Too Much Debt! Interest Payments Rising FAST On US $33.6 TRILLION Debt Load, Bank Losses Mounting As Rates Rise, Mortgage Rate UP 173% Under Biden (At Least Rent Growth Has Turned Negative)

Too much debt!

The Federal Reserve thinks economic growth comes with lots of debt and low interest rates. The Fed succeeded in that banks, consumers and The Federal government went wild in borrowing money, but now a hangover is happening as inflation surged and interest rates rose.

First, debt laden banks.

Paper losses on the most opaque part of US banks’ bond portfolios are now close to $400bn — an all-time high, and 10 per cent above the peak at the start of the year that caused the collapse of Silicon Valley Bank.

Rising interest rates are really causing havoc at banks, particularly small banks. The US 10-year Treasury yield rose again after a brief respite in rate increases.

iShares 20+ Treasury Bond ETF is getting crushed with inflation and Fed rate hikes.

And The Federal government is seeing interest payments on their massive $33 TRILLION debt load. Rising Treasury yields = higher US interest payments on debt … really fast.

And with interest rates rising, Americans are seeing a surge in debt.

With rising Treasury yields, the 30-year conforming mortgage yield is up 173% under Biden’s Reign of Economic Error.

And then we have US Debt Clock, Federal debt is now above $33.56 TRILLION that is causing no consternation for Treasury Secretary Janet Yellen who said that the US economy is great and we can afford to fight wars in Ukraine AND Israel! Of course, Yellen believes in the foolish Modern Monetary Theory (aka, just keep printing money and hope nobody cares).

Multifamily rents turned negative in September, with the average U.S. rent declining $6 from August and $3 during the third quarter. It marked the first time since 2009 when national rents decreased in September.

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Hopefully a downturn in rent growth will let buying a home more affordable relative to rent in San Jose, San Francisco, Honolulu, Los Angeles and Seattle.

Headline NAHB confidence index printed at 9-month lows (down 5 to 45, vs 49 exp). That is the 4th straight monthly miss in a row (and 5 upside surprises).

I remember when economists used to say, “Inflation? No problem! Inflation allows us to devalue the massive debt!” Except that inflation crushes the middle class and low wage workers.

Introducing Treasury Secretary Janet Yellen, the actual Nutty Professor who still thinks that the US can spend and borrow unlimited amounts without consequence.

Livin’ La Vida Biden! Biden Administration Threatens Banks That Refuse To Lend Money To Illegal Immigrants As Biden Relaxes Oil Restrictions On Venezuela (IF Venezuela Allows Non-Maduro Candidate To Run For President)

We are Livin’ la vida Biden as Biden continues to push illegal immigration and working with Communist dictators like Venezuela’s Nicolas Maduro and NOT expand US energy production.

The Biden administration released a statement Thursday warning financial institutions against using a person’s immigration status in credit applications.

The Consumer Financial Protection Bureau (CFPB) and the Department of Justice (DOJ) released a joint statement telling financial institutions that while it is not illegal to consider a person’s immigration status in the decision on whether to lend money, an overreliance on it could run afoul of the law, according to the statement. The statement implicates the Equal Credit Opportunity Act (ECOA), which makes it illegal to discriminate on the basis of race, color, religion, national origin, sex and more in considering a person’s credit application as the mechanism, even though the law does not list citizenship status as a protected attribute.

US, Venezuela to announce oil sanctions deal on Tuesday -report.

The result? WTI Crude is down almost -1% today and Brent Crude is down over -1%.

The sad part of Biden’s deal with brutal Marxist dictator Nicolas Maduro requires Venezuela to allow another candidate to run against Maduro in the next Presidential election. What? Biden and Democrats are working hard to eliminate Donald Trump from running for President in 2024, but want Venezuela to have competition??

So, Biden is sticking to his anti-US energy production stance while supporting a brutal Marxist dictator AND forcing banks to lend to illegal immigrants.

Joe Biden and brutal Marxist dictator Nicolas Maduro.

Weekend Update! Gold UP, Mortgage Rates UP 174% Under Biden, Fed Balance Sheet Barely Below $8 Trillion (Yellen Speaks At IMF/World Bank Meeting In Marraskesh)

Well, the San Francisco 49ers are playing the Cleveland Browns today with the Browns missing injured RB Nick Chubb and QB Deshaun Watson, replacing them with QB Dorian Thompson-Robinson (aka, Do Not Resuscitate or DNR) and RB Jerome “Exploding Pinto” Ford. ESPN gives the Browns a 26% chance of winning. I am amazed it is that high!

But back to economic news!

Gold is soaring due to the instability in the Middle East (Iran/Hamas/Hezbollah attacks on Israel). Let’s see if Israel continues it assault on Gaza or not.

Janet Yellen, Biden’s Treasury apparatchik, was at the IMF/World Bank meetings in Marrakesh (yes, former students are expecting me to like Crosby, Stills and Nash “Marrakesh Express” but I detest CS&N). Instead, here is Them with Here Comes The Night which is more fitting about risks in the global economy.

