Morning Report: Record job openings

Vital Statistics:

  Last Change
S&P futures 4,511 4-2.2
Oil (WTI) 68.64 -0.65
10 year government bond yield   1.34%
30 year fixed rate mortgage   3.07%

Stocks are lower this morning after the European Central Bank said it would start reducing asset purchases. Bonds and MBS are flat.

 

Initial Jobless Claims came in at 310k which was a touch below expectations. Separately, the JOLTS report showed 10.9 million job openings, which is a record. Check out the chart below of the JOLTs data going back 20 years:

 

I suspect the market response to the huge number of unfilled jobs will be to increase investment in labor-saving technology. If the issue simply that expanded government benefits are driving the labor shortage, then it should reverse pretty rapidly once the extended benefits expire. If the government is keeping these expanded benefits in hopes of driving up wages, I suspect it will backfire, and any bump in wages will be temporary. The fatal flaw in that analysis is that workers don’t just compete with each other – they compete with technology which only gets better and cheaper.

 

Mortgage credit availability expanded last month, according to the MBA. “This expansion was heavily driven by the addition of refinance loan programs at a time when the 30-year fixed rate has been above 3% for the past month, and refinance activity has trended lower,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Of note, jumbo credit availability increased 9% to its highest level since March 2020, as more non-QM jumbo and agency-eligible high balance loan programs were offered. In the conforming space, more lenders offered GSE refinance programs catered for lower-income borrowers to help reduce their rates and payments. There was also a slight expansion in government credit, as more investors offered streamline refinance options for FHA and VA loans.”

 

Mortgage applications fell 1.9% last week as purchases declined 0.2% and refis fell 3%. “Mortgage application volume fell last week to its lowest level since mid-July, as mortgage rates have stayed just above 3% for several weeks. Refinance volume has been moderating, while purchase volume continues to be lower than expected given the lack of homes on the market,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “Economic data has sent mixed signals, with slower job growth but a further drop in the unemployment rate in August. We expect that further improvements will lead to a tapering of Fed MBS purchases by the end of the year, which should put some upward pressure on mortgage rates.”  

 

Economic growth “downshifted slightly” in August according to the latest Fed Beige Book. The decline was primarily due to decreased dining and travel, however supply chain shortages also played a part. The report discusses the labor market:

All Districts continued to report rising employment overall, though the characterization of the pace of job creation ranged from slight to strong. Demand for workers continued to strengthen, but all Districts noted extensive labor shortages that were constraining employment and, in many cases, impeding business activity. Contributing to these shortages were increased turnover, early retirements (especially in health care), childcare needs, challenges in negotiating job offers, and enhanced unemployment benefits. Some Districts noted that return-to-work schedules were pushed back due to the increase in the Delta variant. With persistent and extensive labor shortages, a number of Districts reported an acceleration in wages, and most characterized wage growth as strong—including all of the midwestern and western regions. Several Districts noted particularly brisk wage gains among lower-wage workers. Employers were reported to be using more frequent raises, bonuses, training, and flexible work arrangements to attract and retain workers.

Rapid home price appreciation has led to an increase in tappable home equity to $9.1 trillion, according to Black Knight. The average mortgage holder has $173k in tappable equity, an increase of $20,000 from the first quarter. What does this mean for originators? Debt consolidation refinances are a powerful tool for people with high interest credit card debt. Loan officers should be pitching these to their borrowers.

49 Responses

  1. Good read:

    Like

  2. This should be interesting:

    “Biden administration to extend vaccine mandate to U.S. companies
    By Annie Linskey, Yasmeen Abutaleb, Seung Min Kim and Lisa Rein

    Today at 3:30 p.m. EDT

    President Biden is announcing sweeping new vaccine mandates Thursday that will affect tens of millions of Americans, ordering all businesses with more than 100 employees to require their workers to be inoculated or face weekly testing.”

    https://www.washingtonpost.com/politics/vaccine-mandate-federal-employees/2021/09/09/1c1ce9dc-116b-11ec-882f-2dd15a067dc4_story.html

    Like

    • Seriously, fuck this guy.

      “In remarks from the White House, Biden took a more antagonistic tone toward the unvaccinated than he has in the past, as he turned from cajoling toward complusion and blamed those who refuse to get shots for hurting those around them.

      “We’ve been patient, but our patience is wearing thin, Biden said. “And your refusal has cost all of us.”

      https://www.washingtonpost.com/politics/vaccine-mandate-federal-employees/2021/09/09/1c1ce9dc-116b-11ec-882f-2dd15a067dc4_story.html

      Now I almost wish I hadn’t gotten vaccinated, just to defy him.

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      • It’s not about getting people vaccinated it’s about punishing perceived government defiance.

        But hey, no mean tweets.

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      • jnc:

        Seriously, fuck this guy.

