Morning Report: New Home Sales strong

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Last Change
S&P futures 3008 55.1
Oil (WTI) 34.34 1.19
10 year government bond yield 0.7%
30 year fixed rate mortgage 3.28%

 

Stocks are higher this morning on optimism about the economy re-opening. Bonds and MBS are flat.

 

The upcoming week is somewhat data-light. The big numbers will be the second revision to GDP and construction spending.

 

Home prices rose 1.7% in the first quarter and were up 5.7% on a YOY basis, according to the FHFA House Price Index.  That said, the report noted that the data in the report probably doesn’t take into account the effects of COVID. The Mountain states led the charge, with Idaho, Montana, and Wyoming posting double-digit gains.

Home price appreciation by state

The Case-Shiller index reported a 4.4% annual gain. The difference between the FHFA and Case-Shiller indices? FHFA is limited to transactions with a conforming mortgage, while Case-Shiller includes all sales.

 

New Home Sales came in at 623,000 which was up from March, but down 6.7% on a YOY basis. Since April was the worst of the crisis, this is an encouraging number. Note that these are estimates with wide confidence intervals. So there is a chance these could get revised lower. I listened to pretty much every homebuilder earnings call and pretty much every one said that the second half of April was unexpectedly strong.

 

I went to a restaurant in Connecticut last night. Outdoor seating, long line out the door to get a table. Sample size of 1, but it looks like people are antsy to get out of the house and put COVID behind them. Barring any sort of second wave of infections, I think the economy rebound by the 4th of July and will have shaken off most of the economic damage by Labor Day.

40 Responses

  1. California originally made [what I and most constitutional lawyers, as company thought of as] a mistake by arbitrarily categorizing church services for late reopening, behind commercial businesses. Commercial businesses were given health and safety guidelines to reopen but churches were originally assumed unsafe at any speed, apparently.

    The 9th Circuit, predictably, upheld the church ban 2-1 against a pretty well reasoned dissent. But thankfully Newsome and his staff got the message, issued a reasonable set of safety compliance suggestions and rules, and reversed CA’s position without further court proceedings.

    It is a good thing, IMHO, when common sense prevails and a bad winning position in court is voluntarily reversed.

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  2. Worth noting:

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    • As an initial matter, it is indefensible to choose this unprecedented moment of crisis to enact new regulations that jeopardize the civil rights of students

      I have a civil right to lie about sexual assault and to deny the accused the right to defend himself?

      Bet the same signatories on this letter get the vapors when someone uses the term redpill.

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    • “flies in the face of common decency” . . . to allow the accused to confront their accusers?

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  3. And the Libertarian Party goes back to being a joke:

    https://en.wikipedia.org/wiki/Spike_Cohen

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    • Cohen ran with Vermin Supreme for President and Vice President in the 2020 Libertarian Presidential primaries,[2] and was actively involved in campaigning.[3]

      I’d rather have Vermin Supreme.

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      • They were about to have a interesting ticket from an identity politics standpoint:

        White woman for president, black man for vice president.

        The VP nominee who barely lost,John Monds, was one of the highest vote getters ever as a Libertarian candidate for governor of Georgia.

        https://en.wikipedia.org/wiki/John_Monds

        Spike Cohen is running on a platform about Baby Yoda.

        “Cohen, an ally of performance artist and perennial candidate Vermin Supreme, is running on a platform promoting Free Ponies, Mandatory Tooth Brushing, Zombie Power, Killing Baby Hitler, and promoting anarchy. He promises that should these not be achieved within the first 100 days of his vice presidency, he will resign and be replaced with Baby Yoda”

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    • i will never understand how people who are so concerned with the power of the state limit that unease and fear to only one tiny slice of it. local PD? to be feared. central gov with a standing army should have unlimited power!

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    • Seems like that was inevitable. Tim Pool’s take on it:

      His primary conclusion: “Everything is broken.”

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  4. I just created a histogram of COVID-19 deaths by age bucket.

    81% of the deaths are age 65 or older.
    33% are 85 or older.

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    • NoVA, what’s the chance COVID-19 was engineered by CMS to improve the finances for the Medicare Trust Fund?

