Manufacturer’s Durable Goods New Orders growth peaked in April 2021, thanks in part to M2 Money Growth peaking in February 2021. And its been all downhill since then.
This is the 8th downward revision of durable goods orders in the last year…
Source: Bloomberg
Under the hood, defense and non-defense capital goods orders rose with non-defense aircraft orders surging over 30% MoM…
Source: Bloomberg
But… it looks like the AI bubble just burst as Computer & related Products orders plunged 3.9% MoM – the biggest drop since COVID lockdowns…
Source: Bloomberg
Finally, and more problematically, core capital goods shipments – a figure that is used to help calculate equipment investment in the government’s gross domestic product report – saw only a small 0.2% MoM rise, which left core shipments down 1.2% YoY – the biggest YoY drop since the COVID lockdowns…
Source: Bloomberg
Now that Biden is considering a NATIONAL CLIMATE EMERGENCY granting him 130 War-like powers, I shudder to think for much green spending he will initiate.
Biden: “How many times does Trump have to prove we can’t be trusted?”
President Obama selected Slow Joe Biden as his Vice President because 1) he was white and 2) an alleged foreign policy wizard in The Senate. Between Afghanistan, Ukraine, Israel, Taiwan and every other foreign policy disaster under his leadership, I am beginning to doubt Biden’s foreign policy acumen. For example …
While we are acutely aware of the fact that ‘correlation is not causation’, one would find it hard to argue that the practically perfect concomitance of China’s Treasury holdings and the yield of the US 10Y Treasury note over the past three years makes us wonder (in our out-loud voices), if – away from The QT, The FedSpeak, the macro-economy, the geopolitical crises, the AI-hype, the growth scares – if it’s not just all a well-managed (slow and steady) liquidation of China’s (still massive) US Treasury holdings…
Source: Bloomberg
It’s hard to argue they don’t have an incentive to a) de-dollarize, and b) not liquidate it all at once, shooting themselves in the face.
While the de-dollarizing has been steady in Treasury-land (enabled by a vast sea of liquid other players), things have been a little more ‘obvious’ in the alternative currency space – i.e gold.
And in case you wondered, it’s not just China and Russia, world reserve Treasury holdings are ‘relatively’ flat (based on Fed’s custody data) while according to The IMF, the world’s sovereign nations have been buying gold with both hands and feet…
Source: Bloomberg
…happy to take whatever retail-ETF-sellers are offering into their physical vaults…
Source: Bloomberg
Finally, as we note in the chart, this all started to ‘escalate quickly’ when Washington really started to weaponize the dollar.
Assuming that all the US gold is still in Fort Knox (and assuming that China and Russia are honest about their holdings), the world’s ‘other superpowers’ are rapidly catching up to the US’ holdings…
Source: Bloomberg
Who could have seen that coming? With mortgage rates hitting 7.5%, the home price to median household income ratio just hit an all-time high.
The 10Y Treasury yield just hit 4.519%.
And we have The Federal Reserve posting record losses.
Did we REALLY elect this fool Biden as President??
Come feel the noise! After steady growth in 1-unit housing starts under Trump, housing starts have been eratic under Biden despite the foreign invasion force of millions … of low wage workers.
For context, this is the largest MoM drop in housing starts since the COVID lockdowns…
Source: Bloomberg
It was a bloodbath across the board with Rental Unit Starts plummeting 20.8% MoM…
Source: Bloomberg
That pushed total multi-family starts SAAR down to its lowest since COVID lockdowns…
The plunge in permits was less dramatic and driven completely by single-family permits down 5.7% to 973K SAAR, from 1.032MM, this is the lowest since October. Multi-family permits flat at 433K
Intriguingly, while starts and completions plunged in March, the BLS believes that construction jobs surged to a new record high…
Source: Bloomberg
Finally, just what will homebuilders do now that expectations for 2024 rate-cuts have collapsed?
Source: Bloomberg
One thing is for sure – do not trust what homebuilders ‘say’ (as NAHB confidence jumped to its highest since May 2022 at the same time as housing starts crashed)…
Joe Biden, his Administration, and The Federal Reserve are really “The Alligator People.” Despite what they tell you, they have small brains (particularly Biden) and are hyperfocused on spending.
