Confounded Interest – Anthony B. Sanders
Financial Markets And Real Estate
As expected, Powell and The Fed dropped their target rate by 50 basis points yesterday, deflating some of the air in the asset markets, More rate cuts will come, but at a slower rate.
Gold got clobbered but has somewhat rebounded.
Bitcoin did likewise: dropping like a rock then bouncing back somwhat.
But gold and bitcoin/ethereum are down again.
The CBOE VIX volatility index exploded upwards.
Powell is looking old, like most of Congress and Biden.
Washington DC is now officially known as Pork City! Why? Take a look at the House’s Continuing Resolution to to keep the Federal government funded. Includes $110 billion in disaster assistance for relief efforts in North Carolina, Georgia, Florida, Oklahoma, and Western region, among others.
The 1,547 page federal spending bill has so many outrageous things in it, it’s hard to know where to begin – but it without a doubt should NOT pass as-is. But a great example of why we need @doge more than ever to reel in the governments insane spending & redundancies.
Highlights:
1. $8 BILLION—For Emergency Relief for damage caused by a cargo ship to the Francis Scott Key Bridge in Baltimore, MD and 20 surrounding counties, including reconstruction of the bridge.
2. A section regarding our health agencies – has a lot of red flags – and appears to aim to limit what the new HHS Secretary (@RobertKennedyJr) can and cannot do:
“The Secretary may not revise the Vaccine Injury Table to include a vaccine for which the Centers for Disease Control &!Prevention has issued a recommendation for routine use in children or pregnant women until at least one application for such vaccine has been approved… Upon such revision of the Vaccine Injury Table, all vaccines in a vaccine category on the Vaccine Injury Table, including vaccines authorized under emergency use… shall be considered included in the Vaceine Injury Table and they also added “CLARIFICATION—Notwithstanding… an injury or death related to a vaceine administered at a time when the vaccine was a covered countermeasure subject to a declaration under section 319F-3(b) SHALL NOT BE ELIGIBLE FOR COMPENSATION under the Program.”
Why isn’t the shipping company that slammed into the Francis Scott Key bridge paying for its repair? And why aren’t football fans paying for a new football stadium?? Etc. Etc.?
House Speaker Rutherford should officially switch parties and become a crazy spending Democrat!
Remember when President Joe Biden uttered “I give you my word as a Biden!”? Coming from perhaps the biggest liar in history who NEVER tells the truth!
Well, the latest in his long string of lies is that he is handing the strongest economy in modern times to Trump.
Apparently, the late Hawaiian crooner Don Ho foresaw Biden’s irresponsible spending spree. That is, BIG BUBBLES.
Let’s start with the Buffett Indicator (Warren, not Jimmy!). It indicates that the stock market is STRONGLY OVERVALUED.
The S&P 500 Mean Reversion Model also shows the stock market to be STRONGLY OVERVALUED.
How about the Shiller P/E Ratio? Also showing strong overvaluation.
House prices under Biden have exploded partly due to the outrageous Federal spending following COVID.
The Feral Reserve also had a hand in the housing bubble. While mortgage rates remain high (relative to the Trump years), The Fed’s balance sheet remains elevated.
To be sure, some Republicans were complicit in the spending spree. But mostly it was Democrats and the Biden/Harris Administration … which is still doling out millions.
All aboard the Biden/Pelos/Schumer crazy spending train!
Wage and salary income as a percentage of GDP has fallen from over 50% back in 1970 to 43.1% in 2022. And look at the post Covid decline! And the increase in M2 Money.
Meanwhile the US budget balance as a % of GDP has been plunging downwards in recent years.
Despite the slowing economy, pre-tax profits post Covid have SOARED!
Primarily due to reckless/wasteful Federal spending and FEDERAL DEBT that soared.
There you have it! The Biden/Harris economic “miracle” was simply Federal government malspending that benefitted large corporations and few people.
Joe Biden and his woefully corrupt son Hunter of laptop fame.
It is the Biden Boogie!
Joe Biden is leaving the Presidency with an attrocious record. While saying he is leaving Trump with the strongest economy in modern times, the is actually leaving Trump and Republicans with a hollow shell for an economy. It is the final punch in the jaw from an angry, failed President.
