Morning Report: Small Business Optimism Improves

Vital Statistics:

S&P futures4,118-1.4
Oil (WTI)60.140.44
10 year government bond yield 1.66%
30 year fixed rate mortgage 3.27%

Stocks are flattish this morning after good economic news out of China. Bonds and MBS are up small.

The consumer price index rose 0.6% MOM and 2.6% YOY, which was a touch above expectations. Ex-food and energy, it rose 0.3% MOM and 1.6% YOY, which is more or less in line with where it has been the past several years. This reading was a relief to the bond market given that the producer price index was super-hot. Remember, the Fed is targeting an average rate for inflation, so it needs to see inflation above its 2% target for a long time to get the average up. Given that we have seen persistently low inflation since 2008, even with unemployment rates below 4%, the Fed is going to be less trigger-happy raising rates. We have roughly 10 million jobs to get back, and that is the top priority for the Fed.

Small Business Optimism rose 2.4 points to 98.2, according to the NFIB. The most interesting stat from the report is that 42% of business owners reported being unable to find qualified workers to fill open positions, which is a record. From the report:

Thirty four percent have openings for skilled workers (up 1 point) and 19 percent have openings for unskilled labor (up 3 points). Owners are frustrated with mounting unfilled job openings as qualified and willing candidates are scarce. Fifty percent of the job openings in construction are for skilled workers, down 1 point. Fifty-five percent of construction firms reported few or no qualified applicants (down 6 points) and 38 percent cited the shortage of qualified labor as their top business problem (up 3 points).

On the inflation front, 26% of respondents reported increasing average selling prices. Price hikes were most prevalent in wholesale and retail. Overall, improvement in business conditions will be highly dependent on the course of the virus. If we see no more flare-ups and most of the population gets vaccinated over the summer, then we should see a pretty hefty recovery going into the back half of the year.

Loans in forbearance fell again last week, according to the MBA. Total forbearances fell 24 basis points to 4.66% of servicers’ portfolio, or about 2.3 million homeowners. This drop was one of the largest decreases in the survey’s history. The biggest drop was in Ginnie Mae loans, which fell from 6.78% to 6.33%.

Loan delinquencies fell to a 10 month low, according to CoreLogic. 5.6% of loans were at least 30 days down in January 2021, an increase of about 210 basis points from a year ago. 3.1% of mortgages are 120 days plus, but the number in foreclosure is only 0.3%. The low foreclosure number is artificially low due to the foreclosure moratorium, and we will see those numbers jump when it is lifted, probably some time in 2022.

27 Responses

    • It’s BS. Trump was going to have them out by May.This is buying time to keep them in.


      • Agreed, the operative word is ‘if”. I have my doubts.


        • “if he pulls it off” implies that withdrawal is an actual goal of Biden’s and that only external circumstances would thwart him.

          I don’t buy that at all.


        • I’m with you, just hoping for the best.


        • I think your cynicism is entirely merited, jnc4p. But I also get a sense that a lot of the Biden Whitehouse (unreported on, because why would it be, and given they are fundamentally fellow travelers they aren’t going to leak like the TrumpWhitehouse) is running things and setting direction moreso than Biden–and that while they agree about a lot of things, they may not agree on this.

          Ultimately, I would expect the Endless War faction, whomever that might be, to win the day. But fingers crossed anyway!


        • “aren’t going to leak like the TrumpWhitehouse”

          That and the Trump White House was a collection of dysfunction and backstabbing.

          Liked by 1 person

        • The press won’t print anything negative about the WH or the D party in general.

          Even if it is a good leak, they won’t break ranks.


        • That seems to be the case. Any serious leaker would go to an alternative source that would take the leaks–Fox, maybe, or a Glenn Greenwald or Matt Taibbi. Or Ben Shapiro. Or project Veritas. But that’s not happening so I’m assuming there is nobody in the Whitehouse that would feel safe or motivated to leak.


        • There was a Twitter thread where they argued just that, that it was unethical to report on private Zoom meetings that the Intercept covered in December 2020 after they were successfully trolled.


        • That orientation from people who call themselves journalists is astounding. Would they take that approach to, say, a baker who didn’t want to bake cakes for Satan Worshippers or trans people or, I dunno, any Republican. Or any regular person in a context where they think they could get that person with unapproved thoughts shamed and cancelled?


        • That and the Trump White House was a collection of dysfunction and backstabbing.

          @jnc4p: Agreed. In part because Trump, for all this apprentice posturing, was terrible at hiring people. And firing people in a timely manner. But there’s a reason the Biden Whitehouse isn’t filled with Trump-holdovers and probably not a lot of Elizabeth Warren’s or Bernie Sander’s inner-circle.

          People who don’t like you will take the job and then work against you.


  1. 100 to 1 says that within a month we hear that this guy has been fired.

    A teacher in a Manhattan high school is refusing to cave to his administration’s intense critical race theory “indoctrination” of students.

