“Boodle Biden” Strikes Again! Biden Announces $16.4B in New Funding For Amtrak’s Northeast Corridor (For Middle Class Consumers, Borrowing Costs Rising, Housing Prices Rising, Banks Cautious About Consumer Lending, Shipper Maersk Announces Plans To Cut At Least 10,000 Jobs)

President Joe Biden and his boss Barack Obama remind me of the legendary corrupt Chicago politicians First Ward Alderman Michael “Hinky Dink” McKenna and “Bathhouse” John Coughlin. And their love of “boodle” (a slang term money, gained (Biden family payoffs from foreign countries), or spent improperly (Obama shipping large pallets of cash to US enemy Iran). Biden and Obama are indeed the modern day “Lords of the Levee”.

But in another example of Boodle, just in time for the 2024 election, we have Biden announcing $16.4 BILLION to …. Amtrak for the Northeast corridor (aka, the Acela train carrying Congress members, staff, media from Washington DC’s Union Station to NYC’s Penn Station. Bear in mind that the Amtrak route is not a payoff to the US middle class, but a gift to the elite passengers on the Washington DC to NYC (then on to Boston) route. But unlike Biden’s other boodle (the Ukraine war where Zelenskyy and his cronies are partying hearty with US taxpayer funds), at least no one will by dying on Amtrak. (other than in the film “Unbreakable.”)

But on the middle class front, we can see “cheap rates” are a thing of the past as markets have to deal with Biden’s inflation problem and Fed rate hikes.

And with rising home prices under Biden, the house price to income ratio is out of control and causing pain for the middle class.

On the MBS front, we see negative returns.

The 2-year Treasury yield is dropping faster than Biden’s polling numbers.

On the credit side, more lenders are tightening standards for C&I loans.

And banks remained restrictive in their willingness (or lack thereof) to make consumer loans, but there was a marginal improvement from prior release.

On the global front, Maersk announces plans to cut at least 10,000 jobs due to weakening global trade.

Here is a picture of Hinky Dink (Joe Biden) and Bathhouse Barry Soetoro. I mean Bathhouse John Coughlin, the Lords of the Levee.

Alarm! Bidenomics And The Tilt Effect (Mortgage Rates Up 174% Under Biden, 10Y Treasury Yield Up 402%, Real Disposable Income Declining, TLT Calls Explode!)

Alarm!

No, this isn’t the tilt effect in the mortgage market where inflation is front-loaded in mortgage rates making mortgage payments quite unaffordable. Although inflation is causing mortgage rates to be up 174% under Biden (while Biden continues to brag about how Bidenomics is helping). Meanwhile, the 10Y Treasury yield is up 402% under Biden (making refinancing the US staggering debt load more difficult to refinance. Higher mortgage rates tilt the present value of mortgage payments to the front, making housing even more unaffordable. Thanks Joe!

But the Tilt effect I am talking about is the TLT effect. TLT (iShares US Treasuries 20y+ ETF) calls. Friday was the largest TLT call volume ever.

Meanwhile, US real disposable income is declining.

I’ll feel a whole lot better when Biden is gone.

Meanwhile, inflation under Biden is still eight miles high.

Biden’s Fiscal Folly! Massive Federal Spending Is NOT Sound Fiscal Policy, Another $1.6 TRILLION In Debt (Yields Show Washington’s Interest-Rate Payments Will Eclipse Australia’s GDP)

Appartently, Joe Biden and fellow big spenders in Washington DC, Mordor on The Potomac, don’t care about fiscal discipline. With seemingly endless spending of wars (Ukraine, Israel, Taiwan and the invasion at our southern border, and inane “green” spending,

Janet Yellen and the US Treasury will be auctioning off $776 billion of debt in the final quarter of calendar 2023, a bit below market expectations. Treasury said it will auction another $816 billion in the first quarter of 2024. So, that is yet another $1.6 TRILLION in debt.

The rapid rise in US yields to ~5% points to the government’s annual interest-rate bill rising to 4.5-5% of debt outstanding in the next six months. That’s in the region of $1.7 trillion – or the GDP of Australia – each year.

Such large payments are negative for the economy. Interest is likely to be paid for using higher-velocity money (e.g. taxes) and received by holders less likely to spend the proceeds in the broad economy, and instead re-invest it. Independent monetary policy becomes increasingly difficult when the equivalent of 6% of US GDP is being diverted towards interest payments each year.

It’s not only the size of Treasury borrowing that’s a problem, but it’s maturity composition.