A good example comes from “Wall Street On Parade” where they show that The Federal Reserve is still paying BILLIONS to US Treasury in the form of remittances (losses). While at the same time, paying the mega banks on Wall Street high interest loans.
As of April 3 of this year, the Federal Reserve (Fed) has racked up $161 billion in accumulated losses. We’re not talking about unrealized losses on the underwater debt securities the Fed holds on its balance sheet, which it does not mark to market. We’re talking about real cash losses it is experiencing from earning approximately 2 percent interest on the $6.97 trillion of debt securities it holds on its balance sheet from its Quantitative Easing (QE) operations while it continues to pay out 5.4 percent interest to the mega banks on Wall Street (and other Fed member banks) for the reserves they hold with the Fed; 5.3 percent interest it pays on reverse repo operations with the Fed; and a whopping 6 percent dividend to member shareholder banks with assets of $10 billion or less and the lesser of 6 percent or the yield on the 10-year Treasury note at the most recent auction prior to the dividend payment to banks with assets larger than $10 billion. (This morning the 10-year Treasury is yielding 4.41 percent.)
Operating losses of this magnitude are unprecedented at the of Fed, which was created in 1913. In a press release dated March 26, the Fed stated this: “The Reserve Banks’ 2023 sum total of expenses exceeded earnings by $114.3 billion.”
As the chart above indicates, the Fed’s ongoing weekly losses have ranged from a high of $3.3 billion for the week ending Wednesday, January 31, 2024, to $1.86 billion for the most recent week ending Wednesday, April 3, 2024.
American taxpayers have good reason to sit up and pay attention to the Fed’s giant and ongoing losses. That’s because when the Fed is operating in the green, as it was on an annual basis for 106 years from 1916 through 2022, the Fed, by law, turns over excess earnings to the U.S. Treasury – thus reducing the amount the U.S. government has to borrow by issuing Treasury debt securities. According to Fed data, between 2011 and 2021, the Fed’s excess earnings paid to the U.S. Treasury totaled more than $920 billion.
WHO pays for the student loan forgiveness? It just doesn’t vanish, it is transferred to taxpayers. Alligators like Alexandria Ocasio Cortez going on talk shows to argue the benefits of being free from financial obligations that student voluntarily agreed to. Say, can AOC get my mortgage forgiven?? Just kidding. Now those same students can borrow additional money to get MBA degrees with the expectation that the student loan is “free money.”
Yes, Biden is acting recklessly (no surprise). Here is a picture of King Gator, Joe Biden.
The Biden Administration and The Federal Reserve ARE the alligator people. Except these gators are hungry for your money and votes constantly.
Despite Biden’s rambling that inflation is improving, bear in mind that the inflation rate is at it highest in 50 years. Yes, it has improved from 18% in 2022 to above 10% today.
A recent research paper by four noted economists, including Larry Summers, the former Treasury Secretary under Barack Obama and former Harvard President, discovered that the real inflation rate during the Biden years, using pre-1983 calculations reached 18% in 2022.
The number is the highest inflation rate the country has seen in over 50 years.
Gold futures prices are soaring and are at $2,422.00. Gold futures prices are up 19.61% over the past year.
Silver futures prices are also soaring and are at $29.64. Silver futures prices are up 16.40% over the past year.
Bitcoin is almost at $70,000 and is up 133.44% over the past year.
Returning to gold, we are seeing another gold breakout, like the breakout in 2008.
Even central banks are loading up on gold, silver, and cryptos. Why? Primarily fear of US reckless budgets and exploding debts/deficits (don’t listen to Biden talk about how “he” reduced deficits and debt (both have risen to dangerous levels under he inattentive eyes).
However, calming the jangled nerves of pension funds is that the S&P 500 stock market index is up 26.04% over the past year.
Overall prices are up by 19.4% since Biden took office.
Of course, the S&P 500 is not sustainable given that it has been driven by excessive spending by the Biden Adminstration coupled with still massive monetary stimulus from The Federal Reserve.
