Morning Report: John Williams moves markets

Vital Statistics:


Last Change
S&P futures 3003 6.5
Oil (WTI) 55.74 0.54
10 year government bond yield 2.05%
30 year fixed rate mortgage 4.08%


Stocks are up this morning after Mr. Softee beat earnings estimates. Bonds and MBS are up small.


Signs of a recession? Not really. The Conference Board’s Index of Leading Economic Indicators was flat at -.3% in June, while the markets were expecting an uptick. “The US LEI fell in June, the first decline since last December, primarily driven by weaknesses in new orders for manufacturing, housing permits, and unemployment insurance claims,” said Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board. “For the first time since late 2007, the yield spread made a small negative contribution. As the US economy enters its eleventh year of expansion, the longest in US history, the LEI suggests growth is likely to remain slow in the second half of the year.”


New York Fed Head John Williams sent bond yields lower yesterday when his prepared remarks to an academic conference were released. They said: “Take swift action when faced with adverse economic conditions” and “keep interest rates lower for longer” when you do cut rates.” The markets immediately took this as an endorsement for a 50 basis point cut when the Fed meets next week. A spokesman from the NY Fed clarified that comment later, saying that he was referring to studies based on 20 years of monetary policy and was not referring to the FOMC meeting next week. A cut next week is pretty much expected, and the only question is whether it will be 25 or 50 basis points.


After Williams’ comments, the Fed Funds futures actually started handicapping a 70% chance for a 50 basis point cut and only a 30% chance of a 25 basis point cut. They had previously been forecasting a 25% chance for a 50 basis point cut. They ended up settling on 40% chance. There is some more Fed-speak today, and then they will enter the quiet period ahead of next week’s meeting.


FHFA Director Mark Calabria says the Trump Administration should be releasing a plan to deal with Fannie and Freddie sometime in August or September.

43 Responses

  1. “John Williams moves markets”

    For a second I thought this had something to do with the composer of Star Wars, etc.

    Liked by 2 people

    • Mark:

      Wondering if you could offer a man-on-the-ground perspective of this story:

      Since Austin’s liberal policy on homeless camping went into effect on July 1, the big question is how much of an impact would it really have? Was the issue overblown? Would Austin residents see homeless camps pop up all over town or not? And would Austin, woke and weird capital that it is, object to it all?

      …The camps and lawlessness are becoming a visible part of the Austin landscape all over the city. Austinites are posting photos on Twitter to alert Mayor Steve Adler — and the media, Texas Gov. Greg Abbott, and each other — as they see new camps or campers.

      Liked by 1 person

      • Austin has a big visible homeless population because it is not Chicago where a homeless person could not live outdoors in the winter. My twin granddaughters have called them the bridge people since they were five. The APD monitors the under the overpass encampments and does roundups of stolen bicycles, etc. Confrontational homeless persons are arrested – about five per day according to the APD. Jailing en masse for loitering is not physically possible, so the APD tells homeless to not block passageways or streets and chases them off if they trespass or sleep in the parks, and arrest for confrontation or actual crimes, of course. What this article was responding to was the ordinance change effective July 1.

        Previously, the loitering/vagrancy ordinance was typical and authorized APD to arrest all vagrants. Which they never have done because of the logistic nightmare. The APD lobbied for essentially vacating the standard ordinance for one based on confrontation, because that is enforceable by reason of the size of the force and the size of the homeless population.

        I haven’t read about any change in the homeless situation or more crime since July 1 and have not seen any.

        There are shelters, both charitable and public. The City just authorized the purchase of another one for $8.6M. There was a NIMBY reaction to it, which was predictable. That is the only “protest” I know of.

        Under traditional loitering/vagrancy ordinances no city of size ever does much more than chase them from one location to another, jailing the drunks overnight, and charging the confrontational ones with misdemeanors. Austin and every city without hard freezes has a logistics problem. The solutions are not magical. Shelters are cheaper than jails, but past that, I don’t have much to offer.


        • Thanks Mark. It’ll be interesting if the areas of homeless camps start expanding in light of the July 1 change.


        • Scott, now over 10K people have petitioned to rescind the ordinance because even though the APD is chasing vagrants around they now think they can sleep on the sidewalks downtown in front of businesses. So they are.

          Liked by 1 person

  2. I’m tired of Trump breaking all these norms!


  3. Crazy if this works:

    Liked by 1 person

  4. There’s always a strong likelihood, when you are the power-player, that intransigence and a hard-line can force your opponents to the table no matter how much they don’t want to negotiate.


  5. This piece is pretty close to my thoughts on the anniversary of the Apollo 11 landing.

    Especially since the retirement of the Space Shuttle program, it seems that the US is basically regressing as far as space flight goes and that’s symbolic of a lot of other regression.

    This I think is accurate: “The peak of American greatness lies 50 years in the past.”

    Edit: This says it all about where we are now vs 50 years ago

    “Russian capsule carrying 3 docks with space station
    July 20, 2019

    BAIKONUR, Kazakhstan (AP) — A Russian space capsule with three astronauts aboard has docked with the International Space Station after a fast-track trip to the orbiting laboratory.

