Morning Report: Blowout ADP jobs report

Vital Statistics:


Last Change
S&P futures 2945.83 2.3
Eurostoxx index 390.26 -0.72
Oil (WTI) 63.37 -0.27
10 year government bond yield 2.50%
30 year fixed rate mortgage 4.18%


Stocks are higher as we await the FOMC decision. Bonds and MBS are up. Markets should be quiet this morning as most of Europe is closed for May Day.


Today’s Fed decision is set to be released at 2:00 pm. No changes in policy are expected and it should be a nonevent.


Pending Home Sales rose 3.8% in March, according to NAR. Activity increased pretty much everywhere except for the Northeast. Falling mortgage rates have helped boost activity and we are seeing a bit of an improvement in the inventory balance. Pending home sales reached a level of about 5 million, which is the same level as we saw in 2000. We have 50 million more people since then, which means there is a lot of pent-up demand.


The ADP jobs report came in at an increase of 275,000 jobs in April. This was well above the Street expectation of 180,000 for Friday’s jobs report. Professional and business services led the charge, and we also saw an increase in construction employment. The service sector added 223,000 jobs, the biggest increase in two years. With the Fed out of the way, 2019 could be better economically than people were thinking. Note that Trump is still jawboning the Fed to cut rates.


ADP report


Mortgage Applications fell for the fourth straight week, dropping 4.3%. Purchases fell 4% and refis fell 5%. “Mortgage rates were lower last week, with the 30-year fixed rate declining to 4.42 percent, as concerns over global growth, particularly in Germany, outweighed more positive domestic news on first quarter GDP growth and business investment,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Applications to refinance and purchase a home both fell, but purchase activity still remained slightly above year ago levels. The drop in refinances were driven by fewer FHA and VA loan applications, which typically lag the movement of conventional loans.”


Freddie Mac bumped up its origination forecast for 2019 by 4% to $1.74 trillion as rates have fallen. They expect the 30 year fixed rate mortgage to be 4.3% at the end of the year, and home price appreciation to moderate to 3.5%.

29 Responses

    • I missed the funny part.


      • That water is a carcinogen.


        • Aha. The headline is funny.


        • Well, that and the fact that Californians are being told that drinking water is a carcinogen. Municipal drinking water is, arguably, one of the most heavily regulated industries when it’s not owned outright by a local (or state) government. Californians are being told that their water causes cancer and I suspect that the proposed solutions will require even more regulation or government ownership fix it. The fact that some people don’t recognize the humor of this, because of its absurdity, is fascinating and funny (to me) in and of itself.

          Look at Flint, MI. Their water problem is a complete creation of government and the only solution I ever hear about is more government.

          How is that not funny?


        • “How is that not funny?”

          If you have to live there and deal with water that you can’t drink.


        • How is it not funny that a state that is overwhelming democratic and has some of the most intrusive state, county and municipal governments in the country cannot produce safe drinking water?

          What am I missing here?


        • Well, if you are relying on politics as “humor”, then you may have missed that the problems are mainly in small rural water supplies. Rural CA is like rural almost everywhere else – R. But in all honesty, the major problem with rural water supplies everywhere is that they cannot keep up with big AG and its runoff, and that is across party lines, and is more than local or state budgets can handle. There is no stomach for tightly regulating AG runoff because it is a byproduct of AG efficiency. If you want to read about iffy water, try rural NC, where hog slop runoff is regularly exacerbated by hurricanes and torrential rainfall.

          I think LCRA water is clean out of the tap but it really does taste more neutral [“better”] when filtered. Houston water used to be very good. Is it still?

          I will bet TX cities have better water on the whole than the Big Empty.

          Addendum: I missed your Flint post when I read this. Flint changed its water source without due diligence in 2014, according to Wikipedia, source of all wisdom.

          The Flint water crisis began in 2014, after the drinking water source for the city of Flint, Michigan was changed from Lake Huron and the Detroit River to a less costly source of the Flint River. Due to insufficient water treatment, lead leached from water pipes into the drinking water, exposing over 100,000 residents to elevated lead levels.


        • How is it not funny that a state that is overwhelming democratic and has some of the most intrusive state, county and municipal governments in the country cannot produce safe drinking water?

          You say that as if it were ironic or novel, and not a typical, expected outcome (at least, for students of history) of increasing state control and increasing centralization and bureaucratization.

          Filter your water, people!


        • @markinaustin:

          Flint changed its water source without due diligence

          Which is typically the modus operandi of large bureaucracies… for which I blame meetings. I’d bet so many thing were discussed in the meetings about changing water supply that by the time the deal was signed, everybody involved felt everything was taken care of, or that somebody was making sure the decision wasn’t going to poison a bunch of people. It felt like they had discussed it enough to count as due diligence.

          Due diligence is hard, and isn’t taught (generally), and requires people who haven’t thought of things to think of things they haven’t thought of. A lot of theater goes on in project management that is meant to look like due diligence but is really folks collecting a paycheck trying to do what they think looks like due diligence. Fortunately, although government fails to do due diligence constantly (and many large bureaucracies in the private sector), most such things don’t involve the water supply.

          Generally, it just means the wasting of tax payer money.

          Liked by 1 person

  1. PL meltdown part 10,542.


    • Which article? Or just, you know, all of them.

      Reading this one:

      It just looks like more regular WaPo propaganda, misdirection and treating hearsay (and Greg Sargent’s personal opinion) as news. Had to follow two links to get to the actual letter that represents Mueller being “highly cirtical” or Barr’s assessment of the report, and it’s (a) not critical (b) a constructive request, in context (c) does not, as Sargent implies, criticize Barr for saying the report “completely exonerated Trump”. Eh, whatever.

