Vital Statistics:
Last | Change | |
S&P futures | 4,413 | -25.2 |
Oil (WTI) | 72.98 | -0.19 |
10 year government bond yield | 1.44% | |
30 year fixed rate mortgage | 3.07% |
Stocks are lower this morning on overseas weakness. Bonds and MBS are down.
Home equity rose 29% in the second quarter to $2.9 trillion, according to CoreLogic. This works out to be a $51,500 gain per homeowner. The number of homes with negative equity (surprised they still exist anymore) fell to 1.2 million homes.
New Home Sales rose 1.5% MOM to a seasonally-adjusted annual rate of 740,000. This is down big (24%) compared to a year ago. This was above expectations, however.
The Conference Board Index for Leading Economic Indicators rose in August.
“The U.S. LEI rose sharply in August and remains on a rapidly rising trajectory,” said Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board. “While the Delta variant—alongside rising
inflation fears—could create headwinds for labor markets and the consumer spending outlook in the near term, the trend in the LEI is consistent with robust economic growth in the reminder of the year. Real GDP growth for 2021 is expected to reach nearly 6.0 percent year-over-year, before easing to a still-robust 4.0 percent for 2022.”
This is interesting since the GDP forecasts are falling, at least if you look at the 2020 forecasts from the FOMC meeting this week. The Atlanta Fed’s GDP Now index has been trending downward for some time, and Street strategists have been taking down growth estimates. Given what we have heard out of FedEx and Nike, third quarter earnings will be soggy for a lot of companies. So what the heck is going on?
I think the issue is that the Conference Board’s LEI inputs are mainly measuring demand, and the issue for the economy right now is supply. Demand is strong for cars, however chip shortages have reduced inventories. Lots of people want to eat out at a restaurant, but restaurants are short-staffed.
Since GDP is a function of actual transactions, you need both supply and demand. For much of the post-bubble period demand was the issue. People lost a lot of their net worth in the housing market, and they used any extra cash to pay off debt. Since spending is the biggest portion of GDP, the policy levers were used to encourage spending. Today, the issue isn’t demand, it is supply. Unfortunately for DC politicians, they are still fighting the last war.
Ultimately the question becomes whether this is a short-term phenomenon or something longer term. If it is short term, it will work itself out and be forgotten in a year or two. If it is long term, then we will start seeing persistent inflation. And the lesson from the 1970s is that inflationary expectations are hard to control once they start.
Filed under: Economy, Morning Report |
Aren’t we at the point now where the vaccine merely exists to ameliorate the symptoms, like Tamiflu rather than prevent illness altogether?
I agree the vaccine was sold as a preventative but I think it’s time to acknowledge that we were lied to again.
Also, if your in-laws feel fine is there a chance they were not infected?
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oh sure.
i was just frustrated that i did everything “right” and got sick and have to spend the next week in isolation. very possible the in-laws are not infected.
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Fucking sublime.
https://babylonbee.com/news/fisher-price-introduces-supreme-court-protest-playhouse-that-can-be-vandalized-and-burned-down
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“FBI Rally In D.C. Ends Without Incident
WASHINGTON, D.C.—The Federal Bureau of Investigation is disappointed by the low attendance at the D.C. rally they organized for Trump supporters today.
In spite of the FBI’s best efforts to lure a bunch of angry MAGA insurrectionists to the Capitol this weekend, only a few hundred FBI agents dressed as MAGA insurrectionists showed up. ”
https://babylonbee.com/news/fbi-rally-in-dc-ends-without-incident
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It takes a heart of stone not to laugh.
https://redstate.com/sister-toldjah/2021/09/27/watch-uks-labour-party-unwittingly-commits-spectacular-self-own-in-gender-identity-debate-n448567
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Uh… ok
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https://babylonbee.com/news/after-being-fired-by-democrats-radicalized-horses-storm-capitol-shouting-trump-won
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I think the deep blue suburbs of NYC like Westchester County and Fairfield County are the the only places left requiring vaccinated people to wear a mask indoors.
Just got back from Stop and Shop. I would estimate 30% – 40% were unmasked. People have had enough of COVID theater.
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Useful history reminder of debt ceiling raises:
https://www.thedailybeast.com/heres-how-schumer-is-trying-to-gaslight-the-gop-on-debt
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