Confounded Interest – Anthony B. Sanders
Financial Markets And Real Estate
Bloomberg’s market pulse gauge is signalling panic.
The Bloomberg market pulse index quantifies sentiment using 6 factors — price breadth, pairwise correlation, low vol performance, defensive vs. cyclical sector performance, high vs. low leverage performance and high yield spreads.
It’s currently as panicked as in 2008!
Challenger US Job Cut Announcements for September rose 67.6%, the highest since … Covid-19 outbreak in early 2020. This comes after the JOLTS (job openings) fell the most since … Covid-19.
And with rising US job cuts, we are seeing an increase in the probability of a US recession over the next year. But the Conference Board predicts a 96 percent likelihood of a recession in the US within the next 12 months.
Apparently, the US is going down, down, down.
This index quantifies sentiment using 6 factors — price breadth, pairwise correlation, low vol perf, defensive vs. cyclical sector perf, high vs. low leverage perf and high yield spreads.
It’s currently as panicked as in 2008!
I was confused when President Biden claimed ‘I was sort of raised in the Puerto Rican community’ in Delaware.” Here are Joe and Jill Biden singing “America.” Apparently, Biden was in the Sharks gang and Trump’s MAGA supporters are the Jets.
On the real estate side, Bankrate’s 30-year mortgage rate dropped to 6.85% as the 10-year US Treasury yield drops.
On the home price front, according to the Black Knight Home Price Index (HPI), median home prices fell 0.98% in August, only marginally better than July’s upwardly revised 1.05% monthly decline July. August 2022 marked the largest single-month price declines seen since January 2009 and rank among the eight largest on record. The monthly rate of home price decline is now rivaling that seen during the Great Recession – the question is how long it will continue to do so, and how far off peaks prices will fall.
Now, will The Fed pivot to correct the plunging M2 Money growth?
Here is Joe Biden’s memory of a Maga rumble from Wilmington Delaware. I assume Trump is Riff and Biden is Bernado. But where is Corn Pop??
As I frequently told my investment and fixed-income securities students at Chicago, Ohio State and George Mason University, any 10 basis point change in the US Treasury 10-year yield is significant.
But how about today’s 20 basis point decline in the US Treasury 10-year yield?
The UK’s 10-year yield is down even more at -24.1 basis points. Germany is down -18 bps and France is down -10.3 bps.
Speaking of credit default swaps, Credit Suisse is back to financial crisis levels while UBS and Deutsche Bank are not … yet.
And gold jumped $28.5 dollars today as POP goes the yield.
With all the turbulence in markets thanks to the war in Ukraine and Biden’s green energy mandates and spending (not to mention Statists like Klaus Schwab screaming about a Great Reset), I was reminiscing about more simple times.
It is like the Lehman Brothers debacle in 2008 all over again.
(Bloomberg) — Credit Suisse Group AG was plunged into fresh market turmoil after Chief Executive Officer Ulrich Koerner’s attempts to reassure employees and investors backfired, adding to uncertainty surrounding the bank.
The stock, which had already more than halved this year before Monday’s sell-off, fell as much as 12% in Zurich trading to a record low that values the firm at less than $10 billion. That was accompanied by a spike in the cost to insure the bank’s debt against default, which jumped to its highest ever.
Koerner, for the second time in as many weeks, had sought to calm employees and the markets with a memo late Friday stressing the bank’s liquidity and capital strength. Instead, it focused attention on the dramatic recent moves in the firm’s stock price and credit spreads, and investors rushed for the exit when trading reopened after the weekend.
One notable difference between 2008 and today is that Credit Suisse’s equity was flying high in June 2007 then crashed a the global banking crisis went into full motion. We then saw Credit Suisse’s credit default swaps soar in early 2009. But today Credit Suisse’s equity is a pale imitation of its former self, but its credit default swap is now higher than it was at its peak in early 2009.
Credit Suisse is now trading lower than its European rival Deutsche Bank (aka, The Teutonic Titanic).
Yes, this brings back sickening memories of the 2008-2009 global financial crisis. Let’s see how The Federal Reserve, ECB and Bank of Switzerland handle this debacle, particularly with M2 Money growth so low.
It appears that we are in another Lehman debacle. Or should I say “Lemur Bros.”
My 401k is Livin’ in Biden’s Paradise.
The percentage of NYSE stocks closing above the 200 day moving average has collapsed to 13.48% as The Fed tightens to fight Bidenflation.
Bollinger Bands? The lower band is near breaking.
Fibonacci retracement? NOT retracing.
Elliott Wave? I feel like I am at the bottom at Nazare, Portugal.
Ichimoku cloud? The NYA index is so far below the cloud it has landed.
Yes, I feel like my 401k is surfing at Nazare, Portugal.
Sink The Bismarck! Or at least sink the German economy.
Between going green and the war in Ukraine, Germany is seeing economic distress (high inflation) and a -7.89% Real 10yr yield. At least the US is seeing “only” a -4.43% REAL 10yr Treasury yield.
Like the US, I wonder who in Germany studied game theory? That is, going green leaves nations vulnerable to foreign nations oil and natural gas supplies. Like Russian natural gas.
The Nash equilibrium is a decision-making theorem within game theory that states a player can achieve the desired outcome by not deviating from their initial strategy. In the Nash equilibrium, each player’s strategy is optimal when considering the decisions of other players.
Unfortunately, the US and Germany have deviated from the initial strategy are are paying dearly with skyrocketing energy prices. Particularly as we enter the winter season.
So, who blew up the Nordstream natural gas pipeline going from Russia to Germany?
I can take a guess.
We are living in an inverted (bond) world!
19 nations now have inverted 10yr-2yr yield curves.
And housing inventory for sale growth is soaring out West and in Tennessee?
At least Ohio is seeing a modest increase in housing inventory for sale.
On a parting note (before I watch the Ohio State Buckeyes annihilate the Rutgers Scarlet Knights tomorrow at 3pm EST, reverse repos parked overnight at The Fed just hit an all-time high. Apparently, banks don’t believe Janet Yellen’s inflation is transitory mumbo-jumbo.
Bidenflation and The Fed’s counter-attack has caused considerable damage to the housing and mortgage markets.
Today, the University of Michigan consumer sentiment indices were released for September. Of note, buying conditions for houses remained in the tank.
As The Fed tightens, the entire range of Agency MBS TBA (to be announced) are under $100.
For example, the FNCL 2.5% TBA is now 84-17. And falling like a paralyzed falcon.
Here is Brainard with Fed Chair Jerome “Foul Owl” Powell, the dynamic duo of crashing markets.
Welcome to DeSantisville! Miami and Tampa Florida are the only metro areas in the nation (at least of the top 20 metro areas) growing at >30% growth in home prices.
But at the national level, the Case-Shiller National home price index “cooled” to 15.77% growth YoY as The Fed continues to tighten.
My former home, Phoenix AZ, finally is no longer the fastest growing metro area in terms of home prices, relinquishing the crown to Miami and Tampa FL.
It almost seems that people are trying to escape the mess Gavin Newsome made in California and are escaping to Arizona, Nevada, Florida and Texas. But note that all 20 metro areas are positive in growth YoY, but 12 of the top 20 metro areas experienced NEGATIVE growth from June to July.
Any questions as to whether The Fed is killing the housing and mortgage markets??
On a different note, we see all hell breaking out in Great Britain. Like the US, Great Britain’s inflation is off the charts and the Bank of England is scared about the Pound getting pounded with BofE tightening.
Is FLA governor Ron DeSantis actually Snake Pliskin??
Confounded Interest - Anthony B. Sanders 
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