What a mess Biden and his Progressive backers have made. And we are forced to suffer the consequeinces of his policies. Or follies!
Money-market funds saw inflows for the 7th week of the last 8 with a $42BN jump (the most in 2 months) to a new record high of $5.625TN…
Source: Bloomberg
The inflow was dominated by a $24BN increase in Institutional fund assets while Retail also saw a sizable $17.7BN increase…
Source: Bloomberg
And the divergence between money-market fund assets and bank deposits continues to grow…
Source: Bloomberg
And while we actually saw huge deposit outflows (on a non-seasonally-adjusted basis) – despite The Fed’s seasonally-adjusted deposits increase – The Fed balance sheet shrank by another $20BN last week to its smallest since June 2021…
Source: Bloomberg
The Fed’s QT program continues apace with$18.4BN sold last week to its smallest since June 2021…
Source: Bloomberg
Usage of The Fed’s emergency bank funding facility jumped by $328 Million last week to a new high of $108BN…
Source: Bloomberg
Fed BS weekly change:
Fed balance sheet QT (Notes and bonds decline): $4.255 trillion, down $18,2BN
Discount Window $2.1BN, down $800M from $.29BN
BTFP new record $107.9BN, up $400MM
Other Credit Extensions (FDIC Loans): $133.8BN, down $0.6BN from $134.4BN
Finally, US equity markets and bank reserves at The Fed have converged a little recently, but the gap remains wide (thanks to the plunge in reverse repo balances)…
Source: Bloomberg
Tick, tock, banks!
Source: Bloomberg
You have six months to figure out how to clean up the $108 Billion hole in your balance sheet that you’re currently paying The Fed’s exorbitant rates to fill.
Bank deposit growth remains negative as The Fed tightens its overly accomodative monetary policy.
And then we have this chart showing plinging M2 Money (white line fever).
And the horrific unrealized losses on bank’s books.
Bidenomics is failing America. Primarily because Biden was one of the stupidest members of the US Senate. Not to mention nasty. Great President, America! /sarc
As Bidenomics fails to do anything other than make big donors wealthier (green energy companies, big tech and union bosses, etc), we are seeing the impacts of Fed monetary tightening to combat inflation caused by Biden/Pelosi/Schumer’s spending spree.
First, the 10-year REAL Treasury yield is close to breaching 2%.
Second, 30-year mortgage rates are now 7.62%, up over 150% under Bidenomics.
Third, mortgage purchase applications crashed to the lowest level since 1995.
Fourth, the 2-year Treasury yield just breached 5%.
Fifth, the 10Y-2Y yield curve remains deeply inverted.
Speaking of Bidenomics, US mortgage purchase demand just declined to the lowest level in 28 years.
Mortgage applications decreased 2.9 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 1, 2023.
The Market Composite Index, a measure of mortgage loan application volume, decreased 2.9 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 5 percent compared with the previous week. The Refinance Index decreased 5 percent from the previous week and was 30 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 5 percent compared with the previous week and was 28 percent lower than the same week one year ago.
This is not good.
Bank deposits, a source of bank lending, are down -4% YoY as The Fed tightens rates.
Here is Lefty Frizzell’s original version of the Bidenomic’s themesong “If you’ve got the money, honey,I’ve got the time.” Like big donors receiving green energy subsidies. But not middle class mortgage borrowers.
Thanks to Bidenomics, code for massive Federal spending on green energy initiatives and payoffs fo large donors, we have agonizing inflation and consumers are borrowing more and more to cope with inflation. And with the increased use of debt comes …. drumroll … delinquenices!
The US conforming mortgage rate is UP 158% under Bidenomics.
Let’s move on to some forms of consumer loans, where the story is a little more daunting.
Auto loans are definitely the epicenter of the credit cycle. While the overall average is a still somewhat tame 2.41%, younger borrowers are not keeping up. Younger borrowers have delinquency rates that are 1-2% higher than the average while the inverse is true for older borrowers. Eighteen-to-thirty-nine year-old borrowers have the highest delinquency rate in 13 years.
Somehow, I sense that used car lots are going to start filling up again as these vehicles get repossessed. This should put downward pressure on used car prices, bringing that element of inflation down. This is one of the channels through which monetary policy works.
Lastly, I’ll take a look at credit card delinquencies.
Here is where we can really see the stresses building.
First, the overall delinquency rate has about doubled from 2.5% to 5% over the last couple years.
Second, older borrowers have seen a tick up in delinquency rates, a feature we don’t really see in other credit products.
Third, one in 12 younger 18-29 year-old borrowers are 90+ days late making their credit card payments.
Credit Card Delinquency Rate across all commercial banks hit 2.77% in the 2nd quarter, the highest level in more than a decade.
