The Presidential and Vice Presidential debates thus far feature weak moderators asking lame questions. For example, there are still 97 hostages stll held by Hamas and what would the candidates do to get them released? (Hint: Trump/Vance would have sensible responses. Harris would just laugh and say she was raised in a middle class family and Walz would look like a deer in the headlights. Then we have national debt of $36 trillion, $271K per taxpayer.
But the hidden bomb that will never be discussed is unfunded liabilities (entitlements) such as Social Security and Medicare. Currently, unfunded liabilities are $219 TRILLION or $650K per citizen.
Of course, Biden/Harris have let the southern border wide open to criminals and uneducated Democrat voters who will voter for MORE entitlements.
So, when will the lame debate moderators ask HARD questions? And can Harris attempt to answer one hard question without laughing or falling back on lame “I was raised in a middle-class household.” etc.
It turns out that Powell’s “emergency” 50bps rate cut was – drumroll – another major policy mistake by the Fed. Or it is Presidential election interference by The Biden/Harris Administration giving Cacklin’ Kamala as talking point?
Moments ago, the BLS reported that at a time when prevailing consensus was for jobs to continue their recent downward slide sparked by the near-record annual jobs revision and several months of downbeat jobs reports, in September the US unexpectedly added a whopping 254K jobs, the biggest monthly increase since March…
There’s more: unlike previous months where we saw repeat downward job revisions, the BLS said that both prior months were revised up, to wit: the change in total nonfarm payroll employment for July was revised up by 55,000, from +89,000 to +144,000, and the change for August was revised up by 17,000, from +142,000 to +159,000. With these revisions, employment in July and August combined is 72,000 higher than previously reported.
Some context: as UBS notes, the moving six-month average on nonfarm payrolls is 167k. The estimate is that 150k is about consistent with a return of the economy to trend growth. Which means that inflation is about to come back with a vengeance, just as the Fed launches its easing cycle.
Remarkably, while payrolls jumped by the most in half a year, the number of employed people also surged, rising by a whopping 430K, also the biggest one-month jump since March.
It wasn’t just the payrolls, however, which came in far stronger than estimates: the unemployment rate also came in stronger than expected, and thanks to the jump in employed workers coupled with the decline in unemployed workers (from 7.115MM to 6.834MM), it dropped from 4.2% to 4.1% (and down from 4.3% two months ago which spared the entire recession panic).
Among the major worker groups, the unemployment rate for adult men (3.7 percent) decreased in September. The jobless rates for adult women (3.6 percent), teenagers (14.3 percent), Whites (3.6 percent), Blacks (5.7 percent), Asians (4.1 percent), and Hispanics (5.1 percent) showed little or no change over the month.
And here is the rub, because in a vacuum the super strong jobs numbers would have been fantastic, the only issue is that the September blowout comes as the Fed launches an easing cycle and as wages are once again rising as we have warned for the past 3 months. Indeed, in September, the average hourly earnings rose 0.4% sequentially, beating the estimate of 0.3%, while on an annual basis, wage growth was 4.0%, up from an upward revised 3.9% and beating the 3.8% estimate.
One note here: the average workweek for all employees edged down by 0.1 hour to 34.2 hours in September, which means the hourly earnings increase is not “pure” but rather a function of denominator adjustments. In manufacturing, the average workweek was unchanged at 40.0 hours, and overtime edged down by 0.1 hour to 2.9 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls remained at 33.7 hours.
What sector had the biggest growth? UNPRODUCTIVE government workers! A record 785,000 government workers were added in September, pushing total govt workers also to a new record high.
The Biden/Harris Administration has given away billions of dollars to foreign nations (like Ukraine) and illegal immigrants so far this year,
– $24,400,000,000 to Ukraine.
– $11,300,000,000 to Israel.
– $1,950,000,000 to Ethiopia.
– $1,600,000,000 to Jordan.
– $1,400,000,000 to Egypt.
