Mortgage applications decreased 6.9 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending October 13, 2023. Applications decreased to their lowest level since 1995, as the 30-year fixed mortgage rate increased for the sixth consecutive week to 7.70 percent – the highest level since November 2000.
The Market Composite Index, a measure of mortgage loan application volume, decreased 6.9 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 7 percent compared with the previous week. The Refinance Index decreased 10 percent from the previous week and was 12 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 5 percent compared with the previous week and was 21 percent lower than the same week one year ago.
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.
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.
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 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.
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.
According to the New York Federal Reserve, business activity edged lower in New York State, according to firms responding to the October 2023 Empire State Manufacturing Survey. The headline general business conditions index fell seven points to -4.6. New orders fell slightly, while shipments were little changed. Unfilled orders declined, and delivery times shortened. Inventories held steady. Labor market indicators pointed to a slight increase in both employment and the average workweek. The pace of input price increases was similar to last month, while selling price increases moderated. Looking ahead, firms remained relatively optimistic about the six-month outlook.
On the earnings front, earnings downgrades overtake upgrades.
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).
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!”
Joe Biden is the Buzz Lightyear of the economy … and not in a good way. Under Biden and the Congressional spending sprees, the US debt is going to infinity … and beyond!
Twenty days.
That’s how long it took the Biden administration to add another half-trillion dollars to the national debt.
Bidenomics certainly requires a lot of borrowing and spending.
On September 15, the debt quietly blew passed $33 trillion. On October 5, it pushed above $33.5 trillion.
Don’t forget about the $194+ TRILLION in unfunded liabilities that politicians promised the non 1%.
By the way, it only took Biden and his willing accomplices in Congress three months to drive the national debt from $32 trillion to $33 trillion.
As of October 5, the debt stood at $33,513,382,512,663.51.
This is an unimaginable amount of money.
To put things into some perspective, the total output of the US economy as measured by GDP was only $25.46 trillion. That means the US economy would have to grow by 33.5% to cover the national debt.
At $33 trillion, the US national debt is more than the total economies of China, Japan, Germany, and the UK combined.
Looking at it another way, as of Oct. 10, every US citizen would have to write a $99,839 check in order to pay off the debt, and every American taxpayer is on the hook for $258,257.
Part of the reason the debt has increased so fast since June is because the Treasury is still rebuilding cash reserves that were depleted during the debt ceiling fight. But the fact remains – the federal government spends too much money.
It’s hard to overstate just how bad the US government’s fiscal situation has become. We have a trifecta of surging debt, massive deficits, and declining federal revenue. The chart below provides a visual perspective – and it doesn’t even account for the last few years.
This relentless increase in debt is happening when the economy is supposedly strong. Typically, a strong economy generates more tax revenue, and deficits shrink. But this isn’t really a strong economy. It is a house of cards built on debt. Fiscal stimulus is helping to prop it up.
That means there is no end in sight to this upward-spiraling national debt.
The biggest issue is the federal government spending addiction. In August alone, the Biden administration spent over $527 billion.
In fact, the US can’t even afford the interest on the debt.
Uncle Sam’s interest expense is already rising at an astronomical rate, and it’s set to explode.
The federal government has paid well over half a trillion dollars ($630 billion) on interest payments alone in fiscal 2023, with one month left to go. Interest on the debt paid in July exceeded the amount spent on national defense that month. Uncle Sam is well on the way to spending more on interest payments than any line item other than Social Security and Medicare.
The average interest rate on the debt is now at the highest level since 2011, coming in at 2.92% as of the end of August. But that’s still relatively low, and the debt is more than double what it was back in the good ol’ days of 2011.
Meanwhile, the average interest rate is poised to climb rapidly. A lot of the debt currently on the books was financed at very low rates before the Federal Reserve started its hiking cycle. Every month, some of that super-low-yielding paper matures and has to be replaced by bonds yielding much higher rates. That means interest payments will quickly climb much higher unless rates fall.
To give you an idea of where we’re heading, T-bills currently yield about 5.5%, the two-year yield is over 5% and the 10-year currently yields around 4.7%.
This has driven interest payments as a percentage of total tax receipts to over 35%. In other words, the government is already paying more than a third of the taxes it collects on interest expense.
If interest rates remain elevated, or continue rising, interest expenses could climb rapidly into the top three federal expenses. (You can read a more in-depth analysis of the national debt HERE.)
People tend to yawn at the ever-increasing national debt, but it is a ticking time bomb. Who knows how much time is left, but the timer is ticking relentlessly toward zero.
Like President Biden enjoying a barbeque at The White House with a live band (probably NOT Justin Moore singing “Small Town USA”) while Hamas declared war on Israel and Americans are being held hostage with the promise of public executions of hostages livestreamed. Nothing that “Empathy Joe” does ever surprises me anymore, but I am surprise that various Federal Reserve Presidents will speak today while Hamas terrorizes Israeli and US citizens.
It could be that investors think that Talking Heads at The Fed will claim that Fed rate increases are over. Then again, the Iran/Hamas terror campaign against Israel is spookking markets, driving up oil and gold prices and driving up “flight to safety” in US Treasuries.
President Biden called on Americans in Israel to book a commercial flight home, even though Israel has cancelled all flights. Does Old Joe even read the news??
“Two-job Joe” should be Biden’s new nickname for his economy wrecking ball known as Bidenomics.
The economic disaster known as Bidenomics (code for wealth transfers to the donor class) can be seen in the following chart. Non-elite households are struggling to cope with higher gasoline, food and house prices (rent) under Bidenomics.
As a result, the number of people holding 2 FULL-TIME JOBS hit an all-time high of 447,000 people. Biden spokesperson Karine Jean Pierre is likely to say “See? Bidenomics is working! Not every person is holding 2 full-time jobs to afford that Ford all-electric Lightning F-150 pickup truck!”
At the same time, wage growth YoY is crashing from Covid stimulus highs to pre-Covid levels.
It is getting harder and harder for non-elites to buy that Ford F1-150 all-electric Lightning Platinum for $94,000 plus tax. And you still have to pay $500 for the Ford Mobile Power Cord. OMG! For $94k, they couldn’t throw in the power cord?????
Does F stand for Failed? The honorary vehicle for Bidenomics!!
Confounded Interest - Anthony B. Sanders 
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