Morning Report: The Fed makes no changes

Vital Statistics:

S&P futures4,20629.8
Oil (WTI)64.991.17
10 year government bond yield 1.66%
30 year fixed rate mortgage 3.19%

Stocks are higher this morning as earnings continue to come in. Bonds and MBS are down.

The Fed left interest rates unchanged at its meeting yesterday. Bonds had zero reaction to the press release. The Fed is still concerned about COVID and its effect on the economy:

Amid progress on vaccinations and strong policy support, indicators of economic activity and employment have strengthened. The sectors most adversely affected by the pandemic remain weak but have shown improvement. Inflation has risen, largely reflecting transitory factors. Overall financial conditions remain accommodative, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses.
The path of the economy will depend significantly on the course of the virus, including progress on vaccinations. The ongoing public health crisis continues to weigh on the economy, and risks to the economic outlook remain.

The statement stressed that the Fed wants to see inflation at 2% over the long-term and says inflation has been running “persistently below this goal.” In addition, note the “transitory” characterization about inflation in the statement. The runup in commodity prices is due to COVID supply chain disruptions and shortages, which should dissipate as the year goes on.

First quarter GDP grew at 6.4%, according to the BEA. This is the advance estimate and it will be revised twice. Personal consumption expenditures and government spending drove the increase. Investment fell, largely driven by inventory depletion.

Inflation rose to 3.5% in the first quarter compared to 1.5% in the fourth, so inflation is accelerating. Excluding food and energy, PCE inflation rose 2.3%. Supply chain bottlenecks are causing shortages. Again, inflation numbers for the next several months are going to look exaggerated due to the lockdowns a year ago.

Initial Jobless Claims were more or less unchanged last week at 553k.

Professional Real estate investors beware: the new tax plan by the Biden Administration looks to severely restrict the 1031 exchange, which means capital gains taxes will be due immediately after a property sale, even if you buy another property in the next six months. He also wants to double the capital gains rate as well, and increase inheritance taxes. I have to imagine the net result of gutting the 1031 exchange will be to shrink home inventory even more.

Freddie Mac released a statement on the FHFA’s new refi program for low-income borrowers. “Millions of homeowners have benefited from refinancing to reduce their monthly mortgage payment and build long-term wealth. Freddie Mac’s new Refi Possible mortgage creates more equitable opportunities by making it easier for homeowners in lower income brackets to refinance their mortgage. Refi Possible reaches many homeowners who can benefit from refinancing and provides flexibilities that incentivize our clients to serve these eligible borrowers moving forward. Our goal is to expand access to credit responsibly and make sure we are supporting sustainable homeownership.”

33 Responses

  1. So: S&P 500 hits record after blowout earnings from Facebook and Apple.

    I think I get Facebook. But how is Apple doing record earnings? New iPhones are basically old iPhones with some new polishing. New Mac are colorful (which is smart) but based on Apples own chip architecture and more limited in terms of memory, amongst other expansion limitations, which makes their new direction for desktop computing less attractive than ever. And their watches are versions of the watches they’ve been making for the past several years, as far as I can tell. Where’s all that money coming from? It’s just weird. Sales jumped 54% supposedly. Why? To who?

    I would be curious as to the specifics of where Facebooks earning jumps are coming from. Higher-priced ads, the news says. I’m suspicious that some of that is laundered payoffs. Which is a great system, if you think about it. Want us to deplatform somebody? Well, just buy all these super-expensive “ads”. That’s the ticket!


  2. This is a good message for the Republicans to run on:

    “Liberals Think America Is A Worse Place Than Minorities Do

    The liberal reaction to a Tim Scott speech provides another example of the racial demographics of the Great Awokening.

    Zaid Jilani”

    It’s also an argument for why Republicans should support more immigration, not less.

    Liked by 1 person

    • Here is what drives me nut about these dipshits.

      American is a racist hellhole compared to what country?

