Morning Report: New home sales increase

Vital Statistics:

 

Last Change
S&P futures 2857 20
Eurostoxx index 382.42 3.33
Oil (WTI) 60.79 0.65
10 year government bond yield 2.44%
30 year fixed rate mortgage 4.10%

 

Stocks are higher this morning as we kick off the second quarter. Bonds and MBS are down.

 

We have a lot of data this week, and some could be market-moving. The biggest report will be the employment situation report on Friday, however we will get durable goods, construction spending, and ISM data.

 

Retail Sales in February fell 0.4%, which was well below the Street expectations of a 0.4% gain. That said, January’s numbers were revised upward from 0.9% to 1.4%. Separately, personal incomes increased 0.2% in February, while personal expenditures rose 0.1%. Inflation remained below the Fed’s target with the PCE index down 0.1% on a MOM basis and up 1.4% on a yearly basis. Ex-food and energy, the PCE index was up 1.8%. For 2018, personal incomes rose 4.5%, while personal spending rose 4.4%.

 

New Home Sales came in at a seasonally adjusted level of 667,000, which beat the Street estimate of 615,000. This is up 4.3% from the revised January number and about flat on a YOY basis. New Home Sales is a notoriously volatile series, and the margin for error is generally huge. While new home sales have recovered from the bottom, we are still at 50% of peak levels, and when you take into account population growth, we are still well below what is needed.

 

new home sales

 

Pending home sales slipped in February, according to NAR. Lawrence Yun, NAR chief economist, said February’s pending home sales decline is coming off a solid gain in the prior month. “In January, pending contracts were up close to 5 percent, so this month’s 1 percent drop is not a significant concern,” he said. “As a whole, these numbers indicate that a cyclical low in sales is in the past but activity is not matching the frenzied pace of last spring.”

 

Wells Fargo CEO Tim Sloan is out. The bank was unable to put its scandals behind it, and Democrats like Elizabeth Warren were calling for the Board to fire him. He decided to retire at age 58. “This was my decision based on what I thought and believe is the best for Wells Fargo, because there has just been too much focus on me,” Sloan said. “And it’s impacting our ability to move forward. I just care so much about this company and so much about our team that I could not keep myself in a position where I was becoming a distraction.”

 

Despite the action in the Federal Funds market and the dot plot, the Fed doesn’t seem to be ready to start cutting rates. Even dovish Minneapolis President Neel Kashkari is reluctant to ease monetary policy. For the most part, the Fed seems to view the recent economic weakness as influenced by the partial government shutdown and is anticipating a recovery.

21 Responses

  1. On Moore at Fed, it seems to me that the whole spectrum of economists is pretty much against him. This Cato article seems balanced, but it is pretty critical of Moore.

    https://www.cato.org/blog/stephen-moores-other-volcker-rule

    I am guessing that there are dozens of conservative economists with better grasp of monetary policy, given what I have read, and that this is another DJT appointment without Deep Thought.

    On another topic, BHO got into the most trouble in the courts on his EOs that violated the APA. As Joe wrote, it will be no surprise that DJT gets into the most trouble when he disregards APA. There is a reason that we have an APA and it is to keep the Executive from turning the 4th branch into its fiefdom, leaving it theoretically responsible to Congress and the people.

    Presidents, and Governors, for that matter, think that APA and its state analogs are a pain in the ass. I, having represented clients in commenting on proposed regs, can tell you that a ton of them never see the light of day as they were written thanks to the APAs, and that is usually a good thing in a nation that tends to be over-regulated on small stuff.

    As Brent has suggested, from the business viewpoint regulation by punishment first is the Big Bugaboo. Agencies that actually provide guidance like USDA does to farmers about markets and techniques and agencies that seek compliance to reasonable rules by inviting Q and A without exposure to penalty for asking are so much to be favored over OSHA type run-you-out-of-business-if-you-make-an-inadvertent-mistake-enforcement-first crap.

    I know this brings to mind the very fact of having a 4th branch that is not in the Constitution, but as long as it exists it must be tamed.

    Like

    • Mark:

      I know this brings to mind the very fact of having a 4th branch that is not in the Constitution, but as long as it exists it must be tamed.

      I take this as a polite way of saying “No need to bore us with the same old, futile hobby horse, Scott.” 😉

      Like

      • Yesterday I took a wrong turn with my ten YO granddaughter in the car who has a map of Austin imprinted on her brain. She said “This is an unorthodox way to get where we are going.” I asked her where she learned that word and she said in chess club.

        But here, she said, it was a more polite way to say “Nonno, you just made a wrong turn.”

