Too Much Debt! Interest Payments Rising FAST On US $33.6 TRILLION Debt Load, Bank Losses Mounting As Rates Rise, Mortgage Rate UP 173% Under Biden (At Least Rent Growth Has Turned Negative)

Too much debt!

The Federal Reserve thinks economic growth comes with lots of debt and low interest rates. The Fed succeeded in that banks, consumers and The Federal government went wild in borrowing money, but now a hangover is happening as inflation surged and interest rates rose.

First, debt laden banks.

Paper losses on the most opaque part of US banks’ bond portfolios are now close to $400bn — an all-time high, and 10 per cent above the peak at the start of the year that caused the collapse of Silicon Valley Bank.

Rising interest rates are really causing havoc at banks, particularly small banks. The US 10-year Treasury yield rose again after a brief respite in rate increases.

iShares 20+ Treasury Bond ETF is getting crushed with inflation and Fed rate hikes.

And The Federal government is seeing interest payments on their massive $33 TRILLION debt load. Rising Treasury yields = higher US interest payments on debt … really fast.

And with interest rates rising, Americans are seeing a surge in debt.

With rising Treasury yields, the 30-year conforming mortgage yield is up 173% under Biden’s Reign of Economic Error.

And then we have US Debt Clock, Federal debt is now above $33.56 TRILLION that is causing no consternation for Treasury Secretary Janet Yellen who said that the US economy is great and we can afford to fight wars in Ukraine AND Israel! Of course, Yellen believes in the foolish Modern Monetary Theory (aka, just keep printing money and hope nobody cares).

Multifamily rents turned negative in September, with the average U.S. rent declining $6 from August and $3 during the third quarter. It marked the first time since 2009 when national rents decreased in September.

This image has an empty alt attribute; its file name is natrents.png

Hopefully a downturn in rent growth will let buying a home more affordable relative to rent in San Jose, San Francisco, Honolulu, Los Angeles and Seattle.

Headline NAHB confidence index printed at 9-month lows (down 5 to 45, vs 49 exp). That is the 4th straight monthly miss in a row (and 5 upside surprises).

I remember when economists used to say, “Inflation? No problem! Inflation allows us to devalue the massive debt!” Except that inflation crushes the middle class and low wage workers.

Introducing Treasury Secretary Janet Yellen, the actual Nutty Professor who still thinks that the US can spend and borrow unlimited amounts without consequence.

Livin’ La Vida Biden! Biden Administration Threatens Banks That Refuse To Lend Money To Illegal Immigrants As Biden Relaxes Oil Restrictions On Venezuela (IF Venezuela Allows Non-Maduro Candidate To Run For President)

We are Livin’ la vida Biden as Biden continues to push illegal immigration and working with Communist dictators like Venezuela’s Nicolas Maduro and NOT expand US energy production.

The Biden administration released a statement Thursday warning financial institutions against using a person’s immigration status in credit applications.

The Consumer Financial Protection Bureau (CFPB) and the Department of Justice (DOJ) released a joint statement telling financial institutions that while it is not illegal to consider a person’s immigration status in the decision on whether to lend money, an overreliance on it could run afoul of the law, according to the statement. The statement implicates the Equal Credit Opportunity Act (ECOA), which makes it illegal to discriminate on the basis of race, color, religion, national origin, sex and more in considering a person’s credit application as the mechanism, even though the law does not list citizenship status as a protected attribute.

US, Venezuela to announce oil sanctions deal on Tuesday -report.

The result? WTI Crude is down almost -1% today and Brent Crude is down over -1%.

The sad part of Biden’s deal with brutal Marxist dictator Nicolas Maduro requires Venezuela to allow another candidate to run against Maduro in the next Presidential election. What? Biden and Democrats are working hard to eliminate Donald Trump from running for President in 2024, but want Venezuela to have competition??

So, Biden is sticking to his anti-US energy production stance while supporting a brutal Marxist dictator AND forcing banks to lend to illegal immigrants.

Joe Biden and brutal Marxist dictator Nicolas Maduro.

