Morning Report: Decent jobs report

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Last Change
S&P futures 3049 13.25
Oil (WTI) 54.82 0.64
10 year government bond yield 1.71%
30 year fixed rate mortgage 3.92%


Stocks are higher after a decent jobs report. Bonds and MBS are up small.


Jobs report data dump:

  • Payrolls up 128,000 versus 90,000 expected
  • Unemployment rate 6.3%
  • Manufacturing payrolls – 36,000
  • Labor force participation rate 63.3%
  • Average hourly earnings up 0.2% MOM / 3.0% YOY

Overall a pretty decent report. Payrolls were depressed by the GM strike (about 46,000 workers), however the labor force participation rate ticked up and the employment-population ratio was flat at 61%. The two month revision was up 95,000 as well – September payrolls were revised upward by 44,000 and the August number was revised upward by 51,000. So, if you add back the GM strikers, and take into account the revisions, August’s number becomes 219,000, September becomes 180,000, and October becomes 174,000. Certainly nothing that would indicate any sort of major slowdown in the US economy.


Pennymac reported good numbers last night, with originations increasing to $35 billion in the last quarter. This was up 44% from Q2 and almost double last year. As expected, they took a hit on MSR valuations as rates fell, but they got a lot of that back on their hedges. Good times abound in origination business.


TRI Pointe reported numbers that beat the street, however revenues declined, as did average sales prices. That said, margins are increasing which is good news for the building sector. The S&P Homebuilder ETF (XHB) is up 54% so far this year.

55 Responses

    • if she can’t even convince ezra klein…


    • I don’t see how this passes the Senate even if the filibuster is nuked. The constituencies that are invested in the status quo just won’t let it happen.


    • Warren also proposes taxing capital gains for the top 1 percent at the same rate as normal income, and doing so on an annual basis, rather than just when the sale is made.

      So is the government going to be sending folks money when their investments lose money? I mean, hows that going to work? Stock goes up $1 today, you get taxed on that. Tomorrow, it goes down $2. No refund. Then it goes up again the following day, taxed on it? Or some similar thing, year-over-year? Even if assessed on a cost-basis, do I get to write off capital losses against capital gains?

      I mean, sheesh.

      Anyway, Warren is not going to win the primary, I don’t think. We’ll see, but right now I’m thinking Bernie or Biden. With Hillary being a potential outlier.


      • This stood out with me:

        “There’s an even worse inequity for employers with fewer than 50 employees. They’re not required under law to provide health insurance, but a bit over half do. Warren’s plan says that small businesses “would be exempt from the Employer Medicare Contribution unless they are already paying for employee health care today.” That’s a fairly direct penalty to small businesses that offer health insurance today: They have to keep paying a cost their competitors have dodged, but paying that cost no longer gives them an advantage in hiring.”


        • One of the many things in the plan that wouldn’t get through Congress once they started hearing from the public. This would be another Clinton healthcare reform, but Warren has already signaled she doesn’t care about what’s doable, she cares about the appearance of trying to get progressives everything they want all at once. Can’t just be “good”, has to be “perfect”.


  1. LM and her family did not have to evacuate, the San Bernardino fires missed them but not by a whole lot.

    I don’t think Warren or Sanders have a snowball’s chance in an Austin summer to be the D nominee, and if either is I will pick up my real estate search near Victoria BC.

    Why do I think that? Big field won’t allow anyone to get anywhere near even 40% of the delegates. Brokered convention goes to not Warren or Sanders.

    I would bet the field against any single candidate and against both of THEM.

    Unfortunately my guy Bullock won’t be in the mix.

    I want to see Weld, Walsh, and SC guy get some current exposure on the R side. There is a chance DJT will be wounded enough that he really won’t be able to pull off winning, against even the blow everything up twosome, while one of the other Rs could be a realistic better choice than the statist-monopolists who are the loud left of the Ds. It is probably already too late for the Rs to switch horses absent an apoplectic stroke to the President, but the possibility is within the power of my – imagination.


