Morning Report: Fed Day

Vital Statistics:

S&P futures3,860-5.75
Oil (WTI)88.37-0.14
10 year government bond yield 4.05%
30 year fixed rate mortgage 7.05%

Stocks are lower as we await the Fed decision. Bonds and MBS are flat.

The Fed decision is due today at 2:00 pm. The market expects to see a hike of 75 basis point, and there won’t be any new dot plot of set of projections. Jerome Powell will hold a press conference at 2:30 pm.

The economy added 239,000 jobs in October, according to the ADP Employment Report. The vast majority of the jobs were added in leisure / hospitality and trade / transportation. Manufacturing jobs fell. “This is a really strong number given the maturity of the economic recovery but the hiring was not broad-based,” said Nela Richardson, chief economist, ADP. “Goods producers, which are sensitive to interest rates, are pulling back, and job changers are commanding smaller pay gains. While we’re seeing early signs of Fed-driven demand destruction, it’s affecting only certain sectors of the labor market.

The number that jumped out at me was the increase in wages. From the report: “Job changers continued to record double-digit, year-over-year pay increases, but momentum in those gains is ebbing. For these workers, annual pay growth edged down for the third straight month, to 15.2 percent in October from 15.7 percent in September. For job stayers, pay gains were 7.7 percent, in line with recent months.”

This report seems way out of step with other reports on wage gains. FWIW, the market sees average hourly earnings increasing 4.7% in Friday’s jobs report, which is a far cry from the 7.7% reported here. Also this seems out of step with the employment cost index as well. If this report is true (especially for job stayers) then wage are more or less keeping up with core inflation (ex-food and energy).

Mortgage applications fell 0.5% last week as purchases fell 1% and refis fell 0.2%. The refi index is down a whopping 85% compared to a year ago. “The 30-year fixed rate decreased for the first time in over two months to 7.06 percent, but remained close to its highest since 2002,” said Joel Kan, MBA Vice President and Deputy Chief Economist. “Apart from the ARM loan rate, rates for all other loan types were more than three percentage points higher than they were a year ago. These elevated rates continue to put pressure on both purchase and refinance activity and have added to the ongoing affordability challenges impacting the broader housing market, as seen in the deteriorating trends in housing starts and home sales.”

Home price appreciation decelerated in October, according the the Clear Capital Home Data Index. Overall home prices rose 0.5% quarter-over-quarter, and 12.6% on a year-over-year basis. Prices are beginning to soften dramatically on the West Coast, with areas like Seattle and the Bay Area falling in the mid-to-high single digit range. Rising prices and quality of life issues are causing people to exit these MSAs, and home prices are reacting accordingly.

Interestingly, the Northeast (which really missed this whole rally over the past few years) is beginning to exhibit decent growth. Places like Hartford CT and the NYC metro area were among the leaders. Florida remains the biggest beneficiary of migration as cities like Miami, Orlando and Tampa exhibited 25%+ growth.

42 Responses

  1. Go down with the ship:

    “Elaine Luria dedicated herself to investigating January 6. Do her voters care?

    In Luria’s Virginia district, you’d expect threats to democracy to resonate.
    By Ben Jacobs
    Nov 2, 2022, 7:00am EDT ”


    • Reminds me of Iran / Contra. Nobody cares.


      • I can already see all the postmortem columns about how maybe next time Democrats shouldn’t center their campaigns around issues that poll at the bottom of the list of the voters concerns.


        • I kind of suspect that it will start that way and in a few weeks or months it will be right back to: “no, we were right, it’s the voters who were wrong. But we definitely need to do a better job of explaining to them why they are wrong, and should only care about the things we tell them to care about, next time. IT WAS A MESSAGING PROBLEM.”


      • I cared more about Iran/Contra than I do about January 6th. Although honestly–and as someone who still wasn’t a fan of Reagan at the time–I found myself irritated by the harassment of North. I think Jan 6th is much more of a non-issue at this point, the real appeal is 100% with the base and some in the Republican intelligentsia but outside of that regular voters are worried about inflation and the economy and the fact schools can teach about puberty blockers but apparently can’t teach math and English any more.