In summary, gold, silver and cryptos are rising on FEAR! Of Biden, Congress and The Fed.
One reason that America’s youth is disgusted with Bidenomics is skyrocketing prices, particulalry housing. (simply unaffordable). Thanks to awful economic policies, home prices are up 32.5% under Biden and 30-year mortgage rates are up a whopping 160%! Good luck buying a home with a part-time job.
The bad news is that the 10-year Treasury yield rose to 4.53%, the highest since November 2023. This means that mortgage rates will rise even further.
Yes, rising rates AND home prices are daunting to part-time job holders.
Funky cold Joe Biden is his reaction to inflation caused by his outragous spending. His legion of sycophants are now saying inflation is a good thing or don’t notice it. But Biden will never stop spending .
Coming into today’s CPI number, which followed three previous red-hot inflation prints, we said that it’s time for a “miss” (the first of 2024) not because the data demands it – on the contrary, prices continue to rise at a frightening pace – but because a dovish CPI print today would be the last opportunity for the Fed to set a timetable for a rate cut calendar ahead of November’s election.
Well, you can wave goodbye to all that, because we just got the 4th consecutive “inflation beat” in a row…
… with supercore inflation coming in blazing hot…
… thanks to a boiling inflation print which saw every single CPI metric coming in hotter than expected – was a shock, not because it reflected reality, but because it effectively sealed Biden’s fate because as Bloomberg’s Chris Antsey writes, “obviously, this is very bad news for Joe Biden… we’re approaching the point where high inflation is bound to still be in voters’ minds when they head to the polls, regardless of how the price figures come in over summer.”Easy financial conditions continue to provide a significant tailwind to growth and inflation. As a result, the Fed is not done fighting inflation and rates will stay higher for longer.”
It’s about to get even worse: recall today we have a $39 billion 10-year auction which is already being dubbed “sloppy” and a definitive break of 4.5% could easily extend if underwriting dealers are left holding the bag. As it stands, the 10yr has popped above the 4.5% parapet. Ian Lyngen at BMO Capital Markets says:“We expect the setup to the auction will break 4.50% in 10-year yields with ease.”
Obviously, this is very bad news for Joe Biden. It’s still only April, and we’ll have another half-a-year’s worth of inflation reports before the election. But we’re approaching the point where high inflation is bound to still be in voters’ minds when they head to the polls, regardless of how the price figures come in over summer.
Joe Biden continues to act like a gangsta giving away student loan forgiveness despite being told no by the US Supreme Court. As I said, Funky Cold Joe Biden. But Biden’s gangstaism favors the top 0.5% of net worth people, not the masses.
As Biden gropes for more voters, claiming he was raised in Puerto Rican, Greek, Black, and every other race on the planet, he probably sings “Ride The White Horse” to The Presidency. Reminiscint of Hillary Clinton claiming she kept a packet of hot sauce in her purse when talking to a black commentator.
We are living in the USA where corruption, favoritism, open borders and an out-of-control Federal budget and debt are destroying this once great nation.
Former Kansas City Fed President Thomas M. Hoenig was absolutely right when he said recently that The Federal Reserve panders to Wall Street, Congress and special interest groups, prioritizing immediate relief over financial stability. Bernanke’s zero-interest rate policies (ZIRP) and Quantitative Easing (QE) were short-term fixes that never went away. Indeed, since the subprime mortgage crisis of 2008-2009, US Dollar purchasing power is DOWN -32% and M2 Money is up a staggering 177%. While Yellen stuck with zero-interest policies until Trump was elected, then raised The Fed Funds Target Rate 8 times. Yellen only raised the target rate once under Obama. Clearly playing political favoritism.