        Surely you can’t be surprised at this. This is what the left does, it is what their ideology is all about. That this would be the consequence of a Democratic presidency in the middle of a pandemic panic cannot possibly come as a shock. I am certainly no political soothsayer but even I predicted precisely this eventuality before Biden even took the oath of office. I also predicted that the introduction of a vaccine wouldn’t put an end to mask mandates.

        Elections have consequences. Electing Democrats has easily predictable consequences.

        BTW, this kind of fascist authoritarianism should have been easily predictable if for no other reason than that this is precisely what Trump was routinely accused of by the left. As always, to know what leftists have in store for us, simply listen to what they accuse their political opponents of doing.

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        • It should not surprise any of you that I think these are reasonable public health mandates and neither examples of authoritarianism nor invasive of personal liberty. This is seat belts and traffic lights with religious and personal health exemptions. Or so I think.

          In Anglo-American real property law one of the oldest concepts is “nuisance”. Do what you want on your own property so long as you do not create a nuisance for your neighbors.

          I liken the unvaccinated to a nuisance.

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        • Interesting and thanks for the perspective Mark

          Honest question, what steps wouldn’t you take or allowed to be taken against the unvaccinated?

          Also, if your vaccinated, why the concern over the unvaccinated? As far as I know only about 2500 deaths of the overall 600,000 Covid deaths were among the vaccinated. It would seem you have a higher chance of dying from a reaction to the vaccine versus dying of Covid if your vaccinated.

          https://www.precisionvaccinations.com/covid-19-vaccine-related-fatalities-updated

          https://www.kff.org/policy-watch/covid-19-vaccine-breakthrough-cases-data-from-the-states/

          Like

        • Also, if your vaccinated, why the concern over the unvaccinated? As far as I know only about 2500 deaths of the overall 600,000 Covid deaths were among the vaccinated.

          I still want to know what vax they got. mRNA is still and will be for a long while experimental. Would be interested how many of those deaths were the traditional J&J vax versus the other.

          That being said, I’m still seeing conversations where people are saying–these are righties and libertarians, mostly–that the vaccine provides no immunity and is obviously useless. Which I dissent from, but it seems to have no effect. I point out that it clearly makes a difference and that we have never in history administered any vaccine, then constantly tested for the disease, and then referred to any positive result in a PCR test as a “breakthrough” case. Irrespective of symptoms or hospitalizations or anything else.

          We’ve just gone crazy.

          Like

        • I should add that I do not recall [and probably am not current on] OSHA’s emergency powers in detail and am not going to research them. The employer mandate could either be as lawful as OSHA’s existing protocols, or too big a deviation to be done without APA.

          NOVA?

          Like

        • I don’t like them as federal mandates and don’t believe the federal government should be able to issue them (while I might also not like them if they were state mandates, I can see where the states would be able to issue such mandates, presuming no constraints on such via their state constitutions). But it isn’t the first time the federal government has exercised power in a way I consider an overreach and won’t be the last.

          From a “incentives in large populations” I think it’s counterproductive. I know vaccine hesitant folks who were coming around to getting the vaccine who have now gone full “they’ll have to put me in jail before I get the vaccine” because of this. This is also likely to place an undue burden on unvaccinated minorities which I think opens them up to litigation, or at least criticism, that they could have done without. I really don’t think it was a good idea.

          As an aside, my position on seatbelts is that they are fine as a safety requirement in car manufacture but I’ve never agreed with mandating the wearing of them. Although I see an argument for making such safety procedures a requirement for access to state and federal roads. Traffic lights are in a different category, IMO.

          I think expanding the nuisance definition to the unvaccinated is over-expansive, making anything enough people want other people to do that those people don’t want to do into “a nuisance”. I am vaccinated and don’t care if you’re not vaccinated–you don’t pose any nuisance to me, as an unvaccinated person, except via the overreaction of the government and healthcare experts. So the real source of the actual nuisance is not the unvaccinated individual but the absurd overreaction and bad policy choices of various levels of government and government agencies.

          My opinion. Worth what was paid for it. 😉

          Like

        • From a “incentives in large populations” I think it’s counterproductive. I know vaccine hesitant folks who were coming around to getting the vaccine who have now gone full “they’ll have to put me in jail before I get the vaccine” because of this. This is also likely to place an undue burden on unvaccinated minorities which I think opens them up to litigation, or at least criticism, that they could have done without. I really don’t think it was a good idea.

          It’s the point. It’s a feature, not a bug.

          Like

        • I can buy that, but I don’t know they are correctly gaming out the long-term consequences for this particular feature.

          Like

        • They’re playing for the 2022 midterms. They think this will gin up their kook base.

          Like

        • I think they are overestimating the size of their kook-base based on their exaggerated presence on social media and in the press. And underestimating the possible downside of waking up the useful idiots who voted for nice old grandpa and the restoration of norms and “no mean tweets”.

