And with the God awful jobs report, serious delinquencies on auto loans is SOARING. To the highest rate since The Great Recession.
The Producers Price Index is deflating.
At least inflation is cooling down, but still higher than under he that can’t be mentioned on The View, Rachel Maddow or Morning Joe, Donald Trump, the Left’s Voldemort.
I admit, Travis Kelce should have been benched for shoving Head Coach Andy Reid during The Super Bowl. “Damn it, Taylor (Swift) flew here from Tokyo to watch me play and you aren’t throwing enough to me!” Welcome Travis Kelce to the elitist 1% who think the rules don’t apply to them. And your 2.0 GPA at University of Cincinnati certainly qualifies you to opine on the economy … on The View or MSNBC.
“That doesn’t tend to happen in economies, except in very negative circumstances. What you will see, though, is inflation coming down,” explained the Fed Chairman, the average American neither understanding nor caring about the nuance.
Bitcoin raced upward, its market cap roughly half of Nvidia. The market now values this remarkable maker of the semiconductor chips necessary to create an artificial life form at roughly twice the value of the most secure network in human history.
Fidelity added Bitcoin to a model portfolio, spurring investors to consider what happens to the price of a digital asset, whose supply is fixed at 21mm for all eternity, once passive investment products start really stacking Satoshis.
You see, the supply of everything in the universe expands as its price increases, but no matter how high the price of Bitcoin goes, its pre-defined pace of production will only ever decrease.
Nvidia (or any other stock) can be created at the click of a new issuance, or an executive equity option grant for that matter. The average investor neither understands this yet, nor cares for the nuance.
“I would say this. In the long run, the US federal government is on an unsustainable fiscal path,” said Powell, pointing out one of the most important top-down investment themes of the coming decade.
“And that just means that the debt is growing faster than the economy. So, it is unsustainable. I don’t think that’s at all controversial. And I think we know that we have to get back on a sustainable fiscal path. And I think you’re starting to hear now from people in the elected branches who can make that happen,” he added, without naming names, because there really aren’t any.
Under Brainless Joe and Dr. Janet Yellen, the US economy has experienced real GDP growth YoY only once (Q1 2021). Otherwise, debt growth YoY has always exceeded real GDP growth under Biden.
I admit I am rooting for the SF 49ers over the Kansas City Swifties. At least we won’t have to listen to Brainless Biden ramble on during the Super Bowl, unless they issue a pre-recorded propaganda piece for half time similar to the John Gill character from Star Trek.
Blank stares matter should be Biden’s new campaign slogan!
I watched Tucker Carlson’s interview with Russian President Vladimir Putin. Putin is an amazing contrast to our 81-year old President with dementia who can barely speak while Putin was articulate. Not at all what Hillary Clinton was raving about (she is still furious about losing to Trump after losing to Obama). One thing that caught my attention was Putin talking about The Fed’s endless printing of money. Well, THAT is how the US grows GDP these days. Borrow and spend with the private sector as an after thought.
Let’s revisit the HORRIBLE jobs report from December. Not only were all job gains in the past year entirely thanks to part-time workers, but native-born workers plunged by a another whopping 560 thousand, bringing the two-month total drop to just under 2 million.This meant that not only has all job creation in the past 4 years been exclusively for foreign-born workers, but there has been zero job-creation for native-born American workers since July 2018 (don’t believe us? go ahead and check the data directly from the Fed).
So, the Federal government is borrowing trillions of dollars so that 1) part-time jobs are created and 2) foreign born workers have jobs, but not native born Americans?? (Blogger Paul Krugman thinks that immigration will add $7 trillion in real GDP over the next 10 years and this will save Social Security and Medicare. Huh? I admit, millions of immigrants will spend money, but many will be on the Federal and State doles, so its tax dollars going to immigrants to spend.) This seems like Obama/Biden are using Cloward-Piven tactics to overwhelm Social Security, Medicare and other social services, NOT grow the economy as Krugman projects.
Typically, economists look at measures like M2 Money Velocity (Real GDP/M2). M2 Money Velocity is rising … but still remains below where it was pre-Covid under Donald Trump.