The Federal Reserve’s lack of transparency comes amidst reports that countries are removing their gold and other assets from the U.S. in the wake of the unprecedented Western sanctions imposed on Russia over its invasion of Ukraine. According to a 2023 Invesco survey, a “substantial percentage” of central banks expressed concern about how the U.S. and its allies froze nearly half of Russia’s $650 billion gold and forex reserves.Headline USA filed a FOIA request with the Fed for records reflecting how much gold the Federal Reserve Bank of New York currently holds in its vault, as well as records reflecting the ownership stake that each of FRBNY’s central bank/government clients have in that gold. The FOIA request also sought records about the Fed’s gold holdings prior to Russia’s February 2022 invasion of Ukraine. However, the Federal Reserve denied the FOIA request on Wednesday.
It influences the price of nearly everything, as well as the availability of jobs, the stability of our banking system, and the purchasing power of our money.
When the Fed Chair speaks, the entire world stops to listen.
But the average person has a poor understanding of how this colossally important entity operates. Or even why it exists.
And after a series of asset price bubbles — which some argue we’re in another one now — a chorus skeptical of the Fed’s actions has emerged.
So today we’re doing our best to shine as bright a light as possible on the Fed: how & why it operates, the good & as well as the shortcomings of its actions to date, what direction its policies are likely to take from here, and how all of this impacts the households of regular people like you and me.
Here are my top takeaways from from a speech by former KC Fed President Thomas Hoenig:
Dr Hoenig admits the Federal Reserve has experienced substantial “mission creep” since its creation as a lender of last resort. Its track record is very much “mixed” in terms of delivering on the intent of its policies. In Dr. Hoenig’s opinion, its efforts to add stability sometimes instead only create more instability.
While very critical of the Fed’s QE and ZIRP policies in the wake of the GFC, and more recently in the $trillions in monetary & fiscal stimulus unleashed post-COVID, Dr Hoenig thinks current Fed policy is “about right”. Though he expects the Fed to come under serious pressure soon as ebbing liquidity allows recessionary forces to build. He thinks the Fed will need to make an important decision within the coming year: return to QE and re-flame inflation, or allow a recession to occur.
Dr Hoenig criticizes the Federal Reserve for pandering to various interests, noting that short-term thinking and pressures from Wall Street, Congress, and interest groups often lead to decisions that prioritize immediate relief over long-term stability — a sort of “We’ll act now for optics sake and hopefully figure things out later”
In Dr Hoenig’s opinion, our fiscal policy is a runaway disaster. He criticizes both political parties of Congress for their roles in the cycle of ever-increasing deficits. Democrats advocate increased spending and tax hikes, while Republicans aim to keep taxes low but fail to curb spending. He warns of dire long-term consequences for future generations due to this impasse.
Dr Hoenig is very worried about the current stability of the banking system (and this from a former Direct of the FDIC!). He advocates for essential reforms to address government spending, prioritize essential areas without relying on future borrowed funds or inflationary measures, and communicate transparently with the public. He stresses the importance of reducing debt growth substantially below national income growth to avoid a full-blown crisis scenario in the future.
Dr Hoenig predicts the purchasing power of the US dollar (and other world fiat currencies) will continue to decline due to current policies and the lack of a “discipline” to money creation. Until such a discipline is restored (perhaps a return to some sort of hard backing of the currency), the dollar’s fall in purchasing power won’t abate.
Dr Hoenig suggests investing time in reading history and biographies as a valuable way to learn about leadership and gain insights into what strategies works and which don’t.
Here is the “Sound Money Parade” in 1896. By the aftermath of the subprime crisis, Janet Yellen (1993-2020) adopted the UNSOUND Money Fest, an orgy of printing and charging near zero interest rates. Powell in 2021 is ever-so-slowly unwinding The Fed’s balance sheet, but Powell has raised The Target Rate to its highest level since 1998 to fight inflation caused by Biden’s policies.
Combine The Fed not telling us how much gold they hold and their overprinting problems since 2008, and you can see why investors are turning to gold and silver and crypto currencies. The adoption of Central Bank Digital Currency (CBDC) is a step towards financial collapse.
Here is a parade you will NEVER see in Washington DC. A Sound Money Parade!
Powell is beginning to act like a sound money fan, but he still is taking his sweet time shriking the balance sheet.
I am thinking of fleeing to Lilliehammer Normay like Frank Tagliano.