    • if biden is thrown under the bus to get trump, then default is warren or bernie, no?


      • No.

        The default for the state and national DPs is not Bernie, perhaps less so not EW. Watch these first four primaries. They will change perceptions long before CA and TX throw their weight around. Figure that at least four candidates will be alive and well after Nevada. The two wingers may lead in NH as they are both New Englanders, but they neither will have a decisive margin against the field. They may not do better than 3rd and 5th in IA. They will get killed in SC – where Biden will make a strong showing. NV is up for grabs.

        I think back to what wins for Ds in IA and I am going to guess that Pete narrowly leads that caucus field over Biden at the end of the day. EW third. Bernie fifth. Not decisive.

        On Super Tuesday both CA and TX vote this time. If, as I suspect, no one has a true lead among four, lefties will split their vote, younger voters will like Pete, and older voters will like Biden. But Harris may make a showing in CA muddying that result and there are two Texans who cannot win anywhere else who may muddy the results in TX.

        Tis is simply nothing like a two person race. And unlike DJT in his slide past 15 other Rs, Ds tend to argue too much to fall in line. Thus even their two person races last a long time into the process. This is not going to be a two person race even after Super Tuesday, according to my Crystal Ball. Again, if EW or Bernie are the only choices the Ds have at the Convention I will be hunting real estate in BC unless DJT is off the R ticket, opening a less radical approach to my old age.

        Liked by 1 person

        • I think the crowded field will play out exactly as it did for the Republicans and Trump and Sanders or Warren will be the nominee.

          You aren’t going to see four candidates still standing going into the convention.

          Edit: One caveat – if the Democrats still have a larger role for super delegates, then I could see Biden making it in as one of three candidates.


    • Mark:

      It is probably already too late for the Rs to switch horses absent an apoplectic stroke to the President, but the possibility is within the power of my – imagination.

      If the R’s dropped Trump, I don’t think whoever they nominated would have any chance of winning. I suspect the Trump base outnumbers the Never-Trumpers by quite a lot, and the base would never vote for an establishment replacement.


      • And Trump is the only Republican candidate who brings in previous non-voters to the Republicans.


      • Concur. History indicates that kind of shakeup for either party is bad news. Even without the Trump/NeverTrump division. When you have a clear division you lose pretty much all of one side of the voters if you procedurally get rid of their guy.


  2. Decent David Brooks piece on impeachment.


    • We’ll know if Pelosi and the Democratic establishment want to kneecap Sanders and Warren by voting on Articles of Impeachment before the end of the year.


    • All the times “selected” comments are from people who seem to think Brooks is saying that Trump shouldn’t be impeached, which is not what he’s saying.

      And they can complain all they want about how “both sides do it” is false equivalence, but a lot of Trump voters came from the “both sides do it” camp and nobody is making a credible argument that they are wrong.

      Also the folks saying they’d be for impeaching a Democrat under these circumstances are deluding themselves. The majority would see the charges as distortions and the impeachment as a “scheme”—- and they’d start with that no matter what they knew because they believe the GOP is rotten to the core. Which is the same position of Trump supporters but they can’t see that.


  3. New season of Jack Ryan is disappointing.


  4. Everybody is a victim. The new American politics models defense tactics in a criminal trial. I am not even going to cite Trump, here, who we all know to be America’s Victim, like the Cowboys are America’s Team.

    The latest example is that young Congresswoman [D] from Cali who gave her last speech to the HoR whining about being taken down by her ex-husband releasing her soft porn photos from their semi-private place in his email. Trouble is that she is leaving the HoR for diddling her employee, not because she failed her porn tryout, nor because privacy is no longer guaranteed when you send your nude photos to someone over the internet. Remember Weiner?

    Poor me, it would have been different if I were a man…

    Go home.

    I was going to watch the new Jack Ryan beginning tonight. Damn.


