Movin’ On Up To The Dark Side! US Core Inflation Rises To Highest Level (6.6% YoY) Since 1982, Bond Volatility Now Highest Since Covid Lockdown (REAL Weekly Wage Growth Declines To -3.8% YoY)

The US is movin’ on up, to the dark side, while DC elites live in deluxe apartments in the sky. The US is movin’ on up to the dark side, we finally got a piece of the Banana Republic pie. … And its tastes horrible!

Today, the BLS released its inflation data. And it was terrible.

To begin with, headline inflation remains high at 8.2% YoY while CORE inflation (headline less food and energy) rose to 6.6% YoY.

Meanwhile, REAL average weekly earnings growth YoY further declined to -3.8% YoY.

On the bond front, the Bank of America ICE bond volatility index rose to Great Recession/banking crisis levels (also achieved during the Covid government shutdowns).

But back to the low-ball BLS inflation data. The biggest gain in price is … fuel oil at 33.1% YoY. Food at home rose 13.0% while gasoline rose 18.2%. Rent, according to the BLS, rose 6.6%.

Biden has probably been told by Ron Klain and Susan Rice that this is a good report.

US Mortgage Applications Drop Another 2% To Lowest Level Since 1997 As Fed Tightens Monetary Policy To Fight Bidenflation

Mortgage applications decreased 2.0 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending October 7, 2022. As mortgage rates soar with Federal Reserve tightening.

The Refinance Index decreased 2 percent from the previous week and was 86 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 39 percent lower than the same week one year ago.

What Was The White House Press Secretary Talking About? REAL Disposable Income Growth Is NEGATIVE And Diesel Prices Are Skyrocketing (Gasoline Prices Rising Too) Will The Fed Pivot Soon?

I feel sorry (sort of) for people like White House Press Secretary Karine Jean-Pierre who has to read ridiculous scripts in defense of awful Federal policies. For example, yesterday she touted Biden’s “accomplishments” of rising real disposable US income and declining gasoline prices. What? Doesn’t she read Confounded Interest?? /sarc

First, REAL disposable personal income growth for the US is NEGATIVE and has been since Biden and Congress embarked on their green energy crusade driving US inflation to its highest level in 40 years. Not exactly a great sales point for the midyear elections.

If we look at REAL average hourly earnings growth, a similar measure, we see that it is negative also. So, what on earth is Jean-Pierre talking about?

She also mentioned that gasoline prices are falling. Except that they are rising again. Apparently her talking points were from September.

Then we have diesel fuel prices, the backbone of the shipping industry, rising like crazy as Biden drains the strategic petroleum reserve.

Meanwhile, The Federal Reserve is tightening their uber-loose monetary policies (thanks Bernanke, Yellen and Powell). Will The Fed pivot to help with the midterm elections OR will The Fed keep trying to extinguish inflation by raising rates and withdrawing Fed monetary stimulus?

The we have Biden speaking (incoherently) with Jake Tapper about the possibility of recession.

The Inflation Hydra! Los Angeles Diesel Prices UP 176% Under Biden While Strategic Petroleum Reserve DOWN -34.7%

Inflation is a multi-headed hydra (from Greek Mythology). It is composed of 1) monetary stimulus (that The Fed is slowly withdrawing), 2) massive, reckless Federal spending and 3) Biden’s anti-fossil fuel mandates. So, when the inflation numbers are out later this week, it will be fun to dissect the damage being done to the US economy and middle-class/low-wage workers.

Take Los Angeles, for example. The life blood of the shipping industry, diesel fuel, is UP 176% under Biden, despite declining for a short period of time. And the DOE Strategic Petroleum Reserve is DOWN -34.7% under Biden.

Here is a photo of Jerome Powell (Fed Chair) trying to fight the inflation hydra. Unfortunately, one of the inflation hydra heads is The Federal Reserve itself.

Thanks to Gustavo Fuhr!

The Perils Of Fed Tightening In One Chart (Or Sweet Home DC!) Treasury Yield Curve Remains In Reversion And Stock Market Declining As Fed Reduces Money Supply Growth

Sweet home DC! At least for the ruling elites. For the rest of us mortals, Bidenflation is crushing our finances.

To combat Bidenflation, The Fed has signaled that they will continue to raise interest rates. But at what cost?

(Bloomberg) — The world’s leading central banks are finally pushing their interest rates into restrictive territory, causing fears of overkill in financial markets and stoking chatter that policymakers may need to pivot at some point.

And with the withdrawal of monetary stimulus comes the slowdown of US M2 Money growth (green line). And with that slowdown, we see a declining stock market and an inverted US Treasury yield curve.

Of course, Biden could reverse his green energy agenda and allow for oil and natural gas exploration … again. Or begin building nuclear power plants again. But nooooo.

Another peril is rising mortgage rates.

Here is the S&P 500 against global liquidity.

Speaking of Freddie King, here is Joe Biden’s favorite song: hideaway.

US Mortgage Rates Rise To 7.04% As Housing Market Chills (WTI Crude And Gasoline Prices On The Rise Again As Biden Fails To Convince OPEC To Pump More Oil)

Under “Nuclear Joe” Biden, the US is truly the land of confusion.

As the Biden Administration touts “affordable housing,” we are seeing the 30-year mortgage rate rise above 7% as The Federal Reserve fights inflation … caused by the Biden Administration. Meanwhile, US home prices are falling.

The Biden Administration launched a war on domestic energy production, resulting in crude oil prices rising 74% under Biden and regular gasoline prices rising 62.4%.

As Biden pleaded with OPEC to increase oil production, he was embarrassingly rejected. Hence, West Texas Crude Oil prices have begun to rise again along with gasoline prices (pink box).

How about unemployment and the 10yr-2yr yield curve?

Everybody Panic! Bloomberg’s Market Pulse Gauge Signals PANIC As The Market Pulse Index Collapses To Great Recession Lows

Everbody panic!

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!

Down, Down, Down! Challenger Job Cuts Rises 67.6% Following Worst US JOLTS Report Since Covid Outbreak (Conference Board Predicts 96% Probability Of Recession Over Next 12 Months)

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!

America! US 30yr Mortgage Rates Declines To 6.85% As US Home Prices Retreat From Highs (Will The Fed Pivot To Increase M2 Money Again?)

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??

Great Reset?? US Treasury 10yr Yield Tanks -20 Basis Points (UK 10yr Tanks -24.1 BPS)

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.