Free Republic

The Case-Shiller index is out for November 2022. Too bad it is January 31, 2023. Call it “Happenings 2 Months Time Ago.” On a year-over-year (YoY) basis, the Case-Shiller National home price index slowed to 6.77%. On a month-over-month (MoM) basis, the CS National index fell -0.54%. That is the 5th straight month of home price declines. Only San Francisco fell on a YoY basis (down -1.6%). Five metro areas were above 10% and they are all in the South. Atlanta, Charlotte. Dallas, Miami and Tampa. On MoM basis, every metro area in the Case-Shiller 20 index saw price declines...

The first headline I saw when I turned on Bloomberg.com was “DOJ Officials Find More Classified Documents at President Biden’s Home.” This is an improvement! So far, the task has been handled by Biden’s private attorneys who don’t have proper security clearance; at least the Justice Department is finally getting involved! But back to the US yield curve. It is now the most inverted in 30+ years as M2 Money growth stalls. Inverted yield curves have preceded recessions in the past. But as China reopens and Europe is experiencing a warmer winter than expected (meaning that Europe has sufficient natural...

I don’t think this is a record that Biden can run on for re-election: 21 straight months of NEGATIVE REAL WAGE GRWOTH. Fortunately for Fed Chair Jay Powell, he is not an elected official. The December inflation report still shows elevated inflation in the US, but only -0.1% since November (MoM), but still high compared to last year (6.5% YoY). That is still over 3x The Fed’s target inflation rate of 2%. While headline inflation fell to 0.1% MoM, CORE inflation (removing food and energy) rose again 0.3% MoM and 5.7% YoY. At 6.50% YoY headline inflation, the Taylor Rule...

The NFIB Small Business Optimism Index is plunging and just fell below 90. The index was above 100 before the Wuhan virus outbreak in 2020, but has only been at 100 or above for only two months under Biden. And the trend is definitely looking bleak as The Federal Reserve fights inflation with M2 Money growth having collapsed to 0% YoY growth. And the Baltic Dry shipping index is falling with M2 Money growth YoY. I wonder what Fed Chair Jerome Powell is thinking?

The December jobs report is out and the top-line number is … 223k jobs were added. That is strong enough to give The Federal Reserve the green light to raise rates. But while it was a good jobs report, it shows the inflation tax in full view. Hourly wage growth year-over-year (YoY) was 4.6% in December. Unfortunately, the inflation tax was 7.1% in November. If we assume that the inflation rate in December is the same, the REAL hourly wage growth was -2.5% YoY. But it is likely that headline inflation cooled a bit in December as The Fed continues...

Devil’s Tower? ISM New Orders Slump To 45.2 In December As ISM Prices Paid Slumps To 39.4 (Stimulus Is Already Gone, Recession In Sight) confoundedinterest17 #bubble, #inflation, #wine, @MetreSteven @JeffSnider_AIP @DiMartinoBooth @bondstrategist @RaoulGMI @LukeGromen @dlacalle_IA @EconguyRosie @profplum99 @SantiagoAuFund @biancoresearch @pboockvar @SriKGlobal, Banking, CMBS, CRE, ECB, Economy, Fed, GDP, Gold, Housing, Inflation, Jobs, Mortgage, Natural Gas, Oil, Powell, Silver, Treasuries, Treasury, Uncategorized, Wages, Yellen, Yield Curve January 4, 2023 1 Minute To paraphrase The Eagles, US monetary stimulus is already gone. And with it, ISM Manufacturing Report for December is showing weakness. New orders (orange line) is down to 45.2 (below...

There is something happening in markets this morning. First, banks are stashing cash with the New York Fed on an “overnight basis” although it is looking pretty permanent to me. Repos (or repuchase agreements) soared to $2.55 TRILLION as of 12/30/22. But this morning we see the US Treasury 10-year plummeting -15 basis points. As I used to tell my University of Chicago, Ohio State and George Mason finance students, any 10 basis point shift (plus or minus) is a big deal. Something is happening. The 10-year Treasury yield plunging -15 bps is a “good thing” for the mortgage market...

2022 is one of the record books and not in a Tiger Woods way. Call it a year of pain. First, the US enacted policies that drove up energy prices (goin’ green) that reverberated through the entire economy in the form of higher prices. Second, The Federal Reserve, in attempt to combat runaway inflation, started removing the excessive monetary stimulus that had been around since Fed Chair Bernanke initiated QE, the seemingly unlimited purchase of Treasury and Agency MBS securities. Janet Yellen continued the massive asset purchases and zero interest rate policies or ZIRP. Now that inflation has struck the...

US consumers have the Fed Pneumonia and The Avian Flu. As a diabetic, eggs are a perfect food. Unfortunately for me and other diabetics, the price of eggs has soared by a whopping 79% since February 28, 2022. Of course, this year’s deadly Avian flu has been reducing poultry flocks. Also, fertilizer prices have soared as well. Also, soaring inflation has resulted in an aggressive Federal Reserve hiking their target rates.

Let it snow! Or is it a blizzard? Redfin released a terrible housing report showing that home sales fell a gut-wrenching 35% in November, the largest on record since Redfin has been collecting data. Hopefully mortgage rates will continue to decline in 2023! Meery Christmas from sub-zero Columbus Ohio where it is snowing with 50 mph gusts. Brrrrrr.

