Morning Report: GDP disappoints

Vital Statistics:

  Last Change
S&P futures 4,557 13.2
Oil (WTI) 81.66 -1.01
10 year government bond yield   1.56%
30 year fixed rate mortgage   3.30%

Stocks are flattish this morning despite a disappointing GDP print. Bonds and MBS are up.


Economic growth slowed to 2% in the third quarter, according to the Bureau of Economic Analysis. This was well below expectations, and seems to confirm that the economy is slowing down. The Chicago Fed National Activity Index earlier this week confirmed that the economy is growing below trend.


Initial Jobless Claims fell to 281,000. This is close to getting back to normalcy, however we are still elevated compared to pre-COVID.


New Home Sales fell 18% YOY to a seasonally-adjusted annual rate of 800,000. At the end of September, there were 379,000 units in inventory, which represents a 5.7 month supply. The median sales price rose 19% YOY to $408,800.


Durable Goods orders fell 0.4% in September. Ex-transportation, they rose 0.4%. Core Capital Goods (a proxy for capital expenditures) rose 0.8%. I wonder if the labor shortages are encouraging businesses to invest more in productivity-enhancing technology.


Mortgage applications rose 0.2% as purchases rose 4% and refis fell 2%. “Mortgage rates increased again last week, as the 30-year fixed rate reached 3.30 percent and the 15-year fixed rate rose to 2.59 percent – the highest for both in eight months. The increase in rates triggered the fifth straight decrease in refinance activity to the slowest weekly pace since January 2020. Higher rates continue to reduce borrowers’ incentive to refinance,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Purchase applications picked up slightly, and the average loan size rose to its highest level in three weeks, as growth in the higher price segments continues to dominate purchase activity. Both new and existing-home sales last month were at their strongest sales pace since early 2021, but first-time home buyers are accounting for a declining share of activity. Home prices are still growing at a rapid clip, even if monthly growth rates are showing signs of moderation, and this is constraining sales in many markets, and particularly for first-timers.”


Zillow is pausing its iBuying program. The problem is that it has a backlog of inventory has swollen its balance sheet. Zillow’s program basically allowed homeowners to sell their property to the company, which then would make any repairs, stage and sell the home. This was popular in many communities where bidding competition was fierce, and a non-contingent offer could help carry the day. Zillow would charge a fee of something like 7.5% for this service.

Shortages of labor and materials are making it harder for the company to flip and sell their homes, and debt has been building up to finance the activity.

9 Responses

  1. Can someone post the full text of Trump’s letter to the WSJ?

    There’s tons of “analysis” on it in the MSM, but I prefer to read it for myself.


    • In your editorial “The Election for Pennsylvania’s High Court” (Oct. 25), you state the fact that a court wrongly said mail-in ballots could be counted after Election Day. “This didn’t matter,” you add, “because Mr. Biden won the state by 80,555, but the country is lucky the election wasn’t closer. If the election had hung on a few thousand Pennsylvanians, the next President might have been picked by the U.S. Supreme Court.”

      Well actually, the election was rigged, which you, unfortunately, still haven’t figured out. Here are just a few examples of how determinative the voter fraud in Pennsylvania was:

      • 71,893 mail-in ballots were returned after Nov. 3, 2020, at 8 p.m., according to Audit the Vote PA. None of these should have been counted according to the U.S. Constitution and the state Legislature, which didn’t approve this change.

      • 10,515 mail-in votes from people who do not exist on the Pennsylvania voter rolls at all.

      120,000 excess voters are not yet accounted for by the Pennsylvania Department of State—far more votes than voters!

      • From 2016 to 2020, during my term as president, Republicans out-registered Democrats 21 to 1. This translated to a 659,145-vote lead at 12:38 a.m. on election night, with “Trump” up a full 15 points.

      • Hundreds of thousands of votes were unlawfully counted in secret, in defiance of a court order, while Republican poll watchers were thrown out of buildings where voting took place.

      • 39,771 people who registered to vote after the Oct. 19, 2020, deadline, still voted in the 2020 election—simply not allowed.

