Morning Report: Inflation moderates

Vital Statistics:

  Last Change
S&P futures 4,475 13.2
Oil (WTI) 71.09 0.65
10 year government bond yield   1.33%
30 year fixed rate mortgage   3.07%

Stocks are higher this morning after inflation data came in lower than expected. Bonds and MBS are flat.


Prices at the consumer level rose 0.3% MOM and 5.3% on a YOY basis. This monthly increase was the lowest since January. Ex-food and energy, they rose 0.1% MOM and 4% YOY. Higher energy prices have been the big driver for the index, however food has also been a big factor as well. Interestingly, owners equivalent rent (which is a function of housing prices) rose only 0.3% MOM and 2.6% YOY. While this number is an artificial construct, it should generally correlate with housing prices. According to just about every real estate index, prices are rising in the high teens percent.


Small business sentiment increased 0.4% in August, according to the NFIB Small Business Sentiment Index. “As the economy moves into the fourth quarter, small business owners are losing confidence in the strength of future business conditions,” said NFIB Chief Economist Bill Dunkelberg. “The biggest problems facing small employers right now is finding enough labor to meet their demand and for many, managing supply chain disruptions.”


Biden is expected to nominate Mike Calhoun to run FHFA. It sounds like the left is not happy with him due to his Wall Street contacts. Supposedly he is in support of he utility model for Fannie Mae and Freddie Mac.


The share of mortgages in forbearance fell 15 basis points to 3.08% last week. “The share of loans in forbearance decreased by 15 basis points last week, as forbearance exits jumped to their fastest pace since March. The fast pace of exits outweighed the slight increase in new forbearance requests and re-entries,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “Servicer call volume jumped last week as summer came to an end and many borrowers reached the end of their forbearance terms. We anticipate a similarly fast pace of exits in the weeks ahead, which should lead to increased call volume and a further decline in the forbearance share.”


The housing market is beginning to cool off, according to Redfin. Redfin agents reported that 59% of all sales involved bidding wars last month. “Sellers are still pricing their homes very high, but a lot of buyers have had enough and are no longer willing to pay the huge premiums they were six months ago. Instead of 25 to 30 offers on turnkey homes, we’re now seeing five to seven,” said Nicole Dege, a Redfin real estate agent in Orlando, FL, where the bidding-war rate dropped to 57.5% in August from 78.9% in July. “Buyers are getting a bit more selective. I have one seller who recently put his four-bedroom single-family pool house on the market, but the roof was shot. He had to lower his asking price to $423,000 from $427,000 and agree to spend around $7,000 to replace the roof in order to attract bidders. Six months ago, he would have easily been able to sell that home as-is without dropping the price.”

60 Responses

  1. The greatest bugaboo of the left – carried interest – is sticking around…


  2. Like

  3. Great Greenwald piece:


  4. I am sure I have asked this before, but Biden’s vaccine mandate proposal raises the issue again. The mandate will supposedly apply only to businesses with more than 100 employees. Regardless of how one views the regulation, how is it that such an application is not a blatant violation of the equal protection clause?


    • That’s easy. It’s because the equal protection clause applies except when Democrats don’t want it to!


    • I think that’s where OSHA’s statutory authority starts. So really it’s an issue with OSHA regulations in general.

      The other point, is why this should be considered an “emergency” regulation 18+ months into the pandemic and thus be exempt from the regular rule making process.


      • In theory I could see the argument as to why you would count from the release of the vaccine to now–and then you can say you count from FDA approval of the vaccine until now. I can see the arguments that could be made.

        My argument is why should OSHA have this power. Why should this kind of power ever be delegated to unaccountable bureaucracies?


      • OSHA has to determine that employees are exposed to grave danger from exposure to substances or agents determined to be toxic or physically harmful or from new hazards, and (B) that such emergency standard is necessary to protect employees from such danger.” OSH Act § 6(c)(1), 29 U.S.C. § 655(c)(1).

        last year, osha issued new rules but limited them to healthcare because it was concerned that it could not meet the “grave danger” and “necessary” criteria for a broader standard in light of accelerating vaccinations.

        Biden basically overruled that


        • Is the 100 employee threshold based on a general limitation on which companies can be regulated by OSHA or was it just an arbitrary number that was picked for this regulation?


