Morning Report: Foreign investment in US real estate falls again

Vital Statistics:


Last Change
S&P futures 2984 -0.5
Oil (WTI) 57.04 0.24
10 year government bond yield 2.07%
30 year fixed rate mortgage 4.09%


Stocks are flattish after erstwhile market darling Netflix stunk up the joint with lousy earnings. Bonds and MBS are up small.


Initial Jobless Claims were flat at around 219k last week.


Negotiations continue over spending and the debt ceiling, which will probably be hit in September. Treasury Secretary Steve Mnuchin cited “progress” in negotiations, and there is general agreement on the “top line” which includes spending increases from the previous year. That said, Republicans want some spending cuts elsewhere to offset the increase, and Democrats are against cuts. We’ll see if this goes to the mat (and another shutdown), but in the end, we’ll probably just raise the ceiling again and things will go on their merry way. Remember the last time we had a long shutdown, lenders were unable to get tax transcripts out of the IRS so it is something to keep in mind.


The Fed’s Beige Book of economic activity showed that the economy continued to expand at a “modest” pace, with slightly higher sales and flat manufacturing. Employment grew at a modest pace, and appears to be decelerating somewhat, especially as the slack in the labor market gets taken up. The Boston Fed noted that tariffs are having a negative effect, and at least one company is moving some production overseas to escape them. The proposed 5% tariff on Mexican goods was mentioned as a significant shock.


Canary in the coal mine for international asset markets, particularly China? International buyers of US residential real estate fell by 36% over the past year, following a 20% decrease in the prior year. China has been dealing with a real estate bubble for years, and prices are way out of whack compared to incomes – you can see just how bad it is here. This may explain some of the emerging weakness at the high end, especially in the big West Coast markets like San Francisco, Vancouver, and Seattle. The first step in any bursting bubble is a “buyer’s strike,” followed by rising inventory, and then finally a market-clearing event. We may be at the first stage right now.


Macroeconomically, a downturn in China means several things. First, they are going to try and export their way out of it, which means more trade tensions especially if they go the currency devaluation route. Second, it will mean a global growth slowdown, which will act as an anchor on global interest rates. Don’t worry about inflation, the world is awash in capacity. Finally, it could mean a return to a time like the 1990s, where the US was able to have its cake and eat it too, with fast growth but little to no inflation. I wonder if the Fed sees the same thing (after all central bankers do coordinate policy somewhat) and that is part of the reason why they are planning on easing when there is absolutely zero evidence the US is entering a recession.

25 Responses

  1. Ezra Klein interviews George Will.

    “George Will makes the conservative case against democracy

    Where George Will thinks America went wrong.
    By Ezra Klein
    Jul 18, 2019, 10:00am EDT”


  2. Interesting piece in the Atlantic:

    “‘It Makes Us Want to Support Him More’

    Amid a convulsive week in American politics, at one of the darkest rallies Donald Trump has ever held, his base showed up in force to tell the president he’s done nothing wrong.

    Peter Nicholas
    1:15 PM ET ”

    Liked by 1 person

    • I look at it this way… I loved the Detroit Pistons back in the late 80s. Was Bill Laimbeer a completely dirty player? Of course. Did I even like him? No. Nobody did. Except if he took a cheap shot at Danny Ainge.

      But even if I did dislike him, was that going to turn me into a Bulls or Celtics fan?

      Liked by 1 person

      • Seems to work that way for Jen Rubin and Bill Kristol and several others. But the average voter, swing-voters, people discouraged by Trump as the Republican candidate and thus not voting . . . I think those folks are probably more favorably disposed towards Trump than they were in 2016.

        But more to the point, nobody amongst the Democrats or the MSM or the progressive left have any idea, or apparently in any interest, in moving the needle amongst the center-right or barely-left swing-voter types.

        The Atlantic article is a perfect example of this. He cited that he could find nobody at the rally who would agree what Trump said was racist, but he himself starts the article saying the comments were racist. The idea that pretty much everybody predisposed towards Trump don’t think the comments were racist (and the fact he did not attack them on race at all, but country-of-origin, and it was an ideological attack) but he described them as racist tweets as if it would be irrational to not call them that–that’s not worth exploring! That’s just . . . well, those folks must be crazy. Or something. Not worth addressing.

        I am impressed he included a black Trump supporter in his article. That’s not typical.


        • And the Chiu’s. I think everyone was quoted well too.


        • Indeed. But avoiding coverage of the admittedly small (but very real) contingent of African American Trump supporters (aside from Diamond and Silk) has often seemed to be an editorial demand from much of the MSM. So his choice of including a brought spectrum of the demographic and not try to make it all “angry white men” was impressive, and I give him all the kudos for that. Because lots of his colleagues aren’t that willing to let facts influence the narrative.