Joe Biden (aka, BeelzeBiden) is really a piece of … work. His policies are helping drive prices through the roof, he seeks to protect deepstate employees against removal by Trump, had a disastrous withdrawal from Afghanistan and is getting the US engaged in possible hot wars in Ukraine (against Russia), open borders allowing US crime to spike, seems to be suppoporting Hamas over our long-time ally Israel, the list goes on. Biden’s big push for electric cars is a Socialist fantasty and simply unrealistick, drives up energy costs and is EXPENSIVE. It is like Biden is the demon Beelzebub from the TV show “Supernatural.” I once referred to Washington DC as “Mordor on The Potomac.”
Throw in the Federal Reserve operating outside their mandate (excessive interference in the financial crisis of 2008, the excessive interfernce after the Covid outbreak in 2020) and the two together are destroying the US.
Look at housing prices (up 32.5% under Biden) against the purcchasing power of the US dollar (down -16.1% under Biden).
The problem has gotten so bad that Sedona, Arizona, recently set aside a parking lot exclusively for these homeless workers. The city is even installing toilets and showers for the new occupants.
Apparently, the City Council thought installing temporary utilities was cheaper than solving the area’s cost-of-living crisis.
And what a crisis it is.
The average home in the city sells for $930,000, while most of the housing available for rent is not apartments, but luxury homes targeted at wealthy people on vacation.
With such a shortage of middle-class housing and with starter homes essentially nonexistent, low- and even middle-income blue-collar workers have nowhere to go at night but their back seat.
Much like America’s Great Depression in the 1930s, this marks a serious regression in our national standard of living. But shantytowns were not prevalent in the 1920s (a decade that began with a depression) or the 1910s. Nor were they ubiquitous following the Panic of 1907, which set off one of the worst recessions in American history.
Indeed, Americans in the Great Depression faced such a cost-of-living crisis that many were forced to accept a standard of living below what their parents and even their grandparents had.
Fast-forward about 90 years, and countless families are in the same boat. Many young people today don’t think they’ll ever be able to achieve the American dream of homeownership that their parents and grandparents achieved. The worst inflation in 40 years, rising interest rates, and a collapse of real (inflation-adjusted) earnings mean a huge step backward financially.
That inflation has pushed up rents so much that young Americans are moving back in with their parents at rates not seen since the Great Depression because they can’t make it on their own. Sometimes, they can’t even make it with multiple roommates.
But many people cannot move back in with family, so the car it is.
The housing problem is not limited to wealthy towns in Arizona, however. It is systemic. The monthly mortgage payment on a median-price home has doubled since January 2021, and rents are at record highs. Like the Great Depression, this disaster stems from impolitic public policy.
For the past several years, the government has spent, borrowed, and created trillions of dollars it didn’t have. The predictable result of this profligacy was runaway inflation, followed by equally foreseeable interest rate increases.
The deadly combination of high prices and high interest rates has frozen the housing market and reduced homeownership affordability metrics to near-record lows. In several major metropolitan areas, it takes more than 100 percent of the median household after-tax income to afford a median-price home.
Since rents and virtually all other prices have risen so much faster than incomes over the past three years, even renting is unaffordable today, so many people have to go into debt to keep a roof over their heads. And for some, that’s a car roof.
This is the kind of story you might expect from a Third World country or somewhere behind the Iron Curtain during the Cold War, not the largest economy in the world—at least not outside of a depression like the one in the 1930s.
Hoover certainly deserved some blame for the Great Depression, but so did the progressives in Congress, who came from both parties and repeatedly voted to meddle in the economy instead of allowing it to recover from the initial downturn.
Similarly, President Joe Biden deserves blame for constantly advocating runaway government spending. (Runaway Joe??)
But today’s multitrillion-dollar deficits are also made possible by the big spenders in Congress, who come from both parties.
If this bipartisan prodigality of Washington continues, Bidenvilles will only become more widespread as the housing affordability crisis worsens.
Biden’s official White House portrait.
Washington DC under Biden and Schumer, Pelosi, etc.
Confounded Interest - Anthony B. Sanders 
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