Morning Report: Jerome Powell discusses homebuilding

Vital Statistics:


Last Change
S&P futures 3009 6.5
Oil (WTI) 60.31 0.26
10 year government bond yield 2.14%
30 year fixed rate mortgage 4.11%


Stocks are higher this morning on no real news. Bonds and MBS are down.


Two Fed governors (Bostic and Barkin) pushed back on the need to cut rates to maintain the expansion yesterday. That might have explained the increase in the 10 year yesterday afternoon.


Inflation at the wholesale level rose 0.1% month over month and 2.3% YOY, according to the Producer Price Index. Ex-food and energy, it was flat MOM and up 2.1% YOY. Inflation remains comfortably stuck in a range around 2%.


Jerome Powell mentioned homebuilding in his Humphrey-Hawkins testimony yesterday. He blamed tariffs and labor shortages for the lack of building. That said, the underbuilding phenomenon didn’t just start in the last couple of years – housing starts have been at recessionary levels since 2008, and we have had an acute shortage of housing for at least 7 years. Something else is going on, although immigration restrictions and tariffs certainly don’t help matters. But that isn’t the explanation. When you look at new home sales divided by population, you can see just how much we have underbuilt:


new home sales divided by population


The CFPB has been upping its spending on consumer financial education. Democrats are complaining that it shifts the burden of consumer protection from the financial industry to consumers. That said, the enforcement budget has increased.


Jim Grant argues in the WSJ for a return to the gold standard.

27 Responses

  1. The CFPB has been upping its spending on consumer financial education. Democrats are complaining that it shifts the burden of consumer protection from the financial industry to consumers. That said, the enforcement budget has increased.

    What are you doing, teaching men to fish for themselves? You trying to feed them for a lifetime? Screw that, force big business to give them fish! That is, after all, the compassionate thing to do.

    Democrats are just against anything Republicans do, and mostly vice-versa. Not for reasons but just because of the tribe responsible. Consumer education is broadly beneficial. I don’t see how that’s a bad thing.


  2. Jim Grant argues in the WSJ for a return to the gold standard.

    I can’t read the article cuz I don’t subscribe to the WSJ, but this seems like a bad idea to me. And I don’t see anybody in the government seriously signing on to a system that prevents us completely from printing money as a response to economic struggles.

    It seems to be the gold standard is at least as flawed as fiat money, and at the end of the day not credibly a superior option.


    • Grant is arguing that the PHD standard (which is what we have now – rates determined by a bunch of academics sitting in a room) isn’t any better.

      I get his point, but having the money supply determined by Placer Dome and Yamana Gold doesn’t sound great either.

      Liked by 1 person

  3. Good retrospective on Perot.

    “Ross Perot Had the Last Laugh

    Ripped as a human punchline in his heyday, Ross Perot’s political career foretold violent change in America
    By Matt Taibbi”


    • Well, I voted for BigEars twice and I have never regretted it.

      I don’t think Taibbi’s blurb has much to do with his article nor do I think it represents any reality I can think of. Perot was a force in Texas in the late 80s who championed public education and private funded apprentice training, among other things, and he was honest and sincere. He memorably quit the board of a flailing if not failing GM sharply pointing out that internal management was overpaid compared to R&D and production labor and the results were showing in the product. The R I voted for in the 1990 primary against Claytie, Tom Luce, was most notably Perot’s lawyer. These were quintessentially public spirited smart rich men, not foretellers of violent change, not revolutionaries, but utterly pragmatic.

      He really disappointed me when he temporarily dropped out of the race. I think he would have won a plurality of the electoral college had he stayed in, but we will never know. And that plurality probably would not have translated to anything but a blip in history, if it had happened.

      Even those of us who really liked him disagreed with some of his policy prescriptions – he had so many. And we all made fun of his demeanor and his stature.

      His chief of security was a law school classmate of mine, a West Point grad, and a VN vet. Led the successful private helicopter rescue that Perot financed. See

      if you do not know about this.


      • “He really disappointed me when he temporarily dropped out of the race. I think he would have won a plurality of the electoral college had he stayed in, but we will never know.”

        Agreed. Dropping out was what cemented the reputation for kookiness and being a flake.


  4. Trump needs to declare this as an in kind contribution, right?


  5. Feel free to carry some of the load guys.

    The planet ain’t gonna warm itself.


  6. Djokovich wins perhaps the greatest Wimbledon final ever, 7-6, 1-6, 7-6, 4-6, 13-12.

    I expect progressives will be protesting Djokovich’s win, though, claiming that Federer actually won the all important most games match, and demanding the elimination of sets in the future.


  7. This should be interesting:


  8. It’s like she’s in my head, thinking my thoughts!


    • “axis of shevil”

      She outdid you here.