        Like

    • Eh, I don’t mind Moore being on the board. I don’t think it’s a bad thing to bring in one person from the outside. And while the Volcker thing suggests there’s something he’s just wrong about, because he has bad information, I’m guessing an omniscient being would find similar gaps or incorrect data any others on the board. Generally because that’s been my experience with almost everyone everywhere. 😉

      I like it. Given the reaction from the MSM, I sure hope he gets on the board.

      The real reason that Stephen Moore does not belong on the Federal Reserve Board is not that he is unqualified for the job, though he is. Nor is it that he has been a highly partisan and divisive figure for many years, though he has been. The real reason is that, if confirmed by the Senate, Moore could become the Fed chairman — and that is a scary possibility. It could spawn a global financial calamity.

      Democracy dies in Darkness. Jeeze louise, the melodrama.

      https://www.washingtonpost.com/opinions/the-real-reason-stephen-moore-doesnt-belong-on-the-federal-reserve-board/2019/03/31/38b41ace-5233-11e9-88a1-ed346f0ec94f_story.html

      Just a decade ago, the U.S. and world economies suffered the worst slumps since World War II. What saved us then were the skilled interventions of the Fed under Chairman Ben S. Bernanke and the Treasury Department under Secretaries Henry Paulson and Timothy F. Geithner.

      Really? What happened to Obama? I thought it was Obama that saved us.

      Ugh. There’s so much wrong with that sentence. These people and their Dear Leader worship. All the companies, workers, consumers, and everyone else in all the other government agencies are all passive sheep while the few, great elites save the day and single-handedly create all economic activity. Or something.

      Eh. This dude makes me want Stephen Moore at the Fed way more than I did before. Or the WaPo does. This guy is not a good writer, and should not be writing for a major national paper:

      A few months ago, Moore urged Jerome H. Powell, the current Fed chair, to resign. Now, Moore says he regrets this inflammatory suggestion. He also denies he would be a Trump “sycophant.” All this turmoil implies that the Fed under Moore would be chaotic, unstable and unpredictable — precisely the opposite of what’s desired.

      This sounds like something my 13 year old daughter (who, admittedly, is very smart) would have written in response to an assigned essay.

      Eh, I hope Moore gets it, if for no other reason than I’m sick and tired of Government By Media and Punditocracy.

      Like

    • Article from Vanity Fair on Moore:

      There’s a lot one could pick from it, but the end is what made me shake my head and say: “You want Trump? This gets you Trump.”

      For the record, G.D.P. growth in 2018 was around 3 percent; it is forecast at around 2.4 percent this year. I’m still waiting to hear the roar of the crowd from all the middle-class people jumping up and down with excitement because their biweekly paychecks increased $50, if that even happened.

      They just can’t help themselves. $100 a month is pocket change! Nobody wants more money from the government, or to keep more of their paycheck! That’s crazy!

      … Why did people ever vote for Trump? What a mystery!

      Like

  2. This type of DKos comment never ceases to fascinate me.


    Onomastic Crabby Patty
    March 31 · 04:13:03 PM
    When those supposedly on our side parrot RW talking points it matters.  And that is what Buttigieg has been doing, including the GOP’s favorite “coastal elites don’t care about those in rural states.”
    I have issues with that, including how it’s easier to blame Hillary than it is to look at how the 2016 election was stolen.
    The sexism that reeked from MSM and others is still rearing it’s ugly head.
    If we are to prevent a repeat that has to be faced and dealt with.
    We have extraordinary women running and every time another white male pops up they suck all the air out of the conversation.
    That alone speaks volumes.

    And this one is of a piece as well. It reads like a dude trying to say things he thinks a feminist might want to hear so he can bang her.


    raptavio Onomastic
    March 31 · 05:38:13 PM

    Just don’t put me on a pedestal. I’m flawed. Being a good guy for me is a goal, not a status, knowhatImean?
    But I’m another Great White Male Hope, doncha know. So thank whatever deity that there are women like  Kamala, Elizabeth, heck even Amy and Tulsi, to lead the way, and women like you and so many other Kossacks for us aspiring good guys to support. 🙂

    Women as a rule (and especially feminists) love the strong horse, their denial of it is meaningless.

    This is the same dynamic that occurred in the 2016 race, male versus female. If you’re a white dude wanting to be in politics, what kind of future will you have as a Democrat?

    https://www.dailykos.com/stories/2019/3/31/1846584/-Pete-Buttgieg-Wrongly-Buys-Into-Repeats-The-Why-Hillary-Lost-Soundbite-The-Truth-Is-More-Complex

    Like

    • I love the whining about the sexist media.

      The MSM and culture worships women.

      Like

      • And they don’t like all women. They (the left, and the Kossacks) love progressive women. Super-religious women? Pro-life women? Extremely hot women who flaunt their hotness and are proud to be visually attractive to men? They hate those women with a white-hot hate.