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    • I expect once the data is cleaned up and cause of death is separated (in all the data) from simply testing positive for COVID-19 those numbers will shift a little–probably in the direction of it being more impactful on the elderly.

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    • 81% of the deaths are age 65 or older.
      33% are 85 or older.

      Rosanne and I have been painfully aware of this.

      Because we are otherwise in good health, our children keep thinking that we can do what they do. Instead, we cannot hug our grandkids, we won’t be able to help with the new one coming in July, the twin granddaughters who lived in our house for the first 11 years of their lives and for whom I am the dad for practical purposes and their mom had to leave our house. Our daughter in Santa Fe and her husband think they can come stay with us for a visit soon but they cannot. We can only visit others, including family, outdoors. My son is angry with me because I don’t see his kids any more.

      We get our groceries curbside and sanitize them and ourselves after unpacking. We use the drive through at the pharmacy. We use rubbing alcohol and chlorine containing products at a rapid clip. We wear masks because we are thoughtful of others, as we know they do not protect us. We want others who talk to us on our daily walks to wear masks, too, and if they don’t, then we wave, say “hi”, and move on.

      There is a heavily wooded small park near us with 1.6 mi of rough walking trails that we can do early in the morning even in summer, thanks to the shade. We hope it does not become widely used – it is located between Apple and Oracle; their parking lots border the woods on two sides, and the tecchies who do walk it are very considerate about distancing.

      Rosanne and I attempted tennis and I went after a sideline backhand and fell – took it on an appropriate roll and only skinned my right knee at the end of the roll. She then stepped in a hole on the walk back to the car and hurt her ankle. We laughed at our ineptitude but then realized that since we ARE NOT GOING NEAR A HOSPITAL absent an emergency we would not tempt fate again and are now limited to weights/bands at home and walking.

      I have spent a lot of time on honeydo lists in the house and on EZ DIY car maintenance. For example, I have almost completed an LED changeover on my car. The instrument cluster was a bitch and I had to buy 9 LEDs to get 4 working ones [fuck China] but now I can enjoy a well lit cluster in the safety of my garage as we are not driving more than 5 mi from home any time soon. That’s because we cannot use public rest rooms, of course! I started with the easiest LEDs to change out – the reverse lights. It was the amazing difference they made in night vision backing up both to the naked eye and on the rear view camera that got me into the idea I would gradually change ’em all. I still have the headlamps, the fog lamps, and the map lights to do. I have done the dome and cargo lights already. Because I have to drop the bumper to do the headlamps and drop the stone shield to do the fog lights and can only work before 10 AM at the latest perhaps our quarantine will be over before I finish.

      Enough. TMI, probably. But from our side of the Medicare divide this is a real game changer, for what may be a significant portion of the rest of our lives.

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      • Mark, that’s crazy that your kids don’t get the issue.

        If there’s anything I can do to help from the East Coast, you know how to contact me.

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      • I admire your vigilance Mark! If you have significant co-morbidities it’s especially prudent. With each passing day we learn more about how this virus is transmitted and to whom it most effects. I suspect by fall they’ll be enough data about your age and comorbidity cohort to better evaluate what is and what is not risky.

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      • Because we are otherwise in good health, our children keep thinking that we can do what they do.

        Good golly. A: No. B: Things like this, nobody knows everything and really nobody knows much of anything for sure. I’d never tell anybody else they need or should take any risks they would be uncomfortable with. Because honestly you don’t know. Probably it’s fine, but do you want to be insisting grandpa come by only to be the 1-in-a-million chance that leads to a fatality? Not me! People should be exactly as cautious as they feel they should be.

        Our daughter in Santa Fe and her husband think they can come stay with us for a visit soon but they cannot.

        Again–most probably perfectly safe. Chances are they are correct. But with everything going on, I wouldn’t be planning a visit to elderly parents! Just correspond via phone and email and so on.

        My son is angry with me because I don’t see his kids any more.

        Given the circumstances and your age, this does not seem a reasonable position to take. I can get being unhappy about it, but the general situation is what it is. For most of the population this little different than the flu but the numbers on the over 65 set is where it is actually pandemic.

        Good for you looking out for your health! Sorry not everybody who should understand does.

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      • Mark:

        We wear masks because we are thoughtful of others, as we know they do not protect us.

