ECB’s Lagarde Sees Higher Inflation; Pushes Back On Rate-hike Bets (ECB Keeps Foot On Monetary Gas Pedal Despite Inflation)

Its the same all over the world … insane central bank policies and resulting inflation.

I have discussed the US Federal Reserve in depth, but its time to focus on Europe’s European Central Bank (ECB) and their President Christine Lagarde.

FRANKFURT, Oct 28 (Reuters) – European Central Bank President Christine Lagarde acknowledged on Thursday that inflation will be high for even longer but pushed back against market bets that price pressures would trigger an interest rate hike as soon as next year.

With central banks around the world signalling tighter policy amid rising prices, Lagarde said the ECB had done much “soul-searching” over its stance but concluded that inflation was still temporary, so a policy response would be premature.

Soul-searching? The ECB is just doing what Powell and the Fed (aka, Jerome Jett and the Blackhearts) are doing. Keeping the foot on the monetary gas pedal in the face of inflation.

Let’s start Eurozone inflation. It is now sitting a 4.10% YoY. And core inflation is sitting at 2.10% YoY. Inflation is now the highest since 2009 while core inflation is at the highest since 2001.

Like the Federal Reserve, the ECB still has its foot on the monetary accelerator pedal despite booming inflation.

So, Christine, 19 nations in “Europe” having negative 2-year sovereign yields isn’t low enough for you?

The ECB’s platform in Frankfurt reminds me of a bad TV quiz show where participants try to guess prices next year. Call it “The Price Is Wrong.”

Unless, of course, the ECB sees a massive depression ahead.

Invitation Homes Boosts Rents 11% As Housing Shortage (And Fed Stimulus) Persist

(Bloomberg) — The largest owner of U.S. rental houses isn’t seeing any let-up in demand, or in its ability to increase rents.

Invitation Homes Inc., which owns more than 80,000 single-family rentals, raised prices by nearly 11% in the third quarter, according to a statement. The company boosted rents by 8% on renewals and 18% when leasing homes to new tenants. Rates are rising fastest in the Southwest, where rents increased 30% on new leases in Las Vegas, and 29% in Phoenix.

“It’s a little bit crazy,” Chief Executive Officer Dallas Tanner said on a conference call with investors Thursday. “There just isn’t enough quality housing available right now.”

Rising rents have been a staple of the economy since early Covid lockdowns lifted in the middle of last year. Surging purchase prices have pushed homeownership out of reach for first-time buyers.

Invitation’s properties, which tend be more centrally located than those owned by other institutional landlords, have been especially popular. And tenants tended to stay put: The company had a record-low turnover rate in the quarter, which reduced the expenses associated with preparing a house for leasing.

Invitation’s shares rose slightly to $40.77 at 12:49 p.m. New York time after the company raised its expectations for full- year revenue and net operating income. The stock is up 37% for the year.

As Milton Friedman once said, “If you put the federal government in charge of the Sahara Desert, in 5 years there’d be a shortage of sand.” In this case, The Federal government and Federal Reserve were put in charge of the Covid epidemic and we have shortages of almost everything. Including housing.

I don’t have Invitations rent growth chart, but here is Zillow’s YoY rent chart against The Fed’s balance sheet.

The good news? The 11% increase is almost half of the 20% YoY Case-Shiller National home price index.

Here is Treasury Secretary Janet Yellen making housing supply disappear.

Median U.S. Home Price Just Passed $400,000 For First Time Ever! (Prices Could Rise Another 16% By End Of 2022)

In the third quarter the median home price hit $404,700, jumping nearly 13% since third quarter of 2020, when the median sales price was $358,700.

Though it’s an eye-catching number, the market has been hot of late, and a lack of inventory and high demand means foretold the rise in home prices.

According to a recent note from Goldman Sachs, home prices could rise another 16% by the end of next year. Goldman economist Jan Hatzius pointed out that of all the pandemic shortages, the housing shortage might last the longest and that a crash is very unlikely.

Sure Jan. That’s what economists were saying in 2007 too before housing prices crashed and burned. Although this time its different: The Federal Reserve hadn’t gone insane buying Treasuries and Agency MBS before the housing bubble burst in 2008/2009.

Freddie Mac 30-year Rate Rises To 3.14% (Nothing Has Been The Same Since Covid)

Freddie Mac’s 30-year mortgage rate rose today to 3.14%.

Notice how Freddie’s 30-year loan commitment rate tracked the 10-year Treasury yield … until Covid struck. Then there was a separation of the two rates.

U.S. Pending Home Sales Fell by More Than Expected in February (-7.19% YoY) With Sinking Real GDP Growth

US pending home sales declined -2.3% MoM and -7.19% YoY as US GDP sinks like a paralyzed falcon,

(Bloomberg) — The National Association of Realtors’ index of pending home sales decreased 2.3% in September from a month earlier to 116.7, largest drop since April, according to data released Thursday.

The median estimate in a Bloomberg survey of economists called for a 0.5% advance.

Compared with a year earlier, contract signings were down 7.2% on an unadjusted basis”

Forecast range from -4.6% to 4.5% from 30 economists surveyed

Signings declined in all four U.S. regions from the prior month, led by a 3.5% drop in the Midwest
Unlike existing-home sales, which are calculated when a contract closes, the index of pending home sales is based on contract signings

Treasury Secretary Janet Yellen: “What, me worry?”

