Morning Report: Interest rates keep falling

Vital Statistics:


Last Change
S&P futures 2788 -17
Oil (WTI) 57.53 -1.78
10 year government bond yield 2.23%
30 year fixed rate mortgage 4.31%


Stocks are lower this morning as bond yields continue to fall worldwide. Bonds and MBS are up.


Mortgage applications fell 3% last week as purchases declined 1% and refis declined 6%. This is despite a 6 basis point drop in mortgage rates.


Bond yields are down worldwide, with Japan, Australia, and Germany all hitting lows or close to it. This is not being driven by trade concerns – it is being driven by economic malaise in Europe. The German Bund, which is the European benchmark, is yielding -17 basis points (which means you have to pay to lend to the German government). Japanese government bonds yield -10 basis points. All of this will pull down US bond yields as investors swap out of negative yielding assets into positive yielding ones. Even if investors need to bear the foreign exchange risk to buy a US Treasury, many of them figure a possible loss is a better deal than a certain one.


Expect the narrative of the business press to evolve as this goes on, from worrying about trade issues to worrying about an inverting yield curve. The business press is going to jump at the narrative that the yield curve is predicting an impending recession, especially as we head into the 2020 elections. Be careful with that interpretation. Historically an inverted yield curve has been a signal of a recession, that much is true. That was before the days of extensive central bank intervention in the bond markets, which has diluted the economic messages being sent by rates. The signal-to-noise ratio of the yield curve is at a historical low, and has been for the past 10 years.


Instead of signalling a recession, lower long-term rates are more likely to be good news for the US economy in general. Slower global growth will keep a lid on inflation, which will give the US economy more leeway to grow without building inflationary pressures. This has been a theme for the the past 30 years – emerging economies exporting deflation, and that allows the US economy to run hotter than it ordinarily would. And, unlike the late 90s or the mid 00s, we don’t have a stock / residential real estate bubble to worry about. Note that consumer confidence is back towards 18 year highs as well.


Quicken CEO Dan Gilbert had a stroke over the weekend. We all wish him a speedy recovery.

38 Responses

  1. So Mueller is done and won’t say anything further than what was in the report.

    Any chance the left finally focuses on something else?

    Edit: Just stopped by the PL and it is looking like the answer is no.


    • Mueller said at the presser that the OLC guideline re indicting POTUS was controlling feature and AG Barr claims Mueller told him (and others) that the OLC guideline did not determine the lack of indictment.

      This is getting interesting!

      Also, I don’t see how Pelosi doesn’t at least let the base form an impeachment investigation committee.

      Liked by 1 person

        • According to Mueller and his team, charged Russians are presumed innocent. An American president, however, is presumed guilty unless and until Mueller’s team determines he is innocent

          I feel like Mueller was saying that the president was neither presumed innocent or guilty, and his investigation could not make a determination proving either state. That this means Trump is actually innocent in the legal definition was not mentioned, but . . . perhaps he’s still trying to have his cake and eat it too.

          For me, this is the main take away:

          Comey’s display at that press conference was an embarrassment. He did an extreme disservice to the nation and the rule of law by unilaterally declaring himself the primary arbiter of prosecutorial decisions in the federal government when that authority belongs solely to the Department of Justice. And he did an extreme disservice to Clinton herself by dragging her through the mud in such a manner that clearing her name would be impossible.

          In fact, DOJ guidelines expressly prohibit the actions of both Comey and Mueller in naming and shaming individuals who were never formally charged with any wrongdoing.

          Then there is this:

          Mueller’s performance made it clear for all to see that what he ran for the last two years wasn’t an independent investigation pursuant to the rule of law so much as an inquisition motivated by political animus.

          Which I would argue was obvious from the outset. Everything about it stank from day one.


      • I don’t think this resolves the conflict.


        • McWing:

          I don’t think this resolves the conflict.

          They are pretty clearly playing disingenuous, lawyerly semantic games. The two seemingly conflicting statements are in fact reconcilable if Mueller’s statement is taken to mean that they never even bothered to consider whether or not Trump committed obstruction. That is to say, Mueller can’t say that, absent the OLC opinion, he would have concluded that Trump obstructed justice because, due to the OLC opinion, he never even considered whether or not Trump obstructed justice. Had he considered it, he might, and then again he might not, have concluded that Trump obstructed justice.

          In other words, Mueller is pretty clearly lying, one way or another. There is literally no chance that Mueller and his team did not consider whether or not Trump obstructed justice. Such a consideration was, quite literally, the only legal justification for his investigation in the first place. So either he is lying about not having considered it, or he is lying about not contradicting Barr. Either way, the only reasonable conclusion is that Mueller is a liar.