        I am genuinely curious about this. If a mask does not protect the wearer from getting covid from other people, why would it protect other people from getting covid from the wearer?

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        • It works by reducing the amount of particulates you exude into your environment making you see likely to spread. It keeps your own potential contagion more contained—-but still imperfect.

          Contagion happens with COVID and many things from contaminated surfaces—touch one then touch your face sort of thing. So you arguably exhale less that will contaminate surfaces that others might touch. And less likely to expose folks to as much should you cough or sneeze or clear your throat when the mask is in place.

          To my knowledge there are no rigorous studies supporting this assertion, so some of the assumptions may be in incorrect.

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        • KW:

          It works by reducing the amount of particulates you exude into your environment making you see likely to spread. It keeps your own potential contagion more contained

          But if it is not effective at keeping particulates from getting in, how is it effective at keeping particulates from getting out? This is what I don’t get.

          Also, my understanding (please correct me if I am wrong) is that the virus does not spread by mere talking or breathing. It travels in particulates from coughs or sneezes. So, even if a mask does protect others from the wearer despite not protecting the wearer from others, the protection is from coughs and sneezes, not from simple, ordinary interaction. So is a mask better protection from coughs and sneezes than the traditional politeness of covering your mouth and nose when you sneeze?

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        • First, simple breathing creates droplets, coughing or sneezing or cheering or singing just projects them farther as a cloud than mere breathing or quiet talking.

          The rule of thumb from public health officials is that if you can blow out a candle through your mask at 1′ from your face your mask is ineffective to protect others. But if you cannot, as with most that are easily purchased, the velocity and dense congregation of your produced fomites are so reduced that the chance they will reach others as near as three feet away during incidental contact is exceedingly small, especially not as a concentrated cloud.

          If it passes the blow out the candle rule the mask also is effective wrt your sneeze/cough volume and velocity of fomites.

          Simple ordinary interaction without masks in crowded areas, especially indoors, is dangerous even if no one sneezes or coughs, provided that
          infected persons remain in the crowd, as the volume of virus in the airspace around the crowd continues to grow faster than it dies off. But in that instance, masks probably only help folks who had incidental close contact with the infected person who was masked, and then left the crowd quickly.

          The issue with arenas and churches is compounded by audience cheering and congregational singing, which is effectively like everyone sneezing at once.

          The short of it is that masks are very helpful in the context of short conversations between folks, which Rosanne and I have everyday on our walks or when we do curbside pickups. They are very helpful walking on a city street in the open where there are repeated casual contacts many times in each block. They are helpful in a bus or airplane, provided that the cabin is not crowded and the HEPA filters are working.

          Think velocity and density.

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        • Mark:

          Thanks. That still doesn’t explain how it can be that masks protect others, but not the mask wearer himself. It seems to me that if a mask does keep things in to protect others, it seems to me it must also keep things out to protect the wearer. How is that not the case?

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        • But if it is not effective at keeping particulates from getting in, how is it effective at keeping particulates from getting out? This is what I don’t get.

          I think Mark covered that, but it’s volume exuded in shared space (for one thing) but it’s also not the only or even primary vector (that is, from the air). You go through as store wearing your mask while many others, including infected individuals, do not. They breath, clear their throat, talk loudly across an aisle to a spouse or child, and splatter stuff out on surfaces and on their own hands etc, then touch door knobs or other shared touchpoint. You’re wearing your mask and that’s fine, though again–someone splattering you by talking close to you without a mask can get it on the outside of your mask and your face, potentially allowing an entry point through your eyes (for some things, not necessarily COVID) but also making it much more likely that you will do something like rub your face or touch your face, etc.

          Chances are using a hand disinfectant every few minutes would protect you, as when you are wearing a mask you are better protected from airborne particulates directly in the nose or mouth (though not all–most infectious particulates actually shrink or fall so in a crowded area what you are going to be left with in the air is the stuff that can get through regular masks, though not a fitted N95) but mainly the more general exposure to particulates there are in the air and surfaces, as well as on your skin and clothes (thanks to everybody else not wearing a mask–you’re the only one behaving!) makes it more likely you get it to mouth or nose when taking off your mask, scratching yourself near mouth or nose, changing your clothes, etc., etc.).

          is that the virus does not spread by mere talking or breathing

          Not 100% sure. Chances are if speaking loudly you are exhaling particulates, are if you clear your throat, or if you snort. Certain hard k and p and s sounds can project saliva out of the mouth. Also, have you ever yawned and had a saliva gland squirt out a fountain for unclear reasons? I have! People with mouth issues, dentures, etc–all tend to project out more saliva when they speak, and while some of it may be visible and heavy so it pretty much goes straight to the floor if it misses you, not all of it is.