      The fantasy on the left that this is going anywhere for them, or will amount to anything useful in terms of electoral victory or the prosecution of Trump, seems very analagous to Birtherism. Or Trig-Trutherism. Or the people who were convinced that HRC would be going to jail. Or the Clinton Murder List people.

      The questions Sargent comes up for Barr are, charitably, “leading the witness” questions:

      Why did Barr mislead Congress about Mueller’s views on the Barr summary?
      Why did Barr adopt Trump’s talking points at his news conference?
      Why did Barr mislead on obstruction in a way that dismayed Mueller?

      While the analysis of Russian Collusion as being a left-based conspiracy theory of Alex Jones proportions is entirely correct, IMO, I notice the constant attack of it as the conspiracy theory it is doesn’t seem to have any real effect on anyone. Might be another accusation that has lost it’s power.


    • Or did you mean the comments?

      What is Barr’s motivation? Is he being bribed by Trump? Between this coverup and the one with Bush Sr. why does he do this? Certainly history will record him as a Toady.

      What is Barr’s motivation? Is he being bribed by Trump? Between this coverup and the one with Bush Sr. why does he do this? Certainly history will record him as a Toady.

      Both those comments by people with “Patriot” in their name. Which I find interesting.

      And the remaining right-wingers there (except mindnumbrobot) are all “I know you are but what am I?” and “poopyhead” level of argument.

      Which goes to my argument that all comment chat rooms of any serious popularity will eventually chase out everybody worth talking to.


      • KW:

        Which goes to my argument that all comment chat rooms of any serious popularity will eventually chase out everybody worth talking to.

        We’ve done well, then, to keep ATiM less than seriously popular!

        Liked by 1 person

    • They are not taking any of this well…

      Liked by 1 person


    Texas passed a statute that prohibited contractors from boycotting Israel as a condition of doing business with the State. Robert Pitman, USDCt Western District of Texas Austin Division, former US Attorney for the Western District, enjoined the statute on “First Amendment” grounds.

    Volokh [actually Professor Bernstein] thinks the opinion does not stand scrutiny and will be reversed. I haven’t read the case and so I am withholding my own opinion, but what Bernstein writes here about the Judge’s failure to understand the precedents he cites is accurate.


    • I have no problem with the state picking who it deals with based on whatever arbitrary criteria they feel is important. Avoiding companies boycotting Israel seems no different than avoiding companies that do business in South Africa (or Israel) or saying all contractors have to use 100% renewable products or . . .

      I think the restriction is foolish and virtue-signally in the case of Texas, but I think they have a right to and should be to do it. But I am very much a legal layperson, so . . . I’m just blathering.

      Liked by 1 person

      • See also the lengthy list of things that federal contractors have to certify. This sort of thing strikes me as fitting right in with the sorts of restrictions and reporting requirements that are already imposed.

        Liked by 2 people

      • virtue-signal

        Yep – here are all the companies affected by the ban:

        Click to access anti-bds.pdf

        All three of them.

        Liked by 1 person

        • Now that’s hilarious.

          SO AirBNB, a Norwegian finacial services group, and a Norwegian insurance group.

          Yah. Virtue-signalling.

          Thank God the Texas legislature took action to prevent the state from doing business with those guys!


  3. How to prioritize the wrong things:


    • my wife saw some Netflix “documentary” that claims that methane leakage from gas pipelines causes more problems than coal burning plants. Don’t know if that is true or not. Sounds fishy

      Liked by 1 person

      • Comes from this:

        The study, led by Environmental Defense Fund researchers and including 19 co-authors from 15 institutions, estimated that the leak rate from U.S. oil and gas operations is 2.3 percent, significantly higher than the Environmental Protection Agency’s estimate of 1.4 percent.


        They added that, over 20 years, the climate effects of emitting 13 million metric tons of methane annually “roughly equals” the carbon dioxide emissions from all U.S. coal-fired power plants operating in 2015. It would equal about 31 percent of the carbon dioxide emissions from U.S. coal plants over a 100-year time horizon.

        And so on. While they seem to have done some legwork to make a determination:

        The Science study used an extensive aerial infrared camera survey of about 8,000 production sites in seven U.S. oil and natural gas basins and found that about 4 percent of surveyed sites had one or more observable plumes, with two to seven times the methane emissions from average sites.

        I marvel at the specificity of the numbers and wonder how the math adds up. 4 percent of surveyed sites with one or more observable plumes? That doesn’t seem like a lot, and then there’s the question of how do they know how much those plumes emit, how frequent they are, how does that actually add up annually?

        EDF is not an unbiased actor in such things, so such assessments should be consumed with a huge grain of salt.


    • i won’t buy a home that doesn’t have a gas range (or the option for one)
      i might be tempted with an induction burner. but an electric range? i might as well go camping and cook over charcoal. or a gas burner.


    • While I’d like to electrify everything, electric heat is more expensive–and so much heat is gas and oil I think that would be a half-century project to electrify all the heating in the US.

      While I have no problem with electric or induction stoves (which are electric, too) I much prefer having a gas water heater, because the water stays hot even when the power is out. And my gas fireplace. I love that thing.

      Also, @jnc4p, you’re induction stove is going to give you brain cancer!

      Or something.


  4. I’d missed this.

    No wonder they have to call Barr a liar.

    Liked by 1 person

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