      China has imprisonment camps
      India has a caste system and still permits slavery
      Japan lumps everyone into one of two buckets: Japanese and gaijin
      France sticks its Muslim minority into the Peripherie, a no-go zone outside of Paris
      Sweden does the same thing, and doesn’t even bother to collect racial statistics.

      The US has affirmative action, diversity and inclusion boards, a cottage industry of specialists to lecture Corporate America on the latest pieties of woke culture, and academic disciplines created out of whole cloth that do nothing but navel gaze at these issues.

      On a scale of 1-10, where 10 is Saudi Arabia, and 1 is the most woke country in the world (Australia? Denmark?), where is the US? I would say a 1.


      • There’s an active black African slave trade in Libya and other corners of the middle east. You’ll hear American progressives bitch all day long about Israel but that? Nah, that’s fine.

        I would say the US is an example of just about the best possible world (in terms of progressivism) in the real world. The problem is, in the fictional world so many progressives inhabit, it’s terribly compared to their fantasy utopia. Basically, it’s a religion, and they want heaven. Since the mortal realm is not Heaven, they can never be satisfied.

        Also religious in the sense that moral purity is the important thing, not outcomes. So they won’t do anything that compromises their moral purity, even temporarily, for much better outcomes much closer to what they say they desire.

        Yes, they want less pollution and less greenhouse gases. But nuclear energy? No way! That’s not morally pure.

        More money and training for police might reduce police shootings. But giving the police more money isn’t morally pure.

        Lower taxes and cheap energy end up elevating the middle class and the poor. But that’s not morally pure. It’s better that the middle class and poor be made poorer, but moral virtue preserved.

        And so on.


    • Republicans should support more legal, by the book immigration. They should support reforming the process, and, frankly, conservatives generally should have non-profits that help immigrants stay legal . . . and also assimilate. The problem with the right and the GOP in particular tends to be their completely “hands off” attitude toward things like immigration, union workers, the working class, and minorities especially.

      But more than supporting more legal immigration they should be practicing a little of the left’s identity politics and diversity-signaling. They should be doing some affirmative action with up-and-coming conservative politicians. They should have people dedicated to bringing in conservative minorities to run against entrenched blue district Democrats and maybe occasionally primary some moribund Republican.

      Minority outreach shouldn’t be about internships or hiring more minorities to appear in the background at conventions. It should be pulling them into run. It should be picking a solid conservative minority as VP candidate, or grooming them to be the main candidate.

      So much could be done for congress-critter seats. Former minority police officers could make great candidates. Minority military veterans to run in senate races. Etc. Etc.

      I’d love to see Tim Scott run. Is he perfect? No. But I often found some of the most reliable conservatives are minorities, and I think that’s only becoming truer, not less so. Good lord knows Clarence Thomas is often the only dependable conservative in the SCOTUS.

      But there’s also a large number of voters who will be more receptive to a minority candidate. Making the GOP visibly and obviously less white (but no less conservative) would be a good strategy, in terms of politics, of breaking the association of “if you’re a minority you must be progressive”. The GOP should be cultivating black and Latino candidates. An openly gay candidate wouldn’t hurt in a lot of places.

      The best thing the GOP could do is start serious minority outreach (and start fielding far more minority candidates) while, if anything, going more conservative on issues and more populist/working class.



    • Fine. You made me subscribe.

      Most Americans would not find Scott’s conclusions to be all that controversial: America has an imperfect past and a flawed president, but it is not fundamentally a racist society or country.

      I think the flawed president thing is a typo, but I like it.

      The Tweets the cite are . . . interesting. It’s hard to see most of it as anything but going after the black guy who has dared to wander off the progressive plantation.

      However, I think there is a basis to this one:

      Which is something the GOP as a political party needs to work on. IMO.

      And as the piece makes clear, while they should have done it before, this is 100% the time to do it:

      For years, the General Social Survey has asked Americans if they agree with the following statement: “Irish, Italians, Jewish and many other minorities overcame their prejudice and worked their way up. Blacks should do the same without special favors.” The question is often used to gauge racial resentment, but there’s another way to look at it. The more someone disagrees with it, the more racist they’re likely to think American society is, therefore justifying greater government interventions.

