Morning Report: Fed Day

Vital Statistics:


Last Change
S&P futures 3286 8.25
Oil (WTI) 53.98 0.22
10 year government bond yield 1.62%
30 year fixed rate mortgage 3.71%


Stocks are higher as earnings continue to come in. Bonds and MBS are flat.


The Fed is set to announce its decision at 2:00 pm this afternoon. No changes in rate policy are expected, however there might be some news regarding the balance sheet and overnight rates. It probably won’t be market-moving, but just be aware.


Mortgage applications rose 7.2% last week as purchases rose 5% and refis rose 8%. “Mortgage applications continued their strong start to the year, as borrowers acted on the drop in mortgage rates last week. Rates were driven lower by investors’ increased concern about the economic impact from China’s coronavirus outbreak, in addition to existing concerns over trade and other geopolitical risks,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “With the 30-year fixed rate at its lowest level since November 2016, refinances jumped 7.5 percent. Purchase applications grew 2 percent and were 17 percent higher than the same week last year. Thanks to low rates and the healthy job market, purchase activity continues to run stronger than in 2019.” Note that there was an adjustment due to the Martin Luther King holiday.


Pulte reported better than expected earnings yesterday. Revenues were flat, but the 33% increase in new order stood out.  “As demonstrated by our 33% increase in orders, the recovery in housing demand that began earlier this year gained momentum through the fourth quarter as we realized strong sales across all buyer groups,” said Company President and CEO Ryan Marshall. “Strong demand for new homes is benefiting from favorable market dynamics including improved affordability in part due to low mortgage rates, high employment and consumer confidence, and a generally balanced inventory of new homes,” added Marshall. The stock was up about 5% yesterday.


Consumer confidence perked up in January, according to the Conference Board. “Consumer confidence increased in January, following a moderate advance in December, driven primarily by a more positive assessment of the current job market and increased optimism about future job prospects,” said Lynn Franco, Senior Director, Economic Indicators, at The Conference Board. “Optimism about the labor market should continue to support confidence in the short-term and, as a result, consumers will continue driving growth and prevent the economy from slowing in early 2020.”


Strong consumer confidence, better homebuilding numbers and low rates mean that 2020 could be better than people are thinking for the mortgage industry. CNBC polls show that growth is expected to be 2% next year. Seems low if December’s housing starts weren’t a fluke, and judging by what we are hearing from the builders, it might not be. Those hoping for a recession will be encouraged by the inverting yield curve, but in this age of central bank intervention the signal doesn’t carry the weight it used to.

20 Responses

    • But Democrats would actually do well to listen to Gorsuch. In the long run, they have far more to gain than the GOP from Gorsuch’s approach, which would strip liberals of a tool they’ve used to challenge Trump’s policies — but Democratic presidents have much more to fear from a too-aggressive judiciary than Republicans.

      I think Vox is 100% right here. Something I rarely say.

      It’s also likely that Republican litigants will have a much easier time finding judges willing to block Democratic policies. Trump, after all, has filled the federal court with deeply ideological judges. And a party seeking a nationwide injunction may need to find only a single judge willing to hand down such an order.

      I think this is true, but I imagine most of the Woke left feels they can leave all that in place until it’s a Democrat in the Whitehouse and *then* we can say that federal judges shouldn’t be able to issue nationwide injunctions that apply to everybody and not just the plaintiff.

      The article doesn’t seem to mention that Trump will likely be replacing Ginsberg before he leaves office. But again, since injunctions often end up being finally decided by SCOTUS, the Democrats should be all for limiting the power of judges to issue nationwide injunctions, or the next Democratic president will have their hands tied.


    • i guess the left must be scraping the bottom of the barrel for things to complain about..


    • PETA is not a popular organization, even amongst many liberals and animal rights activists. It’s a self-aggrandizing scam, primarily, and constantly seeks attention (and cash).

      And ultimately it’s a Full Woke organization that is not about protecting animals, but instead about deconstructing Western society. They are very much in the “Western Civ has got to go” camp. Like pretty much everything they do, this is not about protecting groundhogs.


  1. If Trump wins again, I think this piece will prove to have been prescient:


    • In some cases, the technology is very simple: the anonymous transmission of negative images of candidates by individuals to Facebook groups.

      I think the influence of this is way overrated. And probably is a wash, at the end of the day. Negative images of candidates may motivate people who already wouldn’t vote for them to register to vote against them, but the reverse can be true for supporters–negative images of Trump, which the news was full of for a year leading up to the election, galvanized rather than demotivated supporters.

      I also think exposure to registered and likely voters is not a super-accurate measurement here, despite all the digital technology.

      And how seriously people take it is another thing. Most of the negative Hillary stuff I saw on Facebook (and, full disclosure, I have no idea what’s going on now as I’m sick and tired of Facebook and stay off it) was Alex Jones type stuff. The folks who buy into the Clinton Murder List narrative, or agreed that Hillary had had a stroke, or was in bed with terrorists–these people are either going to vote for someone else or not vote from the beginning.