But a more relevant velocity is the velocity of DEBT. As in GDP/Debt. Under Biden, the US has added almost $6.5 TRILLION in debt while real GDP has risen by only $1.949 trillion. That amounts to a DEBT velocity of 0.30. Meaning that the US gets an anemic $30 in real GDP for every $100 in additional Federal debt.
Yes, the US economy is broken and requires endless money printing and debt financing to pay for endless wars and now millions of illegal immigrants getting on “the dole.” Then we have Biden’s forgiving student loan debt (inappropriately) and now Big Tech wants $7 trillion to develop AI (in a normal economy, tech companies would develop AI themselves, but under Obama/Biden, we are not in a normal economy).
Here is Daddy (Ukraine) Warbucks Biden with his biting dog and daughter Ashey.
Like Offenbach’s “Orpheus in the Underworld,” the US economy under Joe Biden is going to hell. Like the tech sector! Thanks to the massive hiring surge related to Covid and Covid spending, now trimming the bloat.
1. Twitch: 35% of workforce 2. Roomba: 31% of workforce 3. Hasbro: 20% of workforce 4. LA Times: 20% of workforce 5. Spotify: 17% of workforce 6. Levi’s: 15% of workforce 7. Xerox: 15% of workforce 8. Qualtrics: 14% of workforce 9. Wayfair: 13% of workforce 10. Duolingo: 10% of workforce 11. Washington Post: 10% of workforce 12: Snap: 10% of workforce 13. eBay: 9% of workforce 14. Business Insider: 8% of workforce 15. Paypal: 7% of workforce 16. Charles Schwab: 6% of workforce 17. Docusign: 6% of workforce 18. UPS: 2% of workforce 19. Blackrock: 3% of workforce 20. Citigroup: 20,000 employees 21. Pixar: 1,300 employees
And here’s the government-supplied statistics…
The number of Americans filing for jobless benefits for the first time last week dropped from 227k to 218k (below the 220k exp). On an NSA basis, claims tumbled even more…
Source: Bloomberg
We assume there was some impact in here from the ice storms, but still, Oregon, Ohio, and California saw the biggest declines in claims while Missouri and Texas saw the biggest increase…
Continuing jobless claims also decline (of course, it’s an election year) from 1.894mm to 1.871mm…
Source: Bloomberg
We give the Richmond Fed’s Tom Barkin the last word:
“I am cautious about accuracy of numbers around the turn of the year.”
Cautious is one word…
Not to mention 2024 is an election year, so expect mega nonsense spewing from The White House and the BLS and other government agencies.
With massive job cuts in the real world (unlike the protected, ivory tower of Biden and Congress), the serious delinquency rate on credit cards.
Well, the anticipated Establishment, and anti-middle class “Boader Security” bill has been released. It is all about military spending for Ukrainse (of course), grudging spending for Israel and peanuts for the border patrol to MONITOR, not stop the illegal immigrant caravans.
Independent US Senator Kyrsten Sinema told reporters the legislation would secure the US southern border (OMG, that is hilarious!!), including by requiring the Department of Homeland Security to close the border if there are an average of more than 5,000 crossing attempts per day over seven days.
In addition to $20.23 billion for border security, the bill included $60.06 billion to support Ukraine in its war with Russia, $14.1 billion in security assistance for Israel, $2.44 billion to US Central Command and the conflict in the Red Sea, and $4.83 billion to support US partners in the Indo-Pacific facing aggression from China, according to figures from US Senator Patty Murray.
An additional $10 billion would provide humanitarian assistance for civilians in Gaza, the West Bank, and Ukraine.
The US would provide $4.83 billion to support key regional partners in the Indo-Pacific where tensions have risen between Taiwan and China, as well as $2.33 billion for Ukrainians displaced by Russia’s invasion and other refugees fleeing persecution.
Millions for the military to keep Zelensky and his family in mansions while American veterans are homeless. But we expect massive Ukraine funding and the important US border security begins on page 62.