The Empire Strikes Out! NY Empire State Manufacturing Survey Falls Seven Points To -4.6 (Earnings Downgrades Overtake Upgrades)

The Empire Strikes Out! Or “The March of Klaus Schwab and The World Economic Forum”

According to the New York Federal Reserve, business activity edged lower in New York State, according to firms responding to the October 2023 Empire State Manufacturing Survey. The headline general business conditions index fell seven points to -4.6. New orders fell slightly, while shipments were little changed. Unfilled orders declined, and delivery times shortened. Inventories held steady. Labor market indicators pointed to a slight increase in both employment and the average workweek. The pace of input price increases was similar to last month, while selling price increases moderated. Looking ahead, firms remained relatively optimistic about the six-month outlook.

On the earnings front, earnings downgrades overtake upgrades.

The Emperor Palpatine (Klaus Schwab).

Krugman’s Kerplunk! War On Inflation Over, But Average American Is $7,400 Poorer Under Bidenomics (Real Wages Decline Again And Rent Inflation Over 7%)

Paul Krugman, Nobel Laureate in economics and media celebrity, made a terrible claim yesterday when he pronounced that “The war on inflation is over. We won, at very little cost.” Krugman’s proclamation was trumpeted by The View’s Joy Behar Joy who claimed that everything is going great in the country! The economy is “booming” and people are having an “easier time” putting bread on the table. Huh? Easier than a month ago maybe, but not easier since 2021 under Bidenomics.

Hmm. Suppose that during World War II the Germans had stopped after they invaded and captured Paris on June 14, 1940. The war could have been over, but France was lost to Germany amidst thousands of dead and loss of property. That is not a victory, but a crushing defeat.

Just like my Paris example, Krugman’s claim the war on inflation is over and we won AT VERY LITTLE COST was grossly misleading and a big kerplunk (thud). Why? For one, the average American family is $7,400 POOR than in January 2021 when Biden became President. So, it looks like we know the cost of inflation and it was steep, not “very little cost.” Well, very little cost to elitist millionaires like Krugman.

Krugman loves the recent inflation report from the BLS. Specifically, the 12-month change in the Consumer Price Index Less Food And Energy for September was 4.1%. Krugman focuses on the recent 6-month change being less than 2%. In Krugman’s mind, this is victory … core inflation has been tamed and inflation is at The Fed’s target rate of 2%.

But before Krugman pops the champagne cap on the 1959 Dom Perignon for $42,350 (while the rest of us are drinking E&J Gallo’s Thunderbird), bear in mind that he is referring to the RATE OF GROWTH in prices, not the highly elevated levels of prices. Victory against inflation would be if prices returned to December 2020 levels.

I pointed out yesterday that “real” wages contracted 0.1% YoY (after 3 months positive) in September. It is important to note that real wage growth was negative from 2021 until 3 months ago, but has gone negative yet again. Victory??

Krugman prefers core inflation, removing food, housing and energy. You know, the three things most Americans actually care about. Take shelter (or rent of residence) where rent is growing at a sizzling 7.1% YoY.

Under Biden and Congress’ reckless spending splurges (and inane Federal energy policies), regular gasoline prices are up 64%. Growth in rent of residence has grown 252%! So, Professor Krugman, Americans are far worse off than before Biden was President.

If prices return to December 2020 (or pre-Covid levels), I will declare a victory. But for right now, symbollically, the German army is occupying France and Paris with horrible suffering for the French people. In other words, Americans are still far worse off under Biden even though inflation is finally slowing.ew

Speaking of France and World War II, maybe we should consider Joe Biden as today’s Pierre Laval, leader of Vichy France since Biden seems more concerned with pleasing Klaus Schwab and The World Economic Forum than America’s middle class and low wage worker (like Laval was concerned with that German leader Adolf Hitler thought).

Biden’s Incredible Shrinking Economy! Bank Credit Growth Negative For 10th Straight Week As Interest Rate On Short-term Loans Almost 10%!! (Ouch!)

Bidenomics is failing catestropically. Example? As interest rates rise to fight Biden’s Federal spending splurges, bank credit growth slowed to -0.41% YoY for the 10th straight week of negative credit growth.

While interest paid on short-term loans almost 10%!!

“Jimmy, watch me tank the economy even worse than you did!”

Gimme (Expensive) Shelter! Headline CPI Hotter Than Expected, Core Remains Above 4.00% (Rent inflation 7.41%!)

Gimme (expensive) shelter!

Following August’s bigger than expected jump (driven by surging energy prices and healthcare methodology changes)., September’s CPI was expected to slow (+0.3% MoM) with the YoY pace inching back lower (from 3.7% to 3.6%) after rebounding for two straight months.

However, headline CPI came in modestly hot at +0.4%, with YoY at 3.7% – that is the 3rd monthly rebound in a row.

Source: Bloomberg

Core CPI rose 0.3% MoM, with YoY sliding to +4.1% YoY (as expected)… it still hasnt been below 4.00% since May 2021….

Source: Bloomberg

Food and Commodities contribution to YoY CPI slowed while Services increased…

Goods inflation dipped back to unchanged YoY and Services CPI slowed to +5.7%…

Services stands out on A MoM basis…

Under the hood, gasoline continues to rise and used car prices drop…

Rent of primary residence and owner’s equivalent rent YoY both exceeeded 7%. Fixing a car/truck rose 10.2% (will people start to notice that repairing EVs is outrageously expensive?).

The index for all items less food and energy rose 0.3 percent in September, as it did in August.

The shelter index was the largest factor in the monthly increase in the index for all items less food and energy.
The shelter index increased 0.6 percent in September, after rising 0.3 percent the previous month. The index for rent rose 0.5 percent in September, and the index for owners’ equivalent rent increased 0.6 percent over the month.
The lodging away from home index increased 3.7 percent in September, ending a string of 3 consecutive monthly decreases.
Among the other indexes that rose in September was the index for motor vehicle insurance, which increased 1.3 percent after rising 2.4 percent the preceding month.
The indexes for recreation, personal care, new vehicles, and household furnishings and operations also increased in September.
The medical care index rose 0.2 percent in September, as it did in August.
The index for hospital services increased 1.5 percent over the month, and the index for physicians’ services was unchanged.
The prescription drugs index fell 0.7 percent in September.
The index for used cars and trucks fell 2.5 percent in September, after decreasing 1.2 percent in August.
The apparel index declined 0.8 percent over the month, and the communication index was unchanged.

The index for all items less food and energy rose 4.1 percent over the past 12 months.

The shelter index increased 7.2 percent over the last year, accounting for over 70% of the total increase in all items less food and energy.
Other indexes with notable increases over the last year include motor vehicle insurance (+18.9 percent), recreation (+3.9 percent), personal care (+6.1 percent), and new vehicles (+2.5 percent).

Gasoline prices continue to rise…

Shelter costs are slowing, but accounted for the largest part of core CPI…

Rent inflation 7.41%, down from 7.76% in August and the lowest since Sept 2022
Shelter inflation 7.15%, down from 7.27% in August and the lowest since Nov 2022

Bear in mind that while CPI very stale data is rising over 7%, real-time rent indicators are in freefall. Apt List’s Sept rent drop was the biggest on record…

And perhaps most importantly, one silver lining is that The Fed’s new favorite inflation signal – Core Services CPI Ex-Shelter YoY slowed to +3.74% (despite jumping 0.46% MoM). That is the lowest YoY since Dec 2021…

Is this third straight monthly increase in CPI YoY an inflection point? Or is M2 still leading the trend?

Turning from the cost of things to the ability to pay, “real” wages contracted 0.1% YoY (after 3 months positive)…

This is not the soft-landing cruise lower in inflation that the market (and The Fed) was hoping for…

US Mortgage Purchase Demand (Applications) Down -19% Since Last Year (Mortgage Rates UP 165% Under Biden)

Now you know why the Mortgage Bankers Association, Home Builders and Realtors send a letter to Fed Chair Powell asking for rate hikes to cease. Mortgage rates are UP 165% under Biden.

But on to the demand side of mortgage finance.

Mortgage applications increased 0.6 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending October 6, 2023.

The Market Composite Index, a measure of mortgage loan application volume, increased 0.6 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 1 percent compared with the previous week. The Refinance Index increased 0.3 percent from the previous week and was 9 percent lower than the same week one year ago. The seasonally adjusted Purchase Index increased 1 percent from one week earlier. The unadjusted Purchase Index increased 1 percent compared with the previous week and was 19 percent lower than the same week one year ago.

Fear The Talking Fed! 10Y Treasury Yield Subsides As Fed Presidents Speak While Hamas Terrorizes Israel (Fed Halting Rate Increases OR Flight To Safety?)

Like President Biden enjoying a barbeque at The White House with a live band (probably NOT Justin Moore singing “Small Town USA”) while Hamas declared war on Israel and Americans are being held hostage with the promise of public executions of hostages livestreamed. Nothing that “Empathy Joe” does ever surprises me anymore, but I am surprise that various Federal Reserve Presidents will speak today while Hamas terrorizes Israeli and US citizens.

It could be that investors think that Talking Heads at The Fed will claim that Fed rate increases are over. Then again, the Iran/Hamas terror campaign against Israel is spookking markets, driving up oil and gold prices and driving up “flight to safety” in US Treasuries.

President Biden called on Americans in Israel to book a commercial flight home, even though Israel has cancelled all flights. Does Old Joe even read the news??

Fear The Talking Fed!

Two-Job Joe! How Bidenomics Is Causing Hardship For The Non-Elites (Top 1% Keep Gaining In Percentage Of Net Worth While Bottom 50% Keeps Declining)

“Two-job Joe” should be Biden’s new nickname for his economy wrecking ball known as Bidenomics.

The economic disaster known as Bidenomics (code for wealth transfers to the donor class) can be seen in the following chart. Non-elite households are struggling to cope with higher gasoline, food and house prices (rent) under Bidenomics.

As a result, the number of people holding 2 FULL-TIME JOBS hit an all-time high of 447,000 people. Biden spokesperson Karine Jean Pierre is likely to say “See? Bidenomics is working! Not every person is holding 2 full-time jobs to afford that Ford all-electric Lightning F-150 pickup truck!”

At the same time, wage growth YoY is crashing from Covid stimulus highs to pre-Covid levels.

And as The Fed prints more dinero (green line), the 1% (blue line) hoard a larger percentge of net worth while the bottom 50% (red line) keeps declining.

And then we have the REAL 10Y Treasury yield hitting 2.4%. This one’s gonna to hurt you for a long, long time.

It is getting harder and harder for non-elites to buy that Ford F1-150 all-electric Lightning Platinum for $94,000 plus tax. And you still have to pay $500 for the Ford Mobile Power Cord. OMG! For $94k, they couldn’t throw in the power cord?????

Does F stand for Failed? The honorary vehicle for Bidenomics!!

Bidenomics Is Working? Economic Outlook Index Plunges To Record Low In IBD/TIPP Poll (Net Savings As % Of Gross National Income Negative For 2nd Straight Quarter)

As Biden sleeps through the Hamas invasion of Israel, that is nothing new. Biden is sleeping through a disastrous downturn in the economy and pretending that Bidenomics is working. It isn’t Joe!

The IBD/TIPP U.S. Economic Optimism Index sank to a 12-year low in October as confidence in the near-term economic outlook crashed to the lowest level in the poll’s history. The survey casts doubt on the Federal Reserve’s justification for turning more hawkish last month: robust consumer spending.

The overall IBD/TIPP U.S. Economic Optimism Index dived 6.9 points to 36.3, the lowest since August 2011. Readings below the neutral 50 level reflect pessimism. The 6-month economic outlook index cratered 9.6 points to 28.7, a record low since the IBD/TIPP Poll began in early 2001.

That means the outlook suddenly appears worse than it was at the depths of the dot-com crash, the great financial crisis and the coronavirus pandemic.