Confounded Interest – Anthony B. Sanders
Financial Markets And Real Estate
Remember when former Fed Chair and current Treasury Secretary Janet Yellen said that inflation was transitory? As usual, Yellen was wrong. Look at April’s new home sales. Up 4.1% since March even through M2 Money growth has collapsed.
The Taylor Rule, based on Core CPI of 5.25% (persistent, not transitory inflation Janet) suggest a Fed target rate of 11.78%. The Fed is at 5.25% and likely to pause rate hikes and maybe even lower rates again.
The US middle class is wasting away in Bidenville. While Climate Envoy John Kerry threatens to seize farms in the name of … climate change? The moral hazard problems associated with farm seizures boggle the mind.
So, everyone keeps talking about the debt ceiling and the fact that America is about to run out of money. How did we just find $375 million dollars AGAIN to ship on over to Zelenskyy?
Biden and McCarthy met on the debt ceiling and nothing has been resolved. They both represent the BIG donor class and big Pharma, big defense, big tech, big media, big tech, anything that is big runs Congress and the Administration. So of course they will finally agree to raise the debt ceiling and continue their insane spending on the donor class.
As of right now, there is no deal to raise the debt limit. Biden wants to raise the already insane and irresponsible Federal budget. McCarthy wants no new taxes. Who will cave in this game of chicken? My guess is that McCarthy will cave. Biden may whip out the 14th Amendment to bypass McCarthy and Congress, but this makes Biden a dictator (which would suit him fine, but would be a horrible precedent).
Core Inflation Rate UP 244% under Biden, Food UP 46%, Gasoline Prices UP 60%, Rental Growth UP 268%. What a disaster under Biden’s Reign of Error.
But at least the Biden family are getting wealthy beyond comprehension. Isn’t that Ashley Biden in the blue?
Like the famous novel “All Quiet on the Western Front,” its “All Quiet on the Default Front” as China Joe and Speaker McCarthy are set to meet again. In short, Biden wants to raise taxs on middle class and McCarthy wants to return Federal spending to pre-Covid levels. Sure, Biden throws around the Bernie Sanders’s tax on millionaires and billionaires line, but they know that M&Bs have professional accounts and lawyers to protect them while the middle class has Turbo Tax and H&R Block.
In any case, markets are calm (the calm before the storm?) although I think Biden WANTS to default and blame Republicans ahead of Biden’s reelection. The media will mindlessly repeat DNC talking points. So Biden is covered. After all, he says it isn’t his fault (although it is 100% Biden’s fault if America defaults because of his reckless budget and insane ramblings).
Let’s look at regional banks and the US Treasury SHORT curve: 2Y-3M. Notice that regional bank stocks have gotten demolished as The Fed tightens.
US Treasury cash balance remains dangerously low as Biden and Yellen dither the night away.
Bankrupt Biden. The US, not the Biden pay-to-play family.
I wish we could seize all the Biden family assets if Old Joe defaults. Or at least make Hunter Biden take care of his child Navy and let the poor child get rich off the Biden name.
Yes, the clock is ticking on a possible debt default and Biden is off in Hiroshima Japan instead of negotiating with House Speaker McCarthy.
The treasury cash balance is only $18 billion away from Yellen’s minimum balance redline of $50 billion. That’s one day of spending in crazy spending Washington DC.
Reminder, the US already has $32 TRILLION in debt and politicians have promised $188 TRILLION in entitlement spending. yet we are sending billions to Ukraine, etc. Yet Biden is visiting Japan (hide your little girls, Hiroshima!) and Biden/Congress still haven’t solved the debt limit crisis and Biden’s insane budget yet. Meanwhile, Americans are suffering from Biden’s inflation (aka, Bidenflation) and bad economic policies.
As many as 89.1 million American adults (or about 38.5%) were found to experience some form of difficulty in covering expenses between April 26 and May 8, according to Bloomberg, citing new data from the Household Pulse Survey. This is up from 34.4% in 2022 and 26.7% during the same period in 2021.
The rising trend is alarming but not surprising. Consumers have been battered by two years of negative real wage growth.
As wages fail to outpace the cost of living, many consumers have burned through savings and resorted to credit cards. The latest revolving credit data shows consumers appear to be ‘strong,’ but that’s only because they use their plastic cards more than ever to survive.
