Bitcoin Back Over $40,000 (+12%) And Technical Analyses (Bollinger, Ichimoku, Elliott Wave, Elder Impulse)

Bitcoin surged to over $40,000 as a flurry of short-covering intensified a rally apparently sparked by speculation over Amazon.com Inc.’s involvement in the crypto industry.

A job posting from the retail giant seeking an executive to develop the company’s “digital currency and blockchain strategy” stirred questions among analysts over whether the move could eventually lead to Amazon accepting Bitcoin as a method of payment.

As the largest digital token gained on the speculation, investors rushing to cover bearish bets fueled the rally, with the coin up as much as 15% to $39,681 on Monday. More than $950 million of crypto shorts were liquidated on Monday, the most since May 19, according to data from Bybt.com.

Compass Crypto Volatility Index Bitcoin – 20%

Both Bitcoin and Ethereum are up big today.

Bitcoin and Bollinger Bands.

Bitcoin and Ichimoku.

An Elliott Wave Analysis of Bitcoin.

Elder Impulse System and Bitcoin.

Elder Impulse does not refer to President Biden’s rambling, often incoherent speeches.

US June New Home Sales Disappoint, Down 6.6% Since May (Median Price For NHS Drops 5%)

The expectation was for a 796k print for June, but new home sales checked in at 676k instead. That represents a decline of 6.6% from May to June.

And the median price of new home sales fell 5% from May to June.

At least the US is adding to its woefully low housing inventory.

Stock Market Remains In Bubble Territory As Buffett Indicator And Shiller CAPE Ratio Point To T-r-o-u-b-l-e

Last week’s stock market performance was something to see, sparking by Covid Delta Variant outbreaks. Perhaps the most frightening event was Anthony Fauci hinting that a return to indoor mask mandates for vaccinated people and booster shots may be necessary to once again curb the spread of the virus.

But the week ended higher than where is started.

But since the initial Covid outbreak in early 2020 and the burst of M2 money stock, the S&P 500 index has risen steadily along with M2 Money stock.

The Buffett Indicator (or ratio), the ratio of composite market value to GDP, shows that stocks are alarmingly overvalued.

The Shiller CAPE ratio, cyclically-adjusted price to earnings ratio, is also flashing a warning signal. Shiller CAPE ratio on Friday was the highest since the dot.com bubble of 2000.

In other news, the world’s biggest coffee producer, Brazil, saw a large portion of its coffee crop get damaged by frost, which sent coffee futures soaring to their highest point in nearly a decade.

Is coffee the new gold? Probably not.

Hello t-r-o-u-b-l-e.

Jerome “Trouble” Powell

US House Price Growth = 4x Average Hourly Earnings (Price Growth Will Be Forced To Slow Down)

In an article by Phil Hall for Benzinga, I laid out the case for slowing home price growth.

In a nutshell, the Case-Shiller National home price index YoY is growing at times the rate of growth of average hourly earnings. The last time this gap was this large, we saw a crash in home prices.

And with The Fed claiming that they will tighten their uber-loose monetary policy (next year), look for house price growth to subside somewhat.

Particularly if housing inventory returns to the market place. And The Fed slows its money printing.

Fast house price growth has caused consumer sentiment for buying a house to plunge.

How will Biden’s $3.5 TRILLION infrastructure bill impact housing? It depends on how much of legislation actually transmits to US households.

Here is Parks and Recreation’s Leslie Knope with now-President Joe Biden. Perhaps she help draft the monstrous $3.5 trillion legislation.

US GDP And Bank Lending Prior To Next Economic Lockdown(?) (Real GDP Per Capita Fell -0.05% YoY As M2 Money Velocity Tanked -18.64% YoY In Q1 2021)

There are riots in France as their government mandates vaccine passes and mandate vaccination …. as the Covid Delta Variant case skyrocket. Covid vaccination protests are occurring in Italy, Britain and Greece as well. Threats of a resurgence of economic lockdowns are being tossed about.

So, where does the US economy sit as the likelihood of another round of economic-crippling shutdowns is discussed in Washington DC? Let’s hope there isn’t another devastating economic lockdown.

The Q2 GDP numbers will be out on Thursday, July 29th. But for Q1 2021, we saw real GDP PER CAPITA fall 0.052% YoY. While M2 Money Velocity sank -18.64% YoY.

Headline inflation for June is running at 5.32% YoY ahead of Thursday’s GDP report.

The old adage in economics was that money printing was fine, as long as it didn’t exceed real GDP growth. Well, that old adage was shot to hell with M2 Money growing at 13.84% YoY while real GDP per capital is growing at -0.05% YoY in Q1 2021.