      This is a kind of Facebook propaganda–we decide elections! Spend money here!

      This activity is neither reported to the Federal Election Commission nor linked to official campaigns.

      I feel like certain folks are going to spend a lot of energy trying to prevent negative memes and stories about preferred candidates from circulating on FaceBook and Twitter, and all that effort will be entirely wasted because they don’t matter that much. 30 million Americans use Twitter. Of those, many don’t actually follow or have a lot of interest in politically active accounts, and so would likely ignore any political stuff they do get.

      Also, the top 10% of tweeters create 80% of the tweets. While this kind of follows a typical content/audience model, the lack of engagement on a platform built around engagement suggests those 30 million users aren’t paying that close attention.

      I’m on Facebook, technically. I actually look at it a few times a year, maybe. I just think these same kind of radical overestimation of the power of entertainers to move votes and influence minds is now being projected to social media. Not that it’s not important–just that it’s not *that* important or influential. But it feels that way to the Twitterati–which would include all journalists–who are on social media for pretty much all their waking hours. But they do not represent the entire population of voters.

      12% of American get their news rom Twitter, according to the stats. Which is interesting. Not sure how meaningful that number is, or what counts as “news” in this context–I think it likely means that 12% of Americans use Twitter as an echo chamber to reinforce their preexisting political preferences.

      The examples in that NYT article of memes are a great example of the distortion being on social media all days creates amongst the journos. Those aren’t political ads or stories–they are memes. Memes cause chuckles in people who agree with the central thrust of the memes.

      There’s no one saying, “Wait, this meme says Joe Biden is an idiot. Well, I had better not vote for him then!”

      The list of digital electioneering terms noticeably doesn’t include any terms that really involve memes. Geofencing is a powerful tool for getting votes–if you’re accurately identifying potential voters who just need a few nudges, that’s a winning strategy. Memes are not.

      Nearly 22 percent of identified supporters at President Trump’s rally in Toledo, Ohio, were Democrats, and another 21 percent were independents.

      This is not a product of digital strategy (though it’s good to be identifying them). This is a product of how the Democrats are running the 2020 campaign, impeachment, and the degree to which Woke Culture is taking over the Democratic Party.

      The authors go on to warn that “all of these developments are taking place, moreover, within a regulatory structure that is weak and largely ineffectual.”

      Making an argument for further oppression of political speech will just serve to further alienate those 22% Democrats and 21% independents.

      Trump has two relevant advantages deriving from the asymmetry between the flow of Republican and Democratic information. First, when Trump says something, Fox repeats it. When a Democrat says something, The New York Times and the rest of the MSM knock it down if it’s false or debatable.

      This seems inaccurate. And while Fox is the top-rated cable news network, it averages 2.5 million viewers. In a country with a population of 327 million, 235+ million of which are of voting age. And, again, they reach mostly people who already know who they are going to vote for, and aren’t going to be influenced by negative reportage against their preferred candidates.

      Indeed, most negative reportage about Trump reinforced their belief in Trump–because what the MSM says is “negative” is often a positive to supporters.

      In other words, a huge swath of Trump-supportive media does not perform fact-based journalism.

      Unlike the NYT, WaPo, CNN, MSNBC, Vox, Slate, etc.

      I agree that Trump has a huge advantage over the Democrats–and that certainly includes technology for fundraising and GoTV–but Trump’s biggest advantages are actually the MSM, not Fox News, and of course the Democrats themselves.

      Trump benefits enormously because of the Right’s aligned network of media properties (i.e., Sinclair), Facebook properties, YouTube influencers and bots/sock puppets. This kind of amplification network barely exists for Democrats/progressives.

      This isn’t true. Sinclair may help with the over 60 vote in some cases, but again, those folks don’t change their minds much. Might be a little GoTV juice but otherwise–this isn’t 1980. TV is just one input in a world of a million inputs.

      For example, a Trump ad saying that he’s brought back manufacturing jobs would persuade almost no one. But, when local news or your neighbor starts repeating that, it becomes more credible and persuasive.

      They stop too soon. The real positive happens (for Trump) when the MSM reports on that, fact-checks it, says it’s all lies, then left-leaning pundits come on to explain why more jobs in a community is a bad thing, and why people keeping more of their tax money is a bad thing . . . That such things ultimately inspire the left and Democrats to make bad arguments that allow the argument to be defined as Trump being pro-free market and jobs and the Democrats being anti-free market and, well, if jobs go away then that’s good for the planet . . . that’s where that strategy would pay off. And nobody is forcing them to make that argument.

      Finally, there’s the question of the size of the value of Trump’s data/digital advantage. Big enough to enable him to win the popular vote? Almost certainly not. Big enough to win Wisconsin? Frighteningly so.

      I realize this is a quote in the article, but this demonstrates another problem–one that, if I were an anti-Trump reporter, would have made me leave this quote out of the article.

      And it’s very lo-tech. It’s “adjectives” and “adverbs”. The language the press uses to instruct people how to think will pass by true believers, but fence-sitters and opposite-siders are going to see “frighteningly” being pretty much a straight effort at turning data into propaganda.