        • I’m guessing Barr lit up when he heard Mueller say that. The obvious question to Mueller then in what the fuck were you bothering with obstruction then?

          It’s going to be fun if Mueller has to testify.

          Liked by 1 person

        • McWing:

          I’m guessing Barr lit up when he heard Mueller say that.

          I would love to hear that phone conversation. The fact that Mueller’s team is now saying that he didn’t contradict Mueller’s claim tells us that Barr is not lying. So that leaves only one choice…Mueller is.

          It’s going to be fun if Mueller has to testify.

          Yes it is.


  2. I just went to PlumLine.

    President Trump repeats the claim that the Russia investigation was a treasonous attack on his campaign so frequently that we rarely pause to note how riddled with monumental lies and absurdities it really is.

    They rarely pause to note that Trump is lying about that–and everything else? Really? find that hard to believe.

    Yet Democrats appear to share Comey’s confidence that this process will unfold in good faith. They don’t appear prepared for the contrary possibility — or how bad that could get for them.


    But Trump has granted Barr sweeping powers to declassify secrets about the Russia investigation, a move Democrats fear will lay the groundwork for selective leaking in service of Trump’s political needs.

    If they didn’t do anything inappropriate, why should they be worried about what leaks?

    From the comments: Amash is showing politically correct-conscious dems how it’s done and how people will react to impeachment.
    Dems need to grow some gonads …and get after it!

    And “how people will react”–Amash won’t himself know how people are reacting until the next election.

    And the hyperbole amazes me: William Barr will go down in history as having done dirty spade work for the unholy alliance among theocrats, plutocrats, kleptocrats and the unchecked surveillance state inducing authoritarianism. And perhaps for that dirty spade work having helped dig the beckoning grave of the American Experiment. The thin fabric of civilization and democracy is fraying.

    In all fairness, I witnessed versions of this in response to Obama and Bush and Clinton, but it never ceases to amaze me. Really? This one particular very-contemporary political thing means the end of the American Experiment. Really.

    But consider this: more than 60% of the country did not want Nixon impeachment hearings to start, and Nixon had just been re-elected in a landslide. By the time the hearings were over, Nixon had to resign, in disgrace.

    Can’t stop fantasizing about Watergate. This is not Watergate, Trump is not Nixon. No matter how bad you want that to be the case.

    ndrew Desiderio ‏ @desiderioDC
    Pelosi holds firm on no impeachment: “The Congress will continue to investigate and legislate to protect our elections and secure our democracy. The American people must have the truth.”

    Historian and expert on fascism:

    Ruth Ben-Ghiat ‏ @ruthbenghiat
    This is a big mistake. Trump sees this as a victory and will feel enabled to commit more crimes, further radicalize his followers, plunder our national reaources, and drive the country into conflict and ruin.

    It’s a HUGE mistake.

    The end draws near. Why does any of this matter? Don’t they know climate change is going to kill us all in 12 years?


  3. How to make the case for antitrust regulation of your company:


    • The left has Corporate America completely intimidated for some reason.

      Liked by 1 person

      • I am seeing all of these banner ads and Reuters stories by Juul advocating to increase the smoking age to 21.

        This cannot be by choice. It is not in their best interest. They cannot be doing this without some sort of coercion.

        How the left can force these companies to do something against their interest is beyond me.

        Liked by 1 person

        • I feel like Juul is trying to pre-empt attacks in the works that claim vape manufacturers are targeting children with flavors like grape and berry. There ams are getting twisted, but it’s about pre-making a case that they are doing all the can to prevent kids from getting addicted to the vaping. I think they see a situation where they are being set up, and they are trying to reduce their liability, knowing that there will still be plenty of ways for 18 year olds and younger to get their vape juice.


      • I don’t think the Sales Force CEO is intimidated. I think he’s just a progressive true believer.

        The larger question is whether or not any shareholder activists will object to this.


        • Well, shareholders at Disney have raised objections over ESPN’s focus on social issues instead of sports.

          I refuse to believe that these companies aren’t having their arms twisted by someone. Too many too fast.

          Liked by 1 person

        • Also, I assume he lives in San Francisco. And there is probably somebody or bodies in his social circles or business circles putting the pressure on him to “do the right thing”. Sometimes all the arm twisting required is the social pressure of friends and peers whose approval you want.


        • “I refuse to believe that these companies aren’t having their arms twisted by someone. Too many too fast.”