The Household Pulse Survey found struggling households were primarily based across West Coast and the South.
Compared with the same period last year, the survey found 2.7 million more households were relying on credit cards to cover expenses.
Consumers have record card debt and ultra-low savings rates and are paying some of the highest borrowing costs in a generation (the average interest rate on cards now exceeds 20%). This debt is becoming insurmountable for some as delinquencies rise.
And what we have now is new debit and credit card data published by the Bank of America Institute that shows not just spending slowdown for lower-income consumers, but also the upper-income cohort is finally starting to crack.
However, it is appropriate that Biden is visiting Hiroshima Japan where a nuke was detonated to help end World War II.. Biden is doing the same to the US.
Living in Biden’s economy. The ongoing train wreck is slow motion.
US existing home sales tanked -23.16% year-over-year (YoY) as the economy slows and The Fed tightens.
On a month-over-month (MoM), existing home sales declined -3.4% in April from March to 4.28 million SAAR.
The median price of existing home sales fell -2.09% from March to April (MoM) as inventory for sales remains depressed.
More bad news about the economy and housing sector under Biden/Yellen/Powell’s Reign of Economic Error.
US housing starts are out for April 2023. The bad news? Housing starts tanked -22.3% year-over-year (YoY).
The good news? US housing starts were up 2.19% from March to April. 1-unit detached starts were up 1.56% MoM while 5+ unit starts up 5.24% MoM. Permits for multifamily were down -9.71% from March to April.
The media will no doubt try to ignore the horrifying Durham Report. The report showed that Hillary Clinton and the Obama administration knowingly smeared Presidential candidate Donald Trump with false Russian misinformation and knowingly tried to steal an election. I wonder if Attorney General Merrick Garland will open an investigation into Hillary Clinton’s involvement in election tampering? Oh wait, the IRS was told to stop investigating Hunter Biden’s nefarious dealings. Never mind.
Biden’s economy and mortgage market are like a bad wine hangover. Thanks to inflation and The Fed’s tightening to fight inflation, mortgage purchase demand is down a staggering -42.4% since April 2021.
Mortgage applications decreased 5.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 12, 2023.
The Market Composite Index, a measure of mortgage loan application volume, decreased 5.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 6 percent compared with the previous week. The Refinance Index decreased 8 percent from the previous week and was 43 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 4.8 percent from one week earlier. The unadjusted Purchase Index decreased 5 percent compared with the previous week and was 26 percent lower than the same week one year ago.
Bottle of cheap wine, the fruit of Biden’s and Yellen’s BAD economic policies.
Inflatiion Joe Biden (or Unaffordable Joe). Bidenflation has led to The Federal Reserve tightening interest rates. As I said on Stuart Varney’s show years ago, “When The Fed starts raising rates, KABOOM!”
Now we are seeing US Loan Demand weakening by the most since the 2009 financial crisis.
Then we have large/medium sized banks reporting a crash in stronger demand for C&I loans.
Call Biden “The Recession Hessian.”
I wish Biden would spend more time trying to negotiate with McCarthy to end the debt crisis rather than stir up race hatred like he did at Howard University graduation. C’mon Joe! White “supremacy” is not the most dangerous terrorist threat. I would actually say that Biden, Yellen and Schumer (throw in Pelosi’s spending splurge as Speaker) are the biggest terrorist threat. They are the 4 horsemen of the US debt apocalypse.
Let’s see how Bidenflation (caused by staggering Federal misspending) and years of Yellen’s TLTL (too low too long) monetary policy has caused a massive dislocation in the housing market.
The February Case-Shiller National home price index less core inflation (CPI less food and energy) year-over-year is declining by -3.5%. This is happening as REAL average weekly earnings growth is at -1.06% YoY and has been negative growth for 25 straigth months.
Look at The Fed’s massive overreaction to the unnecessary government shutdowns of economies and schools. It really sent home price growth soaring, then when The Fed starts slowing the monetary stimulus, we get the largest slowdown of REAL home price growth since 2012.
The 4 Horsemen of the US Debt Apocalypse. I would add Mitch McConnell and Fed Chair Powell, but then would have an entire Cavalry company like George Armstrong Custer had at Little Big Horn.
Confounded Interest - Anthony B. Sanders 
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