Morning Report: Senate Resolution complicates trade negotiations

Vital Statistics:


Last Change
S&P futures 3111 -6.25
Oil (WTI) 55.69 -0.74
10 year government bond yield 1.74%
30 year fixed rate mortgage 3.96%


Stocks are lower this morning as tensions increase between China and the US over Hong Kong. Bonds and MBS are up.


The Senate passed a resolution last night supporting democracy for Hong Kong and urging China to not use violence to suppress the demonstrations. This will undoubtedly complicate trade negotiations, and will push the markets to more of a “risk-off” (stocks down, bonds up) posture. Bond yields are lower this morning, with the 10 year trading at 1.74%.


Mortgage Applications decreased by 2.2% last week on a seasonally adjusted basis as purchases rose 6.7% and refis fell 7.7%. Veteran’s Day influenced the numbers. “U.S. and China trade anxieties and protests in Hong Kong pulled U.S. Treasuries lower last week, and the 30-year fixed mortgage rate followed the same path, dipping below 4 percent,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Despite lower rates, mortgage applications decreased 2.2 percent, driven by an 8 percent slide in refinance activity. Rates have stayed in the same narrow range of around 4 percent since July, so we may be starting to see the expected slowdown in refinancing as the pool of eligible homeowners shrinks.”


The retailers are announcing earnings and the markets are looking for indications of how this year’s holiday shopping season will shake out. Target and WalMart both announced strong earnings and took up their Q4 guidance. These two stocks are a bellwether for John Q Public’s spending habits.


The FOMC minutes will be out at 2:00 pm today. The minutes usually aren’t market-moving, but given the somewhat abrupt change in the Fed’s posture there is always the possibility that we could see some action. Just be aware when locking around that time.





13 Responses

  1. Worth noting:


  2. The reaction to the impeachment testimony is about a perfect example of Scott Adams’ “two movies” argument as could be devised.


    • the only people i know who care are on the left. and they will vote for trump is elizabeth warren or bernie is the nominee. (or at least the centrist ones will)


      • The amount of people who are convinced that this is “the big one” and he’s going to resign astounds me.

        My take away is that they can’t actually show a direct link to the military aid, so they are shifting the goal posts to the argument that the quid pro quo was for a White House meeting.

        No one who doesn’t already hate Trump is going to buy that’s impeachable.


        • This strikes me as spot on:


        • Two movies. I haven’t seen any of these things as being solid and clear-cut enough to do it, and the Democrats have gone with such thin and made-up evidence that the legit things they have come up with get lost in the noise.

          Like Trump or loathe him, it’s unrealistic to believe any of the stuff they are doing is going to be the end of him.


  3. The media still can’t be bothered to fact check before publishing allegations about Trump:


  4. This is actually backhanded commentary on the failure of colleges to expose students to diverse viewpoints these days.

    The author apparently got more exposure to them out of a Tinder date than during her undergraduate years at Columbia.


    • As an econ undergraduate at the University of Wisconsin, the only nod to “free markets” was including “Free to Choose” on the optional reading list for Macroeconomics. Other than that, the purpose of the discipline was how to use fiscal and monetary policy to manage the economy and achieve desirable outcomes.


    • College, the media, and pop-culture. Throw in the easy bubble creation of social media as well. None of these things gives people a good idea how people who don’t think like them actually do think.


  5. Good read:

    “Too Much Democracy Is Bad for Democracy

    The major American parties have ceded unprecedented power to primary voters. It’s a radical experiment—and it’s failing.

    Story by Jonathan Rauch and Ray La Raja”

    Liked by 1 person

    • It’s a good article. I quibble with this:

      In a democracy, they argue, party organizations’ most crucial function is to act as gatekeepers against demagogues and charlatans who, once in power, undermine democratic institutions from within, as Donald Trump has done.

      What is it, exactly, that Trump has done to undermine democratic institutions?

      And compared to FDR or Wilson or Lincoln or Adams? I think Trump is being pretty good at not undermining Democracy by those yardsticks.


    • would make the system more democratic and representative, not less so.

      I feel like this is assuming that, except for our betters vetting our candidates and thus keeping us from making poor choices, nothing else would change.

      The problem with that is small groups are more likely to be influenced by special interests, more likely to be distant and unconcerned with the actual needs and concerns of average voters, and more likely to be insulated from poor decision making.

      Smaller groups of kingmakers make much smaller and achievable targets for woke activists and cancel culture. Most approaches have weaknesses, but I find “we need to be offered a small selection of pre-screened choices to avoid the consequences of our proletariat ignorance” to be especially weak, with large downsides and small upsides. A similar system produced FDR, LBJ, and Woodrow Wilson.

      You want to get better and “fairer” results—give every body a positive and negative vote in primaries. 1 vote for your favorite candidate and one vote against the candidate you consider the worst. Then radicals can’t game that system and they know it.

      Say I want Jeb so I vote for Jeb but also against Trump. You want Rand Paul but also don’t want Trump. Someone else want Rubio but also doesn’t want Trump. In this scenario, Ted Cruz might get the nomination. Because though Trump one more positive votes, perhaps, he also got the most negative votes, potentially canceling all the positive votes out.

      Ranked voting is another option. There are so many potential options that don’t involve our voting choices being fed to us by a group of elite thinkers.


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