    • While Trump is always a victim of something or other, she could have benefitted from a little Trumpism. “It was perfectly fine, we were all consenting, blah-blah-blah”. Making herself hero in the story rather than victim would have been more productive.

      There is a difference in how people are treated in these cases, but it has less to do with group membership and more on the individual and how they respond. Weiner’s lies, doubling-down, and choice of targets (age of his last online target is a relevant factor) helped nail him. He could have survived had he learned any lessons.

      Just as the congresswoman could have done better with a different approach. And response.


    • Great article, McWing.


    • It’s telling that Obama groused about the “Deep State” too.

      ““Where am I controversial? When it comes to the use of military power,” he said. “That is the source of the controversy. There’s a playbook in Washington that presidents are supposed to follow. It’s a playbook that comes out of the foreign-policy establishment. And the playbook prescribes responses to different events, and these responses tend to be militarized responses. Where America is directly threatened, the playbook works. But the playbook can also be a trap that can lead to bad decisions. In the midst of an international challenge like Syria, you get judged harshly if you don’t follow the playbook, even if there are good reasons why it does not apply.””

      His advisor called it “The Blob”, but of course didn’t get nearly as much push back as Trump does.


      • Bush had trouble with the State Department and the CIA as well.


      • The Deep State is a “crazy conspiracy theory” or “patriots trying to keep Trump from ruining the country” because they hate Trump. The enemy of my enemy is my friend sort of logic.

        And there is some implication from many on the right that the Deep State is a bunch of lefties trying to advance the progressive cause through the bureaucracy and are mostly Obama or Clinton holdovers or whatever, but that’s not strictly true, either. As Obama’s gentle complaint would suggest. Rather, the Deep State are people and bureaucracies with their own disparate goals and cultures that may align left or right at various times but ultimately always favor government by the unelected bureaucracy over government by elected representative.

        And it’s always been true. Strong personalities demonstrate that best (such as Hoover at the FBI) but I suspect a deep analysis would reveal bureaucracies advocating for both an expansion of their power and a reduction of their accountabilities to the electorate from the very inception of any given alphabet organization.

        Because people ultimately form their own goals–and so to organizations–and feel that the achievement of these goals is the priority, not acting as a tool by which elected representatives accomplish their goals.


        • While I agree in large part with the notion of the self-sustaining bureaucracy as it is revealed in the military, FP, Intel, and law enforcement arms, and how each recent POTUS has had difficulty with it except for Bush42 because he WAS it, I think there is something else going on with DJT and that is his use of personal emissaries outside the establishment to convey messages not so much about policy but about personal predilections. I think it is different in kind, not merely in degree, and that is why the naysayers are going public.


          An historical note – the Army knew from bugging the end of WW2 allied peace conferences that Alger Hiss was a commie spy. Yet Army Intel was so secretive that it did not tell Truman, even as he went out on a limb to defend Hiss. Gen. Bradley knew, and he was HST’s fishing buddy, and he stoically let his friend, a heavy duty cold warrior, get stuck out on that limb as it was being sawed off.

          We did not learn this until the secrets were revealed in the early 1990s.

          So yeah, keeping the POTUS out of Intel has a long and glorious history.


        • Re personal emissaries, it is clear the deep state is hostile to him, so why wouldn’t he work with people he trusts?


        • Because the Ambassadors must do what he says as conveyed through Pompeo. They cannot make their own policy. But they won’t violate the law and ask for internal political favors. So DJT uses Rudy to convey the non-policy message. Or so it seems to me.


        • Well, Trump also used his own mouth to relay the non-policy message. In such a manner that I suspect again Trump’s brilliance is entirely intuitive and a kind of “animal cunning”, and not remotely reasoned. Yet even in this situation, I see instinct winning over intellect.


        • Mark:

          I think there is something else going on with DJT…

          I agree. The bureaucracy’s attempts to undermine Trump go far beyond what it has done to other Presidents.