    The Soyuz capsule docked at 22:48 GMT Saturday, just six hours and 20 minutes after blasting off from Russia’s launch complex in Baikonur, Kazakhstan.

    The launch took place on the 50th anniversary of the day U.S. astronauts landed on the moon.”

    Liked by 1 person

  6. The City of Berkeley California has purged the gender specific word “manhole” from its City Code.

    The article did not say what is the substitute word. Probably not “womanhole”, I guess, as that would also be gender specific. Vertical shaft sewer line entry could be objectionable on gender specific grounds as well. Maybe they just leave a blank.


    • “Theyhole”

      Or zehole, hirhole, or zirhole.

      Assuming you following the gender neutral naming conventions, as specified by random people on the Internet.

      Liked by 1 person

      • Maintenance cover. Which I actually have no trouble with, conceptually. It would not be the first time such naming conventions and official titles were changed, and the substitutes are reasonable. At least the ones I’ve seen all seem like reasonable, gender-neutral replacements. The motivation for doing it seems ridiculous, but at least the execution is not entirely absurd. And ultimately–by itself–relatively harmless.

        Unlike Berkley banning natural gas in all new construction.

        No gas stoves, water heaters, or central heating? Or backup generators? Presumably having big diesel generators on-site isn’t cool either. I guess for some true believers it’s utopia, but it seems like an awful place to live, to me.

        A study by Energy+Environmental Economics shows that transitioning to clean electricity-powered appliances in new construction will allow developers to build more quickly and affordably, while saving homeowners considerable cash.

        This seems unlikely, to me.


        • KW:

          Maintenance cover.

          The irony of a political movement which accepts, nay demands, that literal women be called “men”, but which breaks out the fainting couches any time the word “man” is used as a synonym for human (mankind, manhole cover), is palpable.

          But I would wager that at least 95% of the humans who actually do make use of these covers in order to do maintenance are indeed men, so even in these hypersensitive-to-gender times, it still makes sense to refer to it as a “manhole”.


        • Surely this guy is just trolling, and if so I think he has to be the greatest troll in the history of trolling.

          Jessica Yaniv, the complainant, told the hearing she was entitled to receive the advertised wax service and that if the tribunal ruled against her it could lead to a “dangerous” precedent.

          “You cannot choose who your clientele is going to be,” she said.

          However, business owner Marcia Da Silva said she was not comfortable carrying out a Brazilian wax on a person with male genitalia, nor did she have the training for it. Jay Cameron, Da Silva’s lawyer and litigation manager with the Alberta-based Justice Centre for Constitutional Freedoms, told the hearing that a ruling against his client would be tantamount to ordering “intimate services” against someone’s will.

          The complaint heard Wednesday is one of more than a dozen filed by Yaniv, who describes herself as a digital marketing expert and LGBTQ activist. All allege she was the subject of discrimination by salons. A few complaints have been settled without hearing or withdrawn.

          My favorite part: “Under cross-examination, Cameron put to Yaniv that Brazilian waxes were services performed only around female genitalia and that what Yaniv should have sought was a “brozilian”…”


        • Apparently she is a professional plaintiff… has 15 suits for the same thing


        • By the logic (such as it is) of anti-discirmination law, he/she’s got a case!


  7. This is going to be so much better than the J.J. Abrams crap:


  8. Good read:

    “The Case of Al Franken
    A close look at the accusations against the former senator.

    By Jane Mayer”


    • Franken got railroaded. And she shouldn’t have resigned over that. Over the winning-by-finding-mystery-ballots-in-a-car-trunk, maybe. But that, no.


    • jnc:

      Good read:

      Hard to take her sudden attraction to “due process” too seriously given that she is the same reporter who less than a year ago was trying to keep Brett Kavanaugh from being confirmed by writing her own substance-less hit pieces on him.

      Even Salon, which thinks she is otherwise a good reporter, takes her to task for this one:

      Mollie Hemingway has it pretty much right.

      Of all the people in the world who are in a position to write an article poo-poohing Al Franken’s problems or fretting about journalistic excesses, Jane Mayer may be the very worst choice.

      That’s because she has repeatedly published unsubstantiated allegations of sexual impropriety against her political opponents. Most recently she was part of the public relations rollout of Christine Blasey Ford’s allegation against Kavanaugh, publishing one of the stories that released a few details about the allegation to gin up excitement for the Washington Post report that was to come. Ford’s attorney, Debra Katz, is a frequent source for Mayer and her colleagues, including in the Franken article.


      • I still think Franken was railroaded. The reporter should have extended the same benefit of the doubt to Kavanaugh, though.


        • KW:

          I still think Franken was railroaded.

          I don’t necessarily disagree (even at the time I said that outrage over the photo was overblown and being entirely mischaracterized), although it is worth remembering that the case against him consisted of a lot more than the lone accuser that Mayer focused on. There were 7 other women who came forward with their own stories about what a creep he was.

          But wholly apart from the merits of the case against him, I just can’t drum up much sympathy for progressives who fall prey to the kind of witch hunts that they routinely support when directed at others. If Franken were still in the Senate, what are the chances that he would have defended Kavanaugh from the ridiculous smears that the rest of the Dems and even Mayer herself were directing at him? Where did Franken stand on the corruption of Title IX regulations back when Obama was destroying due process with regard to sexual assault allegations on college campuses?