          So is a mask better protection from coughs and sneezes than the traditional politeness of covering your mouth and nose when you sneeze?

          This is definitively the case. Though covering your mouth and nose is better than not doing that, if that’s all your left with!

          When I get to a store and realize I don’t have my mask, which happens a fair amount, I go in, keep my distance, do my best not to open my mouth or breathe heavily. I try to talk not at all. Don’t think I’m infected, just . . .why not? Should keep down exhalation of particulates out pretty well. Still probably not as good as wearing a mask but it’s not important enough to go back to my house and grab a mask when I’m already at the store!

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        • There are studies that show that when sick patients wear masks nurses are better protected from them.

          Also, this:

          The research that first convinced me was a laser light-scattering experiment. Researchers from the National Institutes of Health used lasers to illuminate and count how many droplets of saliva were flung into the air by a person talking with and without a face mask. The paper was only recently published officially, but I saw a YouTube video showing the experiment in early March. The results are shockingly obvious in the video. When the researcher used a simple cloth face cover, nearly all the droplets were blocked.

          This evidence is only relevant if COVID-19 is transmitted by droplets from a person’s mouth. It is. There are many documented super-spreading cases connected with activities – like singing in enclosed spaces – that create a lot of droplets.

          The light-scattering experiment cannot see “micro-droplets” that are smaller than 5 microns and could contain some viral particles. But experts don’t think that these are responsible for much COVID-19 transmission.

          While just how much of a role these small particles play in transmission remains to be seen, recent research suggests that cloth masks are also effective at reducing the spread of these smaller particles. In a paper that has not yet been peer-reviewed, researchers found that micro-droplets fell out of the air within 1.5 meters of the person who was wearing a mask, versus 5 meters for those not wearing masks. When combined with social distancing, this suggests that masks can effectively reduce transmission via micro-droplets.

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        • When combined with social distancing, this suggests that masks can effectively reduce transmission via micro-droplets.

          It does indeed. Might not have been clear enough, but general wearing of masks to minimize disease spread makes sense–especially when close to others or when moving through shared areas. I was just knowing it’s impossible to know specifically with COVID (and even then it could only ever be “approaching 99% certainty” with almost anything, because we really can’t be 100% sure with complex systems interacting complexly even with the core components aren’t all microscopic and their main actions is generally understood (but not completely) and their may be other involved factors in terms of transmissibility, sustainability, infectiousness, etc that interact in complex ways.

          Though I’m not positive wearing crochet knit masks are helpful in any circumstance.

          But I wear a mask in the store!

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        • think of it as a hose.

          If i put a towel in front of the hose it keeps it from spraying everywhere. but some water still gets out.

          you have a mask on. if I spray right at you, your mask will help, but not 100%.

          but the idea is that by both of us controlling our sprays, we’re helping each other out.

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  5. The Fedralist makes a great point in regards to the possibility that Judge Sullivan charges Flynn with contempt of court for perjury.

    An amusing irony lies in Sullivan’s threat to punish Flynn for perjury during this colloquy if he now asserts innocence. Were this to happen, then the C&B lawyers and the prosecutors would be culpable for suborning perjury.

    https://thefederalist.com/2020/05/27/legal-scholars-embarrass-themselves-in-pompous-letter-attacking-michael-flynn/

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    • “Were this to happen, then the C&B lawyers and the prosecutors would be culpable for suborning perjury.”

      That would almost make it worth it, if he were to really go after the whole system.

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  6. Brent – someone has picked up on your view of what the economy will do:

    https://www.politico.com/news/2020/05/26/2020-election-democrats-281470

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    • Yep. This whole thing has lasted under 3 months. 3 months from now is Labor Day.

      The natural disaster scenario is the right way to look at it, IMO. Probably Hurricane Sandy would be a good study.

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