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Inflation Absent at Wholesale Level.

MBA Mortgage Applications (week ended 11/11/2016) – Purchase Index Week/Week -6.0%. Previous weeks were +1.0%, -0.4%, -7.0%, +3.0%, -3.0%, -0.1%, +1.0%, -7.0%, +9.0%, +1.0%, +1.0%, -0.3%, and -4.0%. – Refinance Index Week/Week -11.0%. Previous weeks were -3.0%, -2.0%, -2.0%, -1.0%, -8.0%, +5.0%, -2.0%, -8.0%, +2.0%, +1.0%, +4.0%, -3.0%, and +10.0%. – Composite Index Week/Week -9.2%.

Does Deficit Spending Reduce GDP Growth?

Most people who have taken economic courses have, to a significant extent, been indoctrinated with the Keynesian notion that sometimes (in recessions especially) private sector demand leads to inefficient macroeconomic outcomes. and that at such times the public sector must step in, take up the slack through deficit spending, and get the economy healthy again.

Globalism.

There is much talk of late about globalism. People tend to lump several things together and then take a stance of the assemblage. That makes no sense. I want to detail several parts of what people talk about when they say “globalism” and remind folks that one can have a view on each. 1) trade

Lower Rates = More Mortgage Applications.

MBA Mortgage Applications (week ended 7/12016) – Purchase Index Week/Week +4.0%. Previous weeks were -3.0%, -2.0%, -5.0%, +12.0%, -5.0%, +5.0%, -6.0%, +0.4%, +1.0%, -2.0%, -1.0%, +8.0%, and -2.0%. – Refinance Index Week/Week +21.0%. Previous weeks were -2.0%, +7.0%. -1.0%, +7.0%, -4.0%, +0.4%, +1.0%, +0.5%, -6.0%, -5.0%, +3.0%. +11.0%, and +7.0%. – Composite Index Week/Week +14.2%.

Initial Jobless Claims up Slightly.

Initial Jobless Claims (week ended 6/25/2016) – New Claims seasonally adjusted 268,000. Previous was 258,000 – New Claims unadjusted totaled 261,640 an increase of 13,055 from previous – 4-week Moving Average 266,750. Previous was 266,750   Chicago PMI (June 2016) – Business Barometer Index 56.8. Previous was 49.3 Growth and a lot stronger than expectation.

Slow GDP Growth Continues.

GDP (1stQ2016) – Real GDP quarter/quarter, seasonally adjusted, annualized +1.1%. Previous estimate was +0.8% – GDP price index quarter/quarter +0.4%. Previous estimate was +0.6%. This is the BEA’s third look at 1stQ2016 GDP. Average GDP growth rate for the past 17 quarters is 1.89%. This despite near zero rates and massive increase in money supply.

Brexit.

Last week the citizens of the United Kingdom voted to leave the EU. First some history. The predecessor of the EU was called the European Economic Community which started in 1957. The original EEC consisted of Belgium, France, Italy, Luxembourg, the Netherlands and West Germany. In 1963 and in 1967 the UK tried to joining

Thoughts on Brexit.

One issue is that the Brexit has not actually happened. The process should take at least 2 years and politicians could conceivable ask for a “Do you really, really want to do this?” referendum. This could have the effect of prolonging the recovery time for markets because now we have a black swan event which

Is Trended Credit Data a Trojan Horse?

On June 25 we will see significant changes to how credit scores are calculated and how the FNMA underwriting system will make decisions on loans based on credit.  The underlying concept is called “trended credit.” The way credit reports have been done is to take a snapshot of what a borrower’s credit looks like at

Drop in PMI Services May Signal Weak BLS.

MBA Mortgage Applications (week ended 5/20/2016) – Purchase Index Week/Week +5.0%. Previous weeks were -6.0%, +0.4%, +1.0%, -2.0%, -1.0%, +8.0%, -2.0%, +2.0%, -1.0%, +0.3%, +4.0%, -1.0%, and +2.0%. – Refinance Index Week/Week +0.4%. Previous weeks were +1.0%, +0.5%, -6.0%, -5.0%, +3.0%. +11.0%, +7.0%, -3.0%, -5.0%, -6.0%, -2.0%, -7.0%, and -8.0%. – Composite Index Week/Week +2.3%.