    “As a teacher, my first obligation is to my students. But right now, my school is asking me to embrace ‘antiracism’ training and pedagogy that I believe is deeply harmful to them and to any person who seeks to nurture the virtues of curiosity, empathy, and understanding,” Paul Rossi wrote of Grace Church High School on former New York Times Opinion Editor Bari Weiss’s Substack on Tuesday.


    • Go Directly to Gulag. Do not pass go, do not collect daily rations.


    • Looks like it’s a private Episcopalian school.


    • Just participated in an RFP for this morning for Digital Pedagogy. Couldn’t quite understand what they were really selling, but the 3rd one was clearly pushing equity and “diversity” and didn’t use the words “critical race theory” or “anti-racism” but it was pretty clear that, if any of us had brought it up, they would have jumped for joy.

      All of them pushed their diversity but this one seemed to be trying to distinguish themselves as the anti-racist Digital Pedagogy supplier (and when I checked their website the first thing that came up was a statement against Anti-Asian Violence and deconstructing White Supremacy).

      However, so far, we are a large, urban district where most of the administration–for good and for ill–came up through the schools in some form or fashion and still remain more or less interested in actually helping the kids learn, obtain skills, and be prepared for a career. The consensus was apparently that none of them had anything to offer (which I think is accurate) and not worth paying for. So, that’s hopeful.

      That being said, I’ve seen how the concept of equity is truly pernicious. While all the mini-districts that fractured off from us in 2014 are now digital 1:1 schools (and otherwise doing much better in terms of classroom environment, school renovations, and in almost every other category with no more money per student) and have been moving that way since 2014, it took COVID and the CARES act for us to do it.

      Why? Because equity. Nobody could get a laptop if everybody couldn’t have a laptop. Nobody could get a hotspot unless everybody had a hotspot (this, fortunately, just kind of faded as a rule under the demands of COVID). But the idea that nobody can get something if everybody doesn’t have it is (a) never universally applied because it can’t be and (b) where it is applied, it just means everybody doesn’t get it, every time.

      We still wouldn’t have student laptops if not for COVID and the CARES Act, and would be no closer to it.

      The mini-districts, in the meantime, our out-performing us in almost every way because . . . they are not equitable. Elementary students got laptops first. Then middle school. Then high school. Resources are targeted. Bartlett High School is a beautiful, modern school because they picked on school and worked on it until it was done. Next they will pick a middle school or the 9th grade academy or something and work on that–even though it means that the quality of the environment won’t be improved for everybody all at once.

      But in a decade everything is far better than anything in our much larger district with far more money.



    Matt Taibbi knocks it out of the park (for anybody not already subscribing, which may be no one here).

    Due Process Is Good, He Said Controversially

    That argument — that the defendant’s intent to actually exercise legal rights shows guilt in itself — is the kind of thing liberals used to decry all the time, coming from “tough on crime” Republicans. Opinions like that occur when you’ve fallen too far into the habit of judging people rather than evidence. Suddenly process becomes a canard, and you even get lawyers saying that hiring a lawyer is evidence of guilt:


    • “At the outset, Greenwald and I were joking because he was trending on Twitter again, the sixth time in six weeks (a non-Trump record?). He was listed just above Usher, whom the world was piling on for allegedly paying strippers in Vegas with $100 bills with his face on them instead of real money. The site exploded in “Usher bucks” memes, including a whole subgenre just about Usher jumping Harriet Tubman in line.”

      Liked by 1 person

      • But it turns out he was giving the strippers real money, just adding promotion Usher Bucks as a kind of advertisement. Leaving them around the table. But, you know. The press doesn’t report any more it just regurgitates whatever Twitter says. Tabloid, entertainment, gaming, technology, politics–doesn’t matter. What does Twitter say? That’s the story!


    • This is why I really distrust the legal system today. The bar is 100% owned by the left.


  3. And Glenn Greenwald:

    Despite that glaring omission, media outlets predictably treated the evidence-free assertions from the security state as fact. “Vladimir Putin did it again,” trumpeted Mother Jones’ David Corn without an iota of skepticism. CNN’s Marshall Cohen actually said this:

    Think about that: to a CNN reporter, evidence-free assertions from the U.S. security state are tantamount to “confirmation.” That they really do think this way is nothing short of chilling. But that is the standard liberal media posture of harboring reverence for the U.S. intelligence community and treating its every utterance as Truth without the need for any corroborating evidence. It is one of their defining attributes.

    But in this case, many of them went far beyond mere regurgitation of CIA claims. Well beyond it: here, they fabricated a claim that report also demonstrated that the Hunter Biden laptop materials were — as they claimed before the election — engineered by Russia. In reality, the report did not even mention the Hunter Biden laptop materials or allude to it, let alone claim that it was produced by the Kremlin, let alone supply evidence that it constituted “Russian disinformation.” But no matter: numerous journalists united to spread the false claim far and wide that the report confirmed this storyline.


    • These two tweets sum up the media now:


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

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