With an impending railroad strike that can torpedo the US economy (but if that is possible, why is the Biden Clan vacationing in Nantucket for Thanksgiving weekend when Joe should be talking with railroads and the unions to not let this happen?), let’s see what interest rates are telling us.
First, the US Treasury 10Y-2Y yield curve continues to descrend into the abyss (now at -80 basis points).
Second, the latest Fed Dot Plot (from September, new one will be issued during December) show that The Fed thinks that their target rate, while rising in 2023, will likely start falling again in 2024.
Third, since it is Thanksgiving Day, US bond markets are closed. But in Europe, the 10-year sovereign yields are falling, a sign that the ECB is reversing course by increasing monetary stimulus and/or a European are slow down.
Fourth, US mortgage rates have cooled since peaking (locally) at 7.35% on November 3, 2022 and now sit at 6.81%, a decline of 54 basis points. A clear sign of cooling.
Fifth, how about Fed Funds Futures data? It is pointing to a peak Fed Funds Target rate of 4.593% at the June FOMC meeting. Then a decline in rates to 2.301% by January 2024.
Now, go and enjoy your Thanksgiving dinner with friends and family (up 20% since last year), courtesy of Jerome Powell, Joe Biden, Nancy Pelosi and Chuck Schumer.
Not surprisingly, the median price of new home sales are up 8.2% MoM (since September).
The Fed’s minutes for their last FOMC meeting will be out at 2pm EST. Let’s see if they discuss WHY they haven’t reduced their balance sheet by much which is contributing to asset bubbles.
Here is The Fed’s Dots plot from the September meeting. I get the impression that The Fed thinks that their target rate will be coming down in 2024 and after.
Again, why did people with professional investment managers not look under the hood, so to speak, when touting FTX and Sam Bankman-Fried’s scam? Or why didn’t Washington DC politicians like Maxine Water (D-CA) look into what was going on with their second largest donor after George Soros?
Former FTX Trading CEO Sam Bankman-Fried, NFL quarterback Tom Brady, supermodel Gisele Bundchen and comedian Larry David are among a celebrity-studded list of people accused of defrauding investors who lost money in the cryptocurrency exchange’s sudden collapse.
A proposed class-action filed in federal court in Florida late Tuesday names those four, along with other athletes and entertainers, as defendants in the case. All promoted FTX, one of the world’s largest crypto trading platform exchanges before it declared bankruptcy on November 11, with the company now under investigation for possible securities violations.
“It is still very difficult to comprehend that just one company defrauded more than $11 billion dollars from consumers, all from our backyard here in Miami,” Adam Moskowitz, the attorney leading the class action, said in an email.The suit seeks unspecified damages and is the first filed against Bankman-Fried and his companies since FTX filed for bankruptcy protection. BECAUSE MR MOSKOWITZ, NOBODY LOOKED UNDER THE HOOD.
Other current and former athletes named in the suit are NBA star Stephen Curry; NFL quarterback William Trevor Lawrence; baseball player Shohei Ohtani; tennis player Naomi Osaka; and broadcaster and former basketball player Shaquille O’Neal. Kevin O’Leary, a host of “Shark Tank,” is also named in the complaint, which was filed Nov. 15 in the Southern District of Florida.
The exchange shuffled customer money between affiliated entities, using new investor funds and loans to pay interest to the old ones in an attempt “to maintain the appearance of liquidity,” Moskowitz alleged, adding that FTX used public figures to give the operation an air of credibility.
Larry David, Trevor Lawrence and Naomi Osaka got stung by SBF like Tom Brady and Step Curry in a fraud scheme. True, celebrities should have excercized caution with dealing with SBF (I would love to see SBF’s investor presentation, but there may not have been one).
Or did SBF show this Bitcoin chart with Fed tightening? Or did ARK’s Cathy Wood look at this chart?/
Despite the recent FTX-fueled crypto market collapse, Cathie Wood, founder and CEO of Ark Invest Management, stood by her prediction that Bitcoin would reach $1 million by 2030.
$16,500 to $1,000.,000 by 2030? In 8 years??
“FTX were geniuses at public relations and marketing, and knew that such a massive Ponzi scheme — larger than the Madoff scheme — could only be successful with the help and promotion of the most famous, respected, and beloved celebrities and influencers in the world,” he said.
FTX did not reply to a request for comment.
FTX’s creditors will be first in line to get whatever assets a bankruptcy judge deems appropriate to distribute as the company seeks to restructure as part of its Chapter 11 filing. Investors in the Bahamas-based company, which had raised some $2 billion in venture capital, come next.
That means FTX account holders, who used the platform to trade bitcoin, ethereum and other digital currencies, may have to wait years to get their money back – if they ever do.
And so it goes. I doubt that Maxine Waters House Financial Services Committee will do anything constructive. The hearing will be a battle cry for more regulation and perhaps even paint SBF as victim of volatility.
The really sad part of this story is that SBF is still trying to raise money to do it all over again. But there are always investors who want to buy a piece of the blue sky, or a bridge in Brooklyn.
