Morning Report: James Bullard sees unemployment falling below 3%.

Vital Statistics:

S&P futures4,377-29.25
Oil (WTI)105.31-2.59
10 year government bond yield 2.92%
30 year fixed rate mortgage 5.27%

Stocks are lower this morning as bond yields continue to rise. Bonds and MBS are down.

St. Louis Fed President James Bullard made some hawkish comments yesterday, saying he would like to see the Fed Funds rate at 3.5% by the end of the year. He also said that unemployment should fall below 3% (!). “What we need to do right now is get expeditiously to neutral and then go from there.” Given that inflation rates are much higher than interest rates, monetary policy is still incredibly loose. Real (i.e. inflation-adjusted) interest rates are highly negative.

The last time the unemployment rate was below 3% was in the early 1950s.

Where were interest rates during the early 1950s? The 3 month T-bill was between 1.5% and 2% for the most part, and high quality corporate debt was yielding about 3%. The inflation rate in 1952 was 1.92%. So real interest rates were about 0%, give or take.

Housing starts came in at a seasonally-adjusted annual rate of 1.79 million in March, which was higher than expected. This is up 4% on a YOY basis. Building Permits rose to a 1.87 million pace.

Despite the increase in housing starts, homebuilder confidence continues to sag. The NAHB / Wells Fargo Housing Market Index, which measures homebuilder sentiment fell for the fourth month in a row. “The housing market faces an inflection point as an unexpectedly quick rise in interest rates, rising home prices and escalating material costs have significantly decreased housing affordability conditions, particularly in the crucial entry-level market,” said NAHB Chief Economist Robert Dietz. Interestingly, the Northeast (which has been the laggard in the US housing market over the past 15 years) rose while everywhere else fell.

66 Responses

  1. The PL meltdown over not being forced to wear a mask on an airplane is a sight to behold.


  2. This will be interesting to see how it plays out:

    “The White House has a problem with Democrats on immigration. And it’s only going to get worse.

    On Monday, Sen. Gary Peters (Mich.), chair of the Democratic Senatorial Campaign Committee, became the latest Democrat to break with the Biden administration over its decision to end the use of Title 42 authority to deny asylum claims at the U.S.-Mexico border by next month.

    Peters joins a growing list of Senate Democrats – we’re up to nine now – who have publicly expressed opposition to the administration’s position on Title 42, at least until a more concrete plan to deal with an expected migrant surge at the border.”


  3. This statement is funny to read when compared with the videos of airline crew members announcing mid-flight that everyone can just take their masks off:


  4. I had not seen this:

    “But for today, we’re a bit more than six months out from the midterm election. And it looks bad for Democrats, really bad. Build Back Better is dead, at least for now. Inflation is outpacing wage gains, and it’s not close. Biden’s approval rating is about where Trump’s was at this point in Trump’s term. And while I don’t put any stock at all in 2024 polling in 2022, it was definitely a psychological blow for Democrats to see the recent Harvard Harris Poll showing Trump winning a Trump-Biden match by 6 points. That’s not the first recent poll showing Trump with a lead in a Trump-Biden match-up.”


  5. The state of NYT journalism:

    The new Editor in Chief has his work cut out for him.


  6. just got back from a cruise.
    putting the mask on in the terminal was pointless.
    but whatever. it’s over.


  7. Rolling


  8. I can’t wait to read Glenn Greenwald’s take on the Taylor Lorenz / Libs of Tik Tok kerfuffle.


  9. I was paying my estimated taxes and couldn’t remember my PIN.

    Found the letter and read my enrollment number

    70 quadrillion something..


  10. Jacobin figures out that Joe Biden is secretly a Republican plant:


    • For a brief moment, Democrats would have the lawmaking power to mitigate at least one of the myriad stresses — health care, housing, education, retirement, and climate survival — that working-class Americans must worry about every day.

      One of these things is not like the others. One of these things just doesn’t belong.

      I don’t think “climate survival” rates anywhere near healthcare and housing and retirement as concerns of working-class Americans.


  11. So many names for “truant officer”

    “That work falls not only to teachers and administrators, but also to teams of district employees with tongue-twister titles like Student Engagement Specialist, or S.E.S., Family and Community Support Service Provider, or F.C.S.S.P., and Pupil Personnel Worker, or P.P.W.”


    • Here, if you’re absent more than 15 times unexcused you get referred to JC. Problem doesn’t resolve your guardian get’s referred to adult court. Jail is a real possibility, as are fines.

      We don’t have the same problem with chronic truancy these folks in the article are having, so I’m wondering it they do the same thing. Article doesn’t mention it.


  12. This doesn’t sound like an argument for following the science, does it.


  13. An interesting read, but this shows a lack of self awareness on the progressive side:

    “To use an extremely loaded and arguably libelous term with the understanding that you don’t really mean what people “usually” understand it to mean?”

    See “racist”


    • jnc:

      See “racist”

      Indeed. Using terms to mean something other than what people usually understand them to mean is the left’s go-to rhetorical tactic. What a shame it is now being used against the left.


