

    The document’s publication has made every revelation about Trump since seem minor, and has tainted the press’s standing.

    David A. Graham
    10:09 AM ET ”


    • “Our responsibility to the readers is to share with them what we know, not to game out the political consequences of every story,” he said.

      Pull this leg, it plays jingle bells!


      • I actually agree with him and disagree with Graham. Once the existence of the dossier became known and people like Reid started commenting on it, I wouldn’t trust the press to summarize it. They don’t have that much credibility.

        Liked by 1 person

        • I also tend to agree. Whether it’s the dossier or a manifesto, I don’t think it’s the press’s job to decide what the general public can be exposed to. Although most of them clearly do think that, and that’s part of the objection to BuzzFeed in this case.

          BuzzFeed publishing the dossier did not force members of the media or politicians to treat it as if it was the gospel handed down to them by God. They did that on their own.


    • Much of the press coverage of the administration has been solid, and to hear the Trump White House howl about distortion of facts is to hear howls of hypocrisy.

      Obviously, calling the press coverage “solid” is a subjective choice. One could argue that Trump has been a “solid” president with equal surety. But in the same place he says there was extensive evidence of Trump aides “colluding” with Russia (adopting the press’s fast-and-loose use of the world “collusion” to represent anything from a extensive conspiracy with Putin to looking at Russia on a map), and links to a story he wrote about it that leaves out context–which I get, can’t include everything, but leaving the implication that nobody but Trump would have looked to foreign countries for potential help in an election is just . . . wrong. But whatever. Solid work. The press does solid work.

      I still remember some reporter complaining that Trump had gone out to dinner without telling the press where he was going, before he was sworn in. The entire story was how offended they were that the president-elect had gone to dinner without telling the press where and when he was going to dinner, because it was the president’s duty to keep the press informed of his movements at all time.

      Solid work, from the press.

      I dunno. I do not see the MSM collectively as Trump’s moral superior. Personally.


  3. Interesting piece that I thought I would dispute, but ended up agreeing with:

    “A Glut of Easy Money Is Clogging City Streets

    When interest rates are this low, even money losers like Lyft get funding.

    Nicole Gelinas
    Senior fellow at the Manhattan Institute”


    • It isn’t a pure “externality” at least not in the traditional sense. people are getting more access to rides at lower prices. The added congestion merely a cost in exchange for convenience / lower prices.

      An externality is something like pollution: where costs are imposed with no real benefits.

      Not only that, but congestion was lowered in NYC and elsewhere by strictly limiting the number of taxi medallions. So this isn’t a “market failure” – because it wasn’t really a free market to begin with.

      But yes, low interest rates are not “free” – they do encourage malinvestment, which is generally a bad thing (and really bad when it creates things like residential real estate bubbles).


      • “So this isn’t a “market failure””

        I think that’s her point as well. That it’s a consequence of the Fed indirectly subsidizing companies like Uber and Lyft, so fare pricing is below what the free market would set and as a result you have more congestion than if the trade offs were clearer with subways, etc.

        I.e. the pricing signals are screwed up.


    • Also, the biggest change in the markets has been the secondary market for pre-IPO positions. Now, the venture capitalists will sell off equity based on implied valuations from each round of financing. Much of the post-IPO “bump” in pricing we were used to seeing has now been captured pre-IPO.


      • Yeah, I don’t see how it can be good long term for the market if more people invest based on their ability to dump the stock onto more ignorant people in the short term than on the company to actually make a profit in the long term that justifies the valuation.

        It seems everyone is betting that one of these companies will become a monopoly or a duopoly and raise prices considerably to actually make money.


        • it will be interesting to see if this antitrust push in tech has some legs… although if you look at amazon, they certainly rewarded customers more than shareholders. AMZN has always had meager earnings and a huge multiple. So, you have exactly the opposite of what the model would pick.


  4. This is a good observation:

    “The other lesson to learn is that Trump would happily obstruct justice even if he knew he was as innocent as the driven snow. It’s his core instinct. He’ll always act guilty — whether he’s guilty or not. He cannot see the process of an inquiry as a way for the entire system to examine and fix itself — let alone exonerate him. He instinctively recoils from any independent challenge to his control. Letting the law take its course would require a modicum of appreciation of a liberal society, and an understanding that the world doesn’t simply revolve around him. And he is clinically incapable of either.

    And so if Trump is charged or accused of anything, he has the identical reflex. Always deny. Always lie. Always undermine. Never concede. Accuse your opponents of doing exactly what they accuse you of. Even if you’re innocent. This is the Roy Cohn playbook, and it’s damaging when even a real-estate developer deploys that kind of tactic, but in a president, charged with the faithful execution of the laws, it’s potentially fatal. But it will also mislead others, as it may have in this case. Most people tend to assume that someone who is acting incredibly guilty probably is a little guilty. But that misses the particular mind-set of this particular president.”

    Just like Nixon.


    • when your opponents are acting in bad faith, the best defense is a good offense.

      And while Mueller may not have been acting in bad faith, the media, the deep state, and the democrats most certainly were.