          I wouldn’t be surprised if their is an activist group targeting these folks, and then maybe targeting friends and peers and people in their social groups. It would be a good strategy. “Did you know your good friend so-and-so is getting rich selling software that facilitates the murder of innocent people?”

          I expect a lot of what is going on these days involves some form of below-the-radar guerrilla activism. Which is smart, because in many cases you don’t have to expose your arguments to public scorn and deconstruction–you just have to shame a few key people.


        • I expect a lot of what is going on these days involves some form of below-the-radar guerrilla activism. Which is smart, because in many cases you don’t have to expose your arguments to public scorn and deconstruction–you just have to shame a few key people.

          Which is why it is imperative that someone figure out who is calling the shots and naming / shaming them.

          Liked by 1 person

        • It’s gonna be hard to figure out who might be doing that sort of thing, if they are, without someone narcing on them. Which, if it’s happening, will eventually happen. Because eventually they’ll try the strategy on the wrong person(s).


    • How is this different than refusing to make cakes for gun owners?

      That being said, changing terms after another company makes a huge investment in your product can at least lead to a lawsuit to recoup losses from having to switch products. Especially given the arbitrary nature of the decision to selectively refuse to do business with you–though last year it was apparently fine to do business with you.

      Virtue signaling should just require refusing to take new clients who sell the objectionable material. That seems less fraught with pushback and lawsuits.


    • Agreed. “Any Defendant” does not equal “any party”.


      • Concur. Also goes why to Thomas remains my favorite justice. The man READS THE TEXT, dammit!


      • MarK;

        “Any Defendant” does not equal “any party”.

        A couple of questions:

        If Home Depot is not the “defendant” in a class action claim filed against it, then what kind of party is it, exactly?

        If Citibank dropped its case against against Mr. Jackson, would the class action claim against Home Depot automatically be dismissed? Or would Mr. Jackson have to drop his claim against Home Depot in order for it to go away?


        • Scott – these are good questions.

          First point is that the removal has to be because it could have been brought in federal court to begin with. So any diversity jurisdiction here depends on Defendant who was originally sued in his home state claiming diversity. Once that does not happen the Rule is: A civil action otherwise removable solely on the basis of the jurisdiction under section 1332(a) of this title may not be removed if any of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.

          So general diversity cannot be established here. Thomas wrote that it might seem plausible without the context of the plain words to argue that Home Depot was in the shoes of a defendant, but the statute plainly treats only the defendant in the underlying action that was originally brought as “Defendant”, not cross parties.

          There was an earlier case, Shamrock Oil, where D in state court counterclaimed against P so P tried to remove as counterDefendant. That was not allowed and Thomas thought it was good precedent.

          I will get to the other statute, the Class Action special one, later. No time right now.


        • Mark:

          Thanks for the explanation. It seems to me that Home Depot’s best strategy would be to pay Citibank whatever Jackson owes them in exchange for getting them to drop their lawsuit against Jackson. So, with that case dismissed, Jackson is no longer a defendant and, if the class action case remains, it is now a standalone case unconnected to any other case, making Home Depot a “defendant” in the normal, traditional sense. Then move to have the case switched to the federal court.

          Any reason that wouldn’t work?


        • Let me quickly add that the special class action statute lets any diverse defendant remove even if one of the class defendants or more are residents of the same state as the plaintiff. This statute was meant to keep plaintiffs from suing a real but nominal home state defendant in a class action, then joining an out of state true target and thus trapping it in P’s local home state court. Plaintiffs sue Chevy dealers in NY and join GM, the big target, for example. GM can remove the whole case under the special class action statute as a Delaware corporation.

          So I think it is literally true that nothing in that statute changes who is a “Defendant” for class purposes, as Thomas opined.

          I think “standalone” as you suggest could work but it might be tricky depending upon the state’s rules of civil procedure. For example, in Texas this case could not be severed [and the parties realigned by order of the trial court] simply because Citibank non-suited [in Texas a non-suit would be unavailable after a cross or counter claim], Citi would have to at least dismiss with prejudice or more likely agree to a final take nothing judgment, which your strategy might permit, although the latter would not be easily approved if the original D did not agree to the terms of the J. Most courts would likely accept the simple submission of a take nothing judgment, of course, but then there would be the timing to finality and to the date Home Depot would be required to make a general appearance, which could get tricky, unless the original removal motion was somehow still alive after the remand which I don’t think it would be. Home Depot could never have made a general appearance in the case, which would have fixed jurisdiction in state court. Remember you have to make the removal motion before you make a general appearance – general appearance is a tar baby.