A classic good news, bad news story. The good news? US new home sales rose 5.8% in November, better that the expected -5.1%, The bad news? On a year-over-year basis, US new home sales FELL Sales of new US homes unexpectedly rose in November, suggesting some stabilization in demand as mortgage rates eased late in the month from their highs. Purchases of new single-family homes increased 5.8% to an annualized 640,000 pace last month after rising in October, government data showed Friday. A mid-month retreat in 30-year mortgage rates back below 7% along with an increase in builder incentives may...

There’s inflation in the air. The US Core PCE deflator slowed to 4.7% YoY in November. But it is still over 2x The Fed’s inflation target. The lower core PCE growth of 4.7% YoY results in a Taylor Rule estimate for The Fed Funds Target rate of 10.10%. Which The Fed will never reach, particularly since the House Of Overlords (the US Senate) just passed a grossly irresponisble omnibus bill of $1.7 trillion laden with insidious pork barrel spending and, on a depressing note, billions for border security in Egypt, Oman and other countries, just not our wide-open border with...

Do I detect a trend in the US Leading Economic Indicator data? The Conference Board’s US Leading Economic Indicator was released this morning and it wasn’t pleasant. The US Leading Index was down -1% MoM in November. On a year-over-year basis, it is down -4.5% YoY as The Fed withdraws its massive monetary stimulus. The good news … for military contractors … is that Biden and Congress have given Ukraine’s Zelenskyy ANOTHER $47 BILLION.

Its another slow growth economic report for the Biden Administration. So much stimulus, so little to show for it other than painful inflation. On a year-over-year (YoY) basis, US real GDP rose to a measly 1.9%. US core PCE YoY fell slightly to 4.93%. M2 Money growth is at 2.6% YoY. The Misery Index (U-3 inflation rate + inflation) remains elevated and above 10% (it currently clocks-in at 12%), far above the pre-Covid reading of around 5%. Here is the rest of the story. On a quarter-over-quarter basis, real GDP rose to 3.2% QoQ. Personal consumption rose 2.3% QoQ. Core...

One of the great ironies of the Sam Bankman-Fried debacle is that while SBF was a generous donor to Democrats (and a few RINOs) and President Biden, it was Biden’s green energy policies that were part of the nail in SBF’s crypto empire. As inflation exploded upon Biden taking office (and massive overspending by Congress), The Federal Reserve jumped in to cool inflation leading to the downfall of cryptos in terms of price. M2 Money YoY (green line) shows the massive growth money with the Covid economic shutdowns in 2020. Cryptos skyrocketed after that much money was printed by The...

Its NOT always sunny in Philadelphia. Here is a video of the Philly Fed economists explaining massively overstated job numbers to Fed Chair Jerome Powell. The Federal Reserve Bank of Philadelphia estimates that the employment data was vastly overstated in 2022. 10k jobs added instead of 1.1 million reported from March to June of 2022. Here is a chart (courtesy of Zero Hedge) showing reported payrolls and REVISED payrolls. Somehow, I don’t think Jean Pierre (Biden’s spokesperson, not the French chef) will be touting “Unlike Trump, our administration barely added any jobs in March, April, May and June 2022. How...

Nancy Pelosi is passing her gavel to someone else (most likely McCarthy R-CA), but her legacy like that of fellow spendaholic John Boeher (RINO-Ohio) and Paul Rino (RINO-WI) is reckless spending and debt load. Since 2007 when Pelosi took the gavel as Speaker of the US House, Federal debt has risen from $5.8 trillion in Q4 2006 to $31.4 trillion today, an increase of over 250%. Pelosi’s spending spree was continued by RINOs Boehner and Ryan before SanFranNac retook the gavel and continued Congress’ spend-a-holic ways. Nothing has been the same since the financial crisis and Pelosi became Speaker in...

Paul Revere and the Raiders said it best about The Federal Reserve. Take a look at yourself. Mickey Levy of Berenberg Capital and Charles Plosser wrote a great op-ed in the Wall Street Journal entitled “The Federal Reserve Needs a Hard Look in the Mirror.” Here is a Fed Reserve St Louis paper by Levy and Plosser entitled “The Murky Future of Monetary Policy.” Abstract In August 2020, the Federal Reserve unveiled its new strategic framework. One major objective of the Fed was to address its concerns over the potential consequences for the conduct of monetary policy when the policy...

Fun week ahead. US inflation numbers are out on Tuesday (forecast? CPI YoY = 7.3%, Core CPI YoY = 6.1%) and The Federal Reserve’s Open Market Committee (FOMC) rate decision is on Wendesday. So, where are we sitting on Monday? First, the US Treasury 10Y-2Y yield curve has been inverted (a precursor to recession) for 116 straight days). Second, the likelihood of recession in 2023 is 100%. Third, with the forecast of core inflation at a still numbing 6.1%, The Fed seems dead set on raising their target rate by 50 basis points to 4.50% on Wednesday. dddd So, as...

Blackrock has a grim presentation on investing in 2023. Particularly with regards to The Federal Reserve and their ability to stave-off a recession (comin’ at you!). Central bankers won’t ride to the rescue when growth slows in this new regime, contrary to what investors have come to expect. They are deliberately causing recessions by overtightening policy to try to rein in inflation. That makes recession foretold. We see central banks eventually backing off from rate hikes as the economic damage becomes reality. We expect inflation to cool but stay persistently higher than central bank targets of 2%. Those companies —...