The Sisyphus Economy! Top 1% Of Earners Gaining Wealth Relative To Middle Class Thanks To The Federal Reserve And Federal Government Policies (Top 1% Have More Wealth Than The Middle Class)

According to mythology, Hades made King Sisyphus roll a huge boulder endlessly up a steep hill in Tartarus. Unfortunately, the modern day version of Sisyphus is the middle class pushing a boulder endlessly up a steep hill while the top 1% (the elite class) horde more and more wealth.

An example of the Sisyphus economy? The top 1% of earners (blue line) have seen an incredible increase in net worth, particularly after Fed Chair Alan Greenspan’s big rate cuts (green line) from 2000 to 2004. Each subsequent rate cuts under Bernanke (2007-2008) and Yellen (who just kept rates too low for too long). The end result? In the red box, the top 1% made out like bandits.

The end result? The top 1% of earners now have more wealth the the middle class.

Of course, asinine Federal government policies (like open borders and making donors wealthy with green energy spending) and the lack of a serious approach to corruption have complicated matters.

So the working class, middle class and low wage workers, are the ones pushing the boulder up a hill while government insiders like Biden make millions through influence peddling. So, unlike the Sisyphus legend, the middle class and low wage workers are being punished by simply existing.

The Fed’s balance sheet has had a similar effect, particularly since the financial crisis of 2007-2008 when The Fed truly became unhinged under Janet Yellen. So of course, Yellen was made Secretary of Treasury, the largest honey pot in the world, so she could continue growing the elites power while minimizing the wealth of all others.

Should we end The Fed? Of course! But we can’t even have a rational discussion on why we are funding a war in Ukraine (to protect their border?) while we leave our borders open to invasion?

Here is one of the 1% who made a fortune by simply having a big mouth and being in politics.

Back In The Saddle Again! Why The Fed Will RAISE Rates (Home Price Growth Reaccelerating, SuperCore Inflation Is Rising, Mass Immigration)

The Federal Reserve (aka, The Keep) is back in the saddle again. The Fed has been unable to control inflation since Federal government spending was so fast and furious after Covid that little thought was given to the long-term ramifications of insane spending. Not to mention The Fed’s overreaction to Covid.

Example?

Home price growth is rising again. Home prices in traditional “bubble cities” out west were cooling, but are reaccelerating. Even Detroit and Cleveland are seeing rapid home price acceleration.

Yes, housing inflation is sticky.

In retrospect, this wholesale dovish euphoria may have been rather short sighted, because after several strong economist reports hit the tape (with the Nov 2024 election growing closer by the day, that should hardly have been a surprise), March rate cut odds collapsed from over 100% in late December, to just 12% currently…

… as first the January CPI printed red blazing hot – with core coming in at 3.9% far higher than the 3.7% expected, with the 3-month annualized rate jumping to 4% from 3.3% and the 6-month annualized rate spiking to 3.7% vs 3.2%, but the biggest highlight was SuperCore CPI (i.e., core CPI services ex-Shelter) which soared 0.7% MoM, the biggest jump since Sept 2022…

… and then the January PPI print come in even hotter, with a core component surging in January by 0.5%, smashing expectations and beating estimates by the most since Jan 2021.

The result: not only has the market rapidly priced out what if formerly saw as many as 6 rate cuts in 2024, but growing speculation that a rate cut may not come at all unless the Fed tightens some more first (and with the S&P500 now over 5000, it is pretty clear that the market has already priced in virtually all rate cuts and has cornered the Fed).

Of course, the mass migration across the Mexican border (who knows? could be up to 11 million under Biden’s Reign of Error). While Paul Krugman, the resident lunatic economist for the New York Times, extols the virtues of mass immigration for driving up GDP, fails to recognize that mass migration is helping drive up prices. This is inflation that The Fed can’t control. And Biden/Mayorkas want even MORE mass immigration.

Maybe Fed Chair Powell should watch the film “The Keep” for lessons on how to control inflation. in the face of government sanctioned mass ILLEGAL immigration from Latin America, China, Africa and The Middle East.

White House Plans Downshift In Electric Vehicle Transition As Demand Slides (A Tesla 4-module Battery Pack Costs $20,000 To $28,000 BEFORE Labor!)

Burn on, Bidenomics!

The Biden administration is reportedly considering easing tailpipe emissions regulations, a move that was designed to force Americans from gas and diesel-powered vehicles to electric vehicles, according to The New York Times, citing three people familiar with the plan. This potential policy adjustment is in response to concerns from major automakers and labor unions and comes amid sliding EV demand, recently prompting companies such as Ford Motor Company to reduce EV production and lay off workers.

“Instead of essentially requiring automakers to rapidly ramp up sales of electric vehicles over the next few years, the administration would give car manufacturers more time, with a sharp increase in sales not required until after 2030,” the people said.

This policy change comes after 3,900 auto dealers penned a letter to President Biden at the end of 2023, warning the president to reconsider the pace of EV mandates, citing a severe decline in demand for these vehicles.

“Currently, there are many excellent battery electric vehicles available for consumers to purchase. These vehicles are ideal for many people, and we believe their appeal will grow over time. The reality, however, is that electric vehicle demand today is not keeping up with the large influx of BEVs arriving at our dealerships prompted by the current regulations. BEVs are stacking up on our lots,” the dealers said.

They warned: “Already, electric vehicles are stacking up on our lots which is our best indicator of customer demand in the marketplace.”

Last month, Ford Motor’s electric vehicle sales ran out of juice as the automaker was forced to slash production of its all-electric F-150 Lightning to April “to achieve the optimal balance of production, sales growth and profitability.”

A recent note by RBC analyst Tom Narayan said the EV slowdown is far from over:

“Key takeaways thus far from earnings season are that the EV slowdown is not showing any evidence of an inflection, Level 4 autonomy headwinds continue to persist, and fears over supplier inventory overbuild are likely overblown.”

Analyst Adam Jonas at Morgan Stanley suggested consolidation is coming to the industry:

The EV bubble is no match for elevated interest rates, and no fiscally conservative American is trying to survive the era of failed Bidenomics with a +$1,000 EV car payment.

Plus, Toyota’s chairman and former CEO, Akio Toyoda, will likely be proven right: EV cars will never dominate the global market, adding hybrids are the future.

If the alleged climate crisis is as urgent as portrayed by radicals in the White House and woke corporate media, then why does the Biden administration feel the need to move the transition goalposts if banning gas cars saves the planet?

Biden would likely sound more sincere if he dumped his gasoline-powered Corvette for a lousy electric car. On a personal note, I own at Volvo XC-60 hybrid and HATE the damn thing!!!

Recession In Mid 2024? Bank Credit And Deposit Growth NEGATIVE After The Stimulus Has Worn Out (EU Ordered To Accept 75 Million More Migrants)

This headline from Zero Hedge makes me so glad I have eaten heart-healthy Quaker Oats and Cheerios every morning for the last 20 years! Study Finds 80% Of Americans Exposed To Fertility-Lowering Chemicals In Cheerios, Quaker Oats. The chemical (chlormequat chloride) was detected in “92 percent of oat-based foods purchased in May 2023, including Quaker Oats and Cheerios.” But that was nothing compared to this Zero Hedge headline: EU “Suicide Pact” Threatens To Flood Continent With 75 Million More Migrants. Makes me wonder if Biden/Mayorkas are under orders from the UN/WEF/Soros to let immigrants pour across our southern border (including 20,000+ Chinese military age males). But back to the economy.

Both bank credit growth year-over-year (YoY) and bank deposit growth (YoY) are NEGATIVE. Covid resulted in massive Federal government stimulus spending (and Federal Reserve hyper stimulus) in 2020, but as the stimulus wears out, so does bank lending and deposits.

Having seen The Fed’s QT appear to stall in February, as Reverse Repo liquidity withdrawal accelerates, all eyes are once again back on the situation on bank’s balance sheets and how deposits are standing up (‘adjusted’ by The Fed’s magical seasonals).

And after the prior week’s miraculous surge in deposits (again, according to The Fed), last week saw total bank deposits (seasonally-adjusted) drop $57BN – the biggest weekly drop since October…

This data is from the week when Regional bank shares shit the bed thanks to NYCB…

Interestingly, on a non-seasonally-adjusted basis, total bank deposits declined about the same as SA -$58BN (and are down $180BN YTD)…

And, excluding foreign banks, domestic deposits dropped $52BN SA (Large Banks -$40BN, Small Banks -$12BN), and tumbled $65BN NSA (Large Banks -$57BN, Small Banks -$$8BN)

As the chart above shows, on an NSA basis, domestic banks have only seen one week of inflows in 2024.

As one might expect, loan volumes shrank during that week by just over $9BN (Large banks -$4.6BN, Small banks -$4.4BN)…

And finally, as a reminder – despite the rebound off the lows again this week in regional bank shares, which must mean everything is awesome, right? – the regional bank crisis is still very much alive as evidenced by the red line below (without The Fed’s imminently expiring BTFP facility)…

…what else are big banks (green line) going to do with all that cash burning a hole in their pockets?

The bottom line is – this looks a lot like a ‘Small Bank’ crisis. The last time this happened, the crisis sparked a sudden $300BN ‘run’ in small bank deposits…

Is The Fed ‘hoping’ for a controlled bank-run this time – so as many small bank deposits are drained voluntarily, before they are drained all at once in a panic (and the Reverse Repo facility is empty, unable to provide any cushion)?

It is looking like a recession in mid-2024 as Covid Stimulypto has run its course. Is the US economy so lame that is requires constant Federal government and Federal Reserve manipulation??

Joe Biden (President of the top 1% of Americans) and his likely replacement “Greasy Gavin” Newsom, wrecker of the California economy. Two economy wreckers on the same stage.

Remember when Democrats were the party of the working man and Republicans (like George HW Bush) were called “Country Club Republicans”? Now Biden and Democrats represent the elitist top 1% of wealth and Trump/Republicans (that Biden snidely calls “Maga Republicans”) represent the bottom 99%. Who woulda thunk??

BTW. Congrats to Iowa’s Caitlin Clark who set the all-time NCAA women’s scoring record with a PERFECT shot.

Thunderstruck! Housing Starts Collapse In January As Producer Prices Soar (Back In Red?)

Its as if the US economy is thunderstruck! US housing starts collapsed in January as Producer Prices soared. NOT a good sign for the US economy.

After single-family home starts plunged in December, analysts did not expect much of a bounce back in January as rates remain high and some regions were affected by weather.

Analysts were way off. Housing Starts puked 14.8% MoM in January (vs unchanged exp), but December’s 4.3% MoM decline was revised up to a 3.3% MoM rise. Building Permits also tumbled, down 1.5% MoM (vs +1.3% exp) and well down from the +1.8% MoM in December…

Source: Bloomberg

This pushed the Housing Starts SAAR back near post-COVID lows…

Source: Bloomberg

DO NOT BLAME THE WEATHER! It’s January – we know there are weather issues and that should be more than ‘priced-in’ on a seasonal adjustment basis.

Multi-family permits cratered to their lowest since Oct 2020. Permits for one-family homes edged higher after rising consistently throughout 2023

And multi-family starts were even worse, plunging from 489k SAAR to 314k SAAR – the lowest since May 2020 (when the economy was closed)…

The government’s report showed housing starts fell in all four of the nation’s regions, led by the Midwest and Northeast. The number of single-family homes completed plunged to the lowest level since May 2020.

They built it, but no one came… the inventory of new houses for sale remains elevated and suggests builders may be cautious about beginning new projects.

Don’t expect Permits to be reaccelerating anytime soon as mortgage rates have started to rise once again…

Source: Bloomberg

Which is not good news for CPI either as it suggests there is little rent relief coming soon.

And finally, there is a record gap between what the government tells us about construction employment and actual construction activity…

Makes you wonder, eh? Did builders all suddenly get massively less productive? Or is the BLS just making shit up as usual?

And then we have producer price spiking in January.

After the hotter-than-expected CPI (which has been shrugged off entirely by the stock market), Producer Prices were expected to rebound very modestly MoM but continue to slow on a YoY basis in January. Instead, like CPI, it re-accelerated with headline rising 0.3% MoM (+0.1% MoM exp), which left PPI up 0.9% YoY (down from December but hotter than the +0.6% exp)…

Source: Bloomberg

The picture was even worse under the hood with PPI ex food and energy up 0.5% MoM (vs +0.2% prior and +0.1% exp) and ex-food, energy, and trade up 0.6% MoM (vs +0.1% exp).

This was the biggest ‘beat’ for Core PPI since Jan 2021…

In fact, core PPI reached a new record high (reminder, disinflation does not mean lower prices), now up 17.4% since Biden was elected…

Services PPI soared MoM, and energy continues to be a driver of deflation (but is losing its power)…

Source: Bloomberg

And on a YoY basis, Services PPI is also re-accelerating (+1.47% from +1.14%). Energy continues to be the deflationary driver…

Source: Bloomuberg

This is not good news for the disinflationistas. And it will stop President Biden’s narrative that ‘prices are coming down’…

Looks like the US economy is back in red.

The Bidenomics Plunge! US Retail Sales Plunged In January, Worst YoY Growth Since COVID Lockdown (Stagflation Warning!)

Like the old Nestea plunge, the US economy is plunging as well.

The Biden matter is about to hit the rotating object as they saw retail sales declining bigly (more than expected) in January judging by real-time credit card spending data…

Source: BofA

After they unexpectedly surged in November and December (driven in large part by a jump in Food Services), headline retail sales in January were expected to decline just 0.2%, but BofA nailed it once again with a large 0.8% MoM drop. That dragged the YoY retail sales down to just 0.6%…

Source: Bloomberg

That is the worst monthly decline since March 2023 and worst YoY rise since May 2020.

It wasn’t pretty…

Motor Vehicles and Parts and Building Materials saw the largest decline MoM…

Source: Bloomberg

On a YoY NSA basis, Gas Stations and Building Materials were the biggest drag, while online retailers and Food Services were the biggest upside drivers…

Source: Bloomberg

Core Retail Sales also declined (-0.5% MoM vs +0.2% exp), which dragged the YoY levels down to their lowest since the COVID lockdowns…

Source: Bloomberg

Adjusted (crudely) for inflation, this was a huge drop in ‘real’ retail sales. REAL retail sales have declined for 11 of the last 15 months – in other words, on a crude basis (Ret Sales – CPI), Americans aren’t buying more shit.

Source: Bloomberg

Finally, the control group – used to feed through to the GDP calculation – tumbled 0.4% MoM (vs expectations of +0.2%).

Soft-landing morphing into a stagflationary crash-landing?

The Empire Strikes Out! NY Empire Manufacturing Survey Declines To -2.4 In February (Treasury Yield Curve Remains Inverted For 420 Straight Days)

The Empire State Manufacturing Survey struck out in February.

The Empire State manufacturing survey was down -2.4 in February.

Note how expectations are always higher than realized figures.

The US Treasury 10Y-2Y yield curve remains inverted, now for 420 straight days.

Biden’s Mortgage Market! Mortgage Demand Down 2.3% From Last Week, Purchase Demand Down -12% From Last Year (Mortgage Rate UP 151% Under Bidenomics)

Wake Joe up before the economy go goes … down any further.

Mortgage applications decreased 2.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending February 9, 2024.

The Market Composite Index, a measure of mortgage loan application volume, decreased 2.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 2 percent compared with the previous week. The seasonally adjusted Purchase Index decreased 3 percent from one week earlier. The unadjusted Purchase Index increased 4 percent compared with the previous week and was 12 percent lower than the same week one year ago.

The Refinance Index decreased 2 percent from the previous week and was 12 percent higher than the same week one year ago.

Mortgage rates (30Y fixed) are up 151% under Bidenomics.

Gimmie (Cheap) Shelter! Shelter Index CPI Increased 0.6 Percent In January (Largest Factor In Monthly Increase In Index) As Inflation Comes In Hotter Than Expected

Gimme (cheap) shelter!

As soon as Joe Biden started bragging on his low-energy campaign trail about inflation declining I knew it would go up. And it is increasing again.

Shelter cost (aka, housing) is still growing.

Expectations were for a big drop in the YoY consumer price index (from +3.4% to +2.9%) but instead it surprised to the upside (just as we warned) with a +3.1% YoY print for headline CPI (spoiling the sub-3% partiers). Consumer prices rose 0.3% MoM (more than the 0.2% exp) but the headline did decline from +3.4% to +3.1% YoY…

Source: Bloomberg

Core CPI fell below 4.00% YoY for the first time since May 2021, but the +3.86% YoY print was hitter than the 3.7% exp (with prices rising 0.4% MoM – the biggest jump since April 2023)…

Source: Bloomberg

CPI Core: The index for all items less food and energy rose 0.4 percent in January.

The shelter index increased 0.6 percent in January, and was the largest factor in the monthly increase in the index for all items less food and energy.
- The index for owners’ equivalent rent rose 0.6 percent over the month, while the index for rent increased 0.4 percent.
The lodging away from home index increased 1.8 percent in January. The motor vehicle insurance index increased 1.4 percent in January, and the recreation index rose 0.5 percent in January.
Among other indexes that rose in January were communication, personal care, airline fares, and education.
The medical care index rose 0.5 percent in January.
The index for hospital services increased 1.6 percent over the month and the index for physicians’ services increased 0.6 percent.
- The prescription drugs index fell 0.8 percent in January.
The index for used cars and trucks fell 3.4 percent in January.
The index for new vehicles was unchanged in January.
The apparel index also decreased, falling 0.7 percent over the month.

Core Service inflation picked up MoM…

..and accelerated YoY

Source: Bloomberg

Under the hood, food and Energy services costs jumped MoM along with transportation services…

Here’s the biggest component upside surprises…

And one step deeper – the so-called SuperCore: Core CPI Services Ex-Shelter index – soared 0.7% MoM (the biggest jump since Sept 2022…

… driving the YoY change up to +4.4% – the hottest since May 2023….

Source: Bloomberg

Finally, as a reminder, lower inflation does not mean lower prices.

Source: Bloomberg

The actual index of consumer prices hit a new record high this month – and is up over 18% since President Biden’s term began (it was up 8% over President Trump’s full four year term).

And it gets worse…

Source: Bloomberg

And on the higher than expected inflation report, we are still seeing bets on Fed Funds rate falling from 5.50% to 4.233% over the coming year.

The re-accleration of inflation means wage growth is back in the red relative to prices.

That Foul Jobs Report! Full-time Jobs Tank Under Bidenomics As Serious Delinquencies On Auto Loans Soar To Highest Level Since The Great Recession (PPI Is Deflating But Inflation Remains Higher Than Under Trump)

As some fans celebrate the Kansas City Chiefs Superbowl victory over the San Francisco 49ers (the game was so much like bread and circuses from the Roman Empire except for who is being thrown to the lions), we have been distracted from the horrible state of the US economy. Just review that horrible December Jobs report where the US actually LOST full-time jobs, replaced by part-time jobs.

And with the God awful jobs report, serious delinquencies on auto loans is SOARING. To the highest rate since The Great Recession.

The Producers Price Index is deflating.

At least inflation is cooling down, but still higher than under he that can’t be mentioned on The View, Rachel Maddow or Morning Joe, Donald Trump, the Left’s Voldemort.

I admit, Travis Kelce should have been benched for shoving Head Coach Andy Reid during The Super Bowl. “Damn it, Taylor (Swift) flew here from Tokyo to watch me play and you aren’t throwing enough to me!” Welcome Travis Kelce to the elitist 1% who think the rules don’t apply to them. And your 2.0 GPA at University of Cincinnati certainly qualifies you to opine on the economy … on The View or MSNBC.