– $1,100,000,000 to Afghanistan.
– $1,100,000,000 to Somalia.
– $1,000,000,000 to Yemen.
– $987,000,000 to Congo.
– $896,000,000 to Syria.
– $9,000 per illegal immigrant that has entered the U.S.
And claim that FEMA has no money left for Hurricane Helene victims who have received only $750 per person. So I have plenty of reasons to have no trust or confidence in the Biden/Harris Mal-administration.
The University of Michigan consumer survery is out and the results are startling.
Under Biden/Harris, buying conditions are far worse than under Trump/Pence.
In fact, buying conditions were extremely favorable (above 100) under Trump and dismal under Harris. Particularly for housing (where higher than normal mortgage rates and high housing prices made the “American Dream” the American Scream.
More evidence of how destructive Biden/Harris economic policies have been.
The NAR data show existing home sales down 2.5 percent in August to a 3.86 million unit seasonally adjusted annual rate after a small upward revision to 3.96 million units in July.
US existing home sales fell in August to near 14-year lows. Pink box.
Meanwhile, pending home sales (red line) ARE at an all-time low.
Commercial real estate market challenges are more severe for older office towers in downtown metro areas than those outside city centers. The mismatch between funding needs and available credit in a high-interest-rate environment has also intensified the strain on building owners, as elevated tower vacancy rates persist across many markets due to the ongoing trend of remote work becoming the norm.
Aging business districts from Los Angeles to Chicago to Boston of zombie towers with high vacancy rates that have no use in today’s economy.
Big landlords, including Brookfield, Blackstone, and Starwood Capital Group, have walked away from older downtown towers in recent quarters.
The latest data from MSCI shows office values in metro areas have crashed 52% from their highs. Some of the worst declines have occurred in San Francisco, Manhattan, Washington, and Boston.
Source: Bloomberg
Between 2019 and 2023, about $557 billion of value evaporated from US offices due to a multi-year slide in demand, with older towers quickly falling out of favor with companies, according to an estimate by economists at Columbia and New York universities. CBRE Group noted that only 2% of towers in the US are considered top-tier, with rents 84% higher than the rest of the market.
Data from brokerage Savills shows office rents in business districts have grown slower than rents for similar buildings outside metro areas.
Source: Bloomberg
The move to new towers highlights how, for decades, the bubbles in legacy downtown districts, fueling economies, have ended for now, and older towers will have to be torn down.
To be very frank. It’s a crisis. Democrats running the crime-ridden metro area are delusional and blinded by their woke religion as the city’s population recently crashed to a 100-year low, and violent crime remains a major issue.
We’ve had conversations with multiple folks at wealth management and investment banking firm Stifel Financial about the latest shift of operations outside the dying business district to a new tower in a much safer and newer district. At first, Stifel contemplated leaving the city for the suburbs because far-left Democrats in City Hall could not enforce law and order.
CRE foreclosures are on the rise.
Don’t forget about Soros-funded district attorneys not enforcing the law in large cities. Expect more of the same if Harris/Walz win the election.
Big bubbles! US home pricest hit an all-time high as The Fed keeps its foot on the monetary gas pedal following the Covid economic shutdown in 2020.
Home prices in America’s 20 largest cities rose for the 16th straight month in June (according to the latest data from S&P CoreLogic – Case Shiller – data today), up 0.42% MoM (hotter than expected and accelerating from May). On a YoY basis, prices rose 6.47%, but notably that is the third straight monthly slowdown in the pace of price appreciation…
Source: Bloomberg
Overall, US home prices reached a new record high in June (as median new home prices continued to tread water)…
Source: Bloomberg
Home prices continue to track Fed Reserves closely, but a turning point may come soon…
Source: Bloomberg
Given the smoothing and heavy lag in the Case-Shiller data, it’s hard to find a causal relationship between prices and mortgage rates…
Source: Bloomberg
But, with prices reaccelerating and mortgage rates already back below 7.00% – in anticipation of The Fed – WTF does Powell think is going to happen when he actually starts cutting with prices at these record highs.