Debt squeeze

The heavy debt burdens of advanced economies — from the United States to China and Italy — was a recurrent theme in the meetings, which came after financial markets in recent weeks pushed U.S. bond yields higher. Italian central bank governor Ignazio Visco said there was an impression markets were “reevaluating the term premium” as investors become more nervous about holding longer-term debt.

JPMorgan chair of global research Joyce Chang put it another way. “The bond vigilantes are back, and the Great Moderation is over,” she told a panel of the two-decade era of relative economic calm before the 2008/09 financial crisis.

The Federal Reserve still hasn’t shrunk their massive balance sheet and removed the Covid stimulus. Call it lack of Fed retreat.

And mortgage rates continue to rise, up 174% under Stumblin’ Joe Biden despite The Fed not really shrinking their balance sheet.

The honorary drink for Bidenomics is The Fireballs “Bottle of (Cheap) Wine.” While Biden, Kerry and Obama drink Dom Perignon champagne.

I may be the only person in the US cheering for House Republicans being at an impasse over House Speaker. Why? Congress can’t approve massive spending bills with out a Speaker! Less spending, less inflation! There fixed inflation without The Fed.

Burning Down (The Economic) House? Food Prices UP 20% Under Bidenomics, Credit Card Delinquencies Now Higher Than During Covid As Credit Card Debt Grows To All-time High To Cope With Inflation

Is Biden trying to burn down the economic house? Under Bidenomics, America’s middle class and low wage workers are suffering from a wild, wild life in terms of inflation.

First, food prices are up 20% since December 2020. Talk about destruction of middle class wealth!

That is in addition to gasoline prices are up 64% under Biden while rent growth is up 252%. Well, Biden waived through millions of illegal immigrants and rent had to rise. Biden and Washington DC’s broken borders is Livin’ La Vida Loco.

To cope with inflation (that Paul Krugman claims is over but the last inflation report showed that the tinders of inflation are hard to extinguish), consumers have turned to credit cards to survive. In fact, credit cards have expanded 38% since April 2021 despite rapidly rising interest rates. And credit card delinquency rates are rising and are now above Covid-era economic shutdown levels.

Despite Krugman and Yellen’s screaming that inflation has been crushed, US household are anticipating FASTER inflation. To paraphrase the Emperor of Austria from “Amadeus,” “You are passionate Krugman and Yellen, but you do not persuade.”

And Billions Biden has just recorded the third largest deficit in history.

US Treasury Secretary (and former Fed Chair) Janet Yellen, the Destroyer of Wealth!

Krugman’s Kerplunk! War On Inflation Over, But Average American Is $7,400 Poorer Under Bidenomics (Real Wages Decline Again And Rent Inflation Over 7%)

Paul Krugman, Nobel Laureate in economics and media celebrity, made a terrible claim yesterday when he pronounced that “The war on inflation is over. We won, at very little cost.” Krugman’s proclamation was trumpeted by The View’s Joy Behar Joy who claimed that everything is going great in the country! The economy is “booming” and people are having an “easier time” putting bread on the table. Huh? Easier than a month ago maybe, but not easier since 2021 under Bidenomics.

Hmm. Suppose that during World War II the Germans had stopped after they invaded and captured Paris on June 14, 1940. The war could have been over, but France was lost to Germany amidst thousands of dead and loss of property. That is not a victory, but a crushing defeat.

Just like my Paris example, Krugman’s claim the war on inflation is over and we won AT VERY LITTLE COST was grossly misleading and a big kerplunk (thud). Why? For one, the average American family is $7,400 POOR than in January 2021 when Biden became President. So, it looks like we know the cost of inflation and it was steep, not “very little cost.” Well, very little cost to elitist millionaires like Krugman.

Krugman loves the recent inflation report from the BLS. Specifically, the 12-month change in the Consumer Price Index Less Food And Energy for September was 4.1%. Krugman focuses on the recent 6-month change being less than 2%. In Krugman’s mind, this is victory … core inflation has been tamed and inflation is at The Fed’s target rate of 2%.

But before Krugman pops the champagne cap on the 1959 Dom Perignon for $42,350 (while the rest of us are drinking E&J Gallo’s Thunderbird), bear in mind that he is referring to the RATE OF GROWTH in prices, not the highly elevated levels of prices. Victory against inflation would be if prices returned to December 2020 levels.

I pointed out yesterday that “real” wages contracted 0.1% YoY (after 3 months positive) in September. It is important to note that real wage growth was negative from 2021 until 3 months ago, but has gone negative yet again. Victory??

Krugman prefers core inflation, removing food, housing and energy. You know, the three things most Americans actually care about. Take shelter (or rent of residence) where rent is growing at a sizzling 7.1% YoY.

Under Biden and Congress’ reckless spending splurges (and inane Federal energy policies), regular gasoline prices are up 64%. Growth in rent of residence has grown 252%! So, Professor Krugman, Americans are far worse off than before Biden was President.