The following chart shows that in October and November, the US deficit exploded to a staggering $624.2 billion, and even though this included several calendar adjustments – which explains the freak September surplus which as we said was due to calendar effects – the November deficit of $367 billion was $14 billion more than consensus estimates of $353 billion. Worse, combining October and November we find that not only was the combined number of $624 billion some 64% higher than the corresponding period one year ago, but it was also the highest deficit on record for the first two-months of the year (and that includes the spending insanity during the covid crisis).
Putting the deficit in context, the budget deficit in October and November – the first two months of fiscal 2025 – are now officially the worst start a year for the US Treasury on record.
No wonder even Statist Janet Yellen (Treasury Secretary who failed utterly at her job) apologized that her abysmal performance. “I am concerned about fiscal sustainability and I am sorry that we haven’t made more progress,” she said adding that “I believe that the deficit needs to be brought down especially now that we’re in an environment of higher interest rates.” Meanwhile Biden keeps handing out $$$ to Ukraine, Africa, Syria, illegal immigrants and anything else that asks … unless it it American citizens. Man, does Biden HATE America!
Here is Yellen’s record on debt. A total of $15.2 TRILLION under her leadership.
Under Biden/Yellen (don’t forget Senate fools like Schumer and McConnell!), debt interest has surpassed Social Security and Medicare as the second largest government agency expense.
Biden is a classic progressive Democrat, spending other people’s money like a wild man (sort of like California Governor “Greasy Gavin” Newsom’s father. Or grandfather. And let’s not forget the $222 TRILLION in UNFUNDED liabilities such as Social Security and Medicare.
“See Joe, I can destroy California’s economy just like you destroyed the US economy!”
We didn’t start the fire … The Fed and Biden/Harris did. And it is still burning.
October STICKY core inflation is still up 4% YoY (year-over-year)
Core CPI rose 0.3% MoM (as expected) which pushed it up 3.3% YoY (not even close to the 2% mandate)…
There has not been a single monthly decrease in core consumer prices since Biden too office.
dddd
Between The Fed’s insane monetary policy and Biden/Harris insane fiscal policies, we are living in a world where Ray Bradbury’s novel Fahrenheit 451 becomes a reality. Instead of books burning, it is the US Dollar burning.
CMBS delinquencies are on the rise.
The delinquency rate for commercial mortgage-backed securities (CMBS) tied to office properties reached 10.4 percent in November 2024, approaching the 10.7 percent peak reached during the 2008 financial crisis. The ascent is the fastest two-year increase on record, with rates climbing 8.8 percentage points since late 2022, significantly outrunning the 6.3-point rise seen during the financial crisis nearly 15 years ago.
The office real estate sector has been grappling with a severe downturn for several years now, but are accelerating recently as they are driven by persistently high vacancy rates and declining rents. Property values, particularly for older office buildings, have plummeted, with many losing 50 to 70 percent of their market value and in some cases becoming effectively worthless. Those conditions have left real estate portfolio managers and building owners unable to borrow, refinance or sell properties, contributing to rising delinquencies and foreclosures. (Mortgages become effectively delinquent when payments are missed beyond a standard 30-day grace period.)
On the CMBS front, there have been no upgrades in 2023 and 2024.
Efforts to convert office buildings into residential spaces are increasing but remain limited by structural and economic constraints. Many office towers are unsuitable for conversion due to their large floor plates or prohibitively high retrofitting costs which often exceed the cost of demolition and rebuilding. In 2024, 73 office-to-residential conversions were completed, with an additional 30 underway. Despite plans to increase the pace in 2025, the cumulative impact remains minimal, addressing just 7.9 percent of the 902 million square feet of vacant office space nationwide.
Milton Waddams personifies the disastrous progressive politics of Biden/Harris.
While Biden travels to Africa giving away money (and looking like the crypt keeper), the November jobs report was released.
The Establishment report showed a gain of 227k jobs. But the household survey showed a staggering loss of -355k jobs.
But not in labor force increased by 368k
Biden, the economic crypt keeper.
Like a Great White Shark, Bitcoin has breached $100k!
Gold, a competitor to the US Dollar, is down a bit today, but has been rising with the prospect of Trump deregulating the hamstrung US economy. Gold rose under Biden/Harris (and McConnel/Schumer’s) gross fiscal mismanagemment.
Here is a picture of Bitcoin breaching the surface. And why it pays not to surf near seals or sea lions.
Confounded Interest - Anthony B. Sanders 
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