Existing Home Sales Update: REAL Median Home Price Growth At -1.17% YoY, REAL Wage Growth At -3.0% YoY, REAL 30yr Mortgage Rate At -0.5254% (How Bad Is US Inflation??)

The US housing market is slowing, to be sure. Yesterday’s existing home sales (EHS) report revealed that US EHS were down -28.43% YoY and the median price of EHS slowed to 6.6% YoY.

But that is just the surface of the EHS report for October. Once I removed inflation (CPI YoY) from the numbers, we are left with REAL median price of EHS growth of -1.17% and REAL average hourly earnings YoY of -3.0% YoY. The REAL 30-year mortgage rate is -5.25%. That reveals how horrible inflation is in the US.

It is important to note that EHS numbers are lower in October than they were before Covid stimulypto (my name for the massive spending spree by Congress and massive injection of monetary stimulus by The Fed. Even the REAL 30-year mortgage rate is negative at -0.5254%.

On a side note, how come fraudulent former Stanford student Elizabeth Holmes gets 11 years in prison for her Theranos scam, but Sam Bankman-Fried only gets a House hearing with Maxine “Dirty” Waters as Chair by losing a far greater amount? Could the fact that SBF and his co-founders at FTX contributed $300,351 to nine members of the House Financial Services Committee, according to Federal Election Commission records?

I guess Elizabeth Holmes did not make the requisite pay-offs.

US Existing Home Sales In October Plunge -28.43% YoY As Fed Tightens Monetary Noose (EHS Median Price Growth YoY Slows To 6.6% As Inventory Declines)

As I mentioned on Varney and Company on Fox Business, housing is going to suffer when The Fed starts to tighten their monetary policy. And here we are, folks!

US existing home sales fell a staggering -28.43% YoY in October as M2 Money growth grinds to almost a halt.

October’s existing home sales YoY of -28.43% is the WORST since The Great Recession and collapse of Lehman Brothers.

The median price of existing home sales slowed to 6.6% YoY. Inventory of EHS remains below pre-Covid levels.

Unrelated to housing, Prince Imhotep (Federal Reserve Bank of Minneapolis President Neel Kashkari) said Friday that the whole idea of cryptocurrency is “nonsense” after the implosion of FTX revealed the industry’s shortcomings.

“This isn’t case of 1 fraudulent company in a serious industry,” Kashkari said on Twitter, commenting on an article about how investors fell for FTX. “Entire notion of crypto is nonsense. Not useful 4 payments. No inflation hedge. No scarcity. No taxing authority. Just a tool of speculation & greater fools.”

Or it could be that investors don’t trust The Fed or Federal government to act in their best interest.

Here is a crypto investor (in red fez) being lectured by Minneapolis Fed President Neel Kashkari.

Limbo Rock! How Low Can The Treasury Yield Curve Go? (Now At -70 Basis Points, Most Inverted Since 1981)

How low will the US Treasury 10y-2y yield curve go?

As of today, the US Treasury 10yr-2yr yield curve is the most inverted since 1981 at -70 basis points.

Meanwhile, equity put/call ratio from CBOE spiked yesterday to highest since 1997.

I am disappointed that The New York Times cancelled their $2,400 event to listen to Sam The Sham Bankman-Fried, Vlad “Show my your money!” Zelensky, Larry “The Big Fink” Fink and Janet “We never saw it coming” Yellen. I would have loved to do the New York Times job for them and ask hard questions to Sam The Sham and Zelensky about money laundering.

Shanghai To LA Shipping Costs Decline 81% From Peak As Fed/Fed Gov Stimulypto Slows To 2010 Levels (M2 Money Growth Slows To 2.6% YoY)

Liz Ann Sonders, Chief Investment Strategist, Charles Schwab & Co, wrote today “Collapse in shipping rates continues to look unreal … cost to ship 40-foot container from Shanghai to Los Angeles has fallen by 83% from peak, by far largest drop on record (bringing level to lowest since June 2020)”

Yes, Liz Ann, shipping costs from Shanghai to Los Angeles are plunging. But why?