If prices return to December 2020 (or pre-Covid levels), I will declare a victory. But for right now, symbollically, the German army is occupying France and Paris with horrible suffering for the French people. In other words, Americans are still far worse off under Biden even though inflation is finally slowing.ew

Speaking of France and World War II, maybe we should consider Joe Biden as today’s Pierre Laval, leader of Vichy France since Biden seems more concerned with pleasing Klaus Schwab and The World Economic Forum than America’s middle class and low wage worker (like Laval was concerned with that German leader Adolf Hitler thought).

Biden’s Incredible Shrinking Economy! Bank Credit Growth Negative For 10th Straight Week As Interest Rate On Short-term Loans Almost 10%!! (Ouch!)

Bidenomics is failing catestropically. Example? As interest rates rise to fight Biden’s Federal spending splurges, bank credit growth slowed to -0.41% YoY for the 10th straight week of negative credit growth.

While interest paid on short-term loans almost 10%!!

“Jimmy, watch me tank the economy even worse than you did!”

Hard To Kill! PPI Final Demand Rose 2.2% YoY In September (4th Consecutive Month Of Growing Producer Prices And Trend Is Increasing!)

Like the Steven Seagall flick “Hard To Kill,” inflation caused by rampant Federal spending is hard to kill.

For the fourth straight month, the producer price index final demand has been increasing. It was 2.2% year-over-year. And INCREASING!!!!

Here are the YoY changes in PPI Final Demand for 2023. After near zero growth in June, PPI Final Demand YoY has been steadily increasing … again.

2023-01-01 5.7
2023-02-01 4.8
2023-03-01 2.7
2023-04-01 2.3
2023-05-01 1.2
2023-06-01 0.3
2023-07-01 1.2
2023-08-01 1.9
2023-09-01 2.2

Yes, it is hard to get the proverbial horse back in the barn once inflation has been unleashed by Federal spending.

Bidenomics At Work! Mortgage Rates Hit Almost 8% (Highest Since July 2000 Under Bill Clinton), Deficits This High Usually Occur During Recessions And HIGH Unemployment

Joe Biden, who has always been a compulsive liar but at least sounded cognicent, is now babbling and whispering that Bidenomics works. But for who?

Clearly not for first time homebuyers or people looking to move. Bankrate’s 30-year mortgage rate is up to almost 8%, the highest since July 2000 and Willy Slick Clinton. That is a 176% increase in mortgage rates under the most inept “Economic Sheriff” in history.

Deficits? Deficits (which Biden makes outlandish claims) are usually only this big at times of HIGH unemployment and recessions. So, are the staggering deficits under Biden a precursor to a hard landing (recession)? Don’t listen to what Biden or KJP say!!!

Biden’s outlandish claims that he single handedly reduced the deficit by the most in history is, well, typical Biden bloviating. Actually, tax receipts soared after Covid lockdowns ended. Period. Now that stimulus is wearing out, deficits are climbing again.

The REAL Hateful Eight!

17 Days Later? Mortgage Demand Decreased -6% WoW In Weekly Survey, Purchase Apps Lowest Since 1995 (Only 17 Days Left For Strategic Petroleum Reserve)

Another week under Biden, another economic disaster. This time, its the mortgage market with mortgage demand (applications) down 6% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 29, 2023.

The Market Composite Index, a measure of mortgage loan application volume, decreased 6.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 6 percent compared with the previous week. The Refinance Index decreased 7 percent from the previous week and was 11 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 6 percent from one week earlier. The unadjusted Purchase Index decreased 6 percent compared with the previous week and was 22 percent lower than the same week one year ago.

The purchase market slowed to the lowest level of activity since 1995, as the rapid rise in rates pushed an increasing number of potential homebuyers out of the market. ARM loan applications picked up over the week and the ARM share increased to 8 percent, as some borrowers searched for ways to lower their payments.

The US 30-Year Mortgage Rate Tops 7.5% for First Time Since 2000.

On the energy front, where we are represented by former Michigan governnor Jennifer Granholm and former South Bend Indiana mayor Pete Buttigieg, we see that the Strategic Petroleum Reserve is down to only 17 days left.

Fear The Talking Fed! Treasury Rates Keep Climbing To Multiyear Highs As Fear Of More Rate Hikes Surfaces (Treasury Yields Decouple From Sinking Manufacturing Numbers)

Fear the talking Fed! Various Fed Presidents are talking this week and when they do. WATCH OUT!

The latest fear mongering will be … inflation is persistent and they might have to keeep raising rates.

The two-year Treasury remains above 5% and the 10Y-2Y T-Curve remains inverted.

Treasury 30-year yield rose to 4.856%, HIGHEST SINCE 2007.

The likelhood of another Fed rate hike is growing.

While inflation is cooling (but still elevated), The Fed could choose to rate hikes again.

Treaury yields have decoupled from US manufacturing data.

Best picture of Lael Brainard, Director of the National Economic Council of the United States and former Federal Reserve member and talking head. Or screaming head.