Keyword: retread
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Three regional Fed reports I like to watch are New York’s Empire State Outlook, Philly Fed’s Outlook and Richmond Fed’s outlook. Today, The Richmond Fed released their manufacturing outlook and … it declined to -11. So the big three are all down (Philly down to -8.9 while NY’s Empire State outlook is down to -32.9. On the Treasury front, the US 10Y-3M yield curve inverted further (a signal of impending recession) just tanked to -126.462 basis points. Winter is coming!
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While the children in Congress and the Administration argue about cutting the Fedcral budget (as if there isn’t trillions of dollars of wasteful spending in the budget), we saw an ever dumber suggestion from Pramila Jayapal (WA-D), Adam (Shifty) Schiff (CA-D) and Sheila Jackson Lee (TX-D): a bill to eliminate the debt ceiling altogether to allow unlimited Federal spending. That reminds me of the Tom Arnold/Julie Ford film “The Stupids.” Yet these clowns keep getting re-elected. In any case, The Federal Reserve’s quantitative-tightening program risks being propelled toward an early end as US politicians bicker in Washington over raising the...
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Ah, the start of a new week with Treasury Secretary Janet Yellen arguing (with a straight face) that there is no room in the Federal budget for cuts. Apparenly, Yellen never read any of the massive, pork-laden spending bills signed by Biden (no one else did in Congress either, nor did Biden). Let’s start with the US credit default swap (1 year). It remains high at 68.72 (the price of insuring against a US default). And the US Treasury yield curve (10Y-3M)? It remains deeply inverted at -114 basis points this morning signaling an impending US recession. Then we have...
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The Conference Board’s Leading Indicator should be called The Bleeding Indicator given that the leading index has declined to 10 straight months. This is happening as The Fed tightens monetary policy to combat inflation. Leading indicators include economic variables that tend to move before changes in the overall economy. These indicators give a sense of the future state of an economy. How about mortgage rates? Settling in a 6.47%.
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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...
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I must admit, Joe Biden has a horribly misleading nickname “Middle Class Joe.” Between Biden’s horrible energy policies and Pelosi’s/Schumer’s spending binges, the US middle class and low wage workers have suffered mightely with the inflation tax. Throw in Jerome Powell and The Federal Reserve’s manic money printing and the American middle class has a problem. US inflation peaked at 9.1% year-over-year (YoY), but has declined to a still painful 7.1% YoY as The Fed removes it aggressive monetary stimulus. But to cope with persistent US inflation, consumers have had to dip into savings and use more credit cards. As...
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Its a sign of the times! First, US default risk as measured by credit default swaps remains elevated (primarily because Biden and Democrats refused to cut wasteful spending or reign in non-retirees on Social Security). And NY Fed’s Reverse Repos remain elevated. And then we have Citi’s economic surprise index for the US at -17 as The Fed slows money growth to 0%. I wish I knew a place where inflation and insane Federal government spending and policies doesn’t exist. Joe Biden was in California and had a secret meeting with Nancy Pelosi’s nephew Gavin Newsome. Is Joe replacing Kamala...
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The Thrill Is Gone from the US housing market as M2 Money growth fells to 0%. US Existing Home Sales fell -1.5% from November to December (MoM) to 4.02 SAAR units sold. That translates to a depressing -34% decline since December 2021 (YoY). On the positive side, these numbers are better than expected (-3.4% MoM expected). Still, these numbers are pretty dismal. Existing home sales MEDIAN PRICE fell to $366.9k as M2 Money growth vanishes. And inventory of existing homes for sale remains lower than pre-Covid levels. Let’s see what Powell and the Gang (aka, The Federal Reserve Board of...
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US Treasury Secretary Janet Yellen has signalled that she will “tap” into Social Security to avoid breaching the US debt limit. Of course, if she does, it is unlikely that she will return the dollars. The Credit Default Swaps 1-year for the US (insurance against default) sits at 68.55, near the highest since 2013 debt ceiling crisis. Notice that the debt ceiling keeps on climbing once the Kabuki Theater of Democrats and Republicans is over. The Volatility Cube for the US CDS 1 year signals that it will all be over soon. So, Yellen and Treasury are threatening us with...
