Biden Boogie! Biden’s Final Punch In The Jaw, Greatest Fiscal Deficit To Start The Year In History, Largest Debt Load, Interest Expense Now Exceeds Social Security

It is the Biden Boogie!

Joe Biden is leaving the Presidency with an attrocious record. While saying he is leaving Trump with the strongest economy in modern times, the is actually leaving Trump and Republicans with a hollow shell for an economy. It is the final punch in the jaw from an angry, failed President.

The following chart shows that in October and November, the US deficit exploded to a staggering $624.2 billion, and even though this included several calendar adjustments – which explains the freak September surplus which as we said was due to calendar effects – the November deficit of $367 billion was $14 billion more than consensus estimates of $353 billion. Worse, combining October and November we find that not only was the combined number of $624 billion some 64% higher than the corresponding period one year ago, but it was also the highest deficit on record for the first two-months of the year (and that includes the spending insanity during the covid crisis).

Putting the deficit in context, the budget deficit in October and November – the first two months of fiscal 2025 – are now officially the worst start a year for the US Treasury on record.

No wonder even Statist Janet Yellen (Treasury Secretary who failed utterly at her job) apologized that her abysmal performance. “I am concerned about fiscal sustainability and I am sorry that we haven’t made more progress,” she said adding that “I believe that the deficit needs to be brought down especially now that we’re in an environment of higher interest rates.” Meanwhile Biden keeps handing out $$$ to Ukraine, Africa, Syria, illegal immigrants and anything else that asks … unless it it American citizens. Man, does Biden HATE America!

Here is Yellen’s record on debt. A total of $15.2 TRILLION under her leadership.

Under Biden/Yellen (don’t forget Senate fools like Schumer and McConnell!), debt interest has surpassed Social Security and Medicare as the second largest government agency expense.

Biden is a classic progressive Democrat, spending other people’s money like a wild man (sort of like California Governor “Greasy Gavin” Newsom’s father. Or grandfather. And let’s not forget the $222 TRILLION in UNFUNDED liabilities such as Social Security and Medicare.

“See Joe, I can destroy California’s economy just like you destroyed the US economy!”

Fahrenheit 451! Sticky Core Inflation Still At 4% YoY (Fed Can’t Douse The Fire Caused By Too Much Government Spending)

We didn’t start the fire … The Fed and Biden/Harris did. And it is still burning.

October STICKY core inflation is still up 4% YoY (year-over-year)

Core CPI rose 0.3% MoM (as expected) which pushed it up 3.3% YoY (not even close to the 2% mandate)…

Source: Bloomberg

There has not been a single monthly decrease in core consumer prices since Biden too office.

dddd

Between The Fed’s insane monetary policy and Biden/Harris insane fiscal policies, we are living in a world where Ray Bradbury’s novel Fahrenheit 451 becomes a reality. Instead of books burning, it is the US Dollar burning.

Rise! CMBS Continues To Struggle Under Biden/Harris (Delinquency Rate For Office Space Hits 10.4%)

CMBS delinquencies are on the rise.

The delinquency rate for commercial mortgage-backed securities (CMBS) tied to office properties reached 10.4 percent in November 2024, approaching the 10.7 percent peak reached during the 2008 financial crisis. The ascent is the fastest two-year increase on record, with rates climbing 8.8 percentage points since late 2022, significantly outrunning the 6.3-point rise seen during the financial crisis nearly 15 years ago.

The office real estate sector has been grappling with a severe downturn for several years now, but are accelerating recently as they are driven by persistently high vacancy rates and declining rents. Property values, particularly for older office buildings, have plummeted, with many losing 50 to 70 percent of their market value and in some cases becoming effectively worthless. Those conditions have left real estate portfolio managers and building owners unable to borrow, refinance or sell properties, contributing to rising delinquencies and foreclosures. (Mortgages become effectively delinquent when payments are missed beyond a standard 30-day grace period.)

On the CMBS front, there have been no upgrades in 2023 and 2024.

Efforts to convert office buildings into residential spaces are increasing but remain limited by structural and economic constraints. Many office towers are unsuitable for conversion due to their large floor plates or prohibitively high retrofitting costs which often exceed the cost of demolition and rebuilding. In 2024, 73 office-to-residential conversions were completed, with an additional 30 underway. Despite plans to increase the pace in 2025, the cumulative impact remains minimal, addressing just 7.9 percent of the 902 million square feet of vacant office space nationwide.

