Morning Report: Fed Week

Vital Statistics:


Last Change
S&P futures 3144 -6.25
Oil (WTI) 58.59 -0.64
10 year government bond yield 1.81%
30 year fixed rate mortgage 3.98%


Stocks are slightly lower as we head into a Fed Week. Bonds and MBS are up.


There are two big events this week: the FOMC meeting on Tuesday and Wednesday and the spate of new Chinese tariffs expected to take effect at the end of the week. We will get some interesting economic data in productivity, inflation and retail sales, but with the Fed on the sidelines trade and overseas markets will be driving interest rates.


The Fed Funds futures are predicting no changes to interest rate policy at the meeting this week. The June 2020 futures are predicting a roughly 50/50 chance of another rate cut.


The average size of a first-time homebuyer’s mortgage was $231,974 for the first 3 quarters of 2018 and was up 4.2% on a YOY basis.


first time mortgage size


Interesting stat courtesy of the Harvard Joint Center for Housing Studies: annual household growth over the next 10 years is expected to be 1.2 million per year. With housing starts around the same level, we are not taking into account functional obsolescence and deterioration.


Is a homeowner who sells his house via iBuyers (think Zillow and Opendoor) leaving money on the table? Turns out the average discount to market value is about 1.3%. The typical fee charged an iBuyer is around 7%. So the total costs is 8.3%. Compare that to using traditional realtors and paying 6%, along with the expense of showing the home, etc. Essentially the seller is paying for convenience, which is a non-contingent offer in a week, with no showing necessary. In this case the fee is about 2.3%, which represents the additional fee of 1% the iBuyer charges along with the 1.3% market value discount.


Paul Volcker, the Fed Chairman who slayed the 1970s inflation dragon has passed away.

16 Responses

  1. I can’t see Obama getting the nomination.

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    Amongst other things. As the campaign wears on, there are going to be longer and more confusing rambling conversations. The media can only cover up so much, and I’m not sure how interested they are in doing so. This may be Bernie’s moment! Or Warren’s! Or Tom Steyer’s!


  2. Good piece by Ace on the Horowitz report, especially the last part.


  3. For Scott, if this doesn’t warm your heart, nothing will.


    • Where’s the link? My heart could use some warming.


        • the left controlled the judiciary from FDR to the Trump administration. cry me a river.


        • What Trump has done to the courts, explained

          Made them more representative of America, rather than a monolithic progressive field team for the Democrats?

          Long after Trump leaves office, these judges will shape American law — pushing it further and further to the right even if the voters soundly reject Trumpism in 2020.

          Which they probably won’t. So, too bad. Ignore the lessons of Bill Clinton at your peril!

          Obama’s appointees — Sonia Sotomayor and Elena Kagan — largely maintained the balance of power on a conservative Court

          And they would have been so upset and concerned if Obama had managed to shift the court far to the left, I’m sure.

          There is simply no recent precedent for one president having such a transformative impact on the courts.

          Oh, no.

          In an age of legislative dysfunction, whoever controls the courts controls the country.

          Let me look for the articles where Vox was wringing their hands about this possibility when Obama was appointing the judges. Hmm.

          The judiciary is where policy is made in the United States. And that policy is likely to be made by Republican judges for the foreseeable future.

          Vote for legislators who will claw back on their constitutional role. Problem solved.

          There are likely now five votes on the Supreme Court, for example, to effectively give the judiciary a veto power over all federal regulations.

          Uh-huh. Well, whose fault is that?

          And that’s not all. In the coming months, the courts are poised to gut abortion rights, eviscerate gun control, and neuter landmark environmental laws.

          Live by the sword, die by the sword. The congress can address almost everything he’s bitching about by, you know, having the legislature write the laws instead of the judiciary. And a lot of that, I expect, would impose no restrictions on these laws and rights at the state level, so . . . move to California!

          Many of our voting rights lay in tatters

          Really? I think “lay in tatters” is a little strong. I’m not seeing how voter rights are abridged when everybody can vote, but voting requires extra effort. And I see an argument for improving the voting process, but improving ease and casualness of voting is not a right, per se.

