Morning Report: December payrolls fall

Vital Statistics:

S&P futures4,57136.2
Oil (WTI)89.551.33
10 year government bond yield 1.81%
30 year fixed rate mortgage 3.77%

Stocks are higher this morning after Alphabet (Google) reported strong numbers. Bonds and MBS are flat.

Private payrolls fell 300k in January, according to the ADP Employment Report. The Street is looking for positive 200k in Friday’s Employment Situation Report, so this is a sizeable miss. The Omicron Variant was the big driver of the decline.

“The labor market recovery took a step back at the start of 2022 due to the effect of the Omicron variant and its significant, though likely temporary, impact to job growth,” said Nela Richardson, chief economist, ADP. “The majority of industry sectors experienced job loss, marking the most recent decline since December 2020. Leisure and hospitality saw the largest setback after substantial gains in fourth quarter 2021, while small businesses were hit hardest by losses, erasing most of the job gains made in December 2021.”

Mortgage Applications increased 12% last week as borrowers rushed to complete refinances ahead of the expected increase in borrowing rates. Purchases rose 4% while refis rose 18%. “Despite the increase in rates, refinance applications were up 18 percent, driven mainly by a 22 percent jump in conventional applications,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “There has likely been some recent volatility in application counts due to holiday-impacted weeks, as well as from borrowers trying to secure a refinance before rates go even higher.”

Loan Depot reported disappointing earnings, as volumes fell 22% on YOY basis and gain on sale margins contracted 106 basis points. EBITDA fell 88%. The company did increase its market share and the servicing book increased by 57% on a YOY basis.

Home Prices rose 18.5% in December, according to CoreLogic. The company expects home price appreciation to take an abrupt halt, with prices expected to rise only 3.5% this year. Frank Nothaft, Chief Economist of CoreLogic had this to say: “Much of what we’ve seen in the run-up of home prices over the last year has been the result of a perfect storm of supply and demand pressures. As we move further into 2022, economic factors – such as new home building and a rise in mortgage rates – are in motion to help relieve some of this pressure and steadily temper the rapid home price acceleration seen in 2021.”

Regarding home prices, the rise in mortgage rates will definitely crimp affordability, however wages are also rising. IMO the supply-demand imbalance is so stark, it will take years of above-average housing starts (think 2.5 to 3 million units) to make a dent. Last year, we did something like 1.6 million starts, which is about what we did in 1959, when the population was a little more than half of what it is now. We have a long way to go.

55 Responses

  1. Good video from Glen


    • McWing, this seems like an observation you would make:

      “The people we have, I don’t call reporters. I call them science writers. The people who write for Science, Nature, Scientific American, these are people who write for science, not on science. They see their job as telling you how fucking awesome science is. That’s what they do for a living.”


      • But a lot of them tell you how awesome science is the way they do on Star Trek Discovery. “The negative-particle ion stream and be cross quantum-inverted through the deflector grid and we can us the inversion to re-polarize the depleted dilithium crystals! I like Science(TM)!”

        And I mean that they don’t have that deep an understanding of science generally, don’t analyze the data, but like to signal that they are Science Geeks and how devoted they are to the Expert Priest Class.


      • I would bet most of them never took a quantitative physics or chem course either.

        so many of them think science is looking through microscopes and wearing a lab coat. they are highly disappointed when they learn that science is math.


  2. I keep saying, McConnell’ content to lose for however long it takes to eliminate the Trump wing.


    • 1/6 is not a hill worth dying on


      • And yet establishment Republicans keep dying on it.


        • Aside from Liz Cheney (and other not-really-establishment-Republicans that now work full-time trying to elect Democrats and deplatform conservatives) most Republicans don’t seem that interested in 1/6. And the vast majority of the country, at this point, is nowhere near as interested in it as the mainstream media and Democratic politicians/activists.


        • And yet establishment elected Reps and Sens act as if it was Kristallnacht. Fuck them and the horse they rode in on.


        • And yet establishment elected Reps and Sens act as if it was Kristallnacht.