Milton Waddams personifies the disastrous progressive politics of Biden/Harris.

Case-Shiller Home Prices Rise 3.9% YoY In September (Only NYC And Cleveland Top 7% YoY)

Rolling into Cleveland to the lake.

NEW YORK, NOVEMBER 26, 2024: S&P Dow Jones Indices (S&P DJI) today released the
September 2024 results for the S&P CoreLogic Case-Shiller Indices. The leading measure of U.S.
home prices recorded a 3.9% annual gain in September 2024, a slight deceleration from the previous annual gains in 2024.

YEAR-OVER-YEAR
The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 3.9% annual return for September, down from a 4.3% annual gain in the previous month. The 10-City Composite saw an annual increase of 5.2%, down from a 6.0% annual increase in the previous month. The 20-City Composite posted a year-over-year increase of 4.6%, dropping from a 5.2% increase in the previous month. New York again reported the highest annual gain among the 20 cities with a 7.5% increase in September, followed by Cleveland and Chicago with annual increases of 7.1% and 6.9%, respectively. Denver posted the smallest year-over-year growth with 0.2%.

Table 2 below summarizes the results for September 2024. Cleveland and New York top 7% YoY.

Going Down! UMich Inflation Expectations Jump To 16-Year-High, Housing Buying Conditions Remains Depressed

To quote Freddie King, the US is going down.

Longer-term inflation jumped to their highest since June 2008, according to the latest UMich Sentiment survey, while short-term inflation expectations dropped to four year lows…

Housing sentiment (buying conditions for housing) remains depressed under Biden/Harris
“Reign of (economic) error.”

Here is a picture depicting the assassination of the US housing market.

Slow Down? Existing Home Sales Rise YoY For First Time Since July 2021 (Near 2010 Levels, So Barely Rising)

Its a slow down in the housing market.

Existing Home Sales were expected to rebound modestly in October (+2.9% MoM) after dropping for 6 of the last 7 months to the lowest levels since 2010, and they did. Sales rose 3.4% MoM (a beat) but thanks to a downward revision for September from -1.0% to -1.3% MoM. What is most shocking about the shift is that it pushed the YoY change for existing home sales positive (+2.9% YoY) for the first time since July 2021…

Source: Bloomberg

…but in context, that shift up to 3.96mm SAAR homes sold is nothing…

Source: Bloomberg

High borrowing costs have led to a shortage of previously owned homes on the market, discouraging many would-be home sellers from listing their properties for sale and having to part with their current low financing costs.

“Additional job gains and continued economic growth appear assured, resulting in growing housing demand,” NAR Chief Economist Lawrence Yun said in a prepared statement.

“While mortgage rates remain elevated, they are expected to stabilize.”

Last month, the inventory of available homes edged up 0.7% to 1.37 million, continuing to trend higher although well below pre-pandemic levels.

Despite the weakness in sales, tight inventory is keeping prices elevated, yielding one of the least affordable housing markets on record. The median sale price last month increased 4% from a year earlier to $407,200, the highest ever for any October, the NAR figures show.

Contract signings rose in all four US regions, led by a 6.7% jump in the Midwest.

Sales of single-family homes increased 3.5% in October; purchases of condominiums and co-ops were up 2.7%

Finally, while that’s all very exciting – a scintilla of growth off almost record lows – the fecal matter is about to strike the rotating object as rising mortgage rates lagged impact threatens…

Source: Bloomberg

In October, 59% of homes sold were on the market for less than a month, compared with 57% in September, and 19% sold above the list price. Properties remained on the market for 29 days on average, compared with 28 days in the previous month. First-time buyers made up 27% of purchases, still historically low.

Already Gone! Mortgage Applications Rise Since Last Week, But Mortgage Purchase Applications Down -60% Under Biden/Harris

Fortunately, the Biden/Harris administration is winding down. On the mortgage side, the mortgage market is already gone under Biden/Harris where mortgage purchase applications are down a whopping 60%.

Mortgage applications increased 1.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending November 15, 2024.

The Market Composite Index, a measure of mortgage loan application volume, increased 1.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 1 percent compared with the previous week. The seasonally adjusted Purchase Index increased 2 percent from one week earlier. The unadjusted Purchase Index decreased 3 percent compared with the previous week and was 1 percent lower than the same week one year ago. And down -60% under Biden/Harris.