    • And Trump snatches defeat from the jaws of victory.


      • Meh, we’ll see. There are only two front page diary’s on Kos discussing this. I think the outrage is being driven by Never Trumper’s on the right.

        Liked by 1 person

        • Meaning discussing his tweets against the squad over the weekend? It’s front page news on the Washington Post and the NYT.

          He should have stuck with this. It was perfect:

          “Speaking to reporters outside the White House, Trump was asked to weigh in on the clash between Pelosi (Calif.) and Ocasio-Cortez’s “Squad,” which includes Reps. Ilhan Omar (D-Minn.), Ayanna Pressley (D-Mass.) and Rashida Tlaib (D-Mich.).

          “I deal with Nancy Pelosi a lot, and we go back and forth and it’s fine, but I think that a group of people is being very disrespectful to her,” Trump said. “I’ll tell you something about Nancy Pelosi, she is not a racist, and for them to call her a racist is a disgrace.””

          But instead, he had to go with the “go back” comments and managed to shift the focus from the Democrats internal feuding.


        • That’s no indication of national interest in the story. How many stories did the NYT do on The Master’s and that there were no minority members? Or WaPo and the name The Redskins? It doesn’t necessarily capture the national zeitgeist. I suspect it very much offends establishment types and those very concerned with being perceived as broad minded. The other thing is that no one outside of politics even cares, it’s mid-July.

          I don’t think this is any grand design by Trump to drive Pelosi and the Democrats to defend members who have very low favorables after they spent the last week attempting to distance themselves from by picking fights with them.


        • Trump continues racist attacks on non-white congresswomen: ‘If they want to leave, they can leave’

          I seriously don’t think this resonates with anyone who would ever in a million years maybe vote for Trump. It might motivate 3 millenials to go vote when they were originally going to get stoned and watch Netflix instead, but I think the impact of this will be small.

          And ultimately, the infighting is not going to stop because of anything Trump is doing. He may make it worse as the squad accuses Pelosi of siding with Trump.


        • Also, there’s nothing really racist about what Trump said. It’s (a) inaccurate and (b) xenophobic. And, of course, nationalist. But I’m not seeing the racism.

          But of course, everything is racist.


        • KW:

          It’s (a) inaccurate and (b) xenophobic…

          I wouldn’t even call it xenophobic. His objection seemed to me to be with their attitude towards America, not with their ostensible foreign-ness. He was just using their (again, ostensible) foreign-ness to make the point…if the US is so bad, why not go back to where you came from?


        • The whole point of the exercise was to piss off his loudest opposition and by doing so delight his base. He won once with a 40% base and if he is to do so again there is no reason not to double down on the game plan, which is to turn out all his base. Put another way, there is no reason in his strategy to reach out to other than his base support.

          For a D to win would rather simply require sustained likability. That ain’t Harris or Warren or Sanders. Put up an unlikable nominee and a solid 40% base will beat her or him. Ds may be in a position where a naturally likable candidate pisses off their angry left so much that even he or she might lose. I wouldn’t bet the D field against Trump tonight.


        • What is xenophobic about it? I oftentimes miss the obvious.


        • Seems to be more than two now. Still, not sure anything that happens on DailyKos matters all that much.

          It is more like for the existence of this country the job of most of the media has been to validate the racism and religious bigotry that formed the basis of the country. Sometimes they come out and call out the blatant racism, but very often they do not. I mean do you think that white people just recently started calling the cops on black kids walking on their lawns, hoping that the cops will shoot the kid? Of course not, but it is getting reported more, and it is becoming a thing because it is no longer technically illegal for a black kid to be in white spaces.

          I mean, the mental space these folks are in . . . I realize they vote, probably, but still. This is not an argument any Democrat who wants votes will make (and kind of points to why Trump’s victory seems far likelier to me than any polls are suggesting).


        • That’s why reading DailyKos is so illuminating. This is the activist base of the Democratic Party, populated with tens of thousands of Regular Plumline commenters.


      • just don’t fumble the snap.



      • I mean, yes, it would always be better if he knew where it stop. However, the problem with the left’s interpretation–and the media’s interpretation, though I repeat myself–is everything I’ve seen presents it as if every right-person thinking that Trump just said something racist.

        Most Trump voters aren’t going to have a problem with anything he said, and a lot of maybe-Trump-voters are probably going to find some areas to agree with his logic. It can grate to have immigrants from objectively problem-riddled countries coming to America and telling us we suck. Likely unwise for Trump to say it, but he’s never going to win over the NeverTrumper TruCons, anyway. They’re less likely to vote for Trump than a rural Democrat who voted for Obama.


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