In conclusion, we are in the early days of a consumer credit cycle. Younger borrowers are the weakest link in this analysis, and this makes me wonder where rates go when student debt payments turn back on at the end of the month.
The cost of living has been soaring, and our standard of living has been steadily going down.
Coping with inflation is tough for American households where consumer debt is up 19.$ under Biden while the free-spending Federal government’s public debt is up only 16.5%.
“In July 2023, 61% of U.S. consumers live paycheck to paycheck, unchanged from June 2023, but 2 percentage points higher than July 2022. Generally, more consumers of all income brackets reported living paycheck to paycheck in July 2023 than last year,” Alia Dudum, a money expert at LendingClub told FOX Business.
Now, 78% of consumers earning less than $50,000 a year and 65% of those earning between $50,000 and $100,000 were living paycheck to paycheck in July, both up from a year ago, LendingClub found. Of those earning $100,000 or more, only 44% reported living paycheck to paycheck.
Because consumers have so little disposable income these days, retailers all over the nation are experiencing difficulty.
In fact, UBS is projecting that 50,000 stores could close in the United States by the end of 2027…
Analysts at investment bank UBS are forecasting that some 50,000 U.S. stores are likely to close by the end of 2027, because of expected cutbacks in consumer spending, tighter credit and the continued shift to ecommerce.
Store closings could accelerate to 70,000 to 90,000 if retail sales turn out to be weaker than expected, according to UBS.
Actually, I think that losing 50,000 stores is a wildly optimistic scenario.
Hopefully I am wrong about that.
The housing market has also been going haywire.
According to Fortune, the month of August “will become the worst month for housing affordability this century”…
On Monday, the average 30-year fixed mortgage rate reached 7.48%, marking the highest level since the year 2000. Even prior to this recent surge in mortgage rates, housing affordability, as monitored by the Atlanta Fed, had already deteriorated beyond the levels seen at the housing bubble’s peak in 2006. Once this latest mortgage rate surge is factored in, August 2023 will become the worst month for housing affordability this century.
Wow.
Thanks Delaware Joe Biden (as opposed to Country Joe Stalin).
Home prices are going to have to come down, and in some areas they have already fallen quite a bit…
Homeowners are sitting on a negative equity timebomb after losing $108.4 billion on their property values this year, experts say.
The average borrower saw their home equity plummet by $5,400 in the first quarter of 2023 compared to last year – with households in Washington, California and Utah worst affected.
Do you remember the housing crash of 2008 and 2009?
Well, now the next housing crash is here, and it isn’t going to be fun.
For a while there, Joe Biden and his minions could at least boast about the employment market.
But now large companies all over America are laying off workers, and it is being reported that a staggering 1.223 million native-born Americans lost their jobs during the months of July and August…
Staggering figures have revealed that over 1.2 million US-born workers lost their jobs last month while the foreign-born workforce increased by nearly 700,000 – as migrants continue to flood across the border under the Biden administration.
Data from US Bureau of Labor Statistics show that between July and August, there was a staggering decrease of 1.223 million native-born people in the workforce – which is a low not beaten since the jobs crash when Covid hit in April 2020.
The numbers that I have shared with you are nothing to brag about.
But Joe Biden is going to keep trying to pull the wool over the eyes of the American people anyway.
Unfortunately for Biden, it has become quite clear that most Americans have lost faith in him. According to the same Wall Street Journal poll that I mentioned above, 73 percent of U.S. voters now believe that Biden “is too old to run for president”…
For Biden, one of his biggest challenges is age. The Wall Street Journal poll found that about 73% of voters think Biden is too old to run for president while only 47% think Trump is too old. Thirty-six percent of voters think that Biden is mentally up for the job while 46% of voters think Trump is mentally capable of being president.
We have never seen numbers like this for any other president.
Sadly, Biden fully intends to run again. (Especially since half-wit Jill Biden is allegedly running The White House).
And the Democrats will get behind him, because at this point no other candidate is posing a serious threat to Biden. Wait, not Gavin Newsom who almost single handedly destroyed California or Michelle Obama who has absolutely no qualifiications?? Other than being Barry Soetoro’s wife?
Face it. No one in Washington DC wants to close the border. Republicans supporting big agriculture support open borders and cheap labor, Democrats love open borders for political gains, despite open borders meaning a flood of migrants and depressing job prospects for native born Americans.
Case in point. Under the leadership of Biden (more like a followship because Biden clearly isn’t in charge of anything), the native born labor force (blue line) grew by 3.6%. However, the foreign born labor force (red line) grew by 14.6%.
