Morning Report: Jobs Day

Vital Statistics:


Last Change
S&P futures 2900 23.1
Oil (WTI) 24.27 0.29
10 year government bond yield 0.66%
30 year fixed rate mortgage 3.36%


Stocks are higher this morning after the jobs report. Bonds and MBS are up.


Jobs report data dump:

  • Nonfarm payrolls down 20.5 million
  • Unemployment rate 14.7%
  • Labor force participation rate 60.2%
  • Average hourly earnings up 4.7% MOM / 7.4% YOY

The report was not as bad as feared. One stat jumped out at me, which is how the COVID Crisis has disproportionately affected lower wage earners. Average hourly earnings increased almost 5%, simply due to hourly workers getting laid off, which means the higher wage people who are able to work from home pull the average up. Average hourly earnings increased to $30.01 an hour in April from $28.67 an hour in March.


That stat may also explain why the stock market doesn’t seem to care all that much about COVID any more. The people who are most affected are the least likely to hold stocks and vice versa. I am hoping however that the stock market, being a forward-looking indicator, is looking over the valley and signalling that this whole thing is on the downside. If so, then we could see a V-shaped recovery as well. FWIW, I don’t think American have the appetite to shelter in place past Memorial Day, regardless of what the health professionals say.


Fannie Mae’s Home Purchase Sentiment Index plunged in April, which isn’t surprising given the jobs report. “The HPSI experienced another unprecedented decline in April, falling to its lowest level since November 2011,” said Doug Duncan, Senior Vice President and Chief Economist. “The 17.8-point decrease reflected consumers’ deepening concerns about both their incomes and the housing market. Attitudes about whether it’s a good time to sell a home fell most sharply, dropping an additional 23 points this month. Individuals’ heightened uncertainty about job security, as registered in the survey over the last two months, is likely weighing on prospective homebuyers, who may be more wary of the substantial, long-term financial commitment of a mortgage. On average, consumers expect home prices to fall 2 percent over the next 12 months, the lowest expected growth rate in survey history. While consumers did grow more pessimistic in April about whether it’s a good time to buy a home, low mortgage rates remain a driver of purchase optimism. We expect that the much steeper decline in selling sentiment relative to buying sentiment will soften downward pressure on home prices.”


Speaking of homebuying, Redfin is resuming iBuying, and Zillow Offers isn’t far behind.

20 Responses

  1. What is surprising to me is that in Austin more retail is still being built – while it is clear that retail space is suddenly going vacant.

    Timing issues?


  2. I think Tucker Carlson has a pretty legitimate point here, and I don’t mean the obvious truth about Schiff:

    Liked by 1 person

  3. This was pretty good. Rep Jim Jordan looks back on and reviews the Russia, Mueller, and Flynn investigations.

    Liked by 1 person

  4. New quote, in honor of the “styles” of presumptive nominees Biden and Trump.

    Liked by 1 person

    • I think that’s right. It’s obviously true with Trump, but could easily apply to Clinton or Biden as well. But Trump’s oddities and errors have such a unique and atypical flair, they definitely fall into a style that would just make him an insufferable prick if he was a middle manager at an accounting firm.

      Not that Biden or Clinton (either of ’em) wouldn’t be insufferable in a low-level work environment–surely they would be–but Trump does it was a unique boisterousness and larger-than-life weirdness that would stand out in any environment.


    • he is basically just parroting what cordray told him. and cordray detests the financial system and the actors in it. The government has always had a hard-on for non-bank servicers and this is just the latest excuse to try and get rid of them.

      as if it is the servicer’s fault that they weren’t prepared for the government to tell borrowers they don’t have to pay their mortgages for a year.

      the thing is, the government loves to use the mortgage market as a tool for do-gooder social engineering. If a Quicken goes under due to servicing advances, that will be the final straw. Back to the days of 20% down and a pristine credit score.


      • “as if it is the servicer’s fault that they weren’t prepared for the government to tell borrowers they don’t have to pay their mortgages for a year. ”

        Yeah, this too:

        “It might be reasonable to expect a big bank like Wells Fargo or JP Morgan Chase to front six months’ worth of principal and interest payments for millions of borrowers. ”

        No, it’s not reasonable to expect the big banks to just front payments from homeowners that aren’t being made.

        If the homeowners don’t make the payments, then the investors don’t get their payments either. There’s no magic middleman to just front this amount of money.


