Morning Report: Incomes and spending rise

Posted on September 30, 2022 by Brent Nyitray

Vital Statistics:

 LastChange
S&P futures3,651-5.25
Oil (WTI)80.760.55
10 year government bond yield 3.71%
30 year fixed rate mortgage 6.68%

Stocks are lower this morning after the personal incomes and outlays release disappointed on the inflation front. Bonds and MBS are up.

Personal Incomes rose 0.3% in August, which was more or less in line with expectations. Personal consumption expenditures rose 0.4% which was better than expected.

The PCE Price Index (which is the Fed’s preferred measure of inflation) rose 0.3% MOM and 6.3% YOY. Both numbers were .1% higher than expectations. Same for the core rate (ex-food and energy) which rose 0.6% MOM and 4.9% YOY.

The core PCE Index is the inflation indicator the Fed prefers to use when making policy. The monthly changes tell the story and are the market’s focus. Does this chart of the monthly core numbers look like a deceleration? IMO, not yet. It looks like the July reading was an outlier, so it doesn’t really hint at a deceleration, at least not yet.

Consumer sentiment decreased in September, according to the University of Michigan Consumer Sentiment Index. The bright spot in the report was the readings on inflationary expectations:

The median expected year-ahead inflation rate declined to 4.7%, the lowest reading since last September. At 2.7%, median long run inflation expectations fell below the 2.9-3.1% range for the first time since July 2021. Inflation expectations are likely to remain relatively unstable in the months ahead, as consumer uncertainty over these expectations remained high and is unlikely to wane in the face of continued global pressures on inflation.

It turns out that the Fed pays close attention to this number, and the 2.7% expected long-run inflation is approaching the Fed’s 2% goal.

Angel Oak laid off about 20% of its workforce and replaced its CEO. The layoffs were mainly in operations in order to get capacity down to the new normal of reduced mortgage origination volume. Non-QM is highly sensitive to dramatic moves in interest rates since TBAs don’t correlate as tightly with this product as they do with other mortgage rates. This means that these loans are unhedgeable, or at least the hedges are imperfect. So when the market makes a dramatic move the market for them sort of dries up.

Filed under: Economy |

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33 Responses

  1. Let the mutherfuker burn!, on September 30, 2022 at 6:14 pm said:

    Good!

    Fucking bigots!

    I bet they’re all white too!

    Like

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    • Kevin S. Willis, on September 30, 2022 at 10:18 pm said:

      In women’s sport, everything should center around men, what they want, and women definitely shouldn’t be allowed to object, complain, or have any rights that conflict with the whims of the man. If a man says he’s a woman and wants to watch you undress in the locker room: shut the hell up and start stripping!

      Who knew the patriarchy could just put on some lipstick to become stunning and brave … doing the exact same shit or worse that used to be the worst thing ever.

      Like

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      • Let the mutherfuker burn!, on October 1, 2022 at 7:57 am said:

        I’m always saying, men make better women.

        Like

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        • Kevin S. Willis, on October 1, 2022 at 8:54 am said:

          Men make better women in literally every way. Which is why their whims should trump women’s so-called rights. And the left agrees! When women’s sports entirely dominated by transwomen—that is to say, by men—they might actually be worth watching!

          Like

        • Kevin S. Willis, on October 1, 2022 at 8:55 am said:

          Serious question, will men lose interest in women’s sports when there are no Actual women in the locker room?

          Like

        • Let the mutherfuker burn!, on October 1, 2022 at 10:20 am said:

          You mean men turning tranny to see stuff and to dominate?

          Prolly, second place sucks.

          Like

        • Kevin S. Willis, on October 1, 2022 at 7:16 pm said:

          Yeah. I think if they actually chase all the biological women out of the spaces they are inserting themselves into, they will have no interest in women’s sports–once all the women in those sports are biological men.

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        • Brent Nyitray, on October 1, 2022 at 2:07 pm said:

          Serious question, will men lose interest in women’s sports when there are no Actual women in the locker room?

          The only men who care about womens sports have daughters competing. Other than that, world class female athletes are about on par with good high school boys.

