Confounded Interest – Anthony B. Sanders
Financial Markets And Real Estate
Surprise! Just in time for the November election, this is a negative surprise that Biden doesn’t want to hear.
The Citi Economic Surprise index crashed to -7.30, the lowest since January 2023.
Under Biden’s leadership (hell, he and his family already own several mansions … on a Senator’s pay), home prices are up 32% under Biden and mortgage rates are up a staggering 160%.
Getting young households who rent to buy a home in this environment will require magic.
Treasury Secretary Janet Yellen told the House Ways and Means Committee that housing is impossible for first-time homebuyers. But doesn’t bother to confess that she is partly responsible because of her “too low for too long” Fed policies under Obama/Biden.
Yellen: Mortgage rates have been so low for so long that it’s created a lock-in effect where people don’t want to sell their homes to buy new ones for fear of losing their attractive rates.
That’s made it “almost impossible” for first-time homebuyers to enter the housing market, U.S. Treasury Secretary Janet Yellen said during her testimony before the House Ways and Means Committee.
Now hold on a minute, Janet. YOU were the one that kept rates too low for too long as Federal Reserve Chair.
What was her record on mortgage rates? Yellen kept the Fed target rate (upper bound) at 25 basis points under Obama/Biden until December 2015, so only one rate hike under Obama/Biden. Then came the election of Donald Trump in November 2016. Then Yellen raised The Fed target rate 4 times after Trump was elected.
Mortgage rates fell to 3.78% by November 2017, so Yellen helped keep mortgage rates low. But mortgage rates soared after Trump’s election to 4.22% by the end of her term.
There are other reasons why first-time homeownership is so difficult, like local NIMBY (not in my back yard) policies and the absolutely lousy labor market.
She added that Biden’s massive tax increase won’t hit middle class households (other than the massive INFLATION tax that was levied by Biden). That is a plain lie. the Tax Foundation says that someone who’s married, two kids, making $85,000 would pay $1,700 more in taxes. A married couple with two children making $165,000 annually would pay $2,450.50 more than in the previous year, while a family with three kids pulling in $200,000 per year will shell out almost $7,500 more per year.
So much for Biden’s “No one making under $400,000 will pay and additional penny of tax.”
The Fed will likely pause rate cuts/increases when The Fed reveals their plans today.
Breaking: Federal Reserve officials are likely to hold interest rates steady at 5.25-5.5%—a 20-year peak—for a 6th consecutive meeting.
With inflation still high, rate cuts seem off the table for now.
Rate decision at 2pm Washington time.
The Street seems aligned.
Conforming rates are already up 161% under Biden.
According to Fed Funds Futures, no rate changes until after the Presidential election.
MBS returns have been abysmal under Biden/Powell.
Housing in the US is simply unaffordable, particularly after HUD levied new regulation rising the cost of new housing up to $31,000. Wait for this to kick into the data for mortgage demand!
Mortgage applications decreased 2.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending April 26, 2024.
The Market Composite Index, a measure of mortgage loan application volume, decreased 2.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 1.4 percent compared with the previous week. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index decreased 1 percent compared with the previous week and was 14 percent lower than the same week one year ago.
The Refinance Index decreased 3 percent from the previous week and was 1 percent lower than the same week one year ago.
MBS returns are weak and volatile.
How is the Biden Regime making homeownership more affordable? They aren’t. The are using regulations, to drive the cost of new housing way up. New HUD energy rules will raise the cost of home construction by imposing stricter building codes. The National Association of Home Builders says the energy rules can add as much as $31,000 to the price of a new home. Payback time is 90 years (how long it will take the recoup the initial investment).
Under Biden’s “leadership” we are all addicted to gov. But at least Ukraine and Zelenskyy will be getting a guaranteed 10 years of financial support from the US … while E Palestine Ohio and Maui remain destroyed.
Janet Yellen, world class propagandist (US version of Baghdad Bob) and US Treasury Secretary under Biden, was so wrong about inflation. Instead of being “transitory”, turns out to be seemingly permanent.
Today’s Case-Shiller home price report was released for February. The National Home Price index was up 6.4% year-over-year. But look at the explosion of M2 Money and home prices. Hmm.
If we look at home prices and M2 Money on a year-over-year (YoY) basis, we can see the surge in money printing with COVID and the corresponding surge in home prices. As M2 Money growth slowed, the Case-Shiller National HPI slowed as well … until The Fed slowed the declined in M2 Money growth resulting in rising home price growth again.
So, The Fed will likely have to keep on printing. You can see Janet Yellen dancing to the thought of printing more money.
Joe Biden could barely eat his dinner at the White House Correspondents’ Dinner. And we think he is calling the shots in The White House?? Oh well. Perhaps it is Treasury Secretary Janet Yellen or Klaus Schwab of the World Economic Forum.
In any case, Treasury bond issuance in 2024 is expected to hit $1.9 TRILLION. Surpassing levels seen even during the 2008 financial crisis.
And with inflation, the US personal saving rate is near the lowest level since Obama (2010).
And with the core inflation rate still higher than anytime since 2010, households are paying more for … everything depleting their savings.