Example: $404,000,000 shall be for Immigration Judge Teams, in16 cluding appropriate attorneys, law clerks, paralegals, court 17 administrators, and other support staff, as well as necessary court and adjudicatory costs, and $36,000,000 shall be for representation for certain incompetent adults pursuant to section 240(e) of the Immigration and Na21 tionality Act (8 U.S.C. 1229a(e)).
What? Homeless vets live on the streets, but Schumer/McConnell want to QUICKLY process illegal immigrants.
Nobody spends other people’s money like Biden and Congress!
$47,500,000 for the procurement and deployment of mobile surveillance capabilities, including mobile video surveillance systems and for obsolete mobile surveillance equipment replacement, counter-UAS, and small unmanned aerial systems; – $25,000,000 for subterranean detection capabilities; – $7,500,000 for seamless integrated communications to extend connectivity for Border Patrol agents; and – $10,000,000 for the acquisition of data from long duration unmanned surface vehicles in support of maritime border security.
Other than helping the border patrol with surveillance, there are NO FUNDS FOR A WALL and just a lot of gibberish on reporting crossings, but NOTHING TO SLOW THE MIGRANT CROSSINGS.
In other words, it is a BIG DEFENSE SPENDING BILL … for Ukraine and Israel and peanuts for the US border. Child slavery and Fentanyl will continue unabated as will murders by illegal immigrants. Why? Illegals rarely live near Biden, Clintons, Obamas, McConnell, Thune and other frauds in the US House of Lords (aka, Senate).
And you wonder why the US is careening off the debt cliff?
The Biden Administration which motto should be “Make Crime Great Again!” with awful crime in big cities, and millions pouring over the border, not to mention providing jobs for foreign workers and not native born Americans, is likely breathing a sigh of relief as food inflation falling to 2.7% year-over-year, still higher than pre-Covid levels under Trump. But at least food price inflation is slowing as The Fed’s money stimulus recedes.
Cocoa prices climbed to a 46-year high this week in New York as concerns about dry conditions across West Africa could reduce yields for the Ivory Coast, the world’s largest producer of cocoa beans, ahead of the mid-crop in April.
In the US, a rapidly shrinking cattle herd, now at the lowest levels in seven decades, has pushed the supermarket price of beef to a record of $5.21 per pound. Rising food prices are the central bank’s worst enemy.
To end the week, breakfast lovers will be disappointed to learn robusta bean prices in Vietnam, the world’s largest producer of the bean, are absolutely out of control.
Local robusta prices in Vietnam hit a record on Thursday, topping nearly 80,000 per kilogram.
“That’s threatening to push prices in London up further, even after the benchmark capped its own all-time high this week at $3,336 a ton,” Bloomberg said, adding the surge in prices was primarily due to farmers “hoarding” the bean.
To recap this week, cocoa bean, beef, and robusta bean prices have been marching higher.
More bad news for Biden. Even though overall food inflation has receded, voters have long memories.
“Progress on inflation has brightened the economic picture despite a slowdown in hiring and pay. Wages adjusted for inflation have improved over the past six months, and the economy looks like it’s headed toward a soft landing in the U.S. and globally,” says Nela Richardson, Chief Economist, ADP.
ADP National Employment Report
The ADP National Employment Report shows Private Sector Employment Increased by 107,000 Jobs in January; Annual Pay was Up 5.2%
Job Switching Payouts
Year-over-year pay gains for job-stayers reached 5.2 percent in January, down from 5.4 percent in December.
For job-changers, pay was up 7.2 percent, the smallest annual gain since May 2021.
Median Change in Annual Pay (ADP matched person sample) Job-Stayers 5.2%, Job-Changers 7.2%
ADP Notice
January’s report presents the scheduled annual revision of the ADP National Employment Report, which updates the data series to be consistent with the annual Quarterly Census of Employment and Wages (QCEW) benchmark data for March 2023. In addition, this revision introduces technical updates, namely, in re-weighting of ADP data to match QCEW data. The historical file was updated to reflect these revisions.
