“Rich Men North Of Richmond” Economy! US Debt Up 45% Since Q1 2020, But Consumer Debt Is Up 19% Under Biden (Personal Savings Down To 3.4% Compared To 7.7% In Last Month Before Covid Outbreak (Earnings Calls Reveal Concern About Continued Demand)

Call it “The Rich Men North Of Richmond” economy. Where the coastal elites drive the US economy off the cliff with insane spending and borrowing with much of the benefits flowing to big political donors, not the middle class. Think of Span Bankfraud Parboiled as an example.

President Biden loves to spend billions and go on endless vacations (he is in Rehobeth Beach Delaware yet again). He (illegally) forgave student debt, keeps spending billions on Ukraine and keeps spending on failed green energy nightmares.

Biden and his allies will tout the latest GDP numbers as an example of how marvelous Bidenomics is. BUT that GDP report was driven largely by consumer spending.

Since the Covid outbreak in 2020, Federal (public) debt is up 45%! Wow. And consumer debt is up 19% under Biden to cope with inflation (caused primarily by massive Federal spending).

To fuel consumer spending, the personal savings rate has fallen to 3.4%. For point of reference, the personal savings rate in Februray 2020 was 7.7%, so the consumer is running out of gas thanks to inflation and spending.

And with a debt-stressed consumer, earnings call revealed concern about continued demand.

Note the trend in jobs added as The Fed tightened to fight inflation.

Back In Time! MBA Mortgage Purchase Demand (Applications) Decline To Lowest Level Since 1995 (Down -22% Since Last Year)

We are back in time … at least for the mortgage market. Thanks to Bidenomics!!!!

Mortgage applications decreased 2.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending October 27, 2023.

The Market Composite Index, a measure of mortgage loan application volume, decreased 2.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 3 percent compared with the previous week. The Refinance Index decreased 4 percent from the previous week and was 12 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 1 percent from one week earlier. The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 22 percent lower than the same week one year ago. Back to 1995 levels.

At least mortgage refinancing applications are back to only 2001 levels.

Two-year yields have risen 5%.

At least it looks like Powell will pause rate hikes … for the moment.

I want a new drug, other than Biden’s top-down, big-donor friendly Soviet-style command economy. How about a free market without Fed interest rate manipulation??

Guns Of August? Home Prices Rise Again In August, +2.57% YoY (Illegal Immingrant Destinations Like Chicago, New York And Detroit Are Up The Most)

Bidenomics is best represented by the novel “The Guns of August” since American’s middle class is getting blasted by Biden’s economic policies and The Fed’s rate rate hikes. Find out where Texas Governor Abbot is bussing illegal immigrants and buy in the market!!

Home prices rose for the 5th straight month in August (the latest data released by S&P Global Case-Shiller today), up 1.01% MoM (better than the 0.8% rise expected).

Source: Bloomberg

The ongoing MoM rises pushed the YoY gain in home prices at America’s 20 largest cities up 2.16%, the most since January 2023. The National Home Price index rose even faster at 2.57% YoY.

Illegal immigration destinations Chicago, New York, and Detroit all saw major home price rises (+5.0%, +4.9%, and +4.8% YoY respectively). Las Vegas, Phoenix, and San Francisco remain lower YoY (-4.9%, -3.9%, -2.5% respectively).

But, judging by the resumption of the rise of mortgage rates since the Case-Shiller data was created, we would expect prices to also resume their decline…

Source: Bloomberg

Inventory is going nowhere, buyers and sellers are stuck (affordability for the former and the mortgage cost gap for the latter), and The Fed isn’t cutting rates any time soon. Not pretty…

Shapes Of Things Under Bidenomics! Russell 2000 Hit Lowest Level Since Nov 2020 As Bidenomics Bites Hard (Mortgage Rates UP 181% Under Biden, Home Prices UP 32.3%)

Shapes of things under Bidenomics! More like Over, Under, Sideways Down.

The benchmark small cap index, the Russell 2000, has hit the lowest levels since November 2020, when the world was still without a vaccine and shut down from Covid. And before Biden’s/Congress wild spending spree and debt volume explosion creating massive inflation causing The Fed to hike rates.

Speaking of over, under, sideways, down under Bidenomics, mortgage rates are up 181% and home prices are up 32.3% under Biden.