          Like

        • “It should not surprise any of you that I think these are reasonable public health mandates and neither examples of authoritarianism nor invasive of personal liberty. ”

          Three points;

          1. Biden position during the campaign was the opposite of this. He explicitly ran against mandates and reiterated it as president-elect

          https://www.bbc.com/news/world-us-canada-55193939

          2. His exempting of the Post Office from the mandates for political reasons shows that he doesn’t believe his own argument.

          3. The use of the “royal we” [“We’ve been patient, but our patience is wearing thin, Biden said. “And your refusal has cost all of us.”] just makes one want to say fuck you even if you agree with the idea that vaccine mandates are effective. I think he’s his own worst enemy when communicating policy and that’s probably why he was under wraps for most of the campaign.

          Like

        • I believe they have also claimed this isn’t a mandate . . . so not contradictory to his previous position?

          My understanding is that the USPS will have to abide by the non-mandate mandate in some form or fashion? Not sure why it’s got different rules but apparently it’s not a blanket exclusion.

          https://www.foxnews.com/media/washington-post-reporter-postal-service-exemption-biden-vaccine-mandate

          I think he’s his own worst enemy when communicating policy and that’s probably why he was under wraps for most of the campaign.

          100%. Good point on the royal “we”. Also, in general, the population has been amazingly responsive about getting vaccinated (despite the various race-based and other non-science strategies that helped bungle much of the roll out in some states). By any reasonable metric for the US, the vaccine production, roll out, adoption and resultant outcomes have been a smashing success. This should be nothing but victory laps in a rational world with an honest press but neither seems to be the case.

          Like

        • the labor department is going to issue regulations “in the coming weeks”

          this is way outside my area .. but I guess they’ll bend the definition of worker safety to the breaking point.

          for the healthcare workers, it is a change in the conditions of participation. you want medicare reimbursement, you meet our rules. so that’s pretty well established. I don’t know how far into employee relations it’s gone before, but they got a lot of leeway there.

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        • I’m interested to see how they reconcile the worker safety rationale for people who are working remotely from home.

          Like

      • I’m fine with having been vaccinated–because I decided to. What they say or don’t say doesn’t change that.

        As I’ve said before, also fine if anybody else is not vaccinated, or if nobody else wants to get vaccinated. Because they are individual human beings and should get to make their own fucking decisions, the same way I did.

        This seems transparently obvious and natural to me but apparently I’m wrong, I guess.

        Like

        • Kev – there are three reasons I think it is like nuisance law. The first is personal. As I approach 80, I sense that I might actually have to go to a freaking hospital someday for something other than COVID and when all the beds are filled with unvaccinated people there will be no room for little ole me.

          Second, when the hospitals are strained, either or all of our hospital district taxes or our insurance rates or our out-of-pocket costs or the federal deficit will go up. Freaking guaranteed.

          Third, the unvaccinated are breeding grounds for variants.

          I am not personally as concerned about the third, although the public health and medical professionals in my family [my sister, my bro-in-law, and three first cousins] are more concerned about that than anything else. I suppose I am a fatalist about that because ultimately that sort of prophylactic requires worldwide immunizations or Draconian restrictions on travel [see NZ]. I wouldn’t expect this last in less than two decades. See how long it took to do multi-national polio vaccines, for example.

          Like

        • I might actually have to go to a freaking hospital someday for something other than COVID and when all the beds are filled with unvaccinated people there will be no room for little ole me.

          This happens almost every winter with the flu, mandate that vaccine as well? If not, why not?

          Third, the unvaccinated are breeding grounds for variants.

          If your vaccinated you’re protected, right? Also, mutations, as a rule, tend to dampen lethality and impact. We should be welcoming them.

          Like

        • There is no evidence that the mutation vector of any coronavirus, including this one, is any other direction than “more contagious and less lethal”. By the time we’re at the zeta variant COVID19 should basically be a case of the sniffles. Might go the other way but the danger of that seems very, very small.

          Also worth noting that leaky vaccines (and these seem to be a little leaky) mean that the vaccinated are the playground where you will get variants that resist or are unresponsive to the vaccines, not the unvaccinated, who would most likely be spreading the variants that the vaccines do handle.

          Finally–we don’t know more than we know, and I find it hard to buy into a “nuisance law” argument for the unvaccinated at this time. It would be like arguing that your neighbors are in violation of nuisance ordinances because they are planning to have a party, and you think it will be a loud one.

          Like

        • Mark:

          As I approach 80, I sense that I might actually have to go to a freaking hospital someday for something other than COVID and when all the beds are filled with unvaccinated people there will be no room for little ole me.