      Highly respected Audit the Vote PA found numerous data integrity problems the Pennsylvania Statewide Uniform Registry of Electors (SURE) system, including:

      • 305,874 voters were removed from the rolls after the election on Nov. 3rd.

      • 51,792 voters with inactive voter registrations at the end of October 2020 nevertheless voted.

      • 57,000 duplicate registrations.

      • 55,823 voters who were backfilled into the SURE system.

      • 58,261 first-time voters 70 years and older.

      • 39,911 people who were added to voter rolls while under 17 years of age.

      • 17,000 mail-in ballots sent to addresses outside of Pennsylvania.

      • Another analysis of Montgomery County, Pa., found 98% of the eligible voting population in the county was already registered to vote—not possible.

      • A canvass of Montgomery County has identified 78,000 phantom voters, with roughly 30% of respondents unaware that there are people registered and voting from their address.

      • One nursing home in Lancaster County had 690 registrations and an extremely high turnout rate of 85% in 2020, while nursing homes were closed due to Covid. One of these residents said she had not voted in the past 3 years, but had a mail-in ballot cast in her name.

      • 25,000 ballots were requested from nursing homes at the exact same time.

      • Numerous reports and sworn affidavits attested to poll watcher intimidation and harassment, many by brute force.

      • Attorney General Bill Barr ordered U.S. Attorney Bill McSwain to stand down and not investigate election irregularities.

      • Mark Zuckerberg of Facebook poured over $17 million to interfere in the Pennsylvania election, including $5.5 million on “ballot processing equipment” in Philadelphia and $552,000 for drop boxes where the voting pattern was not possible.

      And so much more! This is why Democrats and the Fake News Media do not want a full forensic audit in Pennsylvania. In reality, 80,555 ballots are nothing when there is this much corruption or voter irregularities.

      Donald J. Trump

      Palm Beach, Fla.

      Copyright ©2021 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
      Appeared in the October 28, 2021, print edition as ‘President Trump Responds on Pennsylvania.’


    • Needless to say the comments are about 90% against the WSJ printing this, and claiming that the allegations are “demonstratively false.”

      I am sure the orders went out this am to bomb the board…


  2. This strikes me as something that would backfire.

    “Will Conservatives Actually Do Anything about Woke Corporations?

    A new bill provides an opportunity for Republicans to start debating a legislative response to increased social activism by corporations.

    Zaid Jilani

    Once upon a time, Republicans took for granted that the c-suite, like the country club or most every mainline Protestant church in America, was reliably Republican. Donald Trump, in the ancient land of 2015, understood that wasn’t true anymore, and now Marco Rubio, the Florida senator, is picking up where the former president left off.

    He just introduced the Mind Your Own Business Act, which looks to empower shareholders to hold woke corporations accountable.

    Currently, it’s very difficult for shareholders to successfully sue the directors of a corporation. That’s because of the business judgement rule, a doctrine that leads courts to typically uphold decisions made by directors as long as those directors acted in good faith and with the honest belief that the action served the best interests of the company.

    “I would say most directors wouldn’t even serve on corporations if they didn’t think they were protected by the business judgement rule. The number of cases in which directors have had to pay presently is…small,” Dennis McCuistion, Professor Emeritus at UT Dallas and a specialist on corporate governance, told me.

    Rubio’s bill would put the burden of proof on businesses to prove that any political actions they take part in benefit shareholders and the company. If they could not prove that interest, then corporate officers could be held liable.

    “What they’re saying in this [bill], is that the business judgement rule wouldn’t protect them if, in fact…the claimants could prove that the action that they took was not in the best [pecuniary] interests of the shareholders,” McCuistion explained.”


    • IMO this is the ESG issue… it will crash and burn during the next bear market


    • I have said this before: the growth in corporate wokeness is the “cost” of those low-fee passive investment strategies.

      Indexers are not paid for picking good stocks. They are paid to minimize tracking error. If the stock sucks, they don’t care. ESG funds are in the politics business, not the investment business.

      They don’t care whether these companies do the right thing for shareholders.

      Like I said, I think a lot of this is going to fall out of favor during the next bear market.


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