  9. Warren gets called out:

    “We’re Nowhere Near Another Debt Crisis

    Kevin Drum”


  10. And Mother Jones calls out Warren again:

    “Are Democrats Now the Party of Open Borders?
    Kevin Drum”


    • Because Mother Jones wants Democrats to stand a chance of winning. And swing voters and apolitical folks can be very receptive to left-of-center politicians. But hard left is a hard sell. Mother Jones wants another Obama, not another McGovern. Or that’s my interpretation.


      • Because Mother Jones wants Democrats to stand a chance of winning. And so does Drum. And so do I.
        Hard left is impossible to sell to moderate voters – the ones who swing the House back and forth. Moderate voters can vote for McCain and Romney and Obama and WJC and both Bushes, in different years. Or for BigEars twice, in my case.

        On the particular issue, a moderate voter would want border and port security that included more tech and more BP personnel, and more immigration courts, and more humane temporary detention, and with that, a merit based general immigration system rather than a family based one, and almost any arbitrary limit on refugees outside the merit system. And Drum knows that. And he knows that Warren is either pandering to some very small base or is perhaps just simple-minded outside her bankruptcy expertise.

        Becoming the party of extreme reaction to Trump is kneejerk BS. Following an angry old socialist over a cliff is BS. MMT is BS.

        Of course, I believe that only a handful of R legislators have held out as conservatives. Look at the budget. Look at how easily lobbyists are now approved as Cabinet members. I suppose the schisms between small biz and big biz on the R side have been easy in retrospect, when they were once considered major. When I was a member of NFIB [70s-80s] I found us at odds with the Chamber and the NAM on many issues. Now we have the fundamentalists on the R side, the nativists, and movement conservatives/Federalist Society lawyers, and others with agendas that have little or nothing to do with business and commerce. Papering over these schisms, especially the ones between nativists and the Chamber, is hard. Point being that moderate Ds will attract Chamber support where that was once verboten.

        The Ds allowed their Party to become chaotic when they permitted Sanders to run for the D nomination in 2016 and now they cannot step away. The Rs probably accentuated their own schisms with Palin.

        I am not talking lib-con stuff here, just the incredibly awful nature of party politics now. There should always be room for exchanging and debating liberal and conservative and pragmatic and aspirational ideas, but I do not think that is actually happening in the current system. This is not Dirksen and LBJ, or Dole and Mitchell, or Dole and Daschiel, all of whom fostered debate rather than stifle it.

        Australia is sounding good, but I am too freaking old.


        • Mark:

          Moderate voters can vote for McCain and Romney and Obama and WJC and both Bushes.

          Which just makes the thinking of allegedly moderate voters even more inexplicable to me. It is hard to see how Obama fits into this group. The guy literally called for “fundamentally transforming” the US. He implemented the most radical health care policy in the history of the US, and he wanted it to be even more radical than it was. He extended the already dubious notion that mere consumption equals interstate commerce and actually argued the even more radical idea that the absence of consumption equals interstate commerce. He refused to defend traditional marriage (after claiming that he supported it), and openly called for a radical change to the definition of marriage, a definition that had existed since, well, the invention of marriage. His radical reinterpretation of Title IX, followed by threats to universities if they did not embrace it, resulted in the significant dimunition, if not disappearance, of due process for men on college campuses. He spent an astonishing $1 trillion dollars on a so-called stimulus package. He unilaterally signed and implemented international treaties without ever submitting them for ratification to Congress. He maintained a secret “kill list” for targeted drone strikes that included US citizens.

          I think seeing Obama as a “moderate” on the order of McCain or Romney or WJC is a pretty tough sell.

          The Rs probably accentuated their own schisms with Palin.

          I doubt Palin had much to do with it. I think the cause of the dissolution of the traditional R coalition was the failure of Romney to get elected. If the former R governor of Massachusetts – Massachusetts for goodness sake – can’t attract enough allegedly moderate voters to beat a guy like Obama in the kind of economy that Obama presided over, then clearly a strategy other than pandering to the so-called moderate middle was needed. Enter Trump.


        • Obama could come off as moderate to swing voters and aisle-crossers, and through historical glasses he was the very model of civility and presidential class compared to Trump (which is a kind of style-over-substance centrism). And frankly he was a centrist compared to some of the communists running for the Dem nod this time around. And it depends (as such things do) on what centrism, so-called, looks like to you. Obama was not that far from Dubya on a whole host of things, leading some dedicated leftist to hyperbolically refer to his first term as Bush’s 3rd term—both big government politicians with new-con tendency. Dubya never would have inked the Iran deal but … eh, politicrats, the lot of them.

          But there were folks on PlumLine complaining that Obama was too far to the right. Some people will never be satisfied.


        • @mark: there is no desire to seriously cut government spending in the GOP. Any time they talk about cutting spending, they’re just mouthing platitudes for the rubes. We have few ideologically serious conservatives amongst elected Republicans. At least they are good about cutting taxes. Usually.


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