          When Congress has been unable to function, the executive branch has relied on existing federal laws that delegate some policymaking authority to federal agencies, in order to deal with many of the nation’s pressing needs. But with the Supreme Court poised to give judges a veto power over these agencies’ actions

          So the argument here is that various federal bureaucracies should be able to write laws and impose them on the citizenry without possibility of appeal and without any accountability outside of a congress unable to function (so who, by definition, would not be acting as a check on the power of these agencies).

          Under Trump, McConnell’s turned the Senate into a machine that churns out judicial confirmations and does little else — he’s ignored literally hundreds of bills passed by the House.

          And when the Democrats were in charge of the senate, what did they do to try and fix that? Nothing?

          When there’s a Republican president and a Democratic senate, they want the power to do the same–so neither side does anything to check that power.

          By contrast, 10 such judges were confirmed during the same period in the George W. Bush presidency — a period when Democrats controlled the Senate.

          And this doesn’t necessarily mean much. Were their compromises? Half liberals and half conservatives, supposedly? Or something else?

          Obama “did not even make a nomination” to two seats on the Fifth Circuit because the blue slip would have doomed anyone he named; those seats were eventually filled by Trump nominees.

          He could not have found a single Republican squish for the position that wouldn’t get blocked? I find that hard to believe.

          In response, Democrats fundamentally altered the filibuster to allow lower court judges to be confirmed by a simple majority.

          So Democrats elect senators who aren’t that smart and can’t consider long term consequences. Good to know.

          During this period, the Federalist Society grew increasingly obsessed with limiting the power of federal agencies to create binding regulations

          And for good reason.

          Republicans haven’t simply ensured conservative dominance of one branch of government. They may have entrenched conservative governance for decades.

          And the left made that possible! So, good on them.


        • I told you it was good. There’s also the part that says that Trump’s nominees have been the most qualified of any POTUS in recent memory. Not really a compliment to Obama.


        • There’s also the part that says that Trump’s nominees have been the most qualified of any POTUS in recent memory. Not really a compliment to Obama.

          I think the argument there was that was because the Republicans were preventing the qualified ones from getting confirmed. Which makes sense, as that’s why the author is mentioning how qualified they are–all potential SCOTUS picks, oh no!–because it’s part of his argument that the Federalist Society is taking over the country by judicial fiat.


        • McWing:

          Sorry, here it is.

          I feeling a little toasty. More later!


        • McWing:

          Sorry, here it is.

          The most notable thing to me about this Vox piece is that at no point is the Constitution ever mentioned. Not one single time. The author says that “Judges…have become the most consequential policymakers in the nation”, but this plainly and obviously unconstitutional state of affairs does not, in itself, seem to bother the author in the slightest. It is only the fact that Republican appointed judges will wield this power that concerns him.

          Of course, it shouldn’t concern him nearly as much as it does. The author is, as progressives are wont to do, simply assuming that conservative judges have the same contempt for the Constitutional order that progressives do, and that therefore the left must fear the imposition of conservative policies via the court in precisely the same way that conservatives must fear the imposition of progressive policies via the court. But that just shows that the author is ignorant of what distinguishes conservative jurisprudence from progressive jurisprudence.

          Two examples will easily suffice. He claims that the courts are “poised to gut abortion rights”. There is little better way to say it than…this is ignorant bullshit. What distinguishes conservative judges from progressive judges with regard to abortion is not their willingness to outlaw abortion by judicial fiat rather than grant rights to abortion by judicial fiat. Conservative judges are distinguished from progressive judges by their willingness to allow the political process to decide the issue. Under conservative jurisprudence, if legal abortion is in fact in danger (and in reality it is not), it will be because the people want it to be, not because of any judges.

          The author also laments that 5 conservative justices on SCOTUS will “effectively give the judiciary a veto power over all federal regulations”. But this, too, is bullshit. SCOTUS already effectively has veto power over all federal regulations, regardless of how many conservatives are on it. Surely what actually concerns the author is not that this veto power exists, but rather that it will be used to frustrate rather than facilitate progressive policy. (Just ask him what he thinks of a SCOTUS veto of Trump-era immigration regulations.) And again, what will distinguish conservative rather than progressive use of this “veto” power will not be policy, but will be a deference to rather than disdain for the accountable political process.

          Ultimately the only thing that progressives actually have to fear from a more conservative judiciary is a more effective constitutional order. And the fact that they are indeed so fearful of it is one of the that things that makes it all the more necessary.


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

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