          Indeed. Ironic, given that Kristallnacht was an attack primarily on working Jews and Jewish business owners. Not an attack on the elite politicians fomenting attacks on Jews.

          Anyway, it doesn’t seem like the Republican rank-and-file (most of them) or independents care that much about it. For the Kossacks it will always be 9/11+Pearl Harbor+Kristallnacht+The-time-the-cute-girl-in-science-class-said-a-mean-thing-to-them. That is, the worst event ever imaginable in history. But for the general public, I’m assuming it usually comes under “other”:

          [Wisconsin] Poll suggests voting, election laws should be top 2022 priority

          Inflation/Economy: 26% (135)
          COVID-19/Health Care: 14% (74)
          Voting/Election Laws: 44% (231)
          Schools: 5% (28)
          Immigration: 4% (20)
          Other: 7% (38)

          Further searching on Google proved fruitless on the issue for 2022 (surprise, surprise–Google has become completely worthless when searching on political stuff, or most anything that might have an ideological bent) but went to Bing and found this right away:

          Respondents were asked what one issue matters most in deciding how they will vote in the United States mid-term elections in 2022. While a variety of reasons were mentioned, the two issues that mattered most on deciding how to vote among respondents were the economy (27%) and coronavirus (17%). Following behind were health care (13%), national security (11%), climate change (10%), immigration (7%), racial/gender equality (6%), supreme court (4%), education (3%), and foreign policy (3%).

          An interesting ommission, to me, in both the Wisconsin poll and the Long Island University poll was crime. Crime is clearly an issue. Are these polls just not asking about it because they don’t want that answer?

          Nothing about abortion, either. Presumably COVID is an umbrella for all the political responses to it, including mandates and lockdowns.

          Found an article from Chris Cillizza that called inflation “the sneaky biggest issue of the 2022 election” . . . sneaky? SNEAKY?!?!

          And this on Newsmax:

          A recent poll spells trouble for Democrats in the 2022 midterm elections as crime (77%) is topped only by inflation (84%) …

          Registered voters are also very concerned about:

          Taxes: 71%.
          The deficit: 69%.
          Coronavirus: 68%.
          Being able to pay bills: 63%.
          In the partisan breakdown of key issues for voters, registered Democrats are most concerned about:

          Coronavirus: 81%.
          Inflation: 75%.
          Rising crime rates: 67%.
          Registered Republicans are most concerned about:

          Inflation: 91%.
          Crime rates: 84%.
          Taxes: 83%.

          So a poll that actually has crime in there turns out to be the second biggest concern of voters. Huh. Can’t imagine why those other polls aren’t interested in asking about that.

          Anyway, you know what you don’t see? Angst over the failure to pass Build Back Better, urgency in getting rid of the filibuster, or garment-rending over January 6th as critical voter issues.

          Also, not a lot of concern over the admin’s failure to get a new federalization of voting passed.

          Also, notable: you don’t see climate change on that list, either. Ask about 10 issues, one of which is Climate Change, and it will always be dead last. Speaking of hills for politicians not to die on.


        • IMO it is about fundraising.


      • Well, the Democratic January 6th Anniversary Celebration (with SPECIAL SURPRISE MUSICAL GUESTS) was any indication, the Democrats and the media think 1/6 is the PERFECT hill to die on. Or to goad Republicans into dying on, more like.


        • Any Republican that doesn’t say 1/6 was bad will be toxic as far as fundraising. So they have to at least say that.

          But 1/6 is a plaything for partisans.


        • I’ve no reason to doubt you, it makes me wonder which donors are focused on it and why?


        • I think the left is going to be highlighting every company and organization that donates to the Republicans and trying to sic the Twitter Mob on them.


    • Probably. That being said, I imagine the strategy here for both sides is a kind of “make an example of people who just showed up, did nothing except walk around and take pictures, and now are in jail for over a year”. I think a lot of folks in DC prefer to discourage right wing riots at the capitol, or even protests. And the risk is low. You might lose some of your most politically and practically expensive “potential voters” but avoid alienating a lot of your independent voters. I don’t see a real downside for McConnell to his position here.