Federal Reserve and Federal government stimultypo has wound down. M2 Money YoY growth is the lowest since 2010 and no, it isn’t the result of Mayor Pete’s magical skills at clearing the logjam at Los Angeles ports. It is the slowing of Federal stimulus (or stimulypto).

Here is Liz Ann Sonders tweet.

Let’s see if 1) The Fed continues to hike and 2) will House Republicans halt the insane spending, particularly since the start of Covid in 2020.

FTX Chief Hunts for Crypto, Calls Controls ‘a Complete Failure’ (Cryptos Getting Creamed As Fed Tightens) Didn’t SBF See That Coming??

As I have said before, Sam Bankman-Fried and FTX exemplifies loose Fed monetary policy and its unintended consequences: shoddy investment practices by both sides and ridiculous claims that are unverified.

Like Sam Bankman-Fried tweeting that FTX and his team were held as paragons of running an effective company.


I am sure that SBF’s attorneys (like his parents) are telling Spam to stop tweeting ridiculous defenses. As in its all the fault of crypto volatility. We now know that at best SBF had a total lack of corporate controls and thought risk management was the Hasbro board game. And SBF while virtue signaling failed to mention his twisted relationship to Ukraine funding.

(Bloomberg) — Advisers now overseeing the carcass of Sam Bankman-Fried’s FTX Group are struggling to locate the company’s cash and crypto after finding poor internal controls and record keeping at the now-bankrupt company.

“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information,” John J. Ray III, the group’s new chief executive officer who formerly oversaw the liquidation of Enron Corp., said in a sworn declaration submitted in bankruptcy court. 

“From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented,” he added.

Advisers have located “only a fraction” of the digital assets of the FTX Group that they hope to recover during the Chapter 11 bankruptcy, Ray said. They’ve so far secured about $740 million of cryptocurrency in offline cold wallets, a storage method designed to prevent hacks. 

The company’s audited financial statements should not be trusted, Ray said. Advisers are working to rebuild balance sheets for FTX entities from the bottom up, he said.
 

FTX “did not maintain centralized control of its cash” and failed to keep an accurate list of bank accounts and account signatories, or pay sufficient attention to the creditworthiness of banking partners, according to Ray. Advisers don’t yet know how much cash FTX Group had when it filed for bankruptcy, but has found about $560 million attributable to various FTX entities so far. 

Although restructuring advisers have been in control of FTX for less than a week, they’ve seen enough to depict the crypto company as a deeply flawed enterprise. Lasting records of decision making are hard to come by: Bankman-Fried often communicated through applications that auto-deleted in short order and asked employees to do the same, according to Ray. 

Well, this story keeps getting worse and worse and makes Sam The Sham look like a common criminal rather than a Democrat Saint.

Didn’t SBF’s chief economist show this chart to him and his Alameda team? The one where crytpos soars at The Fed and Federal government go wild on stimulus, then back-off? As The Fed tightens, cryptos are getting crushed.

At least Bitcoin rallied a bit today to $16,564.21, but other cryptos are down … again. Litecoin is actually up 4.57% while Solana is down -4.35%.

SBF, like Janet Yellen, will claim he didn’t see it coming.

Philadelphia Fed’s Business Outlook Plunges To -19.40% YoY, Lowest Since 2012 (It’s NOT Always Sunny In Philadelphia)

Call out The Birds Of War! Aka, The Federal Reserve.

The Philadelphia Fed’s Business Outlook plunged to 1-9.40% YoY, the worst since 2012. Notice how the Philly Phed Plunge is related to M2 Money growth YoY.

Birds of war!

The Thrill Is Gone … From Cryptos? Bitcoin Resumes Downward Trend As Fed Tightens To Fight Inflation

The Thrill Is Gone … from cryptocurrencies.

The cryptocurrency market is getting hammered thanks mostly to two things: 1) Sam Bankman-Fried’s horrid failure with FTX (fraud, Enron, front-running, stupid investors, Democrat-Ukraine connection) and 2) Fed tightening to combat high inflation.

Bitcoin, the Mac Daddy of cryptos, is down another 2% today.

The rest of the story.

The NEW face of the US Federal government and why they will sweep the Bankman-Fried fiasco under the rug, just like Hunter Biden’s laptop fiasco.

Buying Typical US Home Now Requires Income of Over $100,000, Up 46% YoY (19 Straight Months Of Negative REAL Wage Growth Isn’t Helping)

Redfin had an interesting post where they showed that the “typical” US home now requires income of over $100,000.

Of course, it is easy to blame the figure on rapidly rising mortgage rates and Federal Reserve tightening.

But the rest of the story (as Paul Harvey used to say) is that US REAL wage growth has been NEGATIVE for 19 straight months. This alone makes housing unaffordable for the middle class and low wage workers.

Good day!

Again, why are Biden and Trudeau wearing Mao jackets in Bali? And why is Biden looking like a robot?? Biden does look like he is saying “Take me to my leader, Pei.”

US Mortgage Rates Drop Below 7% in Biggest Decline Since July (But MBA Purchase Applications Drop -9.52% WoW, Refi Apps Drop -11.44%)

US mortgage rates fell last week by the most since the end of July, slipping below 7% and helping generate a bounce in purchase applications that otherwise remain depressed, but only in the Seasonally Adjusted data. The NON-Seasonally Adjusted data show a hefty decline.

The contract rate on a 30-year fixed mortgage decreased 24 basis points to 6.9% in the week ended Nov. 11, according to Mortgage Bankers Association data released Wednesday. The group’s index of applications to buy a home rose 4.4% — the most since June — but is still near the weakest level since 2015. 

But the bounce was in Seasonally Adjusted data only. The NON-seasonally adjusted data remained depressed.

Mortgage applications decreased -10.0 percent SA from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending November 11, 2022. This week’s results include an adjustment for the observance of Veterans Day.

The Refinance Index decreased -11.44% percent from the previous week and was 88 percent lower than the same week one year ago. The unadjusted Purchase Index decreased -10 percent compared with the previous week and was 46 percent lower than the same week one year ago.

Mortgage purchase applications will continue to fall in NSA terms since it is the Winter and home buying season won’t really start until January. Refinancing applications actually dropped -11.44% even with the drop in mortgage rates.

The data. As my former students know, I like the “raw” data, better known as NON-seasonally adjusted (NSA) data and avoid seasonally-adjusted data (SA) since it hides what is going on.

And on The Fed Futures Front, The Federal Reserve is still looking a hiking their target rate from 4% to just under 5%.

Are Cryptos Like Bitcoin A By-Product Of Horribly Loose Monetary Policcie By The Fed? (Or Did Sam Blankmind-Fried Look At This Chart?)

We know that Federal Reserve monetary policy, with the exception of Paul Volcker, has been incredibly loose helping to produce asset bubbles. Particularly under Bernanke, Yellen and Powell.

But cryptos like Bitcoin saw an amazing run-up in price, once in 2017 which came to a halt as The Fed raised their target rate and started to let their balance sheet shrink. Then came Covid in early 2020 and The Fed’s massive overreaction by pushing their target rate to 0.25 basis points (again) and massively expanded their balance sheet. During the Covid “crisis” and the massive Fed response, we saw Bitcoin soar in price.

But starting in 2022, we saw The Fed counterattack inflation by raising their target rate and the expectation of future rate rose rapidly. With this tightening of rates, we saw Bitcoin come crashing back down. I can see Bitcoin crashing further to 7,000 as The Fed continues their counterattack.

My question is … did Sam Blankman-Fried and his team even notice that cryptos were plunging with Fed tightening? Or did he even care? And what were his models? Or Alameda Research’s models? I would love to look at them.