          I suspect this has been done successfully in some permutation of your strategy.


  4. More news from the left coast:

    The prep school that was heavily involved in SAT cheating also sold HS diplomas to non-students.

    How sad is that?

    Liked by 1 person

  5. This is why no one trusts the media – they lie about things you can look up yourself:

    “Despite Trump administration denials, new evidence suggests census citizenship question was crafted to benefit white Republicans

    By Tara Bahrampour and Robert Barnes
    May 30 at 3:25 PM

    The evidence was found in the files of the prominent Republican redistricting strategist Thomas Hofeller after his death in August. It reveals that Hofeller “played a significant role in orchestrating the addition of the citizenship question to the 2020 Decennial Census in order to create a structural electoral advantage for, in his own words, ‘Republicans and Non-Hispanic Whites,’ ” and that Trump administration officials purposely obscured Hofeller’s role in court proceedings, lawyers for plaintiffs challenging the question wrote in a letter to U.S. District Judge Jesse M. Furman. Furman was one of three federal judges who ruled against the question this year.

    The files show that Hofeller concluded in a 2015 study that adding a citizenship question to the 2020 Census “would clearly be a disadvantage to the Democrats” and benefit white Republicans in redistricting. Hofeller then pushed the idea with the Trump administration in 2017, according to the lawyers’ letter to Furman.”

    The actual quotes: – CVAP means Citizen Voting Age Population in apportionment, instead of total population

    “Use of CVAP would clearly be a disadvantage for the Democrats.”

    “A switch to the use of citizen voting age population as the redistricting population base for redistricting would be advantageous to Republicans and Non-Hispanic Whites.”


    • A recent example that I think is more obvious is the Nancy Pelosi video. There are media examples (numerous) of them saying Trump “released” a “doctored” video of Pelosi, and several cases where they played a video making the rounds on Facebook and elsewhere of Nancy Pelosi that was slowed down–so ostensibly doctored–but wasn’t the video Trump shared.

      Because Trump didn’t “release” the video. He shared a tweet. The video wasn’t the slowed down video, it was a normal video of hilights of Pelosi slurring and misspeaking (the same sorts of videos have been released of Trump and others) and although in other cases reporters referred to the correct video and called it “deceptively edited”, the video has obvious video transitions between each slur or misspeak, meaning that it was not “deceptively” edited at all.

      This is so easy to find the actual facts. And so obviously just wrong. Trump re-tweeted a video that featured a number of speaking fumbles by Pelosi. He didn’t “release” it and it wasn’t “doctored” and it wasn’t the slowed-down video that multiple outlets played while talking about Trump having released a doctored video.

      But yeah: as I read that, he’s talking about apportionment, and not addressing the citizenship question at all, is he?


      • He says you need to have the citizenship data in order to be able to do the apportionment based on Voting Age population, hence the need to have the question added to the census.

        But the apportionment issue isn’t being litigated at the SCOTUS currently, and the statement that just adding the question about citizenship to the census will “advantageous to Republicans and Non-Hispanic Whites” isn’t what his quote says.

        Liked by 1 person

    • I wonder. I don’t feel like this will get a lot of mainstream coverage.

      Also, we know this stuff because he was under constant surveillance because he was agitating for civil rights. I don’t expect a lot of movers and shakers would come off better—but the FBI didn’t have them under constant surveillance.

      But given it’s King and not, say, Cosby … I’ll be interested to see if this reframed MLK and his sainthood or not. I think probably not.


    • MLK is a saint to the left. They will hide whatever flaws he has.

      Liked by 1 person

    • This will be a hell of a reckoning:

      I doubt that. Too late. We live in the 24/7 culture now. It was already too late when the truths of JFK’s personal life were revealed. Nothing seems to stick on DJT even if it is only a decade old. If Gary Hart and Donna Rice had been exposed after Hart became POTUS it would not stick. The people who are most likely to be outraged are only selectively outraged as are the people who are least likely to be outraged.

      I attended a sermon of MLK’s at a synagogue when I was 19 or 20. He had a great voice. He was easy to listen to. However he did not know the “rule” that pervades among Jews, Methodists, and Presbyterians, in my limited experience, that 18 minutes is the attention span of the congregation. He went on for 66 minutes, IIRC. I have no idea what he said for most of the sermon and was relieved when it was over. I thought of him then as a flawed hero because I believed the rumors of his womanizing. I was also then of the opinion it was nobody’s business but his wife’s. My viewpoint then was generally shared by males not in the FBI, I think.

      I do think the rape tape will certainly have women’s groups calling for the removal of his statues.


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