          I think it is different in kind, not merely in degree, and that is why the naysayers are going public.

          That doesn’t explain why they have been trying undermine Trump since before he was even inaugurated or, indeed, elected.


        • Heh.


        • A fun one would be to pick out a lot of Dubya coverage (audio) and dub it over Obama appearances. It would be a good follow up. Because it does illustrate of the obeisance and humility with which the vast majority of the press covers Democrats versus how they cover Republicans. And what they would do if it had been Obama doing much the same things, only with a much more civil delivery.


        • I think this has been going on since before the election because (a) he really is an outsider, in a way Dubya and Obama and Clinton and obviously George H.W. were not. And (b) the press was signaling early on that they’d love it and whoever did it would get a free ride and be declared a national hero.

          And (c) Trump presents as not-that-bright, and buffoonish. That such a person defeated the chosen one–and that they couldn’t beat him in a fair election despite being Incredibly Brilliant and Smarter Than Everybody and also Incredibly Attractive–drives them nuts. It’s an offense to the universe. Combine all those things, and I think the incentives were overwhelming.


        • It’s amusing the amount of flak that Taibbi gets for what should be anodyne comments:


        • “I think there is something else going on with DJT and that is his use of personal emissaries outside the establishment to convey messages not so much about policy but about personal predilections. I think it is different in kind, not merely in degree, and that is why the naysayers are going public.”

          Yes, there’s two distinct issues here.

          1. Going against the foreign policy establishment on actual policy, i.e. withdrawing from Syria

          2. Running a side “drug deal” as part of his re-election campaign.


        • Joe – Agreed.


  5. Jacobin goes full Jacobin – nostalgia for East Germany.


    • Other demands included the introduction of nonauthoritarian school models, and even more bicycle lanes. In other words: an explosive and colorful mix of creative suggestions for reforming and improving the German Democratic Republic — not abolishing it.

      And what does that tells about bike lanes?

      But as for “not abolishing it”–well, that’s not what happened, is it? And there’s a reason that communist nations were awful at reform. The system was not amenable to change, and, frankly, when you try democratic communism, the number of people voting themselves other people’s money becomes unsupportable rather quickly.


      • Also, there are bike lanes all over the city now. I never see anybody using them. Yet I see cyclists often–on exurban and rural-ish streets mostly, usually two-laners, where there are no bike lanes and they hold up traffic.

        Also see cyclists using bike park lanes, and the “green line” project–which turned an old closed Southern railroad line through the city into one giant walking/biking lane–was very succesful, and I see bikers on it frequently, though most of them around the Shelby Farms area (the big, foresty-park like area where the greenline started) and rarely on the parts of the greenline that run down through the city.

        Bike lanes are a great example of where the creative theory runs afoul of human nature when implemented. There is no way the barely used bike lanes all over the city now justify the expense by any accounting. But the greenline at Shelby Farms gets a lot of use–which makes sense. It’s a nice area. Other things to do. Not likely to be hit by stray bullets. Unlikely to get run over by drunken commuters. There, it made sense. The bike lanes all over the city that are never in use when I see them–that was just a waste of money.


      • In the next issue of Jacobin, Bring Back the Khmer Rouge!


    • Prices rose dramatically because of higher-than-expected costs for items other than actual construction, such as consultants and financing.

      Uh-huh. “Consultants”. How many sons/brothers/nieces/nephews/mistresses/spouses got in on that action, I wonder.

      Those items comprise up to 40%


      It’s not just Los Angeles: 4 homeless men were beaten to death in Manhattan while they were sleeping, police say

      But it is pretty much all Democrat/left-leaning run cities, yeah? Not saying that’s causal, but it seems like it might at least be mentioned.

      At the time, Los Angeles Mayor Eric Garcetti responded by saying if Trump cared about the crisis, he’d be trying to find more federal money to help resolve it.

      For 40% of it to go to “consultants”.


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