        Though the sexy women are a place where typical progressive feminists diverge from the media. The media likes them because ratings.

        Like

    • than it is to look at how the 2016 election was stolen.

      Donald Trump came up with the awful “I’m With Her” slogan to compete with “Make America Great Again”? The Russians kept her from campaigning in Wisconsin, and insisted she keep her campaign events well below the level of DJT? And who made her go call people who disagreed with her “a basket of deplorables” in a sort-of-kind-of insinuation that anybody who didn’t vote for her was a Nazi?

      The sexism that reeked from MSM and others is still rearing it’s ugly head.

      I’d be the first to say the MSM did Hillary no favors. But they thought they were.

      We have extraordinary women running and every time another white male pops up they suck all the air out of the conversation.
      That alone speaks volumes.

      What does it say? Exactly?

      And this one is of a piece as well. It reads like a dude trying to say things he thinks a feminist might want to hear so he can bang her.

      I think most of them are looking for a more general acceptance and status in their social group or in a given clique. They have decided or have been told this is their tribe, and they are observing the conventions. Or might be a mama’s boy and really thinks women are better than their loser deadbeat dad who abandoned them men.

      Like

  3. MarK:

    Good article from Mollie Hemmingway:

    https://thefederalist.com/2019/04/01/heres-why-i-didnt-fall-for-the-russia-trump-conspiracy/

    Lots of interesting reminders about the history and evolution of the Trump/Russia follies, but of particular note to me in light of our recent conversations here are:

    1) The HRC campaign was pushing the Trump/Russia narrative even before the election (not surprisingly, since it had paid good money for that Russian dirt on Trump)

    2) The book Shattered, an insiders account of HRC’s failed campaign, noted how in the days following the election, HRC and her handlers made a conscious decision to push the narrative that the embarrassing loss was due to Russian “collusion”, not anything the campaign had done or not done.

    3) Long time John McCain associate David Kramer had peddled the Steele dossier not just to the FBI via John McCain, but also to many members of the media, including Buzzfeed which actually published it after he had given it to them, as well as to Carl Bernstein, co-author of CNN’s piece which first made the existence of the dossier public.

    Also of note is the reminder that, in the wake of Trump’s criticism of the intelligence agencies after the election, lots of people, including hardcore Trump critics (ranging from David Frum to Chuck Schumer) were pointing out that the intelligence agencies had plenty of weapons at their disposal if they wanted to make life difficult for Trump.

    Liked by 1 person

    • … the intelligence agencies had plenty of weapons at their disposal if they wanted to make life difficult for Trump.

      If true, they chose a weird one. Of all the areas they could have potentially pursued him, the Manchurian candidate angle seems a very bizarre one.

      Like

      • KW:

        Of all the areas they could have potentially pursued him, the Manchurian candidate angle seems a very bizarre one.

        3 points:

        1) We’re talking about the kind of people who tried to kill Castro with exploding cigars and a poisonous wet suit. Bizarre is what they do.

        2) The standard scandals – sex, taxes, business corruption – had already failed to effect him.

        3) It worked, didn’t it? There are plenty of serious, smart people who actually believed it might be true.

        Liked by 1 person

        • 1) We’re talking about the kind of people who tried to kill Castro with exploding cigars and a poisonous wet suit. Bizarre is what they do.

          Point taken. You’re right, of course.

          3) It worked, didn’t it? There are plenty of serious, smart people who actually believed it might be true.

          Worked with people who would have believed anything, including stuff that might have generate more actual material during an investigation.

          But they had tried everything else. You have a point. Maybe I was just thinking they should have settled on something more credible to really hammer. Like Trump University, or Trump Steaks. Or past shady real estate dealing.

          But none of those would have the sex appeal of The President is a Secret Russian Spy. That is way more Hollywood. Kind of real unlikely to work as a strategy but very exciting to talk about. So, yeah.

          Like

        • There are plenty of serious, smart people who actually believed it might be true.

          I agree there are plenty of people that believe it but I’m not sure they’re serious and smart. I don’t see how you can be a rational thinker while also believing a bizarre Russian collusion conspriarcy, let alone a pee tape.

          Like

        • I agree there are plenty of people that believe it but I’m not sure they’re serious and smart.

          I don’t think anyone who believed the Russia story was both of those things at the same time. It’s easy for smart people to believe stupid things if they aren’t serious about the issue, or not-so-smart people to believe crazy things even if they are serious about them.

          Like

  4. Is it weird that Obama not not (yet?) come to
    Joe Biden’s defense?

    Like

  5. I just saw Howard Schultz red and blue FB ads…

    Like

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