  5. Why is it that the desire to either end or extend the lockdowns seems to have such a high correlation with political ideology? Conservatives seem to almost universally want to open things back up, and progressive seem equally inclined to want to maintain the lockdowns. The easy answer is that it is all driven by electoral politics, as the more damage that is done to the economy, the less likely Trump is to get re-elected. That may be true to some extent, but given that I am seeing pretty much the same phenomenon here in the UK, I don’t think that fully explains it.

    Progressives are just as likely as conservatives to be economically destroyed by continued lockdowns, and conservatives are just as likely as progressives to contract and die from Covid. So what is it about their respective ideologies that causes them to weigh these two relative risks so differently?


    • The longer the lock down goes on, the higher the likelihood that large government programs will become acceptable to mitigate it.

      This is viewed as an event significant enough to possibly justify getting rid of capitalism and replacing it with real socialism.

      I don’t think it will happen, but left Twitter sees this as their best shot to get what they’ve wanted since the 2009 crisis. Global Warming was taking too long.


      • You are so much more concise than I am!

        That being said, I’m thinking a lot of this stuff is going to be rolled right over into climate change–or a serious effort will be made to do so. Whether it works will depend on how future elections go.

        Because I’ve already heard arguments about “this is how seriously we should be responding to climate change”. OR anger that we haven’t been doing this stuff for 20 years–because it’s not just a pandemic, it’s the fate of the entire planet!

        So I’m expecting a lot of arguments that this is how proactive federal and local governments need to be responding to the threat of climate change, sort of using it as a template (and excuse) for extending the government overreach that began with the pandemic.

        How that turns out, I don’t know. A lot of the pro “crush the economy to fight the disease” folks are pundits, media-types, progressive politicians and Twitterati. I don’t think it’s guaranteed that the electorate is as excited about arresting parents for taking their kids to parks. Cuomo and De Blasio may survive the next election cycle–it is New York, after all–but I think some of these sate-based totalitarians may find their approach to the pandemic gets them kicked out of office.


        • It’s the same solution offered no matter what the ostensible problem is.


        • When you’re a hammer, everything looks like a nail.

          I think that vast majority of them believe that this kind of pandemic is an existential crisis and that climate change is an existential crisis.

          But, indeed, greater centralized control with wise leaders such as themselves micromanaging the daily decisions of everyone is always the solutions to those problems.

          There were always a couple of people in any ancient tribe that felt they naturally needed to be in charge and did what they had to to make it happen. The more things change, the more they stay the same.


      • The other thing is this fits neatly into the left’s “Greed vs saving lives” framing, because really why should people have to work at all to get paid?


        • People are valuable! They are entitled to a living wage for their entire lives, whether they work or not!

          Secondary consequences to that approach? It doesn’t matter! I’m talking about social justice! Equality! Fairness!


    • I think most of the progressives you hear advocating for extended lockdowns either won’t be destroyed economically, or don’t believe they will be, or have a deep and abiding faith that the government (despite Trump) will bail them out at the end of the day.

      I think also suspect those they consider genuine experts are pro-extension (safety over liberty at all times!) so they are pro-extension also. And, of course, Trump is advocating to get the country sensibly opened up again, and if you have TDS then whatever Trump wants is wrong and will kill millions.

      I do believe this is one of those cases if respected conservatives, religious leaders, and others on the right were advocating for continue lockdown and respected progressives were advocating to maintain the lockdown, a lot of these folks would swap positions. Not all but I think for a lot of people it comes down to “which side are my people on?”

      And of course in other places it’s going to tend to be conservatives most worried about the long term impact to the economy. So there’s that. And conservatives are more closely aligned to libertarians and generally think individuals should be making their own decisions, not the government.

      And in many places the government is using enforcement tactics that would never sit well with conservatives and libertarians. My guess is a lot of things are leading to the ideological divide (including the need on the left and right generally to be on the opposite sides of every issue).

      OF course one of the reason I suspect this is that’s how the debate is framed–and to some extent what the debate is about: lockdown vs. not-lockdown. When it should be more or entirely about “what works, what doesn’t work, what makes sense”.