Issuance has latterly been skewed to bills, which has ameliorated the impact on liquidity as money market funds have been able to intermediate through the reverse repo (RRP) facility at the Fed. But as issuance skews back towards longer-term debt (watch for increases in auction sizes in 2y, 3y, 5y, 7y, 10y, 20y and 30y debt for insight on this), that will have an increasingly negative impact on liquidity, especially if the Treasury maintains its large cash balance at the Fed (as it said on Monday it expected to do).

The Fed has little (or no) say over any of this.

Monetary policy will become increasingly overwhelmed in such an environment, which is why today’s Fed meeting, where it is expected to keep rates on hold, is a bit of an afterthought.

Also of more consequence currently is Japan.

The BOJ’s decision to maintain negative yields and keep its yield curve control policy largely intact ladles on yet more underlying risks to the global macro environment.

Allegedly, The Fed isn’t interested in buying additional US debt, and likely China and Japan won’t be buying our debt either. But maybe the REAL Federal government, Blackrock and their friends will buy the debt!

Back In Time! MBA Mortgage Purchase Demand (Applications) Decline To Lowest Level Since 1995 (Down -22% Since Last Year)

We are back in time … at least for the mortgage market. Thanks to Bidenomics!!!!

Mortgage applications decreased 2.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending October 27, 2023.

The Market Composite Index, a measure of mortgage loan application volume, decreased 2.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 3 percent compared with the previous week. The Refinance Index decreased 4 percent from the previous week and was 12 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 1 percent from one week earlier. The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 22 percent lower than the same week one year ago. Back to 1995 levels.

At least mortgage refinancing applications are back to only 2001 levels.

Two-year yields have risen 5%.

At least it looks like Powell will pause rate hikes … for the moment.

I want a new drug, other than Biden’s top-down, big-donor friendly Soviet-style command economy. How about a free market without Fed interest rate manipulation??

Guns Of August? Home Prices Rise Again In August, +2.57% YoY (Illegal Immingrant Destinations Like Chicago, New York And Detroit Are Up The Most)

Bidenomics is best represented by the novel “The Guns of August” since American’s middle class is getting blasted by Biden’s economic policies and The Fed’s rate rate hikes. Find out where Texas Governor Abbot is bussing illegal immigrants and buy in the market!!

Home prices rose for the 5th straight month in August (the latest data released by S&P Global Case-Shiller today), up 1.01% MoM (better than the 0.8% rise expected).

Source: Bloomberg

The ongoing MoM rises pushed the YoY gain in home prices at America’s 20 largest cities up 2.16%, the most since January 2023. The National Home Price index rose even faster at 2.57% YoY.

Illegal immigration destinations Chicago, New York, and Detroit all saw major home price rises (+5.0%, +4.9%, and +4.8% YoY respectively). Las Vegas, Phoenix, and San Francisco remain lower YoY (-4.9%, -3.9%, -2.5% respectively).

But, judging by the resumption of the rise of mortgage rates since the Case-Shiller data was created, we would expect prices to also resume their decline…

Source: Bloomberg

Inventory is going nowhere, buyers and sellers are stuck (affordability for the former and the mortgage cost gap for the latter), and The Fed isn’t cutting rates any time soon. Not pretty…

The Crazy World Of Bidenomics! Actual Cost Of Charging An Electric Vehicle Is $17 Per Gallon, Automakers Losing $36,000 Per EV Sold (Big Boondoggle For China)

Biden is the God of Hellfire! Forcing Americans to support China.

The actual cost of charging an electric vehicle is $17 per gallon, and automakers are losing $36,000 per EV they sell. Its enriches China and makes the US dependent on Chinese batteries and minerals controlled by China.

Ford EV sales are almost nonexistant. High prices, big losses per vehicle sold, a dearth of charging stations for travel.

At least Biden will say the pain he is causing actually “hurts so good.”

Here is California governor and greaseball Gavin “Gruesome” Newsom test driving a Chinese EV on his trip to China to undercut Biden’s dying reelection prospects.

Shapes Of Things Under Bidenomics! Russell 2000 Hit Lowest Level Since Nov 2020 As Bidenomics Bites Hard (Mortgage Rates UP 181% Under Biden, Home Prices UP 32.3%)

Shapes of things under Bidenomics! More like Over, Under, Sideways Down.

The benchmark small cap index, the Russell 2000, has hit the lowest levels since November 2020, when the world was still without a vaccine and shut down from Covid. And before Biden’s/Congress wild spending spree and debt volume explosion creating massive inflation causing The Fed to hike rates.

Speaking of over, under, sideways, down under Bidenomics, mortgage rates are up 181% and home prices are up 32.3% under Biden.

Biden: “WTF? He doesn’t smell like a little girl!”

Simply Unaffordable! Income Needed To Buy A Home Is $111k While Median Household Income Is Only $78k, Credit Card Delinquencies Highest Since 1991, REITs Down > -10% YTD (Bitcoin, Gold UP YTD!)

Bidenomics is a windfall for the donor class (high rate of return on campaign contributions) while the middle class gets beaten to a pulp. Waiting for Biden to lean over and creepily whisper “It’s working!” Even though it is clearly not working, at least for the middle class.

Evidence that Bidenomics is not working and destructive? Try the surging income needed to buy a house under Biden. Home prices are rising faster than median household income. As in $111,000 income needed to buy a house, while median household income is only $78,000. So, housing is simply unaffordable under Bidenomics. The Biden era is outlined in pink.

Mortgage purchase applications have collapsed to 1994 levels.

Meanwhile, stressed households are seeing credit card delinquencies at the highest level since 1991.

And thanks to Uncle Spam (given how Uncle Sam is destroying the middle class it is now Uncle Spam), 2023 interest payments are the same as the total debt from 1980! Spam, which the Federal government has devolved into, is very high in fat, calories and sodium and low in important nutrients, such as protein, vitamins and minerals.

2022 was a bad year for investments under Bidenomics. 2023 year to date is showing huge gains for Bitcoin, the NASDAQ and gold. Bringing up the rear are long duration Treasuries and REITs (real estate investment trusts), both earning negative returns thus far of less than -10%.

When will we see rats fleeing the sinking SS Bidenomics as it sinks? JPMorgan Chase stock slips after bank says CEO Jamie Dimon is selling 1 million shares.

Biden, Treasury Secretary Janet Yellen and Fed Chair Jay Powell have a bad case of screwing you (Doctor, Doctor).

Bidenomics At Work! Savings Rate Plunges As Spending Soars, Inflation Slows As Govt Wage Growth Nears Record High (Commercial Office Delinquencie On The Rise, San Francisco Soars To 30.4% In Q3)

Biden’s leading “economist” Lael Brainard loves to brag about the strong economy under Bidenomics, and then pulled a brain freeze when asked about crashing savings rates as consumers struggle with inflation.

The good news? One of The Fed’s favorite inflation indicators – Core PCE Deflator – slowed to 3.7% YoY in September (its lowest since May 2021). Headline PCE was flat at 3.4% YoY. Both were in line with expectations… But 3.4% is still far too high compared to The Fed’s target of 2%.

Source: Bloomberg

Now for the bad news. However, while the YoY data slowed, Core PCE rose by 0.3% MoM – the biggest MoM jump in four months.

Services inflation excluding housing and energy accelerated to 0.4%, from 0.1% in the prior month.

The overall PCE price index, meanwhile, rose 0.4%, bolstered by higher energy prices.

Even more focused, is the Fed’s view on Services inflation ex-Shelter, and the PCE-equivalent shows that it is slowing/trending lower but very much still stuck at high levels (and rose a large 0.4% MoM)…

Personal Consumption soared 0.7% MoM while incomes grew at only 0.3% MoM…

Source: Bloomberg

Focusing on the income side alone, private workers wages plunged to 3.9%, down from 4.5% and the lowest since Feb 2021.

So where is the offset to hot wages you may ask? Why government workers: wages of govt workers are up 7.8% YoY vs 7.4% in August and approaching the record high of 8.7% in Oct 2021

All of which means the personal savings rate collapsed even further, from 4.0% to 3.4% of DPI…

Source: Bloomberg

The savings rate is down 4 straight months, back near record lows… AND this is after artificial revisions that artificially boosted the savings rate 3 times in the past year (see above chart)

Bidenomics, hard at work.

On the commercial real estate front, office delinquencies are on the rise again. But in San Francisco (queue the late Tony Bennett), the office vacancy rate soared to 30.4% in Q3.

And if you’re going to San Francisco, be careful where you walk because of exploding crime, feces on the sidewalk, homelessness and used needles.

Addicted To Gov? US Added $600 Billion In Debt In One Month And $10.47 TRILLION Since Covid Outbreak, Credit Card APR Now 28.93% As Credit Card Debt Exceeds $1 TRILLION, Family Healthcare Costs Surge 7% To $24,000, Q3 Real GDP Rises 4.9%

Bidenomics new theme song is “Addicted To Gov.” Bidenomics needs lots of Federal spending and borrowing to survive. But all this spending and borrowing is causing rapid price increases and other distortions.

The US Federal government just added $600 billion in debt in ONE MONTH. And The Fed’s have borrowed $10.47 TRILLION since Covid in Q1 2020.