          Like

        • Kevin S. Willis, on October 1, 2022 at 7:09 pm said:

          To rephrase, will men lost interest in competing in women’s sports, ostensibly as a woman, when there are no longer women in the locker room to watch undress? Or otherwise get their rocks off on the fact they are intruding in biological women’s spaces, pretending to be women?

          Like

  2. Let the mutherfuker burn!, on September 30, 2022 at 6:26 pm said:

    Lol! Suckers!

    Like

    Reply
  5. Let the mutherfuker burn!, on October 1, 2022 at 11:08 am said:

    Cause it’s her truth, bigot.

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    • Brent Nyitray, on October 1, 2022 at 12:35 pm said:

      But don’t say we are for equality of result, bigot.

      Like

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    • Kevin S. Willis, on October 1, 2022 at 7:14 pm said:

      I feel like there should be a tipping point for this sort of blatant racism to actually backfire on you–especially given the demographics of the country. I’m not saying this is it, at all, just that if I were on that side I’d be worried about constantly treating the majority of people in the country as irrelevant and unworthy–as deplorable, essentially–and that red-pilling a lot of people who otherwise might be in our camp, or at least not opposed to us, forever.

      It’s not just Republicans who might need hurricane aid. And it’s not just white people living in the suburbs, rather than in the “communities of color”. Do this too many times in too many places and eventually it’s going to backfire.

      So the right can sweep into power and start doing their own stupid things.

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  6. jnc4p, on October 1, 2022 at 2:05 pm said:

    Krugman’s take on housing price increases:

    “So what happened? Like many people, I’ve speculated that the pandemic-induced rise in remote work led to a demand for more space at home. New research from economists at the San Francisco Fed supports this view. They found that remote work expanded most in locations where it was already relatively common and that home prices rose the most in these locations. (“Migration controls” refers to the Fed’s attempt to measure this relationship with and without the separate, though not unrelated, movement of workers from place to place.)

    Crunching the numbers, they estimated that 60 percent of the increase in home prices was caused by the rise in remote work. This may seem like a lot, given that even now, only about 30 percent of work is taking place from home, but remote workers tend to have above-average incomes and presumably account for a disproportionate share of housing demand.

    I’d also speculate that the pandemic increased demand for space at home for reasons that go beyond remote working. For a while there, many of us couldn’t go to restaurants and movie theaters, and that experience may have led to a lasting shift in preferences, say, toward streamed entertainment — again, changes that may lead one to want more space.”

    Also, Netflix’s documentary on the Gamestop speculation is pretty funny:

    https://www.netflix.com/title/81424332

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    • Brent Nyitray, on October 1, 2022 at 2:10 pm said:

      I disagree. Lower rates explain it. People think about the monthly payment not the sticker price. Rates, fall, you can afford a bigger loan.

      Krugman is bird-boxing the money printing and the “too much money chasing too few assets” phenomenon.

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  7. jnc4p, on October 1, 2022 at 2:09 pm said:

    Because of course the Post would do this:

    Like

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  8. jnc4p, on October 1, 2022 at 2:19 pm said:

    Worth noting:

    “‘Farewell’ to Sanity
    Are we seriously pretending that Russia, and not the U.S., blew up Russia’s pipeline?

    Matt Bivens, M.D.
    Sep 29

    Forty years ago (!), the U.S. security state was cheesed off by a Soviet natural gas pipeline from Siberia to Europe. So the CIA arranged to blow it up. The resulting massive explosion was visible from space. It set off U.S. nuclear explosion monitoring alarms, and startled White House security officials not in on the scheme.

    We know this today because, years later, the people involved finally started bragging.”

    https://mattbivens.substack.com/p/farewell-to-sanity

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    • Kevin S. Willis, on October 1, 2022 at 7:02 pm said:

      I think it would be a stupid thing for us to do, and a stupid thing for Russia to do, and likely not possible for Ukraine to do. But either Russia or America is definitely capable of making terrible decisions when it comes to stuff like this. So I just don’t know.

      Like

      Reply

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