      As researcher Zach Goldberg has noted, for years the people who most strongly disagreed with this statement were African Americans themselves. For instance, in 1994, over 40 percent of them disagreed, while around 20 percent of white liberals disagreed. In recent years, however, the order has flipped. 46 percent of white liberals disagreed in 2016, while 32 percent of African Americans disagreed.

      And there is this: It’s very possible these two things are connected. The decline in religiosity in the United States is most pronounced among young white liberal people. Lacking the organizing principles and foundation of religion, I think many of these people have, for their own psychological health, adopted wokeness as a religion.

      I don’t think this is even a question. I just don’t think there is any doubt. Wokeness is a religion. Period. It’s a young-ish religion at present, here, so there’s still a lot of experimentation regarding rituals and dress and doxologies and so on. And there are different sects. There’s the Holy Church of Critical Race Theory and The First Church of the Climate Emergency. But it’s a religion, without a doubt.


  3. Not the biggest fan of NRO, but I certainly find this point interesting:

    But Scott’s most controversial statement, allegedly, was to contend that, “America is not a racist country.” All the usual suspects took to social media to mock the senator for simultaneously saying the nation wasn’t racist and pointing out that he had personally experienced bigotry. Of course America is a racist nation, they wailed, before getting “Uncle Tim” trending on Twitter to try and prove it. The Left’s demeaning of any African American who strays from leftist orthodoxy is one of the ugliest acceptable smears in our political discourse.

    In any event, at CNN, Van Jones argued that Scott’s message “was nonsense” and that the senator had lost African Americans “by the tens of millions” by denying what everyone knew was true about American. This was the tone across left-wing media.

    Yet this morning, Vice President Kamala Harris, when asked by ABC News about Scott’s comments, said: “I don’t think America is a racist country but we also do have to speak truth about the history of racism in our country and its existence today.”

    There are flagrant double standards in politics, and then there is seeing two people say the same thing within 24 hours but being treated completely differently.


    • And everyone can see it. Running against the media works for Republicans. The media’s approval is dropping.

      Liked by 1 person

    • I’m going to sound like an asshole here but why are we still paying attention to the obvious double standard in the media? I get it once in a while, but to do it several times a day everyday is like acting surprised the weather changes through the course of the day. It’s a problem with all right-leaning media, by reacting to the MSM your acknowledging that they set your own agenda and narrative. How about initiating stories about government malfeasance, for example and ignore MSM narratives?


      • I expect some folks are doing some of that. Glenn Greenwald maybe?


        • Yep on Greenwald. He’s also recruiting a new crop of better journalists.

          “Biden Erased Decades of Historic Crimes in His Speech to Congress

          Biden’s claim that the Capitol Riot was the “worst attack on our democracy since the Civil War” is ahistorical garbage.

          Siraj Hashmi”

          Looks like they are taking Carville’s advice on January 6 protests/riots and I suspect that by going overboard on this it will backfire come next years midterms.


      • well, they are journalists too. so still lazy.

        Liked by 1 person

        • NoVA, you see the piece I posted about protesters complaining that the police are FIDOing in Minneapolis now when they call them?


        • To insure no illegals with hoof and mouth disease or carrying unpasteurized milk.


        • no, i missed that. i’ll have to go find it.


        • good piece. that type of coverage should be in the local section of every major newspaper.


        • I read that earlier. This guy is really good. Somebody else I might have to subscribe to . . . but I can seem to read the whole article right now without a paid subscription so I’m going to mooch for the time being.

          This guy is dead on and . . . one of the problem all these guys have, from Taibbi to Greenwald to everybody else . . . you can barely actually do journalism without having to tackle how propagandistic, lazy, bought-and-paid-for, and functionally worthless so much of the mainstream media is.