As of July 14th, we have seen bank deposits growing at 10.24% YoY while loans and leases at all commercial banks remain at negative growth at -2.3655 YoY.

Let’s hope that the US avoids going into economic lockdown … again … like the UK and Europe have done.

The Ride of The Federal Reserve … coming to the “rescue”?

US House Price Growth Slowing … A Bit … As Fed Slows M2 Money Growth (Slow Stimulus Withdrawal)

John Burns consulting has this interesting chart showing a slight slowdown in home price growth. But HPI growth is still growing strong. At 17% YoY in June.

The Case-Shiller National home price index, growing at 14.6% Yo is lagged with reporting only as of April. But you can see the slowing M2 Money Stock YoY. Although M2 Money stock is still growing at a sizzling 13.84% YoY as of May.

So if John Burns is correct, then we should see an increase in the next Case-Shiller report for May, then a slight slowdown in Case-Shiller’s June report.

But if we look at new home prices (net of incentives), we see a 20% YoY price increase (Source: John Burns)

And the housing pump is primed with the lowest REAL 30-year mortgage rate since 1975.

Here is Fed Chair Jerome Powell talking about The Fed’s monetary policies and housing bubbles.

US 30-year REAL Mortgage Rate Plunges To -2.35%, The Lowest Since 1975, House Price Growth Highest In History

Talk about NIRP (negative interest rate policy). The Real 30-year mortgage rate (nominal rate – headline CPI YoY) has now fallen to -2.35%.

While the REAL 30-year mortgage rate is at its lowest level since 1975 and President Gerald Ford, home price growth is at its highest in history and higher than the peak of the housing bubble.

And then we have this chart of US House Price-to-Rent ratio. Highest ever! Even exceeding 1975!

Lowest real mortgage rates since Gerald Ford.

Fed Helps Repress Stock And Bond Volatility While Commodity Volatility Soars (House Price Growth Jumped From 4.28% Pre-Covid To 14.59% Post Fed Intervention)

Since the Covid outbreak of March 2020, The Federal Reserve entered markets in force, spiking their assets purchases and continually expanding their balance sheet.

Consequently, stock and bond market volatility (as measured by VIX and MOVE) have been repressed.

But commodities are a different story.

Crude oil futures are tracking The Fed’s balance sheet pretty closely while coffee “Arabica” futures have soared since July 17th. On the other hand, lumber futures prices have declined considerably since spiking in early May. Steel rebar prices have risen dramatically since mid-December 2020, a month before Biden’s inauguration as President.

Now, that’s volatility.

Home price growth jumped from 4.28% YoY pre-Covid to 14.59% after Fed intervention.

Fed Reserve Chairman Jerome Powell using his stock and bond market volatility repression beam.

US Existing Home Sales Rise 1.4% MoM In March, But Median Prices Soar 23.4% YoY With Small Increases In Inventory (Where Have All The Affordable Houses Gone?)

I was reading the usual pundits talking about massive increases in housing coming onto the market, then I saw today’s existing home sales numbers from the National Association of Realtors.

US existing home sales were up 1.38% in June from May, but up 22.85% YoY.

But the scary numbers were median price of existing home sales YoY printing at +23.4% while EHS inventory increased to the highest level … in 2021 but 2021 is sill lower than anytime since 2000. Maybe July’s numbers will show that incredible spike.

Existing home sales were largely in the South, then Midwest, then West and finally the Northeast.

But look at distribution of EHS prices. Houses in the $100K-$250K range (green line) are rapidly vanishing while houses in the $500K-$750K (pink line) are rapidly increasing.

Where have all the affordable house gone?

The good news? Freddie Mac’s 30 year commitment rate fell again.

The housing and mortgage markets are being washed in The Fed’s dirty water.

Wells Fargo’s 41.44% Earnings Surprise In Q2 Despite Lower Lending And Higher Deposits (The New [Ab]Normal?)

Is this the new normal for banking? A big 4 bank actually had a huge upside earning … on declining lending??

Yes, Wells Fargo had a 41.44% earnings surprise on July 14, 2021.

Wells Fargo Earnings Per Share (EPS) plunged during the March 2020 Covid outbreak, but has been recovering … in terms of EPS and share price.

Wells Fargo is seeing booming deposits (green) at virtually zero deposit rates while loans have fallen (green). The recent widening between deposit and loans is in the pink box while the general widening has taken place since Q4 2010.

Total loans to total assets (white) has been falling since The Financial Crisis and housing bubble burst.

Wells Fargo’s total risk based capital ratio dramatically increased after the financial crisis, as it did for all banks.

O-ho the Wells Fargo Wagon is a-comin’ down the street, but to collect deposits and make fewer loans.

Ya got trouble right here in DC city.