    • If at first you don’t succeed…

      “Biden to deliver speech on democracy tonight near Capitol”

      “I got a fever! And the only prescription.. is more cowbell!”


    • Even the progressive pundits are admitting it now:

      “If Democrats truly believed differently, they would have governed differently. You can see from their actions that they are not actually serious about the arguments they’re making now, and I for one am sick of the disingenuous speechifying.”


      • That’s the thing about this kind of stuff from the Democrats. There are shills out there, people who root for the Democrats (or Republicans) like their favorite sports team, and low-information progressives who don’t really pay enough attention to know what the Democrats are really doing or saying.

        But you know there have to be sincere progressives and lefties (not entirely crazy ones) that are not happy about the pro-surveillance, pro-censorship, pro social-credit-scoring, pro using-the-tools-of-the-state-against-political-opposition direction of the Democrats. They may not all be speaking up but it has to be alienating for some of them.

        The idea that telling voters about January 6 one more time would help anything is just crazy

        January 6th is now and has been, since about March 2020, and certainly since Dec 2020, about nothing but vanity. The whole hearings were about how traumatic it all was and how important they all are and how brave they all are and how wonderful what they are doing is and how they are single-handedly fighting the worst, most orange evil to ever attack our nation. It’s just been pure, unadulterated vanity. They are getting to the bottom of anything, aren’t learning anything new, aren’t solving any problems and aren’t building any bridges. They aren’t even attracting new voters or persuading independents. They are accomplishing any real or political goals. They are just preening.

        When Democrats talk about “democracy,” they’re talking about the importance of institutions that ensure the voters get a say among multiple choices and the one they most prefer gets to rule. But they are also saying voters do not get to do that in this election.


        Democratic campaign committees have spent millions of dollars trying to elevate Republican candidates who are objectively more threatening to democracy than their primary opponents were, on the theory that those candidates were less likely to win general elections. That theory is correct

        I don’t think that theory is correct. At least, I don’t think it is solid enough to put all your hopes on getting those Trump candidates through the primary gauntlet. I don’t think it’s ever been a better than 50/50 bet that the more extreme candidate will be less electable. At the very least you risk getting a bunch of sleeping Republican non-voters motivated by the crazy MAGA-type to go to the polls when otherwise they never would have. So it’s not just cynicism on display, IMO. It’s also incompetence.


    • But Luria pushed back pointedly when asked about the fact that voters were not terribly concerned about the state of American democracy. “I’m just tired of answering this question,” she said. “It should be front of mind for everyone.”

      Once again, the voters fail to be good/smart enough for their wise and benevolent Dem leaders. They have no idea what is important to themselves!

      “Just wake up on January 20, 2025, and see how you feel when we’ve lost our democracy.”

      These people….she should lose just for saying something this stupid.


      • “I’m telling you, fellas — you’re gonna want that cowbell”


      • “and see how you feel when we’ve lost our democracy”

        Words have no meaning to these folks, it seems to me. If your side not winning the election means “you’ve lost the Democracy” then you’re saying “if my side was a dictatorship and elections were abolished so only my side won, that would save the democracy” . . . which doesn’t make sense.

        I mean, democracy not be all that it’s cracked up to be, but if more than half the country votes for the other guy . . . it’s still democracy. If I wake up on January 20th, 2025 (and somehow don’t already know who the president is because I’ve really been avoiding spoilers) and it turns out to be Biden, I won’t be saying we’ve lost our democracy.

        I might say we’ve lost our minds. But not our democracy!


    • Elaine Luria dedicated herself to investigating her own personal hobby-horse and exaggerating the existential threat a couple of hours of rioting by a handful of people two years ago poses to the nation, while neglecting the growing crime that is happening now in the rest of the country. Also didn’t devote herself to investigating the causes of inflation or high gas prices or supply chain disruptions, the sorts of things her constituents might be interested in. BUT SHE WAS ALL ABOUT HOW THOSE YAHOOS THOUGHT THEY COULD JUST COME IN TO THE INNER SANCTUM! She will defend her noble title and the titles of her fellow landed gentry to HER VERY LAST BREATH. Sorry if you guys can’t get babyfood, but she’s dealing with REAL threats.