The Refinance Index increased 2 percent from the previous week and was 43 percent higher than the same week one year ago.

Slowing economy, rising rates, too expensive housing. Not a good sign for the mortgage market.

US Housing Starts & Building Permits Slump Back Near COVID Lockdown Levels

As Biden/Harris approve of Ukraine launching missiles against Russia risking nuclear war, we are witnessing a slow down in the US economy. This time, housing starts and permits.

US Housing Starts and Building Permits disappointed in October with the former dropping 3.1% MoM (-1.5% exp) and -0.6% MoM (+0.7% exp) respectively. This is the second straight month of declines for both measures of housing activity.

Source: Bloomberg

That pulled the SAAR totals down to four month lows – hovering just above COVID lockdown levels…

Source: Bloomberg

Under the hood, it was very mixed with Single-family permits rising and multifamily permits dropped. Single-family Starts plunged while multi-family Starts jumped…

Source: Bloomberg

As rate-cut expectations have fallen, so have homebuilders actions it seems…

Source: Bloomberg

But homebuilder ‘hope’ remains high…

Source: Bloomberg

With Trump back in charge, how much will Powell and his pals really want to cut rates now?

Did The US Treasury Yield Curve Predict Trump’s Victory? Mortgage Rates Rising With Rising 10Y Treasury Yield

Put it where you want it. Trump that is!

The US Treasury yield curve (10Y-2Y CMT) went negative on April 1, 2024. And remains positive.

The US Treasury 10Y-2Y CMT (constant maturity Treasury) peaked locally on March 29, 2024 and then fell, eventually turning negative on April 1, 2024. And remained negative until August 30, 2024 just prior to the election. It looks like the yield curve accurately predicted the election of Trump.

The 10-year Treasury yield is rising with a positive economic outlook under Trump. And with that optimism we see mortgage rates rising too.

The market is feeling comfortable under Trump. Not Harris.

Thunderstruck! Mortgage Applications Decreased -10.8% WoW (Interest Rates Bear Steepening With Trump’s Election!)

Thunderstruck! The election of Donald Trump has rocked markets. But not mortgage applications … yet.

WASHINGTON, D.C. (November 6, 2024) — Mortgage applications decreased 10.8 percent from one week earlier, according to data fro m the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending November 1, 2024.

The Market Composite Index, a measure of mortgage loan application volume, decreased 10.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 12 percent compared with the previous week. The seasonally adjusted Purchase Index decreased 5 percent from one week earlier. The unadjusted Purchase Index decreased 7 percent compared with the previous week and was 2 percent higher than the same week one year ago.

The Refinance Index decreased 19 percent from the previous week and was 48 percent higher than the same week one year ago.

“Ten-year Treasury rates remain volatile and continue to put upward pressure on mortgage rates. The 30-year fixed rate last week increased to 6.81 percent, the highest level since July,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Applications decreased for the sixth consecutive week, with purchase activity falling to its lowest level since mid-August and refinance activity declining to the lowest level since May. The average loan size on a refinance application dropped below $300,000, as borrowers with larger loans tend to be more sensitive to any given changes in mortgage rates.”

The refinance share of mortgage activity decreased to 39.9 percent of total applications from 43.1 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 7.0 percent of total applications.

The FHA share of total applications decreased to 15.5 percent from 16.4 percent the week prior. The VA share of total applications decreased to 12.5 percent from 14.6 percent the week prior. The USDA share of total applications increased to 0.5 percent from 0.4 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) increased to 6.81 percent from 6.73 percent, with points decreasing to 0.68 from 0.69 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $766,550) increased to 6.98 percent from 6.77 percent, with points increasing to 0.65 from 0.49 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 6.75 percent from 6.55 percent, with points decreasing to 0.87 from 0.94 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 6.21 percent from 6.27 percent, with points decreasing to 0.55 from 0.77 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to 6.05 percent from 6.20 percent, with points increasing to 0.84 from 0.59 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The bond market is reacting to the election of Trump with a clear Bear Steepening.

Bear steepening happens when yields move up across tenors, but long-end yields move up even faster than short-end yields.

This isn’t going to help mortgage applications due to lowering rates.