Morning Report: Another bad inflation report

Posted on February 16, 2024 by Brent Nyitray

Vital Statistics:

Stocks are lower after the producer price index came in hotter than expected. Bonds and MBS are down.

The producer price index (a measure of inflation at the wholesale level) rose 0.3% in January, which was above expectations. Services drove the increase. On a year-over-year basis, the PPI rose 0.9%, which is below the Fed’s 2% target. Healthcare was a big driver of the increase in services cost, and services inflation is driven primarily by wages.

Housing starts rose 1.33 million in January, which was way below expectations. This is 14% below December and down around 1% on a year-over-year basis. Building permits fell 1.5% MOM to 1.47 million, which is up 9% on a YOY basis.

The mix of permits is changing pretty dramatically, with single-family houses up 36% YOY while multi-fam is down 27%. Remember, we have a record number of multi-fam units under construction, and rental inflation is leveling out.

Homebuilder sentiment improved in January, according to the NAHB.

“Buyer traffic is improving as even small declines in interest rates will produce a disproportionate positive response among likely home purchasers,” said NAHB Chairman Alicia Huey, a custom home builder and developer from Birmingham, Ala. “And while mortgage rates still remain too high for many prospective buyers, we anticipate that due to pent-up demand, many more buyers will enter the marketplace if mortgage rates continue to decline this year.”

“With future expectations of Fed rate cuts in the latter half of 2024, NAHB is forecasting that single-family starts will rise about 5% this year,” said NAHB Chief Economist Robert Dietz. “But as builders break ground on more homes, lot availability is expected to be a growing concern, along with persistent labor shortages. And as a further reminder that the recovery will be bumpy as buyers remain sensitive to interest rate and construction cost changes, the 10-year Treasury rate is up more than 40 basis points since the beginning of the year.”

Filed under: Economy |

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23 Responses

    • Brent Nyitray's avatar
      Brent Nyitray, on February 17, 2024 at 6:18 pm said:

      I think China is going to follow the Japanese model post 1989… Extend and pretend.

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      • Let the mutherfuker burn!'s avatar
        Let the mutherfuker burn!, on February 17, 2024 at 6:51 pm said:

        Aren’t we doing that with QE?

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        • Brent Nyitray's avatar
          Brent Nyitray, on February 17, 2024 at 8:01 pm said:

          Extend and pretend refers to credit issues – i.e., take a bond that has 0% chance of being repaid and lowering the interest rate so that the debt service is super-low. it is about waiting it out for better prices in the future.

          IMO the Fed really wants to detach from the zero bound, and the strength of the economy gives them the leeway to do it.

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  2. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on February 16, 2024 at 2:25 pm said:

    I find this hilarious for a couple of reasons. The first is, why would anyone continue to want to do business is New York if you can so capriciously lose your business because your valuation of a property is different than someone else? If I’m an insurer of business, my rates have are going way, way up. The can of worms that New York is opening will resound for quite a while. I also do not think any of this get’s overturned on appeal, which makes it worse for business and the New York tax base, not better. 

    Another reason it’s funny is that the only thing that seems to animate Trump is his business! That’s where his passion lies. For Eisenhower it was golf, Reagan, his ranch, Bush loved exercising, Clinton loves pussy and Obama loves himself, For Trump, it’s his business!

    Thirdly, my God -Erogon created a beautiful spectacle, having his clerk sit with him through every second of the trial, his posing for the media prior to court starting whenever Trump was there and Leticia James being there glaring was beautiful theater! Unsurpassed until Fani Willis’s testimony yesterday. 

    I have a hard on that no amount of jacking will aleviate!

    https://1ft.io/proxy?q=https%3A%2F%2Fwww.nytimes.com%2F2024%2F02%2F16%2Fnyregion%2Ftrump-civil-fraud-trial-ruling.html

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    • jnc4p's avatar
      jnc4p, on February 18, 2024 at 5:28 pm said:

      “Even though the lenders made money from Mr. Trump, they were the purported victims in the case, with Ms. James arguing that without his fraud, they could have made even more.”

      Odd then that all of the penalty is going to the state not the “victims”.

      ““The court intends to protect the integrity of the financial marketplace and, thus, the public as a whole,” he wrote.”

      Ok, so who is going to be next then?

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  3. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on February 17, 2024 at 6:15 pm said:

    I have been thinking about why the Fani Willis prosecution nuked Nathan Wade’s former law partner Terrence Bradley with the sexual assault allegations and the reason why he was fired. He was pretty solid in not revealing anything to the defense re a time when Wade/Willis started banging prior to their sworn statements, in effect, he was friendly to them. So why just savage him at the end?

    From the beginning Bradley was an admitted reluctant witness and did not want to be there. He was never critical to Wade or Willis. I think the prosecution was suspicious of him (Bradley) because Wade knew the circumstances of his leaving the firm and also knew there was probable bad blood. In fact, they were worried enough that they had a friend of Bradley’s call him to remind him in detail the rules of Privelage. I suspect that Bradley had assured Wade/Willis that he had never spoken to anybody, let alone Ashley Merchant, about any information he might have about their personal relationship. That’s why the Prosecution demanded sanctions against Merchant last week, claiming that she knew nothing and that she has never even talked to Bradley, because he had told them he’d never talked to her.

    When it came out that he had, and that it was obvious he’d gossiped with her and God knows who else, and that he’d lied even to the court about speaking/texting Merchant, they figured they had to blow any credibility he might have so that if he did claim knowledge bad for Wade/Willis it wouldn’t matter.

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  4. jnc4p's avatar
    jnc4p, on February 18, 2024 at 11:42 am said:

    Worth noting. NoVA you may find this of interest:

    “Biden’s brother used his name to promote a hospital chain. Then it collapsed.

    Jim Biden played a major role in a company called Americore, which the government has accused of massive Medicare fraud.”

    https://www.politico.com/news/2024/02/18/the-biden-name-how-the-presidents-brother-became-embroiled-in-a-hospital-fiasco-00141868

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  5. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on February 18, 2024 at 1:39 pm said:

    lovely company ya got there, be a shame if something happened to it.

    https://ca.news.yahoo.com/hochul-tells-ny-businesses-not-120000351.html

    Thug life.

    how does a real estate person in New York get insurance now?

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    • Brent Nyitray's avatar
      Brent Nyitray, on February 18, 2024 at 4:12 pm said:

      NYCB is in trouble because the democrats changed the rules for rent-control renovations, and won’t let the owner change to market rents.

      Multi-fam and office RE in trouble in NYC.

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