      I don’t think that many Republicans are exercised about the treatment of the J6 rioters, certainly not as a decisive issue when it comes time to vote. Most polling indicates inflation, supply chain, COVID response all way more important issues.

      Also, the Democrats really want J6 to be an issue and remain an issue, and the GOP as an entity that exist to get Republicans elected, would reasonably not want to give them that. Tactically, it’s better that they let that be a one-sided conversation.


    • Former president Donald Trump’s niece Mary L. Trump, who wrote a best-selling book highly critical of her uncle, also announced that she would be removing her podcast from Spotify.

      Oh, no. Not Mary L. Trump!

      I’m guessing Rogan gets a lot of money if Spotify dumps him, although no doubt he will have to sue them for it. On the plus side he could probably move immediately to the Daily Wire or just start his own distribution network with some pay-for-play thing and make tens-of-millions a year, easy. If not hundreds-of-millions.

      Spotify can definitely lose in this scenario, but I don’t think Rogan will.


      • If Spotify dumps Rogan, I would assume they have to fulfill his contract.

        I am sure the Daily Wire would love to have him.


        • Or Adam Collola’s company, Podcast One. Don’t forget that NBC thought it was better to pay Megyn Kelly $69 million and fire her than keep her on the air.


        • A value proposition. It was more important that they not be embarrassed than to have that $69 million.

          That said, the format of her show was awful (from what I saw) and apparently the ratings were in the tank. Turns out, it actually was a bad idea.


        • Indeed. Interesting that Corolla now has a show with Daily Wire. Apparently the non-left media companies and platforms are teaming up.



    Dan Synder, still a clown.
    what an underwhelming choice, design, and .. in no surprise, they botched the release and roll out by not covering it up before the announcement


  4. This is funny. ADL had to change their definition of racism again.


    • The best part is that they have characterized the new definition as the “interim definition”. I guess they just want to give a heads up to the fact that they will be changing it again in the future, as and when circumstances require it.

      We truly are in an Orwellian world.


  5. It takes a heart of stone not to laugh.


    • Really? It’s surprising the Communist party comes put in support of leftist state authoritarianism?


    • Still nothing about it in Jacobin. But they do have a piece on the implications of Wordle being bought by NYT.


      • Workers are a tool for the left. The goal is control.


        • Sure, but the omission is pretty glaring.


        • Blue collar dudes are more conservative these days. So the left doesn’t feel any loyalty there.


        • Rest assured, every swing in’ dick cooling their heals in the DC pokie with charges from the 1/6 riot is guilty and should be locked up forever. Only a wing nut would doubt the FBI.

          The evidence? Rock.Fucking.Solid.


        • The FBI is a polluted institution in desperate need of reform, although it has ALWAYS been that to some extent. Now just more so.

          That being said, most of the 1/6th rioters brought it on themselves. Even if they were mislead and tricked by FBI plants or other agent provocateurs into walking through the capitol and taking selfies. So much of what I’ve heard about that day screams SET UP to me that–even if it wasn’t–you were an idiot if you didn’t get out of town with all the red flags they were waving.


        • I agree there was a tremendous amount of stupidity, and stupidity is no excuse for breaking the law. However, I’m not going to support a two-tiered legal structure and am appalled that any elected Republican is. If BLM and Antifa terrorists get let off the hook then EVERY elected Republican that doesn’t demand that all 1/6 prosecutions cease (and any current convictions be expunged) as well as insure a full pardon if otherwise is dead to me.

          Like I said,two-tiered laws are my hill to die on.

          That and the desire to have elected Republicans terrified of going against the base.


        • The left has loyalty to no one who isn’t 100% obedient to the present narrative. This includes the working class–but will also include black and brown people who don’t obey, women who don’t obey, transgender people who don’t obey, media folks who don’t only report exactly what they are told, elected Democrats who don’t obey . . . basically, everybody who doesn’t obey deserves no loyalty.