The Freddie Mac HP index shows the variation in home price growth. New Jersey coastal towns of Atlantic City and Ocean City grew at 10% YoY while Lake Charles LA declined by -2% YoY.
Combined Biden/Harris’ spending spree with The Fed’s monetary goonery and we got inflation (gasoline, food, shelter). With spiraling inflation in mortgage rates and shelter prices we saw a correponding decline in existing home sales under Biden/Harris.
Harris claims to lower prices on her first day in office (she has been in office as VP since 2021 and actually voted in the US Senate as tie breaker to enact policies that INCREASED Inflation). But her suggestion of $25,000 for ALL first time homebuyers is of course INFLATIONARY. And her anti-price gouging policies willl of course reduce supply of groceries avaiable, driving up INFLATION.
Having put inflation fully in the rearview mirror, the “Powell payrolls pivot” is now complete because as the Fed chair said, “the cooling in labor market conditions is unmistakable” even if it was quite mistakable to the Biden admin’s presstitutes as recently as one month ago.
Which is also why it was imperative for the Biden labor department to admit the truth about the deteriorating labor market: without that -818K revision earlier this week, the Fed would have some pushback to turning fully dovish. But now that we know that a third of the job gains in the last year of Bidenomics were bogus…well, please come save us Chairman Fed.
Or, as TradeStation head of strategy David Russell said, “here comes the punchbowl. Jerome Powell came out swinging today with a litany of dovish signals. He said inflation is on a sustainable path lower and talked about how the job market has cooled to pre-pandemic levels. He drove the point home with a clear call for adjusting policy.”
The market agreed, and quickly cemented at least one rate cut while also pricing in as much as 33% odds of a 50bps rate cut.
Which is all great: after all as we have long said, with the November elections looming, the Fed will do everything to make sure the establishment candidate isn’t distracted by such trivial things as a market crash.
There are just four small problems with this.
First: the Fed will end its tightening cycle and starts the next easing cycle with stocks at all time highs, something that has never before happened in the history of capital markets!
It means that, unless the current expansion ends in a gruesome recession which crushes the economy, the S&P is about to enter a full-blown bubble, which in turn will burst in even more spectacular fashion and force the Fed to not only cut back to ZIRP, but activate NIRP (just like Japan did years ago) and also go right back to QE and buying bonds ETFs. For now, however, as in the next three months ahead of the elections, all shall be well and should serve the all time high in the market to Kamala Harris on a silver platter…. which is precisely why the Fed is doing what it is doing.
Second, this is also the first time in history when the Fed has aborted a tightening cycle having achieved zero home price easing. Indeed, one look at the case-shiller index shows that home prices are the highest they have ever been…
… as are actual asking rents according to Zillow (not that delayed aberration known as Owner-Equivalent Rent).
And then you have Kamala’s promise to provides $25,000 in new home purchase subsidies, which will go straight to the asking price, sending prices even higher.
In short, both home prices and rents, already at record high, are about to go record-er…
Third, while one can technically live without housing or rent, one still needs to eat. And here we find another problem, because not only did the Fed’s rate hikes not contain stock, home or rent prices, but food prices – both at home and away from home – are also at all time high! And guess what cutting rates and stimulating the economy will do to food prices from this point on…
Fourth, and final, the seeds of the next inflationary bubble are already set, because even as the Fed kept conditions tight (or even exceptionally tight), M2 – the broadest money aggregate tracked by the Fed – is once again rising after declining for the past three years.
Of course, there are countless other examples, because besides the above case studies, prices are at all time highs pretty much everywhere else too. But you get the message. The only question is what can possibly go wrong with the Fed launching an easing (i.e., monetary stimulus) cycle with prices for pretty much everything, stocks and homes included, at all time highs and rising.
Confounded Interest - Anthony B. Sanders 
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