      • Inevitable. Every tactic used by one side effectively will eventually be used by opposition. Not necessary the understood “other side” opposition–say, the DNC may adopt tactics that the GOP never does. But life isn’t a movie and there are people not in the GOP who are still not progressives and may be much more willing to use tactics proven effective in the field–on them.

        There seems to be a sense among many people hyper-into their ideology/partisan side/whatever that for some reason they are immune to having their common tactics turned on them. They are not. And the common defense–crying about how unfair it is that someone is doing to them what they’ve done to people multiple times–only finds a receptive audience with cult members.

        Unfortunately, the MSM are all cult-members on the progressive side, generally, so the deck will always be stacked against the opposition.


      • What’s funny is that they’ve tried to apply the groomer label to Matt Gary’s because the left is convinced he was banging teen broads.


    • See literally any term they apply to anyone or anything in an attempt to move the needle on an issue or gain power.

      I also thought this was full of left-to-right projection:

      “One of the questions I asked was whether he could tell me how active her NGO was, given the possibility that it “could have just existed on paper.” Résumé inflation is common in the MAGA community, and the foreign aid/development world is known to be populated by cardboard-cutout entities that are created as part of larger influence campaigns”

      Resume inflation is common pretty much everywhere. I doubt there is a career path or industry immune to it. Calling out the MAGA community as somehow uniquely prone to resume inflation is just absurd. I have no doubt they are, but there are leftwing NGOs and activist groups full of people with hyperfinflated resumes.


  14. The next Republican president should adopt this:

    “Speaking of Airport Rules, Let’s Stop Taking Our Shoes Off Now
    One easy thing the Biden administration could do to win hearts and minds.

    By Henry Grabar ”


    • That would be a smart move. So I’m not counting on the GOP to do it. Trump won’t, I don’t think Desantis will, can’t think of anyone else in the GOP that would consider taking the risk of making an unforced error by pushing something that might backfire.


  15. The quote here is A MAZE ING!


  16. Worth remembering and reading the whole thread:


    • I find it very interesting how concerned CNN and other news outlets and lefty pundits are about the potentially DISASTROUS tax implications for Florida citizens.

      The dissolution of the special district would mean that Orange and Osceola counties take on the assets and liabilities of Reedy Creek. That could lead to higher taxes for those residents to pay off Reedy Creek’s debts and take over the care of roads, policing, fire protection, waste management and more.

      Suddenly it’s a problem for the government to take over something? Suddenly we’re worried about taxes going up . . . on FLORIDIANS?

      “Somebody is still going to have to pay for the bonds that were purchased in order to build that infrastructure. A lot of roadways. Someone is going to have to do those building inspections. It’ll take a lot of those inspectors with a lot of expertise,” he said. “Someone is going to have to pay for that. If that burden falls on taxpayers, that’s not going to look good for Gov. Desantis. This is going to look like folly.”

      This all feels like concern-trolling. I don’t believe for a second they care about the tax consequences to anyone in Florida, at all. Also despite that the consequences clearly haven’t get been planned for . . . they have plenty of time to do it. A special tax on amusement parks over a certain amount of acreage could do it. I’m expecting certain taxes will be going up on Disney, anyway.

      I’ve seen a dozen articles like this now, all concerned about what’s going to happen if Florida doesn’t let Disney continue to have its own little local government. My anticipation is this change will be and will end up being much worse for Disney than the local tax payers. Although I guess that remains an unknown. But the concern here seems like total bullshit.


  17. Interesting history of libertarian attempts to buy an island to set up a extra-national community:

    This was particularly amusing:

    “In 1995 Oliver returned to Vanuatu in a joint venture with Romanian economist Stefan Mandel. Mandel had managed to game the lottery system in the 1990s by purchasing every possible combination of tickets for the Virginia lottery’s $27 million jackpot. He had convinced investors to loan him money to purchase all the combinations, at the cost of some $7 million, in exchange for a share of the winnings. “I knew that I would win one first prize, six second prizes, 132 third prizes and thousands of minor prizes,” Mandel bragged. He pulled in nearly $20 million, but his investors saw little return on their investment after taxes, reimbursements, and Mandel’s appropriation of nearly $2 million as a “consulting fee.”

    Because of Mandel, the US lottery system no longer allows people to fill in their own tickets. In addition, they have expanded the possible number of configurations to offset the possibility of another Mandel.”


    • The saddest documentary I ever saw was about poor people who were convinced there was a system to the lottery. They wasted every spare penny on it.


    • Well, duh. Obviously THAT election was stolen. Saying there was anything wrong with the 2020 election is tantamount to treason, also. Because, you know . . . reasons. And stuff.


  18. I’m still trying to wrap my head around the left’s – the hard left’s – bloodlust when it comes to Russia and Ukraine. To listen to them Ukraine’s “democracy” is somehow the paragon of fraterne, equalite and eglalite. While the Russians are Hitler and Ghengis Kahn in one.

    Why Ukraine? Why the whitest country on the earth?


  19. I admit to finding this flabbergasting if true.


  20. This broad’s answer is utterly incoherent.


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