  6. She supports the Canadian truckers, right?


      • The folks who were serious about January 6th–and all the trumpists who got goaded into going into the capitol or just followed along–gave the left and the Democrats the biggest gift imaginable. They will be caressing and slobbering over the January 6th for a long, long time.


    • I think some of this has to be a reaction to the Abraham Accords–as was, I think, the launching of thousands of rockets into Israel by the Palestinians last year. For much the same reason that the Palestinians have never agreed to a two-state solution and always blow-up any deal between Israel and the Palestinians before any agreement can be reached. They don’t want a resolution. I’m fairly sure they don’t even *really* want Israel to just go away. They want the status quo–where the very top of the food chain is super-powerful and super-rich and the reason everybody at the bottom is in such bad shape is because of the perfidious jews. And everybody–especially in the Arab world–needs to understand it. And they need to understand that the good people in the West also understands that the jews are perfidious and responsible for everything bad that’s ever happened to any Muslim anywhere.

      It’s hard to say because the media has mostly ignored the Abraham Accords and the normalization of relations between Israel and various Arab states. But my guess is that this–and other things like it–are about getting back lost ground, trying to move back to where all Arabs agree that Israel is bad, and everything bad is because of “the Jews”.

      I am surprised Amnesty sat down for this interview. I can only assume its because there so deeply embedded within their Jew-hating bubble they are astonished that any of these questions would be asked. Or something. Agreeing to this interview doesn’t make much sense to me. I mean, just this answer to the first question about polling indicating that 68% of Palestinians admire Israeli democracy:

      How can I comment on a poll? I am commenting on international human rights law. I mean it’s good: We’re glad that the Palestinian people, 68% of them, feel that way. Under international law, what we have found is that the laws, policies, and practices that are currently in place amount to a system of apartheid.

      That answer is nuts. And doesn’t answer the question asked. “What we have found is under a bunch of arbitrary, legalistic gobbledy-gook, we have found we can attack Jews. So we did. Even though the assertion is idiotic.”

      Whether or not people feel otherwise, it doesn’t matter.

      Yeah, no shit.

      I will engage with them, and I will say, how can you support a law that makes a distinction between citizenship and nationality on the basis of your race? It’s mind-boggling to me.

      That distinction seems less arbitrary than rules that let you say Israel is an apartheid state.

      It is such a complicated system, and it’s a dizzying array of laws, policies, and practices that interweave with each other. Now, any one component of those may mask the reality behind it, or may have what appears to be an innocent and legitimate aim.

      There they go again, accusing people not doing a thing of doing that thing because that’s exactly what they do, so it’s the only way they can think.

      I need to get back to you on exactly what it includes because I don’t know that level of detail in terms of what that footnote referred to.

      But I’m sure he knows for certain that Jews are perfidious and the cause of all problems in the middle east and probably the world. Funny that they have such a specific number yet can’t say how they came up with it, because they likely don’t know how they came up with it really, they just figured a number that seemed adequately high to make a report on how much they hate Jewish people and were done.

      You said at the press conference that you have dedicated a very significant amount of resources looking at China, but you have not found that they maintain a system of apartheid.

      Jewish people living in a historic Jewish homeland, and having a state that is a liberal democracy with specified rights and the protection of rule of law, where Arabs work and live freely–and even serve in the Knesset–that’s apartheid. Rounding up Muslims and putting them in concentration camps? Which are kind of run like prison camps? Without any recourse for the people confined there? Well, that seems fine. Who can say if that’s right or wrong?

      Not even getting into how Jews are treated in the vase majority of Muslim states.

      I’m sure like many liberal organizations, Amnesty International was a good thing and a positive force in the world at one time. It is, IMO, a bad actor now. It does not appear to operate in good faith. It ignores human rights violations that don’t fit with its a priori narrative. Like the SPLC, it should not be taken serious and it would not be unreasonable to classify them as a Hate Group.


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