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I watched Biden’s Press Secretary Karine Jean Pierre giving Biden credit for the lowest unemployment rate in US history thanks to his economic policies. And Biden mentioned that he inherited a terrible economy from Trump. Hmmm. Let’s let the data talk. Covid was horrific (I almost died from it), but it was the government response to Covid there was disastorous. Government shutdowns (and the masking of the populace) killed off numerous small businesses and sent jobless claims soaring in 2020 (white line) and U-3 unemployment rate rose to the highest level since The Great Depression. The response from The Federal...
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December’s housing construction numbers are a mixed bag. On the one hand, US housing starts are down -1.36% from November to December, but down -21,8% since December 2021 (YoY). The good news? 1-unit (single family detatched) rose 11.26% from November to December (MoM). But 5+ (multifamily) starts are down -18.91% MoM. But 5+ unit PERMITS are up 7.14%. Perhaps Hunter Biden can now rent an apartment rather than pay his father $50,000 a month in rent for Joe’s Wilmington Delaware house.
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Soft landing for the US economy? It is looking less and less likely. The bond market (10-year Treasury yield) just shed -14.1 basis points. As I always told my investments students, any 10 basis point shift in the 10-year Treasury yield is significant. Let’s start wit the US business leaders survey of current conditions. It just crashed to -21.4 Then we have US industrial production, down -0.7% in December. And is up only 1.65% year-over-year as M2 Money growth stalls. Capacity Utilization plunged more than expected to 78.7% (79.5% exp). Biden claiming the US economy is strong is pure Fantasy...
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Markets are strange. Mortgage applications increased 27.9 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 13, 2023. But mortgage applications are 60% lower than the same week last year. The Refinance Index increased 34 percent from the previous week and was 81 percent lower than the same week one year ago. The seasonally adjusted Purchase Index increased 25 percent from one week earlier. The unadjusted Purchase Index increased 32 percent compared with the previous week and was 35 percent lower than the same week one...
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The Empire Strikes Out! No, not Klaus Schwab and the World Economic Forum, but the New York State Manufacturing index. For January, the index fell to -32.9. Then we have Wells Fargo and their crashing mortgage originiations. Everytime I see Klaus Schwab’s face, I think of Emporer Palpatine from Star Wars.
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Why Belarus Might Invade Ukraine Too
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We got trouble in Potomac City! No, I’m not talking about the numerous Top Secret documents that Biden carelessly left in his garage in Delaware and the UPenn Biden Center. And they found more over the weekend. I’m talking about the US Treasury 10Y-2Y yield curve being inverted for 135 straight days. And thanks to inflation, REAL wage growth has been negative for 21 straight months. All this is happening while M2 Money growth (green line) stalls to 0% YoY. Swaps 5Y are rising as The Fed withdraws monetary stimulus.
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Andrei Piontkovsky, a Russia-born commentator now living in exile in the United States, argues that the Russian elite believes that defeat in Ukraine is looming and that the Putin era is doomed. The feuding clans are gearing up for what comes next: protecting what they already have and contending for the vast assets that will be available after the regime’s collapse. This chimes with Prigozhin’s oddly conciliatory behavior of late: on New Year’s Eve, he gave mandarin oranges and seasonal greetings to Ukrainian prisoners-of-war. He has also said that “it’s time to finish the war and start real business.” It...
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The 2020 Covid outbreak and the resulting government shutdowns and school closures begat a Washington DC spending spree and Federal Reserve monetary stimulus barrage unlike anything other time in history. Congress and Administrations love to spend other people’s money, but as Rahm Emanuel once said “You never let a serious crisis go to waste. And what I mean by that it’s an opportunity to do things you think you could not do before” And wow, did they ever binge spend and expand the M2 Money supply. I call it “The Great Dislocation” of the economy and we never recovered. Or...
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Its that time again when Congress does its Kabuki Theater drama about raising the US debt limit. Of course, everyone in Congress and the Biden Administration want to spend trillions of dollars so they will hike the debt limit. With the US government facing the danger of a payments default later this year, Congress has a variety of paths to avert economic disaster and boost the debt ceiling. All of them would likely involve going right up to the market-rattling brink, according to current and former lawmakers and aides. The timeline kicks off within weeks, when Treasury Secretary Janet Yellen...
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The US residential mortgage market seems to be born under a bad sign … and if it wasn’t for The Federal Reserve, it would have no luck at all. It is the start of a new year and, like clockwork, residential mortgage applications are rising (at least until May). But it is important to realize that purchase mortgage demand is down 44% from the same week last year (YoY). And refinancing mortgage applications are down 86% YoY. Mortgage applications increased 1.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for...
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