          Moreover, whiny media activists seem to think there’s something inherently suspicious or reactionary about reporting on violent crime trends. This is very odd. Not only did homicides hugely spike in 2020, but numerous jurisdictions broke all-time records — one being Milwaukee, WI, where homicides increased by 101% in 2020 compared to 2019. And even after last year’s giant increase, many cities (like Minneapolis) are on pace to break all-time records in 2021:

          Philadelphia, PA is on pace for a record-breaking year of homicides, after coming just one shy of the all-time record in 2020. As of April 29, homicides are up 36% year-over-year.

          Portland, OR is on pace for a record-breaking year of homicides, after recording the highest total in 26 years in 2020. In the first quarter of 2021, homicides increased year-over-year by 733%. (Yes, you read that right.)

          Columbus, OH is on pace for another record-breaking year of homicides, after breaking its all-time record in 2020. Homicides have already doubled in April year-over-year.

          Albuquerque, NM is on pace for a record-breaking year of homicides, which are up 79% in April year-over-year.

          Indianapolis, IN is on pace for another record-breaking year of homicides, after breaking its all-time record in 2020. Homicides are up 33% in April year-over-year.

          Other cities on pace for another record-breaking year of homicides, after already having broken their previous records in 2020, include:

          Macon, GA
          Kansas City, MO
          Memphis, TN
          Jackson, MS
          Paterson, NJ
          Baton Rouge, LA
          Bakersfield, CA

          This is just a tiny sampling, but it should be obvious that something extremely sociologically significant is underway as much of the country reverts to early 1990s levels of peak homicides — with many cities greatly surpassing those peaks. It’s odd for national journalists to be so antagonistic about covering such an important trend (local journalists are usually better about it), and the only viable explanation for their hostility is that this reporting in some way undermines their ideological imperatives.

          But he’s right. The mainstream thinks reporting on actual crime stats isn’t interesting, and may in fact be a bad thing. So they don’t.


  4. Gorsuch was a great pick for the Supreme Court:

    ‘Neil Gorsuch’s Persnickety Libertarianism Gave Immigrants a Win at the Supreme Court

    The decision came down to a one-letter word.
    By Mark Joseph Stern
    April 29, 2021″


    • jnc:

      Gorsuch was a great pick for the Supreme Court:

      One ruling does not a great Justice make. His ruling in Bostock was horrible.


      • Indeed. Not that I have any particular objection to the implication–if you can’t fire someone for being a lady, why should you get to fire someone for wanting to identify as a lady?

        But that is clearly not covered by the Civil Rights Act of 1964. Could be covered by the Civil Rights Act of 2020 or 2021 or whatever, in which case it could and should be legislated. Not discovered in the emanations and penumbras of a law that clearly said nothing on the idea of firing people for being transgender.


    • “Playing his favorite role of uncompromising textualist”

      … when convenient.

      In Bostock, Gorsuch held that the plain meaning of the Civil Rights Act prohibited discrimination against gay and transgender employees, using a traditionally conservative methodology to reach a progressive result. “Only the written word is the law,” Gorsuch wrote then, “and all persons are entitled to its benefit.”

      Yet I don’t find that “plain meaning” there at all. If only “the written word” is law, IMO, he would have found differently.


      • I think you may be confusing textualism and originalism, which usually align but don’t always.

        For example, in common parlance as all of us grew up, the male pronoun included the female, and had for a very long time. However, legislators often meant “men” to mean male. Intent, if it could be divined from an outside source, could make that clear. With no outside source, the text itself could mean “men and/or women”.


        • Then here would be my follow up question. If a word’s meaning becomes commonly understood as also meaning something else, or even its opposite, from the time a law was written, it seems very . . . iffy . . . to me (not a lawyer) to say, “Well, now this law covers this thing, too, even though that’s not at all what it meant when the law was drafted”. And that’s assuming the new definition was universally agreed on, where describing transexual men as “men” and transexual women as “women” is not at all universally agreed upon.

          Sex as encompassing “sexual orientation” is also a stretch but could make a little more sense, even understanding that it isn’t originalist intent to do so. But is kinda-sorta textual sounding (from a layperson’s standpoint), where as saying “well, some people think sex encompasss not just biological sex now, but also thinking you’re a different sex than your biological sex”.