Biden: “WTF? He doesn’t smell like a little girl!”

Simply Unaffordable! Income Needed To Buy A Home Is $111k While Median Household Income Is Only $78k, Credit Card Delinquencies Highest Since 1991, REITs Down > -10% YTD (Bitcoin, Gold UP YTD!)

Bidenomics is a windfall for the donor class (high rate of return on campaign contributions) while the middle class gets beaten to a pulp. Waiting for Biden to lean over and creepily whisper “It’s working!” Even though it is clearly not working, at least for the middle class.

Evidence that Bidenomics is not working and destructive? Try the surging income needed to buy a house under Biden. Home prices are rising faster than median household income. As in $111,000 income needed to buy a house, while median household income is only $78,000. So, housing is simply unaffordable under Bidenomics. The Biden era is outlined in pink.

Mortgage purchase applications have collapsed to 1994 levels.

Meanwhile, stressed households are seeing credit card delinquencies at the highest level since 1991.

And thanks to Uncle Spam (given how Uncle Sam is destroying the middle class it is now Uncle Spam), 2023 interest payments are the same as the total debt from 1980! Spam, which the Federal government has devolved into, is very high in fat, calories and sodium and low in important nutrients, such as protein, vitamins and minerals.

2022 was a bad year for investments under Bidenomics. 2023 year to date is showing huge gains for Bitcoin, the NASDAQ and gold. Bringing up the rear are long duration Treasuries and REITs (real estate investment trusts), both earning negative returns thus far of less than -10%.

When will we see rats fleeing the sinking SS Bidenomics as it sinks? JPMorgan Chase stock slips after bank says CEO Jamie Dimon is selling 1 million shares.

Biden, Treasury Secretary Janet Yellen and Fed Chair Jay Powell have a bad case of screwing you (Doctor, Doctor).

Addicted To Gov? US Added $600 Billion In Debt In One Month And $10.47 TRILLION Since Covid Outbreak, Credit Card APR Now 28.93% As Credit Card Debt Exceeds $1 TRILLION, Family Healthcare Costs Surge 7% To $24,000, Q3 Real GDP Rises 4.9%

Bidenomics new theme song is “Addicted To Gov.” Bidenomics needs lots of Federal spending and borrowing to survive. But all this spending and borrowing is causing rapid price increases and other distortions.

The US Federal government just added $600 billion in debt in ONE MONTH. And The Fed’s have borrowed $10.47 TRILLION since Covid in Q1 2020.

Meanwhile, retail credit card APR average just hit 28.93%! While credit card debt outstandnig just exceeded $1 trillion.

On the healthcare front, a family’s health insurance costs nearly $24,000 this year after the biggest increase in more than a decade.

.On the GDP front, Real gross domestic product (GDP) increased at an annual rate of 4.9 percent in the third quarter of 2023, according to the “advance” estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 2.1 percent.

Here is the breakdown.

But inflation is reaacelerating, harming the middle class.

Real weekly earnings growth is falling again, down to 0.8% YoY.

And the US Dollar purchasing power keeps on falling. All together now!

Gavin Gruesom has a great smile like Joe Biden. Perhaps that is all you need to be a Democrat. President. Like Obama.

Mortgage Purchase Demand (Applications) Fell 2% Since Last Week And 22% Since Last Year As Mortgage Rates Hit Highest Level Since 2000 (Almost 8%)

The US is teetering on World War III with tensions soaring in the Middle East, Ukraine, and southeast Asia. And Biden wanders off to Rehobeth Beach Delaware to relax … while over 200 Americans are still held hostage by terrorist group Hamas. The bad news? Biden is back in Washington DC trying to make the border crisis even worse by demanding funding for “border security” in the form of transporting illegal immigrants to US cities. Is The Squad running The White House??

But on the housing/mortgage front, we have another week of declining mortgage demand/applications as mortgage rate hit almost 8%.

Mortgage applications decreased 1.0 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending October 20, 2023.

The Market Composite Index, a measure of mortgage loan application volume, decreased 1.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 1 percent compared with the previous week. The Refinance Index increased 2 percent from the previous week and was 8 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 22 percent lower than the same week one year ago.

Mortgage rates followed Treasuries higher, with the 30-year fixed mortgage rate jumping 20 basis points to 7.9 percent – the highest since 2000. Rates have now risen seven consecutive weeks at a cumulative amount of 69 basis points.