          Perhaps people over 80 shouldn’t be treated in hospitals. They have already lived beyond the average life expectancy, and if the hospital beds are filled with old folks, there will be no room for younger people with a long life in front of them. Logan’s Run, anyone? Besides, you want to talk about cost of care burdening the tax payer?!?

          This butterfly-effect logic is insane. Covid has driven people mad.

          Like

        • “Covid has driven people mad.”

          Or our politicians, healthcare “experts”, and the media have used COVID to drive people mad.

          The chances of anyone having difficulty accessing healthcare due to an overabundance of COVID patients at any given time is exceedingly low.

          The news has picked outlier cases and presented them as the norm, during the pandemic. In New York, the Trump admin supplied a ton of overflow capacity–and during the height of the pandemic it went almost entirely unused. Because it wasn’t necessary.

          Most “all the ICU beds” are full reports are done to give the impression that the hospitals are overrun with COVID patients, when in fact the hospitals are mostly empty and have a dozen beds they can magically turn into ICU beds with the blessing of the state (which they need to have so they can bill the insurance companies accordingly) . . . and so on.

          But COVID has been a lengthy and ongoing example of replacing reality with fantasy. Frequently, many of the COVID problems (overwhelmed hospitals, people unable to see a doctor, yada yada) are a product not of COVID but the overreactive response to COVID.

          I recall during the beginning of COVID where a shortage of ventilators was going to kill us all. Presented as if there was simply no solution. Never mind that ventilators for the most part have been no help in treating COVID patients, but the problem was solved in like a month and soon we had an overabundance of ventilators. And then that story vanished without comment.

          But the chances of there not being room at the hospital for anyone in need because of COVID is actually quite small. It is not a good argument for what I would consider extraconstitutional mandates. But, alas, I am not the president.

          Like

        • Second, when the hospitals are strained, either or all of our hospital district taxes or our insurance rates or our out-of-pocket costs or the federal deficit will go up. Freaking guaranteed.

          This is a reasonable argument but I have to say I kind of see this happening either way. Even if you get 100% vaccination, the hysteria and hypochondria around all this is likely to lead to greater expenses.

          Still not convinced on the nuisance argument. But that’s my opinion and we all know what opinions are like.

          Like

        • Mark:

          there are three reasons I think it is like nuisance law…

          Second, when the hospitals are strained, either or all of our hospital district taxes or our insurance rates or our out-of-pocket costs or the federal deficit will go up.

          So does this mean you think that prohibitions or mandates on any activity or non-activity that could possibly result in circumstances that then could possibly lead politicians to increased taxes are justified as “nuisance” laws? If so, you’ve just justified regulation of literally any and all activity and non-activity.

          Like

  3. Seriously, who cares? The Officer Corps is abysmal anyway.

    Like

  4. I laughed.

    Reminds me of the joke, how do you bring a woman to orgasm?

    Who cares?

    Like

  5. Was thinking about this.

    What are your opinions? I’m guessing Federal employee unions stay silent publicly but defend member from being fired.

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    • that’ll do wonders for the labor shortage.

      Like

      • I’m sure there will be no unintended consequences.

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        • the left is thinking this whole labor shortage is going to increase wages. In the short term it might, but in the long term it will accelerate the adoption of labor-saving technology.

          The left never learns.

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        • Then they’re being particularly naive as the massive influx of illegals is going to prevent any sort of real wage growth as well.

          Like

        • Wage growth is the product of a tight labor market and business optimism and lack of uncertainty. IMO. I don’t think wages are going to grow, no matter how big the labor shortage is, unless businesses in general feel certain about the direction of the economy and are optimistic about the future.

          Like

        • You give them more credit than I would. I don’t think they give two shits about increasing wages for the peasants. It’s all an ideological hobby for them. And they enjoy “changing the world”. In terms of actual wage growth, I’m not sure if they could give two-shits if anybody anywhere made any more money.

          They would love to get the minimum wage up to $15 nationally or $25 nationally–and it would not mean anything to them if the result was a steep drop in average incomes because of job losses. It’s an academic exercise, but one where they want credit and praise. So they want to be part of the reason “workers are getting paid a living wage” because they passed some mandate.

          Like

    • McWing:

      What are your opinions?

      I think that under Democratic legal theory on race discrimination and the 14th amendment, this is plainly an illegal order. Blacks and Hispanics are over represented among the unvaccinated, and thus this will have a “disparate impact” on them. It is therefore a violation of the 1964 Civil Rights Act and the equal protection clause.

      I also think, though, that not a single leftist judge would rule as such.

      Like

      • I also think, though, that not a single leftist judge would rule as such.

        I think that will depend on who mounts a challenge, and how. But mounting the challenge might be difficult as it’s unlikely any typical social justice organizations will do so. As they are captured, and not in the business of representing their ostensible communities.

        Like

  6. Good thread for Scott about the Administrative State,

    The first:

    And it’s continuation:

    Like

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