      And “Almost certainly so” would be better writing, after “Almost certainly not”, than the unnecessarily editorially “frighteningly so”.

      Or, the bottom line: We don’t have Trump because Trump is so awesome or because of the GOPs digital advantage. We have Trump because his opposition is so weak and unappealingly, or actively hostile and condescending to the public at large.


      • this is nothing more than the MSM laying down a marker that social media should be censored by the left.


        • Social media, particularly Facebook, is there competition. I find it fascinating that Warren is taking the side of traditional media, I get it, she thinks they can amplify her, but it’s amusing that she hasn’t realized that her foundering is precisely because of they no longer are able to.


  2. Mark:

    In an ordinary criminal trial, do defendants have the right call any witness that they want?


    • Federal Rules of Criminal Procedure certainly make it possible for D to compel testimony very widely, but as a practical matter, it may take pretrial motion practice and depositions on foreign soil to get testimony from witnesses outside the subpoena range of the Court.

      It is also made very difficult to sandbag, for either side. All prosecution case-in-chief witnesses must be disclosed well ahead of trial and all defendant alibi witnesses must be disclosed in advance. If defense counsel stumbles upon an alibi witness after the exchange of witness lists, or worse, during trial, it is like pulling teeth to get a judge to allow that testimony.

      Parties are given more latitude on surprise rebuttal witnesses, however.

      I don’t know if this is what you were looking for.


      • Thanks. So it sounds like a defendant can call anyone he wants, as long as he gives the required notice and the court is in a position to compel testimony from a reluctant witness.

        I was thinking about this only in the context of this impeachment nonsense. I understand the Senate debating about whether to allow witnesses at all, but there also seems to be a debate over which witnesses to allow, if any. If they go the witness route at all, I don’t see how they can deny the defendant the ability to call any witness he wants. The presiding judge may be able to restrict the type of questions put to the witness, as in any trial, but if the Trump defense wants to call Joe Biden, or Hunter Biden, or “the whistleblower” or even Adam Schiff (which they should) I don’t see how the Senate could in fairness deny him that right. The whole debate over what witnesses to allow seems nuts to me.


        • The Senate makes its own rules.

          What the public or the minority of the Senate think is fair is legally inconsequential, but could have political consequences, obviously.


        • Mark:

          The Senate makes its own rules.

          Sure, I get that. But the process is called a “trial” which ends with either a “conviction” or “acquittal”. I would think that if they want thinking people to view this thing as a legitimate legal process in the sense of the language being used to describe it, rather than just a political show trial (which, ok, I realize is what it actually is), at least some nod to traditional due process concepts should be made. I know they haven’t actually done it yet, but if there was indeed a vote to have certain House manager-favored witnesses, while Trump favored witnesses were prevented from being presented at all, I think it would be, as I said, nuts, and reveal it to be the sham that I already think it is.


        • I find it very hard to think of what’s going on in the Senate as a “trial”. Feels like a very long “hearing” where the congress poses and preens and gets nothing done, which is what they seem to preoccupy themselves with these days.

          Of course, I have a hard time of thinking of the “impeachment” as anything but various factions playing politics, and don’t really think any party has the best interest of the country or their constituents in mind.

          While one can certainly argue the tit-for-tat Ukraine call was in itself impeachable, the way that was decided on (and the fact there was impeachment talk on the left generally before Trump was even sworn in) seems entirely political to me. Nobody really cares about the call, there was just a consensus that *this* was the thing that could get recalcitrant Democrats on board–especially Pelosi–and even stir a few liberal Republicans and get a bunch of NeverTrumper Republicans on TV saying Trump needed to be impeached. And thus, this is what they went with.

          None of it seems that serious to me. I’ve linked to the Legal Eagle guy on YouTube before, and I like him a lot, and he’s treating the whole impeachment thing very seriously as a legal case/process. And good for him, but I’m just not seeing it.


    • The only difference between this and what Dems have been doing for years is that Trump isn’t using tax money.

      Liked by 1 person

    • The group’s tax-exempt status raises questions about the propriety of indiscriminately handing out envelopes of money and whether doing so somehow serves a legitimate charitable or educational need, as required by law.

      So the argument is that it’s bad to hand out charity to African Americans unless it serves “a legitimate charitable or educational need”–which would require some kind of paperwork, verification process, and other expensive bureaucracy which would not doubt ultimately cost more than the money being handed out.

      These are the same folks who object to means-testing the doling out of tax dollars in terms of welfare, foodstamps, Medicare, etc., I assume.

      This seems like a smart strategy, and one that the WinRed folks would be smart to use, if they can, as they are flush with cash.

      But sure, I’d like to see Democrats and the left make the argument to the black community that African American’s raising cash and then handing it out to other African Americans is a bad thing and they need to stop.


  3. I’m still trying to understand the point of this one. What does it gain Warren or the Dems to trash Roberts and the Supremes over impeachment?


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