          But in both cases I find sexual orientation and identifying as a different gender than you were born to be clearly different than biological sex (and transexuality and homosexuality have different contexts). As you can be discriminated against for either thing, seeking civil rights protection based on chosen gender-identification or sexual orientation makes sense, but I would find it difficult to find that protection actually present in the 1964 law.

          Ultimately, the court has ruled, and decided it’s there. So it is! I actually have no real objection to the outcome, just the route taken to get there.

          Congress could have passed a bill to expand the scope of the law. I would have much rather seen that, personally.


      • KW:

        Yet I don’t find that “plain meaning” there at all.

        You are correct. It’s not there. He did it use a conservative methodology to reach a progressive result. He feigned using a conservative methodology.


      • As I asked when we first discussed the decision, “if a legislator wanted to craft a law that prevented discrimination against men as men or women as women – ie on the basis of sex – but which did not prevent discrimination on the basis of sexual orientation, what words could that legislator have used in 1964 that would have precluded Gorsuch et al from reaching yesterday’s conclusion?” There is no answer, because Gorsuch’s ruling was designed not to understand the words as they were understood by the authors of the law. It was designed to achieve a preferred result.


        • For the sake of argument, the statute could easily have included a caveat that the prohibition of discrimination did not apply to discrimination against homosexuals on the basis of their homosexuality.


        • Mark:

          For the sake of argument, the statute could easily have included a caveat that the prohibition of discrimination did not apply to discrimination against homosexuals on the basis of their homosexuality.

          Easily? Unless they could see into the future, I think not, because in 1964 it could never have occurred to anyone to do that. They understood discrimination on the basis of sex to mean something entirely distinct and separate from discrimination on the basis of sexual orientation (as, frankly, did virtually everyone until Gorsuch decided differently). In 1964, there was no question that the phrase “discrimination on the basis of sex” did not encompass discrimination on the basis of sexual orientation, which is why for many years after 1964 there were attempts to add sexual orientation to the list of those characteristics for which discrimination was barred, which already included sex.

          It is absurd to expect lawmakers to be fortune tellers and craft laws anticipating and accounting for misconstruals of what is to them perfectly clear and well understood language that will not occur until 50 years in the future. This is why it is incumbent upon judges to interpret the words of laws as they were understood by the society that passed them, which is accessible to them, rather than as they are (or as the judge wishes they were) understood in modern times, which was not accessible to those who wrote and passed the laws.

          BTW, the real problem with Gorsuch’s approach was that the phrase “discrimination on the basis of sex”, or “sex discrimination”, has a distinct and specific meaning that is not fully or accurately captured by parsing the phrase and trying to understand each word individually. He knows this, and so does everyone else. Because he was parsing it and using the meaning of the individual words even as they were understood at the time, he could (and did) make claims to making a textualist interpretation, but we all know that the result was not what the full phrase itself was understood to mean by literally anyone at the time the law was passed. Or frankly anyone up until Gorsuch pretended differently.


        • Easily? Unless they could see into the future, I think not, because in 1964 it could never have occurred to anyone to do that.

          Is there anything in 1964 what would have led anyone to think that sexual orientation was congenital, rather than a choice? I think the sort of gender dysphoria that led to cross-dressing was considered a mental illness.

          I think reading that into the law is a serious stretch, and goes back to the court legislating from the bench rather than saying. “This can easily be addressed in law. So why doesn’t congress do that?”

          There would have been no need to say “discrimination on the basis of biological sex” at the time because that was universally understood to be the meaning. But beyond that, I don’t see how it’s arguable that Gorsuch’s interpretation was “textual”. It seems to me, as a layperson, to have been the opposite of that–reading things into the next that are not there explicitly, and in no way could have been interpreted to mean that upon the original drafting. Nor would it have passed if it had been understood to mean that.

          It would likely pass now. So what’s wrong with saying: congress should write a law about this? And why wouldn’t congress do that? Why are they constantly waiting for the court to reach a decision on something so they don’t have to be on record as voting for or against something?


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

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: