Category: GDP

Economic Vertigo! US Interest Payments Expected To Keep Rising Under Marxist Harris (And Why The Fed MUST Try To Lower Interest Rates)

After watching the Democrat hate fest last night (Aka, the Democrat National Convention), I was not shocked that the DNC platform looked like a playbook to destroy the US economy. High taxes, endless spending, more regulations, etc. Not a word about the staggering side of the US debt load … with Harris’ economic plan projected to add a whopping $25 trillon in debt to the already massive $35+ trillion debt load.

And not a mention that US interest payments on the national debt already exceeds defense spending. And is booming!

Of course, Harris’s economic vision is a continutation of Biden’s disastrous visions (which are Obama’s vision of US obliteration). Most politicians in Congress are millionaires (including Bernie Sanders) and won’t suffer from their insane “progressive” policies. Watching last night’s DNC hatefest was like watching nasty 2nd graders having a party.

Of course, the drove of anti-American, anti-properity speakers spewing venom (I hate Hillary’s flat-tone speaking style) like Hillary, Jaime Raskin (aka, Rasputin), AOC, etc. all failed to acknowledge to acknowledge the already monstrous size of the US debt ($35+ trillion) or the massive size of the unfunded promises ($218+ TRILLION). Of course not.

The handle the staggering interest payments that will crowd out other spending, The Federal Reserve will be forced to lower rates.

Of course, Democrats will wheel out “economists” like Robert Reich who say that the debt doesn’t matter.

That’s Biden/Harrisnomics! Leading Economic Indicators Down For 29th Straight Month (Outside Of Great Financial Crisis, The Worst Decline In LEI Since Mid ’70s!!!)

That’s Biden/Harrisnomics!

US Leading Economic Indicators down for their 29th straight month – at a level worse than the trough of COVID lockdowns…

…and the head of The Conference Board says ‘nothing to see here’…

“The LEI continues to fall on a month-over-month basis, but the six-month annual growth rate no longer signals recession ahead,” said Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at The Conference Board.

For context, outside of the great financial crisis, this is the worst decline in LEI since the mid ’70s!!!

And what is behind the ‘no recession’ call… US equity strength!!

Thank The Feral Reserve for the equity spike!

So, to summarize – almost all the macro data signals weakening growth for years… but because stocks are up (and credit spreads down), there’s no recession anywhere on the horizon!!??

Too Much Debt? Harris Proposing $1.7 Trillion In Spending Despite The US Begin $35+ Trillion In Debt And $218+ Trillion In Unfunded Liabilities (National Assets Of $213 Trillion Less Than Unfunded Liabilities Of $218+ Trillion)

Too much debt? Kamala Harris doesn’t think so. She is proposing economic policies costing $1. 7 trillion without sufficicent offsets. Harris is putting the US on the path to default, following numerous other badly managed nations, like Ukraine and Greece. And much of Latin America.

The US is already at $35+ trillion with unfunded liabilties totalling $218+ trillion. Of course, the Biden Administration is attempting to cut Medicare for seniors and raise the price while handing out unlimited benefits to illegal immigrants.

In July, Ukraine avoided defaulting on $20 billion in loans by reaching a preliminary agreement with private creditors.

.Given the financial burden of war, the country suspended interest payments on international debt over the last two years, which was set to expire on August 1, 2024.

Without this new debt restructuring, this default would have ranked among the 10 largest in recent history. The last time Ukraine defaulted on its debt was in 2015, after Russia’s invasion of Crimea.

This graphic, via Visual Capitalist’s Dorothy Neufeld, shows the largest sovereign debt defaults since 1983, based on data from Moody’s via Aswath Damodaran.

The Top 10 Sovereign Debt Defaults

Below, we show the biggest sovereign debt defaults between 1983 and 2022:

Greece’s $264.2 billion default in 2012 stands as the largest overall, unfolding when the country was mired in recession for the fifth consecutive year.

The country defaulted again just nine months later, making it the fourth-largest ever. Leading up to the crash, Greece ran significant deficits despite being one of the fastest-growing countries in Europe. Furthermore, in 2009, the newly elected prime minister revealed that the country was $410 billion in debt—substantially more than previous estimates.

With the second-highest default recorded, Argentina failed to repay interest on $82.3 billion in foreign debt in 2001. Like Greece, it is a repeat offender, defaulting numerous times since independence in 1816. Today, Argentina is the largest debtor to the International Monetary Fund, despite being Latin America’s third-largest economy.

Following next in line is Russia’s 1998 default on $72.7 billion in loans, coinciding with a currency crisis that erased more than two-thirds of the ruble’s value in a matter of weeks. That year, several other countries including Venezuela, Pakistan, and Ukraine defaulted on their debts after the Asian Financial Crisis of 1997 spurred instability in global financial markets.