The global economic slowdown has one nice unintended consequence: as the 10-year Treasury yield softens, mortgage rates decline.
US mortgage rates retreated sharply for a second week, hitting a two-month low and providing a bit of traction for the beleaguered housing market.
The contract rate on a 30-year fixed mortgage decreased 23 basis points to 6.67% in the week ended Nov. 18, according to Mortgage Bankers Association data released Wednesday.
Rates have plunged nearly a half percentage point in the past two weeks, the most since 2008, as recession concerns mount, inflation shows signs of cooling and a number of Federal Reserve officials say it may soon be appropriate to slow the pace of monetary tightening.
The slide in borrowing costs helped stir demand as the group’s index of applications to buy a home climbed 2.8%. That marked the third-straight increase since the gauge stumbled to the weakest level since 2015.
The pickup in demand allowed the overall measure of mortgage applications, which includes refinancing, to rise for a second week, but it still remains depressed. The index of refinancing activity edged up from a 22-year low.
The Refinance Index increased 2 percent from the previous week and was 86 percent lower than the same week one year ago.The unadjusted Purchase Index increased 9 percent compared with the previous week and was 41 percent lower than the same week one year ago.
But you need an electron microscope to see the increase in both purchase and refi apps.
One indicator of a slowing global economy is the decline of FANG (Facebook, Amazon, Netflix, Google) with declining liquidity.
The Biden Administration is setting all sorts of records. One is the worst inflation rate in 40 years. Another is highest gasoline prices in history (until the latest global slowdown). The list goes on, but here is another one: the US Treasury 10Y-2Y yield curve is now at -72.5 basis points, the more inverted curve since 1981.
This is the US Treasury version of 50 Shades Of Grey.
As Americans prepare to hit the road for Thanksgiving, average gas prices will be at their highest seasonal level ever, according to GasBuddy.
GasBuddy says the national average is projected to stand at $3.68 on Thanksgiving Day. This is nearly 30¢ higher than last year, and over 20¢ higher than the previous record of $3.44 set in 2012.
And diesel prices, the life blood of the shipping industry, relative to gasoline prices, are soaring. Highest since 2004.
As we approach Thanksgiving Day, it is important to be thankful … that things aren’t even worse under Billions Biden. US CRB foodstuffs are up 49% under Biden while diesel fuel is up 102%.
Now, gasoline prices fell recently as WTI crude prices slipped on slowing demand. And as stimulus wears out.
And its now only food.
Have a holly jolly Thanksgiving!!
My Thanksgiving dinner, because of the cost, will be a Jersey Mike’s turkey and provolone sub (mini). Or this canned dinner.
The US housing market is slowing, to be sure. Yesterday’s existing home sales (EHS) report revealed that US EHS were down -28.43% YoY and the median price of EHS slowed to 6.6% YoY.
But that is just the surface of the EHS report for October. Once I removed inflation (CPI YoY) from the numbers, we are left with REAL median price of EHS growth of -1.17% and REAL average hourly earnings YoY of -3.0% YoY. The REAL 30-year mortgage rate is -5.25%. That reveals how horrible inflation is in the US.
It is important to note that EHS numbers are lower in October than they were before Covid stimulypto (my name for the massive spending spree by Congress and massive injection of monetary stimulus by The Fed. Even the REAL 30-year mortgage rate is negative at -0.5254%.
As I mentioned on Varney and Company on Fox Business, housing is going to suffer when The Fed starts to tighten their monetary policy. And here we are, folks!
US existing home sales fell a staggering -28.43% YoY in October as M2 Money growth grinds to almost a halt.
October’s existing home sales YoY of -28.43% is the WORST since The Great Recession and collapse of Lehman Brothers.
The median price of existing home sales slowed to 6.6% YoY. Inventory of EHS remains below pre-Covid levels.
Unrelated to housing, Prince Imhotep (Federal Reserve Bank of Minneapolis President Neel Kashkari) said Friday that the whole idea of cryptocurrency is “nonsense” after the implosion of FTX revealed the industry’s shortcomings.
“This isn’t case of 1 fraudulent company in a serious industry,” Kashkari said on Twitter, commenting on an article about how investors fell for FTX. “Entire notion of crypto is nonsense. Not useful 4 payments. No inflation hedge. No scarcity. No taxing authority. Just a tool of speculation & greater fools.”
Or it could be that investors don’t trust The Fed or Federal government to act in their best interest.
Here is a crypto investor (in red fez) being lectured by Minneapolis Fed President Neel Kashkari.
As of today, the US Treasury 10yr-2yr yield curve is the most inverted since 1981 at -70 basis points.
Meanwhile, equity put/call ratio from CBOE spiked yesterday to highest since 1997.
I am disappointed that The New York Times cancelled their $2,400 event to listen to Sam The Sham Bankman-Fried, Vlad “Show my your money!” Zelensky, Larry “The Big Fink” Fink and Janet “We never saw it coming” Yellen. I would have loved to do the New York Times job for them and ask hard questions to Sam The Sham and Zelensky about money laundering.
Confounded Interest - Anthony B. Sanders 
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