Notice Translation
ADP revises its data to match annual BLS data from March of 2023. The BLS will do the same in its annual revisions.
The BLS does not even back adjust the numbers so its historical record is bogus. And despite being incredibly lagging, the Fed makes key decisions on the data.
Job Openings Rise in December But Quits Tell the Real Story
There’s lots of meaningless chatter yesterday about job openings. However, actions speak louder than openings.
This report comes after Fed Chair Jerome Powell said “No Sugar Tonight” as in no expected rate cuts. That is, until it becomes obvious that Biden will lose the election, THEN The Fed will start cutting rates like crazy.
An example of the trash that Biden and Democrats are importing from Latin America, Africa and China. Among other sewers. I am sure that employers are lining up to hire this guy. … NOT! Correction: Biden may appoint this creep to his cabinet with the other losers.
Joe, are you kidding about the sizzling economy? Karine Jean Pierre is also guilty of comedy or gross propaganda.
So right up front – and the Fed has been talking about this, though no one listens: The “core services” PCE price index has gotten stuck at 3.5% over the past six months annualized, and accelerated to 4.0% month-to-month annualized in December, with housing inflation stuck at about 6.7% over the past six months annualized, and with other core services components still red-hot.
The core services PCE price index rose by 0.33% in December from November, the second acceleration in a row, according to data from the Bureau of Economic Analysis today. This amounts to an increase of 4.0% annualized (blue).
The six-month moving average, which irons out the huge ups and downs of the month-to-month data, accelerated to 3.5%, and has been in this range since August, after the sharp deceleration in early 2023 (red).
Core services is where consumers spend the majority of their money, and they matter. Which is why Fed governors have said in near unison that they’re in no hurry to cut rates, but have taken a wait-and-see approach, with an eye on core services. And if it goes away, fine.
But on the surface, the PCE price index looks encouraging, and this has been the trend for months, with the overall PCE price index at +2.6% year-over-year in December, the lowest since March 2021; and with the core PCE price index at +2.9% year-over-year, also the lowest since March 2021, and aiming for the Fed’s 2% target.
The factors for the year-over-year cooling in these inflation measures have been the same for months: plunging energy prices, sharply dropping prices of durable goods after the huge spike in 2020 and 2021, cooling food inflation (with prices still rising from very high levels, but slowly), and favorable “base effects” when compared to a year ago.
But energy prices don’t plunge forever, so that will go away; durable goods prices don’t drop sharply forever either, though they can drop for a while longer to unwind some more of the price spike they’d been through in 2020 and 2021; and the base effects are going to get timed out this year, when the base of the year-over-year comparisons become the lower inflation figures of 2023.
Housing inflation, still red hot and not cooling anymore. The PCE price index for housing rose by 0.46% in December from November and has been in this range since March, after the sharp slowdown early in 2023. This amounts to 5.7% annualized (blue in the chart below).
The housing index is broad-based and includes factors for rent in tenant-occupied dwellings; imputed rent for owner-occupied housing, group housing, and rental value of farm dwellings. It’s the largest component of core services.
The six-month moving average annualized, which shows the more recent trends, also rose by 5.7% in December, and has been in the same range since August (red).
So it looks like the PCE price index for housing has gotten stuck at 5.7%. This stubborn inflation in housing is a blow to theories trotted out for 18 months that housing was lagging, and that we know it will go away as an issue, etc., etc. The increases are less hot than they had been, but remain hot and have become persistent.
The major categories of core services in the PCE price index, as a six-month average of month-to-month changes, annualized:
Core services, major categories, 6-month average, annualized
Housing
5.7%
Description and chart above
Non-energy utilities
2.5%
Water, sewer, trash
Health care
2.5%
Physicians, outpatient, hospital, nursing care, dental, etc.
Transportation services
6.1%
Auto repair & maintenance, auto leasing & rentals, public transportation, airfares, etc.
Recreation services
5.6%
Concerts, sports, movies, gambling, streaming, vet services, package tours, etc.
Food services, accommodation
2.8%
Meals & drinks at restaurants, bars, schools, cafeterias, etc.; accommodation at hotels, motels, schools, etc.