  2. This is great:

    ““People that are not inside of a total activist bubble don’t assume that men can have babies,” said Marjorie Dannenfelser, the president of the anti-abortion Susan B. Anthony List. “Honestly, how many focus groups do you need to get through to figure out that this isn’t a winning issue?””


    • I just love how it is Republicans who are “muddying up” the abortion issue by talking about all the non-abortion issues that Planned Parenthood spouts about, and not Planned Parenthood itself for spouting about them. Classic “Republicans Pounce” framing.


      • It may just be my awareness–and I’ve been aware of the Republican’s pounce framing for decades at this point–but it seems like, I guess, a lot of millennial bloggers and reporters and editors just discovered it and love it so much they want to shoehorn it into all reporting on Democrats. It’s become difficult to find a story about anything that isn’t frame as “Republicans are pouncing” — “Republicans attack” and so on, whereas it’s almost impossible to find the same narrative construction for something Republicans do. There are no “Democrats pounce” stories. And I think there might have occasionally been such stories, long ago, when the framing might have made sense.

        Sometimes it feels like they are drawing attention to negatives about the Democrats that otherwise would just pass by public awareness because they are so excited about another “Republican’s pounce” story they are actually doing as much pouncing as the Republicans, sometimes more.

        It feels to me like “Republican’s pounce” has moved from being a tired cliche to being a weirdly obsessive tic.


    • True enough, but lefties have been weird about sex and gender and abortion and whatnot for a long time. This thing where they come up with a progressive view point they think signals the most virtue–let’s say, men can have babies, and also the word “mother” should be banned because it’s sexist–and then start a campaign to force you to agree with them seems newer, or at least more frequent. Or more embraced by the media.

      I think there is a signficant difference between someone saying, “I think men can have babies” and saying, “You must agree with me that men can have babies. You must also say that is established science. You must also say it is a moral good that men have babies. You must also agree that the term ‘mother’ is sexist and should never be used. Here are a thousand other things related to this that you must accept. Also, it is violent assault to disagree with me about any of it.”

      Add in the frequent: “That’s crazy, nobody is doing that, that’s never happened, but also it’s good that it’s happening and it should be happening and also now you must celebrate it happening, and also it has always happened” — I don’t care if you think men can have babies. It’s all that other stuff that’s really turning me off, however.

      Just went to vote today. I’m Tennessee so it doesn’t matter, but I 100% voted a straight Republican ticket. In other years I would have been doing the independents but not this year. I voted for whatever I thought would be the biggest middle finger to the Democrats. And also with the hope we could unseat the forever-job of Steve Cohen. I doubt he will lose but still . . . I really want to see Cohen kicked to the curb and Charlotte Bergmann take his place.

      Who lost against Cohen by a whole lot last time–187k to 48k. Which is the kind of level he always wins at. Still, in a red wave election maybe he can at least be made to sweat. Since he’s always winning by like 80% he has every reason to take the seat for granted, and since the 9th district covers pretty much all of Memphis and clips out Germantown and Bartlett, it’s probably always going to go for Cohen. Looking at the map I shouldn’t be in Cohen’s district. But apparently I am.


  3. This is awesome. Start at around the 2 minute mark. I’m a big fan of Loury.


  4. The circle is now complete:

    “The Price of $5 Donations: Is Small-Dollar Fund-Raising Doing More Harm Than Good?

    As midterm frenzy reaches its peak, your inbox might be full of imploring fund-raising emails with increasingly desperate headlines: “Just $3 can make all the difference.” “Can you chip in today?” “Ultimately, it’s up to you.” In theory, the small-dollar donation model is a good thing: It enables voters to have a say in who their candidates are and counterbalances the influence of superdonors and industry lobbyists. But as extremist candidates increasingly adopt grass-roots approaches and self-fund-raise their way into Congress, could small-dollar donations be doing more harm to our democracy than good?”

    Next up, get rid of primaries. To safeguard democracy.