Hey Joe, I’ll bet those 200+ US hostages held by Hamas aren’t enjoying ice cream cones.

Back In Red! C&I Loan Lending Standards Tightening To Recession Era Levels (Bank Credit Growth Remains Negative For Twelve Straight Week)

Back in red? As US fiscal policy deteriorates further thanks to endless Federal spending (not to mention seemingly endless wars under Biden and Nobel Peace Prize winner Obama), we are seeing pain in the bank lending business.

Commercial and industrial (C&I) loan lending standards is tightening (blue line) to levels typically seen in recessions. Even though Barclays HY-10Y spreads remains low.

Bank credit growth remains negative for the twelve straight week.

Billions Biden’s spending spree has led to the budget gap has doubled in the last year.

CDS is now at 55.24, highest after the Covid shock.

Under Biden/Yellen’s economic model, the appropriate themesong is “Hell’s Bells.”

Already Gone! US 10-Year Yield Rises To 5%, Highest Since 2007 As Yield Curve Goes Positive! (Housing Affordability At All-time Low)

The chances for interest rate cooling are already gone!

The 10-year Treasury yield rose to 5% for the first time since 2007 and the housing price bubble, and ensuing financial crisis and Great Recession.

Then promplty dropped below 5% again.

But at least the 30Y-2Y yield curve has turned positive.

And with rising rates, housing affordability is at a record low.

Housing prices are expected to decline later this year, but rebound in 2024.

Its another cheap tequila sunrise under Bidenomics!

But we have video of Biden and his wife Jill walking along the beach on yet another vacation to Rehobeth Beach, Delaware while the world teeters of WWIII, over 200 hostages are still held by Hamas, and housing affordability hits an all-time low. It must be nice not to care.

The most empathetic President in history, my ass.

Can The Fed Fix Biden/Congress Spending Addiction? Volcker, Greenspan, Yellen, Powell All Pushed Rates Lower … Until Biden (Fed Still Ignoring Taylor Rule) Mortgage Rates Continue To Climb

I had a wonderful time speaking at the Passive Investors Conference last night. One question I was asked was “Why doesn’t Powell (the current Fed Chair) pull “a Volcker” to cool inflation. She was referring to former Fed Chair Paul Volcker’s sudden raising of The Fed’s target rate which resulted in a cooling of inflation, but also an increase in the 30-year fixed mortgage rate to 16.63% in 1981.

Notice the trend in the Fed’s target rate and 30-year mortgage rate after Volcker’s rate shock. The trend in both has been downward as inflation was cooled.

But, each Fed Chair ranged from hyperactive to hypoactive (meaning doing little). Volcker and Greenspan saw wild swings in The Fed’s target rate. Bernanke pretty much only lowered rates AND expanded the Quantitative Easing (QE) or asset purchases by The Fed. And nothing has been the same since.

Yellen, now Treasury Secretary, continued Bernanke’s practice of zero interest rate policies (ZIRP) and QE (asset purchases) … until Donald Trump was elected President. In fact, Yellen raise rates only once prior to Trump’s election as President. Then raises rates 8 consecutive times. This is why I call Yellen “TLTL Janet”. Too low for too long Janet.

The she was replaced with DC insider Jerome Powell. Trump’s economy was strong (one explanation for Yellen trying to cool the economy with 8 consecutive rate hikes). But the Covid struck and Powell/Fed Open Market Committee overreacted, lowered the target rate back to 25 basis points and massively expanded the balance sheet. Powell also oversaw a rapid increase in the target rate, very Volckerish! But Powell stopped short of the rate suggested by The Taylor Rule of around 6.5% to 8.17%. The current target rate is 5.50%. So, Powell stopped far short of rates need to cool inflation.

But with Bidenomis came Bidenflation and a reversal of misfortunes for The Fed. They started rapidly raising rates … again.

Mortgage rates continue to climb as The Fed stubbornly won’t reduce its balance sheet.

Biden/Congress have a broken fiscal model where spending is out of control. And The Fed can’t buy all the debt Biden/Yellen want to issue.

US deficits are the third highest on record.

We might as well have Taylor Swift as Fed Chair. And Travis Kelce as Treasury Secretary replacing TLTL Janet.