      There’s no evidence that complete economic lockdowns are beneficial over everything being open with social distancing. There’s zero evidence that banning people from public parks and beaches and other outdoor spaces prevents the spread of the disease. Despite Fauci coming out against masks, there are good reasons to think that universal masks wearing would inhibit spread–by keeping you from spreading your molecules, not so much protecting you from other people’s. And so on.

      Almost everybody has seen people alone, in their cars, driving with masks on–a completely useless behavior. So some of it is people just don’t know what works, and so overreact. And invest too much confidence in public officials and experts, who are just humans and just as likely to make errors or provide bad guidance as good guidance.

      In my opinion, people generally are bad at assessing unintended consequences and secondary consequences. To me, the further left people are the worse they are at assessing secondary consequences where incentives are involved in complex systems. So they believe it is possible to have a society where everybody will continue on lockdown and things will just work out and everybody will eventually get in line.

      IMO, a lot of folks on the extreme edges of ideological points of view are also very prone to believe in apocalypses–and don’t see how complex systems all do a great deal of self-regulation (with people, they don’t understand incentives–with the pandemic, it makes them dismissive of herd immunity or relying on informed individuals to behave themselves; they don’t believe the market can self-regulate, which is why they often create artificial shortages in something like a pandemic by preventing “gouging”; it’s why they look at climate change data and assume the only variables are the temperature and people using their grills and cars).

      So there’s a tendency on the left to see this as an existential struggle (though the numbers don’t support that), to trust the data from the experts (even though expertise doesn’t make you omniscient and can sometimes make you trust your intuitions way too much), to overreact and to be sure you and your side knows better than everybody else.

      In short: I don’t know, I’m just guessing.

      But it occurs to me the progressives and the left tend to me more utopian than utilitarian. So you’re much more likely to get an argument that “if it saves the life of one single child, it’s worth doing a trillion dollars in damage to the economy”. It’s their frequent argument for government programs or regulations with huge economic downsides and poor or no results. If you are prone to think any government program, no matter how expensive, is worth it “if it saves just one life”–then why would you have any problem cratering the economy for the lockdown? No matter that you can’t really compare outcomes, just because not everybody is dead at the end of it you can argue that it saved “millions of lives”.

      Sort of like Obama’s “jobs saved of created”—when he took credit for millions of jobs that existed before his economic packages and still existed after them. 😉


      • I’d love to see Trump use “jobs created or saved” just for the satisfaction of seeing the media laughing at the absurdity of the claim. Even if it’s only considered absured when the POTUS is a Republican.


        • ABC did quote critical Republicans, but ended the article with “but real experts think Obama did just that!”

          Romer said she believes the stimulus package is on track to meet the administration’s goal of creating or saving 3.5 million jobs by the end of next year.

          I don’t feel like that’s how they’d cover Trump. In fact, when unemployment was at it’s lowest, they were still saying: “Yeah, but that really comes from Obama administration policies”.

          Although thinking the president can really herd the billion cats that is the American economy is kind of silly.


    • I find the partisan divide on hydroxychloroquine interesting, too. And that has to be mostly about Trump–as I’ve heard NeverTrumpers sound just like progressives of hydroxychloroquine. And it’s very similar: it doesn’t work at all, don’t use it, don’t even think about it from the TDS folks and then “it’s a miracle drug, it cures all ills” from folks much further to the right.

      Everything I’ve read indicates it’s been used successfully as part of a treatment regimen for those infected with COVID-19. There are so many indications that it’s helpful, that all the folks with TDS and the NeverTrumpers who are just constitutionally against it because Trump was pimping it earlier need to get over themselves. There have been non-peer-reviewed studies that have indicated it’s worthless or counter-productive, but as others have indicated (and isn’t a surprise for any studies being done in the midst of this) the studies have problems, and were released by people with a long history of anti-Trumpism. But a non-trivial number of doctors have clearly had beneficial results–though like all things, it’s not a cure-all.

      But as a layperson just looking at a distance, it looks better than the super-expensive largely untested drug Fauci is recommending.

      And on the other hand–I don’t think there’s any real evidence or even reason to think that using hydroxychoroquine has prophylactic benefit. But there are those further right that are pushing it hard beyond the data.

      It may turn out that hydroxycholorquine is not a great treatment and that there are much better ones. It may also turn out that remdesivir is worthless. There really isn’t great evidence for remdesivir compared to hydroxycholoroquine, but I find it interesting the anti-Trump folks aren’t lining up against remdesivir. At least not yet.


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