    • jnc:

      Next up, get rid of primaries. To safeguard democracy.

      That really is consistent with their logic. They have zero understanding of/regard for actual democracy. The word (as opposed to the concept) is really just a totem, divorced from any objective meaning/existence.


  5. This is one reason why Twitter is evil, and our culture is collapsing. It not only allows, but actually encourages mentally ill people to parade their illness to the public at large.


  6. As always, I’m jazzed seeing Obama back on the campaign trail. He has a way of energizing the base! IMO, there’s a lot at stake in this election and while I doubt D’s will win enough, or anything, to make much of a difference, at least they don’t lie about elections, pretend the
    crime wave is worse in liberal cities, mock a violent political attack, pretend that the election only counts if they win, or try to essentially kill women who are vulnerable in a very desperate health situation. I’ve become a Liz Cheney supporter which is so bizarre to me, but at least she gives a shit about election integrity and maybe even the country. Right now we’re on a precipice that I haven’t seen since the 60’s, and this is even worse!

    Wishing all of you the election result you’re looking for as long as I live in CA and your prescriptions won’t hurt me or my family too much!

    See ya on the other side of Nov 8! I’m on my way to SF for the weekend……….LOL


    • lms:

      …at least they don’t lie about elections

      It is truly astonishing to me, the things people can convince themselves to believe in order to reconcile cognitive dissonance.


    • “at least they don’t lie about elections”

      They totally lie about elections. Every election including the current one features accusations of voter suppression, not only with no evidence but in the face of contrary evidence. Hilary just announced the Republicans had a nefarious plot to “steal” the 2024 election as if she has secret knowledge. She does not. Stacey Abrams insisted she had won the 2018 governor’s race (in opposition to all evidence) for years and then pivoted to claiming she’s never done that. Democrats lie about elections and everything else, all the time, just like Republicans and pretty much all politicians.

      I expect Democrats will Pull off a few upsets. That’s generally how elections run so it won’t be all bad news.

      “or try to essentially kill women who are vulnerable in a very desperate health situation.” The majority of Republicans either want to avoid abortion as an issue or walk a middle line that would allow for on-demand abortion for 15 weeks or thereabouts—basically giving us the same setup as Europe. And some states will offer abortions up to birth so … I think it will be okay for the pro-choice folks for the most part.

      “but at least she gives a shit about election integrity and maybe even the country”

      My take is she gives a shit about her elite class and doesn’t care at all about election integrity, otherwise she would have been hammering the same reform of the election count that other Republicans were that clarified in specific language that the VP could not vacate electors or otherwise change election results. So she like the Democrats wanted to maintain the “threat to democracy” issue rather than do anything about it.

      I voted a straight R ticket this time but ultimately I agree, they are the worst political party possible, except for the other ones. 🙂


  7. Looks like the guy who attacked Paul Pelosi is in the country illegally. he’s Canadian.


    • Yep. Saw that earlier. Will be interesting to see if San Francisco refused to cooperate with ICE on this one.


    • The Northern Fucking Menace!


    • I love how the left is trying to spin the story that some boho canadian who lives in berkeley in a bus festooned with blm and pride flags is somehow an ultra-maga dude


      • Brent:

        I love how the left is trying to spin the story that some boho canadian who lives in berkeley in a bus festooned with blm and pride flags is somehow an ultra-maga dude

        If there are people who believe that Democrats don’t lie about elections, there are people who will believe literally anything.


        • see JNC’s story in the NYT on today’s post. The NYT is trying to sell the story that the attack on Pau Pelosi was due to a right wing extremist.


        • As was the Kennedy assassination, according to them. It was also due to right-wing extremism. I’m out here literally killing and eating political opponents in the name of right-wing extremism and the cops aren’t doing anything. Hell, had a local constable stop and help me gut and skin a D poll watcher the other day.


        • Which they always do for any violence that isn’t done in the service of attacking acceptable targets (i.e., Republicans; middle-class white people who aren’t overtly progressive).


        • The left is trying to sell the story that Oswald was a ultra capitalist?

          it should be funny, but it is dangerous.


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