With Biden and Congress spending like drunken sailors on shore leave, and no end in sight, this will eventually explode. Ukraine, foreign aid, no border security, virtually no money for Maui fire, E. Palestine Ohio is still a wreck, etc. They always have money for someone else. And if Trump is elected in November, watch CNN and MSNBC and Biden/Congress blame Trump.
Commodities are a way to protect yourself against the government and their insane spending and debt.
My point? Gold keeps rising!
The leading foreign holder of US debt is Japan, which is following the insane path as the US and resembles a banana republic.
Former Fed chair under Obama and current Treasury Secretary Janet Yellen under Biden is Doctor Wonderful. NOT!!
I don’t know what Biden thinks is so funny. Maybe it is because House “Majority” Leader Mike Johnson (RINO-LA) gave Biden and Schumer everything they wanted (Ukraine, Israel funding but nada for security our borders). Life is good when you are stupid and mean-spiritied like Joe Biden!
Biden is so vain: capped teeth, hair plugs, constant tan, face lifts, etc.
The Green Slime! The global movement towards Green Energy (or global Marxist movement) is really The Green Slime! Or maybe it should be renamed “The Red Slime.”
Ford lost $132,000 on every electric vehicles they sold in Q1. It was so bad that even CNN reported it!
And then we have Hertz dumping its inventory of EVs. A slew of used Teslas have hit the Hertz car sales website after the company announced Thursday it planned to sell off 10,000 more electric vehicles from its fleet than originally planned, bringing the fire sale’s total to 30,000. Perhaps one of the reasons you can get such a good deal on a Tesla at Hertz right now is that the outlook for EV value retention is pretty grim at the moment.
Given the incidents of electric cars catching fire, perhaps saying its a fire sales is a bad choice of words. But what it says is that DESPITE massive incentives to buy EVs, consumer demand stinks. Although Transportation Secretary Pete Buttigieg will claim the market is booming.
How bad is the trainwreck that is the Biden Regime? China is bailing on US Treasuries.
Then we have the harpies on The View claiming that the solar ecilpse is caused by … global warming. Also earthquakes. Sunny Hostin must have taken different courses that I did in college.
The Biden Regime is hereafter known as The Green Slime, given their horrible policies. Unfortunately, The Green Slime is here already … and Hertz knows customers don’t want them at least on a temporary basis.
The Federal Reserve is playing the song “Don’t rock the boat” ahead of the Presidential election. Despite the horrible economic news.
1) 4 months of hotter inflation (like today’s stagflationary GDP report)
2) Nearly 1.5 million full-time jobs decline with 1.9 part-time jobs created over a year
3) $2 trillion annual deficits
Leading traders to price in 1 rate cut in December 2024. AFTER THE PRESIDENTIAL ELECTION!
Under Biden, home prices are up 32.5% and conforming 30Y mortgage rates are UP 160%.
One of my colleagues at George Mason University in finance (an economics PhD) constantly quoted Lenin’s famous “You have to break a few eggs to make an omelet.” But why is it always OUR eggs that have to be cracked, never the wealthy elite.
COVID was a gift to Biden. The furious Federal spending of Q2 2020 through Q1 2021 helped keep GDP growth above recession levels.
Ignore Biden’s demented rants/lies about cutting the debt in half. Biden has claimed he cut the $34+ trillion national debt by $7 billion, $1.4 trillion, $1.7 billion, $1.7 trillion, and “in half,” depending on the day he rants. He did no such thing. He is confused and is talking about the BUDGET DEFICIT (don’t look to Snopes to fact check “Trucker Joe”, they really only fact check Trump).
Not surprisingly, the Federal deficit spiked with the Covid lockdowns. But when the economy reopened, the budget deficit shrunk because … the economy was open and Federal tax receipts soared. But we are back to rising deficits again.
Today, Q1 GDP numbers were released and it looks great. Real GDP year-over-year was 2.97% while Federal government expenditures YoY were 4.21%. But the US is still processing the tidal wave of COVID-related spending out of Washington DC (red line). The YoY growth in Federal spending was 86.4% in Q2 2020, 48.9% in Q3 2020, 22.4% in Q4 2020, and 67.8% in Q1 2021. Like The Titanic trying to avoid the iceberg, it takes a while for massive Federal spending to work itself through the economic system.
On a QoQ basis, US GDP increased by only 1.60%. Here are the contributions to GDP.
GDP QoQ was up 1.6% while Core PCE Price Index rose 3.7%. Yikes!
Are we entering Stagflation with the worst GDP print in 2 years as prices soar. As COVID stimulus seems to be wearing out.
The election campaign for Biden should be Lloyd Price’s “Stagger Lee.” Redone as “Stagflation Joe.”
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.
Preliminary March data showed a slightly better than expected 2.6% MoM rise (2.5% exp) in the headline orders print. However, thanks to the downward revisions, Durable goods orders are now down 2.2% YoY… the biggest YoY drop since the COVID lockdowns…
This is the 8th downward revision of durable goods orders in the last year…
Under the hood, defense and non-defense capital goods orders rose with non-defense aircraft orders surging over 30% MoM…
But… it looks like the AI bubble just burst as Computer & related Products orders plunged 3.9% MoM – the biggest drop since COVID lockdowns…
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…
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?”
Confounded Interest - Anthony B. Sanders 
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