Stimulypto! US Q3 Real GDP Falls To 2% QoQ On Consumption Crash (Atlanta Fed GDPNow Falls To 0.195%)

Despite the staggering and unorthodox monetary stimulus from The Federal Reserve, US real GDP continues to fall. The Q3 real GDP report is out and real GDP QoQ fell to 2%. Not surprising given that the Atlanta Fed’s GDPNow tracker is at a dismal 0.195% and falling.

The culprit? Personal consumption fell to 1.6% in Q3 after hitting 12% in Q2.

The GDP price index actually declined slightly from 6.1% to 5.7%.

Of course, Bloomberg blames the decline in GDP on supply constraints … which were created by The Fed and Federal government dumping trillions of dollars of stimulus. While the monetary stimulus is still raging, Federal government stimulus has worn out. To paraphrase BB King, “The fiscal stimulus is gone.”

Yes, The Federal Reserve and the Federal government reacted insanely to the Covid crisis and created a total mess (including ill-advised government lockdowns of the economy, stimulus to households who already were employed, etc.)

Bloomberg News headline of “U.S. Posts Weakest Growth of Pandemic Recovery on Supply Woes” misses the point that The Fed and Federal Reserve CAUSED the supply woes. It reminds me of an episode from the British comedy series “Blackadder” with Rowan Atkinson, Hugh Laurie and Stephen Fry.

General Melchett:
[explaining why they can’t rescue Captain Blackadder] Now George, you remember when I came down to visit you when you were a nipper, for your sixth birthday? You used to have a lovely little rabbit, beautiful little thing, do you remember?

Lieutenant George:
Flossie.

General Melchett:
That’s right, Flossie! Do you remember what happened to Flossie?

Lieutenant George:
You shot him.

General Melchett:
That’s right! It was the kindest thing to do after he’d been run over by that car.

Lieutenant George:
By *your* car, sir.

General Melchett:
Yes, by my car. But that, too, was an act of mercy when you remember that that dog had been set on him.

Lieutenant George:
*Your* dog, sir.

General Melchett:
Yes, yes, my dog. But what I’m trying to say, George, is that the state young Flossie was in after we’d scraped him off my front tyre, is very much the state that young Blackadder will be in now: if not very nearly dead, then very actually dead!

For those of you who watched Blackadder, think of The Fed and Federal government as being populated by Baldricks.

Speaking of people acting like Baldrick …

Atlanta Fed GDPNow Tracker Falls To 0.2% Despite Massive Fed Stimulus

Despite monetary Stimulypto from The Federal Reserve (still growing!), US real GDP has fallen to almost zero.

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2021 is 0.2 percent on October 27, down from 0.5 percent on October 19. After the October 19 GDPNow update and subsequent releases from the US Census Bureau, the National Association of Realtors, and the US Department of the Treasury’s Bureau of the Fiscal Service, a decrease in the nowcast of third-quarter real government spending growth from 2.1 percent to 0.8 percent was slightly offset by an increase in the nowcast of third-quarter real gross private domestic investment growth from 9.0 percent to 9.3 percent. Also, the nowcast of the contribution of the change in real net exports to third-quarter real GDP growth decreased from -1.56 percentage points to -1.81 percentage points.

US Mortgage Purchase Applications UP 3.24% From Previous Week As Mortgage Rates Rose To 3.30% (But Purchase Applications Down 9.3% From Same Week Last Year)

Mortgage purchase applications rose 3.24% from the previous week, according to data from the Mortgage Bankers Association. However, purchase applications are down 9.3% from

Mortgage refinancing applications declined -1.57% from the previous week as mortgage rates rose from 3.23% to 3.30%.

US New Home Sales Rise 14% In September As Median Prices Rose 20.1% YoY (Fed Pumping Trillions Into Clogged Economic System)

US new home sales rose a whopping 14% in September as the median price of new home sales rose 20.1%.

Existing home sales still remain low allowing median prices to soar with Fed money printing.

New home sales surged as The Fed turns a blind eye to out-of-control inflation in prices.

Thanks to The Fed, new homes under $150,000 have disappeared and new homes over $500,000 have grown to 31% of all new homes. Where have all the starter homes gone?

Between Fed stimulypto and massive over-spending by Congress and the Biden Administration, the economic system is clogged like an interstate toilet, driving construction prices soaring.

Apparently Fed Chair Jerome Powell and Treasury Secretary Janet Yellen have never experienced clogged plumbing in their homes. And President Joe Biden has probably forgotten.

I can’t wait to hear if Biden’s press secretary Jen Psnarki attempts to put a positive spin on this debacle.

US Home Prices Still Soaring! Case-Shiller National HPI UP 19.84% YoY In August As Fed Stimulus Remains (Phoenix AZ UP 33.31%)

Between The Federal Reserve’s unorthodox monetary policy and insane spending from Congress and Biden Administration, we are seeing a near 20% rise in home prices for August.

Please note that pre-COVID the Case-Shiller home price index (national) was growing at 4%. Thanks to Fed Stimulypto, home prices are roaring at near 20% YoY.

Phoenix AZ home prices are growing at a 33.31% pace. The slowest growing? The US “shoot ’em up” capital, Chicago, is growing at 12.72% and is the slowest growing Case-Shiller 20 city.

I feel like I am living in the movie “Cloverfield” with The Federal Reserve as the uncontrollable monster.

UPDATE: Columbus Ohio as of Q2 2021 is growing at a 13% YoY pace.