      Liked by 1 person

      • Maybe. I think Nixon could have survived Watergate if he hadn’t done the coverup. Reagan took the opposite approach on Iran-Contra with the Tower Commission and then his speech.

        All Trump had to do was not fire Comey.


        • Or if Mark Felt’s motivations (revenge for not getting a job) had been accounted for.


        • jnc:

          All Trump had to do was not fire Comey.

          I’m not sure what that would have changed. The investigation was already under way and would have continued as it did, only under Comey’s direction rather than Mueller. So, other than perhaps that there would have been a lot more leaks aimed at damaging Trump, what would be different had Comey not been fired?

          Liked by 1 person

        • Nixon could have survived if he had thrown Liddy under the bus as having acted on his own, and also not kept a taping system in his office.


        • Or Nixon could have just not authorized the break-in at all. It was a pointless, stupid thing to do and only Nixon’s own paranoid made him think it could possibly be worthwhile or necessary to do it.


        • “Or Nixon could have just not authorized the break-in at all.”

          He didn’t. He authorized the cover up.


        • Apparently it’s not known if he authorized the break-in? Apparently, some people think he did but there’s no hard evidence. I thought it was a known thing, though, and apparently it is not.

          Although in Googling it I found this quote for Liddy about John Dean, and it’s gold:

          “I wouldn’t consider him worth the quarter it would cost to buy the cartridge that would propel the bullet to kill him with.”

          Ah, Internet. You teach me something new every day.


        • Liddy’s book is hilarious.

          Liked by 1 person

        • My reading of the history is that it was Mitchell, and that’s after he vetoed Liddy’s kidnapping to Mexico plan.

          Nixon apparently said on the tapes after being told about the break in something like “who was the asshole who authorized it?” and then made comments about it not being appropriate to second guess Mitchell after the fact.

          Liked by 1 person

    • It’s hard to take Dr. Andrew Sullivan, OBGYN, the great uterus sleuth, seriously on anything.


    • I don’t see how Trump was acting incredibly guilty in this case. But maybe that’s just me.


      • Firing Comey for starters.


        • I guess? It didn’t seem particularly out of character for him–he’s got a history of firing people, after all–and I don’t see any way that was going to prevent the investigation going forward, or clear his name, or anything else. I don’t see what benefit firing Comey would have had for him–as a guilty person–in terms of mitigating or covering-up his guilt.

          May just be a difference in perspectives. For me, I’m not sure what Trump acting “incredibly guilty” would look like. He always seems to do and say what he wants, is always the hero of all his stories, and I’m not sure how he’d be acting differently if he were incredibly guilty.

          Eh. Potato, po-tah-toe.


    • McWing:

      This seems insane to me.

      Insane, but increasingly not surprising.

      Liked by 1 person

      • So, crash-out or permanent hold?


        • ??


        • Like everything else, it goes to the SCOTUS.

          To be fair, Trump invites this by skipping a lot of the process requirements of things like the administrative procedure act.

          They are sloppy in their implementation. Setting executive policy by tweet doesn’t help.

          Edit: This however is total bullshit and can’t be allowed to stand.

          ““The wording of President Obama’s 2015 and 2016 withdrawals indicates that he intended them to extend indefinitely, and therefore be revocable only by an act of Congress,” said Gleason, who was nominated to the bench by Obama.”

          Liked by 1 person

        • I was referencing Brexit, will there be a crash out or a negotiated permanent delay? Sorry.


        • McWing:

          I was referencing Brexit, will there be a crash out or a negotiated permanent delay?

          Ah! Permanent delay. I thought May’s deal might actually pass at the eleventh hour, but I’ve come around the conclusion that Brexit is never going to happen now. The europhiles are going to get their way.

          Liked by 1 person

  5. Dynamite article on fossil hunting and the asteroid that caused the dinosaurs to go extinct.

    Liked by 1 person

    • Fascinating.


    • This is fascinating. Although the whole reportage of “what happened” when the meteor struck involves a great deal of theoretical modeling–based on what we know–but is all written about if it is all independently verified established fact, which is impossible. Which presumably all the brilliant New Yorker readers would know, but I still think there should be more “What scientists think happened is x. It explains what they can observe in a,b and c. Alternate explanations of d and e seem less likely, for reasons f and g.”

      Which gets long and boring, I guess. Eh, I’m just a curmudgeon.

      I suppose the theoretical nature of it all is implied by the skepticism about DePalma. Still . . .

      The article is very good.


      • I think the most fascinating part is how the rain of glass BBs would have preceded the tsunami which in North America might not have been enough to kill everything, so they had to posit an earthquake caused instantly which it turns out has happened in recorded history.

        And I also think that the meteor might have been the terminal event but that the recorded volcanic activity of the preceding thousands of years might have slimmed the worldwide population of these giants enough to lay the groundwork for a total extinction event for non-migratory cold blooded giants.

        What is not in the article but we know to be true is that sharks and crocodilians preceded dinosaurs, survived that age, and survived the event. This has sometimes been attributed to the ability to slow their metabolisms to where the could live on minimal food for 6 months, where Mosasaurs that competed with them could not.

        Liked by 1 person

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