    • My predictive power is poor for such things, but I’m feeling like if Trump were a littler better-spoken and a little less impulsive, 2020 would be a 1984-style blowout in Trump’s favor. As it is, I don’t see that, but I would not be surprised if he won by a more significant margin this time around, and maybe even takes the popular vote.


      • I think he’s going to win narrowly. Depending on who the Democrats nominate of course.


        • And if who they nominate turns out to be way more awesome than the primaries indicate so far. Or just smarter than Hillary when it comes to campaigning and not calling half the country “deplorables”. I’m still betting it’s a better than previous win. Of course, my track record here isn’t great. I predicted a Hillary win.


    • “darkest rally”. Does he remember “lock her up” chants?


    • “Convulsive week”?, “darkest rallies”? Jesus, what a fucking drama queen.

      Was the week Steve Scalise was shot for being a Republican also a “convulsive week”?

      What a fucking drama queen.

      Liked by 1 person

      • Was the week Steve Scalise was shot for being a Republican also a “convulsive week”?

        No, it was concerning, because that unfortunate accident of a lone crazy person of no political affiliation might cause the White Nationalists who shop at Wal-Mart to go crazy and beat up black people. Which would be convulsive. But the even itself was merely “concerning”.



    Great interactive graphic.


  4. Wow. Now I’m reminded why I don’t come here very often.


    • No one but yourself to blame. If we had some more folks like you to make us behave we’d be a lot more fair and balanced!

      But I’ve given up on the idea of reasonable discussions between opposing ideologies. Honestly, it’s not in human nature to make the effort—and humans are wired to see the worst in those who disagree about the big things (and thus identify themselves as being of another tribe) while seeing the best in those who agree with them (or are blind to, or are willing to look past, poor behavior of similar flaws in their fellow traveler).

      It is hard, hard work to have frank and honest conversations about ideological disagreements with others … which is why you never see it. Or you never see it for long. Nobody wants to do it, and everybody else is ready for the other side to break the ground rules (and someone always does—in fact almost everybody does).

      Much easier to just talk with people you only disagree with around the edges. And sometimes even those discussions get heated and hyperbolic.

      Which is funny. These huge schisms are often about very small differences. But the narcissism of small differences can lead to brutal wars. Because people are driven to see their differences as so huge and important.

      Anyway, glad you stopped by. Have a great weekend!


      • KW:

        It is hard, hard work to have frank and honest conversations about ideological disagreements with others … which is why you never see it. Or you never see it for long. Nobody wants to do it…

        I do. In fact that is mostly what I want to do.


        • Well, then, let’s just say it’s rare that two or more people want to do it to the same degree at the same time. And while you consciously may want a frank and honest exchange of ideas, the way humans debate with one another tends to militate against it. I think, anyway. Lots of issues but primary ones are: the other party reads things into the opposing party’s statements that aren’t there, and yet is often positive those things are there (remarkably hard to avoid), most humans tend to get offended when other people are disagreeing about Big Ideas, and it gets personal (often without about conscious effort), people (and this is a lot ideologues) who spend a lot of time in their bubble get an intuitive feeling about what is “right and true”, and when others disagree it feels blasphemous. When your certain of your position, debate seems pointless to many people, and other people just as certain of their opposing position seem to be a little mad. The other party often seems to be “so far gone” in their wrongness that a sincere effort at dialog feels like a wasted effort—so a cathartic jab at them is all that is merited.

          But the evidence to my point tends to be the self-selection of discussion groups and comments sections. A side becomes dominant and then most everybody left is relatively close enough that outside witnesses might consider them of a single mind. Larger groups than this often sport trollers, and the occasional serious debater—but the dominant group makes serious debate impossible, and lumps all the opposite side in the “troll” category.

          Serious debate seems to happen mostly where the debaters mostly agree about most things. Which I think there are reasons for (intrinsic or instinctual respect not afforded to non-tribe members).

          I imagine you’ve had some difficulty finding liberals and progressives to have serious and thoughtful debates with. Though I’m sure there are some somewhere!


        • KW:

          I imagine you’ve had some difficulty finding liberals and progressives to have serious and thoughtful debates with.

          It can be difficult, for sure, but I’ve found a reasonable share of them over the years.

          Liked by 1 person

        • There are always outliers. But most folks (in my experience) are more interested in venting their spleens or trading snark with fellow travelers—or ganging up against one of the Others With Wrong Ideas—than discussion. And then of course there are trolls who just like to stir the pot.


      • No one but yourself to blame

        No, I just don’t hang out with bullies. It took a while, but I figured out that I can’t change a bully.


        • ok, but not seeing the bullying.


        • The problem is, nobody here thinks about themselves as a bully. Bullying is also a nebulous term in these online discussions, where one thinks it’s conversation and the other thinks it’s bullying. Also, your “bully” often sees their bullying as defense against your “bullying”. And people generally resist unpacking that so we spend our times in our bubbles. 😂


Be kind, show respect, and all will be right with the world.

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: