Hot, Hot, Hot! Case-Shiller National Home Price Index Slows … To 20.4% YoY In April As Fed Stimulypto Remains

Housing market is still hot, hot, hot!

A national measure of prices climbed 20.4% in April, down from the 20.6% gain in March, the S&P CoreLogic Case-Shiller index showed Tuesday. Craig Lazzara, a managing director at S&P Dow Jones Indices, noted that April data was showing initial, but inconsistent, signs of a deceleration in price gains.

Mortgage rates have nearly doubled since the end of 2021. The run-up in rates, combined with high prices, are squeezing potential buyers and starting to slow housing markets in some of the most popular pandemic boomtowns.

Covid monetary stimulus remains in place at inflation hits 8.6%.

Washington DC has the slowest growth in home prices at 11.9% with Chicago and Cleveland close behind. Phoenix barely beat Tampa, FL for hottest home prices with both above 30% YoY.

Fed inferno!

Blitzkrieg Bop! ECB to Activate First Line of Defense in Bond Market July 1 (Lagarde Calls For Monetary Maginot Line) WIRP Forecasts US Rate Hikes Until March 2023, Then Declining Rates

The ECB is planning on a Blitzkrieg Bop, monetary style.

When Lagarde talks about the first line of defense, all I can picture is The Maginot Line in France, a failed defensive line that was easily bypassed by the German Wehrmacht (army).

The European Central Bank will activate the bond-purchasing firepower it’s earmarked as a first line of defense against a possible debt-market crisis on Friday, according to President Christine Lagarde.

Applying “flexibility” to how reinvestments from the ECB’s 1.7 trillion-euro ($1.8 trillion) pandemic bond-buying portfolio are allocated is aimed at curbing unwarranted turmoil in government bonds as interest rates are lifted from record lows to curb unprecedented inflation.

Net buying under a separate asset-purchase program is also set to end on Friday.

In other words, Euro-area inflation has exploded in 2021, just like the USA.

But the US also has an inflation problem caused in part by Covid and the government’s reaction to Covid: economic shutdown and massive Federal monetary and fiscal stimulus. The stimulus is still in play.

The bond market is already anticipating an about-face by The Federal Reserve (implied overnight rate peaking at the March 2023 FOMC meeting, then receding.

Again, nothing has been the same since the Covid outbreak of 2020 and Fed monetary blitz. Here is the US Dollar Swaps curve before Covid (yellow line) and today’s Fed-enhanced curve (green).

Mortgage rates in the US have climbed to 6% then backed-off slightly. The good ole Back-off Boogaloo as The Fed attempts to unwind its monetary stimulypto.

The French Maginot Line, easily bypassed by German tanks. The Federal Reserve is the US’s Maginot Line. The Yellenot Line??

More On Fed’s Bullard’s “Consumers Healthy” Remark (Consumer Sentiment At Lowest Level Since 1977 While Unemployment Rate At Only 3.6%)

St. Louis Fed President Bullard made a remark the other day that consumers are healthy so a recession is unlikely.

Consumers are healthy? It is true that the US U-3 uemployment rate is low (3.6% versus 14.70% in April 2020 thanks to government shutdowns over Covid). But even though unemployment is low, consumer sentiment is at its lowest point since 1977.

Generally, consumer sentiment is high when unemployment is low, but not this time around. Currently, inflation is at the highest level since March 1980 even though consumer sentiment bottomed-out in April 1980.

Here is my chart showing that REAL average hourly earnings growth YoY is negative and getting worse, hardly a sign of “healthy consumers.”

Of course, rising gasoline and diesel prices have risen dramatically since 2021, but are declining slightly thanks to the global economic slowdown (read “lower demand”).

And a M2 Money Stock (green line) declined, US rents (blue line) declined as well.

We are truly living in Birdland. As in bird-brain land.

Four Horsemen! US Consumer Sentiment Plunges To Lowest Level In History (Home Buying Sentiment Falls To Lowest Since 1982) As Inflation And Home Price Growth Rage

What a legacy for Biden/Pelosi/Schumer/Powell, the four horsemen of the inflation apocalypse.

As inflation soars, the University of Michigan Consumer Sentiment index plunged to its lowest level in history.

None of the contributions to consumer sentiment are positive.

The good news? The University of Michigan Buying Conditions for housing only fell to its lowest level since 1982.

Speaking of housing, more than 8 million Americans are late on rent as prices increase.

The four horsemen of the inflation apocalypse.

The DC Stomp! New Home Sales Decline -5.9% YoY, Median Price Rises +42% YoY As Fed Stimulypto Still In Place

The kids running Washington DC are not as sharp as pistols (which they want to take away) when they do the DC stomp.

Thanks to massive Fed monetary stimulus still stalking the housing market, US new home sales rose +10.7% MoM (from April to May), but were down -5.9% YoY (from May 2021 to May 2022) as mortgage rates rose.

Median price of new home sales rose 42% since May 2021, thanks to Fed stimulypto. And Federal government stimulus spending.

Yes, like the predators from the movies, The Fed’s balance sheet is still stalking markets.

Fed Chair Jerome Powell.

Slippin’ Into Darkness! US Mortgage Rates Decline Slightly As Recession Probability Spikes (Will Fed U-turn From Inflation Fighting To Recession Fighting?)

Slippin’ Into Darkness!

Despite what Biden and his muppets say, there is a good chance that the US will slip into recession over the next 24 months. And with that, we are seeing a slight drop in US mortgage rates.

Inflation is surging, and The Fed seems intent on “inflation fighting” but may have to pause that fight the impending recession. This is called a “U-turn” although Powell didn’t mention that is his testimony yesterday.

According to Mortgage News Daily, the 30-year fixed dropped below 6% to 5.88%.

Europe is signaling their u-turn to recession fighting as 10-year sovereign yield have dropped over 10 basis points this morning. Australia and New Zealand are dropping hard as well.

Here is the Federal Reserve’s open market committee deciding on the direction of interest rates … inflation fighting or recession fighting?

Mr Freeze! Existing Home Sales Drop -3.39% MoM In May, Median Price Growth At 14.8% YoY, Inventory Rises Slightly As Fed Stimulus Continues

Rising energy prices, rising home prices, rising mortgage rates, declining hope.

But as The Federal Reserve begins to withdraw it Covid stimulus, existing home sales declined -3.39% in May from April.

But like Covid itself, The Fed’s outrageous monetary stimulus is still in place, helping caused median home prices to rise 14.8% YoY. And inventory for sale is rising, but still remains low.

Jointly, Treasury Secretary Yellen and Fed Chair Powell are “Mr Freeze.”

Cleveland Ohio? 5 Of The Top 10 Foreclosure Zip Codes As Home Prices Rise 31.5% Since Covid Stimulypto (Q2 Real GDP Falls To 0% Growth)

How crazy was The Federal Reserve’s overreaction to the government shutdowns surrounding the Covid epidemic? While most analysts talk about California, I am going to discuss … Cleveland Ohio as an example of how The Fed can destroy markets.

The Case-Shiller home price index for Cleveland rose 31.5% since January 2020 just before The Fed unleashed its massive monetary stimulus on an unsuspecting city.

But as The Fed starts to tighten monetary policy after Yellen’s too loose for too long policies followed by Powell, foreclosure rates are soaring in Cleveland. In fact, according to Attom Data, 5 of the top 10 zip codes with the worst foreclosure rates in May 2022 were in Cleveland.

Of course, Cleveland is much like much of the rust belt (except Columbus Ohio). The rust belt is losing population along with heavy tax states like New York and Illinois. Destination states? Texas, Florida, the Carolinas and Tennessee.

Then at the national level, Atlanta Fed’s GDPNow real-time tracker fell to 0% growth.

Bitcoin Rallies To $20k As Yellen Confesses That Inflation Will Remain High For 2022 (So, Monetary Tightening ISN’T The Answer??)

US Treasury Secretary and former Federal Reserve Chain, Janet Yellen, admitted on ABC’s This Week that US inflation is “unacceptably high”and prices are likely to stick with consumers through 2022, and that the US economy is likely to slow down.

“We’ve had high inflation so far this year, and that locks in higher inflation for the rest of the year,” she said Sunday on ABC’s “This Week.”

“I expect the economy to slow,” she said, adding: “But I don’t think a recession at all inevitable.”

US inflation accelerated to 8.6% in May, a fresh 40-year high that signals price pressures are becoming entrenched in the economy. Those figures dashed any hope that inflation was starting to ebb, prompting the Federal Reserve to unleash its biggest interest-rate increase since 1994.

Hey, I thought strangling the US mortgage market and housing markets was supposed to cool the inflation rate, Janet.

On the good news/bad news front, cryptocurrency Bitcoin fell to $17,600 earlier today before rebounding to above $20,000 as the expectation of further Fed rate increases diminished (Yellen admitted the economy is slowing).

Yellen ignored rising mortgage rates which is putting a chokehold on the US housing market.

Hey Janet! So you are admitting that Biden’s energy policies AND massive Congressional spending bills ARE helping to drive prices through the roof and that Fed rate increases won’t tame the savage inflation beast?

Winter Is Coming 2! Mortgage Rates Hit 6%, Gasoline Prices Hit $5, Inflation Continues To Rage (Taylor Rule Implies 22.10% Target Rate, Only At 1.75%)

Where is Stanford’s John Taylor when we need him?

Even since the housing bubble burst and ensuing financial crisis on 2007-2008, The Federal Reserve under Ben “The Savior!” Bernanke, Janet Yellen and Jerome Powell let their zero/low interest rate policies be too low for too long that anyone with common sense knew would lead to serious problems when The Fed was forced (this time by inflation) to end the massive OVER monetary stimulus. We are now living through The Great Reset of the US economy.

Since Biden was sworn-in as President (or El Presidente) in January 2021, 30-year mortgage rates are up 108% to 6%, regular gasoline prices are up 108% to $5 a gallon nationally. Inflation is up to 8.6% YoY.

Bernanke, Yellen and Powell did not follow any rule per se, just a “seat of the pants” panic button approach. Using the Mankiw specification of the Taylor Rule model, the Fed Funds target rate should be 13.25% based on CORE PCE. Notice starting in 2014, The TR suggested target rate started to be higher than the actual Fed target rate. And since the Covid monetary blast of 2020, the gap between the Taylor Rule and Fed target rate (red area) has grown to near the highest level in history. Even now Mohamed A. El-Erian, Chief Economic Advisor at Allianz, is starting to admit that The Fed’s ZIRP policies are beginning to hurt.

But if we use total inflation rather than core inflation, the measure that picks up the actual pain that Americans are feeling from rising gasoline prices and mortgage rate, we get a Fed Target rate of 22.10%. Since The Fed’s current target rate is only 1.75%, The Fed has “Room To Move.”

And in a painful. bad way.

Bernanke, Yellen and Powell must think that The Taylor Rule is the New Jersey ham pork roll.