Financial services
3.5%
Fees & commissions at banks, brokers, funds, portfolio management, etc.
Insurance
2.8%
Insurance of all kinds, including health insurance
Other services
0.1%
Collection of other services
Inflation in Transportation services and Recreation services is accelerating on the basis of the 6-month moving average, with the PCE price index for Transportation services rising by 6.1%, and the index for Recreation services rising by 5.6%:
The head-fakes last time.
Inflation in services turns out to be tough to beat, and it can dish up big head-fakes. Last time we had this type of surge of inflation, so that was in the 1970s and 1980s, we thought repeatedly that we had inflation licked, only to find out that we’d fallen for an inflation head-fake. There were three head-fakes in core services on the way to the peak of 11% in 1981:
But Democrats are desperate to stay in power and rake in billons of dollars. Their strategy? Nobody But Joe. Well, except maybe Mike Obama.
New home sales disappointed in December, rising just 8% MoM (vs 10% exp) but that is still the biggest MoM jump since last December.
Source: Bloomberg
Of course, having pointed out the dramatic series of downward revisions to this data series this year, November’s 12.2% plunge was revised up to a 8.0% drop
Source: Bloomberg
On a SAAR basis, new home sales ended at 664k (pre-COVID-lockdown levels), completely decoupled from existing home sales…
Source: Bloomberg
This left new home sales up 4.4% YoY…
Source: Bloomberg
The median new home price fell 13.8% YoY to $413,200
Source: Bloomberg
Trouble is, even as mortgage rates have plunged recently, applications for home purchases have only rebounded modestly…
Source: Bloomberg
And while mortgage rates have declined (rapidly), they remain massively high relative to the effective mortgage rate for all Americans. That difference is the ‘subsidy‘ that homebuilders have to fill to enable buyers – and it’s still yuuuge!
Source: Bloomberg
Of course, investors don’t care about actual fundamentals, rates are down so ‘buy buy buy’ the builders…
Source: Bloomberg
Finally, we note that supply shrank from 8.8 months to 8.2 months in December – so don’t expect new home prices to keep falling (they’ll be rising like the supply-constrained existing homes market)…
…and don’t expect The Fed cuts to prompt an excess-supply-driven decline in prices – it’s start your engines time on the next bubble.
As only Clueless Joe can do, Biden brags about something that he has nothing to do with: falling mortgage rates.
Mortgage rates (30-year conforming rate) are up 392 basis points or a whopping 142% under Biden. Mortgage rates are down from the 2023 peak of 7.83% to 6.69% as of yesterday. One reason that mortgage rates are stable is that M2 Money GROWTH has been negative since the end of 2022.
Of course, it is The Federal Reserve acting to slow down inflation caused by excessive Federal government spending that is leading to mortgage rates declining, not Biden’s open border policy or his green agenda.
But for the future, does Biden know something that we don’t know? Like is Biden buying into the hypothetical Disease X (20 times worse than Covid) that was discussed in Davos at the World Economic Forum. If a major pandemic is unleashed (again) in the election year, The Fed would have to cut rates (again) to offset the damage done by another round of goverment economic shutdowns. Not to mention the shutting down of schools again.
Or did Biden just tell us that he knows the US economy is slipping and The Fed will come riding to the rescue of Biden (or Newsom or Michelle Obama) like in an old John Ford western with John Wayne. That would also lead to declining mortgage rates in 2024.
But all is not well in the banking sector. Use of Fed funding tool jumps most since April to fresh record: Banks borrowed record sum of $161.5bn from Fed’s Bank Term Funding Program, w/demand at $14.3bn climbing the most in 9 months as they piled into a reliable arbitrage trade just weeks ahead of its scheduled closure.
The availability of mortgage credit remains VERY TIGHT.
Whether its Disease X (unleashed The Kraken!) or just a slowing economy, The Fed (the master manipulator) will likely cut rates in 2024. Making mortgage rates come down.
Confounded Interest - Anthony B. Sanders 
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