        • pretty sure arbitrary. but OSHA stuff is really new to me, so i might be wrong.


  5. Face Coverings Now Required at State-Regulated Child Care Facilities for Children Ages Two and Up, All Staff and Visitors

    Keeping a face mask on a two year old? Easy peasy!

    This is some genius regulatin’


    • zero thought went into that regulation.


    • I really am amazed. I’ve been listening to a lot of Heinlein novels and he has multiple histories where some strip of time is called “the crazy years”—because of spoiled people who want pull their weight and hippies and drug use and so on.

      Listening to a lot of essays reminds me that people always think it’s the worst it’s ever been and the end is nigh.

      But it also makes me think the present era should be called “the stupid years”. Because it seems collectively, the experts and the Titans of industry and our political leaders are astoundingly stupid.


  6. Gotta say that the KosKidz attack on Biden’s DoJ being incompetent surprised me.

    It seems, given the heavily Democratic makeup of the jury pool in Washington DC, getting these people convicted of anything, including Treason, would not be much of a challenge.


  7. Ah, the irony.

    Medical professionals, who were hailed as heroes during the throes of the pandemic, are now resigning in droves over a dictate from the governor’s office in New York requiring all healthcare workers, including long-term care facility employees, to be vaccinated, lest they be fired.

    As a consequence, the NY healthcare system — and its patients — are already feeling the strains, only compounding an established nurse shortage

    So much for justifying vaccine mandates as measure to ensure that the availability of health care.


    • This is much more likely to feed vaccine skepticism than anything that Republicans do.

      When nurses refuse to get the vaccine, the natural inference is that as insiders they know something that the rest of the public does not.


      • I got some “news” email from Microsoft with a story about “Fauci debunks some tweet” and all I could think is that the government doesn’t have the credibility to debunk the Great Pumpkin at this point.


        • The media generally has completely destroyed the credibility and meaning of “debunking” and “fact-check”.

          Primarily because they’ve defined “fact check” as conforming to a preferred opinion or narrative and “debunking” as someone with a perceived or assumed degree of authority disagreeing with the supposedly “debunked” assertions.


      • This makes sense. It doesn’t feel like a significant influence to me … probably because I feel like nurses and doctors are human and capable of being wrong. Wouldn’t make me worry overmuch about vaccine efficacy. What tends to make me suspicious is mandates and coercion, suppression of dissension and silencing of debate (a general sense that advocates feel I, as a layperson, should have no say as to whether I get it or not) and pro-vaccine arguments that distort or misrepresent data or are incoherent (needing to get vaccinated to protect the vaccinated is an incoherent argument, IMO, and at minimum begs much more explanation).


    • The other thing that’s now fucked-up is the Federal takeover of the monoclonal antibody distribution. I predict (intentional) shortages soon for outpatient infusion sites. There really is a STRONG desire to get people in the hospital so they can give more money to hospital systems and pump-up the severe case rhetoric.


    • “So much for justifying vaccine mandates as measure to ensure that the availability of health care.”

      I never felt that justification was sincere, or that mandates were ever intended to benefit the general public except in the most abstract and theoretical of terms.

      Which would mean it will take much more bad news and bad “unintended consequences” to get them to backtrack. Because the actual consequences aren’t important; the principal of expert management by our superiors is the point.

      Also if they were serious about their desired outcome they’d do some due diligence, game out likely scenarios, ask the question: what happens if healthcare workers reject the mandate and lose their jobs? Doctors? What happens if Wal-Mart loses 25% of their employees? And so on.

      But there isn’t much gaming out—-or due diligence—on anything the elite/expert class does, by “plan” or by cultural contagion. There’s just an endless rolling forward with whatever has become the new normal or the latest fashion … because they are experts, they are the smartest folks in the room, they don’t need any stinking plans or due diligence.

      Which is in part because they suffer so few consequences no matter how bad their decisions or initiatives are.


  8. First indictment by Durham on Russiagate:


    • Comments indicate that (a) nobody there gives a shit about a nurse, doctor, or specialist shortage. Because all they want to do is talk about how the people refusing the vaccine are stupid and anti-science and really guilty of murder, basically.

      As long as they can use the situation to point out how awful people are and how they are better, I don’t think they care about the actual situation. They’d be content for all hospitals to be closed down because of the mandate . . . just so long as they can point the finger at the villains.


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