The media focused on 1 million jobs lost for native-born and a gain of 697k jobs for foreign-born. But this claim is misleading. Look at the month to month changes in the labor force since 2020 (pink box). In several past months, we witnessed the same thing … native born job losses when foreign born gained jobs. But several months had the exact opposite. It is the overall trend that is alarming: native born jobs only grew 3.6% under Vacation Joe Biden while foreign born jobs grew 14.6%.
If we look at Employed full time: Earnings of foreign born as percent of native born: Median usual weekly nominal earnings (second quartile): Wage and salary workers: 16 years and over, we see that the YoY growth rate of earnings for foreign born declining. I attribute this to open borders and the influx of unskilled, largely uneducated immigrants pouring over the southern border.
Biden’s biographer claims that Biden is worried that he will be remembered as “Stupid.” Well, Biden IS stupid. But he is also the most corrupt President in history.
You know Bidenomics isn’t working at all when the best I can say about it is … the current housing bubble isn’t as bad as the house price bubble of 2006. We are truly in Biden’s ShamWow economy!
Yes, if I look at real home prices less real median earnings we can see that the ratio, while terrible, is still not as bad as the housing bubble of 2006.
If I look at Case-Shiller National home price index less REAL median earnings, it is now far worse than in 2006.
But home prices are still up 32% under Biden
While the 30-year conforming mortgage rate is up 155% under Vacation Joe.
It should be GREEN ShamWow!. The money seems to be disappearing into the pockets of green energy donors, and Ukraine.
Under Bidenomics, there is still too much Fed monetary stimulus in the form of >$8 trillion on its balance sheet. While the biggest surge in Fed activity occurred with Covid, The Fed has added 10% to its balance sheet under Billions Biden.
Despite not backing off the assets purchases by The Fed, conforming 30Y mortgage rate is still up 155% under Bidenomics.
Yes, The Fed is raising its target rate to cool inflation, but doing little with its balance sheet.
The Case-Shiller national home price index is up 32% under Vacation Joe!
It seems prices are out of control and The Fed refuses to trim its balance sheet. But don’t worry, Vacation Joe is probably on yet another vacation while Maui and Flordia suffer and The Ukraine war is seeing bodies pile up. Meanwhile, he still hasn’t visited East Palestine Ohio like promised.
Soviet Joe Biden, who is a believer in Soviet-style command economies where rather than rely on free market capitalism, we now have CC (Crony Communism) running the US economy. Into the ground. But in the tradition of bad Federal policiies, Soviet Joe and Energy Secretary Granholm (with help from Congress) mandate green energy transition at all costs, watch the auto industry suffer, then bail them out. Sounds a lot of like the banking crisis of 2008 where The Federal government pushed homeownership until it helped almost collapse the banking sector, then the Federal government bailed out the banks. Rinse, repeat, bailout. And the bailout of banks in going! (Notice that The Fed has barely shrunk its $8+ trillion balance sheet!).
Automakers are looking to finish the week with strength after it was announced on Thursday that the Biden administration would be making “up to $12 billion” available to retrofit facilities to make both EVs and hybrids.
The money will include $10 billion from a US Energy Department loan program for clean vehicles and an additional $3.5 billion in financing to expand domestic battery manufacturing, according to Bloomberg.
The United Auto Workers, currently in negotiations with Detroit, has argued that a shift to EVs will cost the industry union jobs. US Energy Secretary Jennifer Granholm said on Thursday that the funding would help Detroit retain workers.
However, we’ve seen this “bailout” business model to save jobs before – at banks and during Covid, to name two examples – and it always winds up turning into a company cash grab before ultimately firing workers regardless. The UAW will try to prevent such a situation from taking place as it negotiates.
UAW President Shawn Fain “cautiously” welcomed the news after warning earlier this month that the White House should not push an EV agenda if it means the loss of jobs in Detroit.
Almost like the government should stay out of the auto industry as a whole, right? But that would make too much sense.
“The EV transition must be a just transition that ensures auto workers have a place in the new economy,” Fain said this week. Meanwhile, the Alliance for Automotive Innovation, a Washington lobby group that represents most Detroit automakers, said this week the funding “will further advance the domestic automotive supply chain and globally competitive battery manufacturing platform that automakers have already made sizable investments.”
Instead, Bloomberg calls the move the Biden administration “doubling down on efforts to support carmakers’ transition to EVs”. In a statement this week, President Biden said: “This funding will help existing workers keep their jobs and have the first shot to fill new good jobs as the car industry transforms for future generations.”
The Biden administration continues to aim for half of all vehicles on the road being EVs by 2030.
Oh and now that UAW Boss seeks 46% raise and 32-hour work week. Reminds me of Federal student loans where students run up massive amounts of debt to major in useless degrees like political “science” and gender/race studies, yet universities hire more admininstrators.
Confounded Interest - Anthony B. Sanders 
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