Just as 1998 saw a wave of defaults, 2020 was a year marked by major debt upheavals. Due to the pandemic and collapsing oil prices, it was a record year for sovereign defaults, reaching seven in total. Among these, Lebanon, Ecuador, and Argentina saw the largest defaults amid deepening fiscal pressures.

Harris is just another free-spending politician who will eventually lead the US into default. But at least Harris/Walz exude joy.

At least Harris/Walz haven’t adopted (stolen) the phrase “Work makes one free”. 

July Housing Starts Drop -6.8% MoM, Lowest Since Covid Economic Lockdowns Of 2020

Another bad housing report for July, this time its housing starts.

Housing starts declined in July to the lowest level since the Covid economic lockdowns.

Housing starts fell -6.8% in July.

On a YoY basis, housing starts fell -14.8% YoY.

Goin’ Down! Traders Expect Fed’s To Cut Four 25bps By End Of Year And More Cuts In 2025 (Mortgage Rates Will Fall!)

Freddie King said it best! Interest rates are goin’ down!

Yes. traders expect The Fed to cut their target rate from 5.50% (current rate) tp 4.297% by the December meeting. That is a whopping 120 basis points.

And expect another 100 basis points of cuts by the September 2025 Fed FOMC meeting. Down to 3.232%.

Mortgage rates will fall.

Like the Roman Empire. Et tu Kamala?

Still Crazy After 4 Years Of Biden/Harrisnomics! Core Consumer Prices (Inflation) Up For 50th Straight Month, Hits New Record High (Up 3.2% YoY)

Core inflation is still hot at 3.2% YoY, although cooling.

Following last month’s ‘deflationary’ print (-0.1% MoM), analysts expected headline CPI to rise 0.2% MoM and they were spot on, shifting the YoY CPI print to 2.9% (from 3.0%) – the lowest since March 2021…

Source: Bloomberg

Core CPI also rose 0.2% MoM (as expected), and the YoY rate of inflation slowed to 3.2% (from 3.3%) – the lowest since April 2021…

Source: Bloomberg

However, that is the 50th straight month of MoM increases in Core CPI, and a record high…

Source: Bloomberg

Under the hood, used car prices fell 2.3% along with airline fares (-1.2%) while Car insurance costs jumped 1.2% and furniture prices rose 0.3%…

Source: Bloomberg

Finally, the so-called SuperCore CPI rose 0.2% MoM (same as the rest), dragging the YoY down to 4.73% (still notably elevated)…

Source: Bloomberg

A sad reminder about the impact of Biden/Harrisnomics on food prices.

Inflation is still crazy after 4 years of Biden/Harris. What will The Fed do?

Big Short Redux CMBS Style, Top AAA-rated CMBS Experienced $40 Million Loss In May (First Time Since 2008 Financial Crisis)

Is this The Big Short, CMBS style?

The delinquency rate on commercial mortgage-backed securities (CMBS) for offices spiked to 8.1% in July, the highest in 11 years.

The delinquency rate of office CMBS loans has QUADRUPLED in 1.5 years.

Delinquencies are currently rising at a faster pace than during the 2008 Financial Crisis.
A top AAA-rated CMBS experienced a $40 million loss in May for the first time since the 2008 Financial Crisis.

While not an office, Edward Hopper painted some great real estate properties!

Kama Kameleon! Fed Loses Record Amount, Bankrupty Filings (Chap 11) Highest In 13 Years, Foreign Investors Pulling Out Of China

Kama Kameleon.

Kamala Harris, despite being VP for almost 4 years, is going to annouce her plans for taming inflation. Why doesn’t she do it now?? What Harris can’t control is The Federal Reserve that is losing money at breakneck speed.

Here is The Fed’s balance sheet.

I shudder to think what Harris will propose to solve the highest bankrupty (Chap 11) rate in 13 years. Probably more Bidenomics (big wealth transfers to large corporations/donors).

Meanwhile, foreigns pulled a record amount of funds from ailing China.

Kamala Harris will say anything to get elected, then fall back on her Communist agenda.

VIX Vapo Rub! VIX Explodes Last Monday (Only Two Other VIX Episodes Higher Than 60)

I have another use for VIX … to wipe out stock market gains. VIX is the S&P 500 volatility index, also known as “The Fear Index.”

Over the last 35yrs, the whole life of VIX history, there have only been 2 prior episodes of VIX trading >60: The 1st was during GFC, the collapse of Lehman, the 2nd episode occurred during Covid and we had a 3rd occurrence: that was last Monday.

VIX … wiping out stock returns!