Surviving Inflation And The Fed: ARK’s Cathie Wood or TSLA’s Elon Musk? Or Bitcoin? (Answer: All Are Down Around -68% YoY)

Trying to survive high inflation is difficult, but surviving The Federal Reserve’s counterattack to inflation is even more difficult.

Two people who constantly appear in the business are ARK’s Cathie Wood and TSLA’s Elon Musk. A third we can add is Sam Bankman-Fried of FTX and Alameda Research infamy.

So which one was the best at surviving inflation and The Fed’s counterattack? Answer? None of them.

Since the same day last year, we have seen M2 Money growth plunge and The Fed Funds Target rate rise rapidly from 25 basis points to 4.50%, a rapid increase. But over the last year, Cathie Wood and ARK fell -68.4%, Elon Musk’s Telsa fell -68.9% and Bitcoin fell -65.1%

So, ARK, Tesla and Bitcoin were demolished in 2022 thanks to inflation and The Fed’s counterattack. But the NASDAQ index was down too, but only -35.2% YoY.

US Gasoline And Diesel Prices Falling As Fed Tightens Monetary Noose (But Gasoline Prices Still Up 30% Under Biden, Diesel Prices Up 78%)

As the global economy slows and global central banks continue to tighten, we are seeing gasoline and diesel prices falling.

But bear in mind that US gasoline prices remain 30% higher since Biden was sworn-in as President. Diesel prices are up a staggering 78% since that fatal day.

Speaking of tightening monetary policy, the US Treasury yield curves have flattened/inverted since The Fed started tightening with rate increases to fight inflation.

Let’s see how inflation does with Congress’ $1.7 trillion, unread Omnibus bill. Aka, Grand Theft Congress. Pelosi is holding an iPhone and Schumer is holding the scope rifle. McConnell is wearing the gas mask since the wasteful spending truly stinks.

Inflation Bomb? US Core PCE Deflator Calms Down To 4.7% YoY, Still Over 2x Fed Inflation Target (Taylor Rule At 10.10%, Still Unachievable)

There’s inflation in the air. The US Core PCE deflator slowed to 4.7% YoY in November. But it is still over 2x The Fed’s inflation target.

The lower core PCE growth of 4.7% YoY results in a Taylor Rule estimate for The Fed Funds Target rate of 10.10%. Which The Fed will never reach, particularly since the House Of Overlords (the US Senate) just passed a grossly irresponisble omnibus bill of $1.7 trillion laden with insidious pork barrel spending and, on a depressing note, billions for border security in Egypt, Oman and other countries, just not our wide-open border with Mexico.

Here are the Lords of Darkness (Schumer and Pelosi) who concocted this witch’s brew of crony payoffs that will be ulitmately signed by El Stupido (Biden).

US Leading Economic Indicator Falls To -1% QoQ In November, -4.5% YoY As Fed Sugar Dissolves (Do I Detect A Trend?)

Do I detect a trend in the US Leading Economic Indicator data?

The Conference Board’s US Leading Economic Indicator was released this morning and it wasn’t pleasant. The US Leading Index was down -1% MoM in November.

On a year-over-year basis, it is down -4.5% YoY as The Fed withdraws its massive monetary stimulus.

The good news … for military contractors … is that Biden and Congress have given Ukraine’s Zelenskyy ANOTHER $47 BILLION.

Misery! US Real GDP Remains Below 2% YoY As Core PCE (Inflation) Rises And Remains Near 5% YoY (Misery Index Remains Elevated At 12%)

Its another slow growth economic report for the Biden Administration. So much stimulus, so little to show for it other than painful inflation.

On a year-over-year (YoY) basis, US real GDP rose to a measly 1.9%. US core PCE YoY fell slightly to 4.93%. M2 Money growth is at 2.6% YoY.

The Misery Index (U-3 inflation rate + inflation) remains elevated and above 10% (it currently clocks-in at 12%), far above the pre-Covid reading of around 5%.

Here is the rest of the story. On a quarter-over-quarter basis, real GDP rose to 3.2% QoQ. Personal consumption rose 2.3% QoQ. Core PCE (Personal Consumption Expenditures) rose to 4.7% QoQ. If we use core PCE as a measure of inflation, inflation is rising.

Here is a video of Fed Chair Jerome Powell (doubling as President Joe Biden) saying creating inflation and then raising interest rates to fight it “It’s for the best.”

US Existing Home Sales Plunge -35.4% In November, 16 Straight Months Of Negative YoY Growth (Median Price YoY Falls To 3.21% As Fed Stimulus Wears Out)

One of the big problems with Federal goverment and Federal Reserve monetary stimulus is … it wears out. Just look at M2 Money growth.

US existing homes sales fell -7.70% in November to 4.09 million units SAAR. And since the same month last year, existing home sales are down -35.4% YoY.

Existing home sales were the lowest in November since 2010.

The good news? The median price of existing homes fell to 3.21% YoY. The bad news? The ark is really bad pointing to a bad December. Inventory for sale (orange line) remains below pre-Covid shutdown levels.

Of course, will the Federal government and Federal Reserve come riding to the rescue of the housing market … again? It looks like The Fed is thinking about it.

Stimulypto! US REAL 10Y Yield, REAL Fed Funds Target Rate And REAL Wage Growth Have Been Negative Under “Inflation Joe” Biden And An Overly Generous Fed

Like the Mel Gibson movie “Apocalypto!”, we are seeing the US middle class and low-wage workers being economically sacrificed by The Federal Reserve, the Biden Administration and Congress.

Despite the rhetoric that Fed stimulus (aka “Stimulypto!”) is being removed, the US remains plagued by NEGATIVE real 10-year Treasury yields, NEGATIVE real Fed Funds Target rate and NEGATIVE real average hourly earnings growth under Inflation Joe.

This chart demonstrates the Stimulytpo problem. Prior to Covid, US wage growth was consistently higher than headline inflation. But starting in March 2021, three months after Biden became President, headline inflation became higher than wage growth.

Even with all these negative REAL rates, the US economy is forecast to have almost no growth in 2023.

To quote Peggy Lee, Is That All There Is? Trillions in Federal spending and Fed monetary stimulus and all we get it 0.50% Real GDP??

US Real GDP Growth Forecast To Be Dismal 0.50% In 2023, Personal Savings Rate -67.9% YoY In October, US Mortgage Rates Headed Down (Economic Lights On But Nobody’s Home)

Albert Collins said it best about the US economy under Joe Biden: “Lights Are On But Nobody’s Home”.

The Federal Reserve forecast for the US economy is a dismal 0.50% YoY. Do I detect a trend?

The FOMC forecast for 2023 and 2024. Core PCE YoY (inflation) is forecast to drop to 3.50%, still considerably higher than The Fed’s target rate of inflation of 2%. And unemployment is forecast to be 4.60%.

To cope with Bidenflation, US personal savings rate as of October is -67.9% YoY. The “good” news is that rents YoY are crashing. But food prices under Inflation Joe remain very high. But most everything is slowing down, not due to Biden’s policies, but a global and US economic slowdown.

With a big slowdown coming our way, you can understand why The Fed’s December Dot Plot is showing declining Fed Funds Target rate starts declining in 2024.

Even US mortgage rates are headed down.

Speaking of going down, cryptos are down across the board with Cardano leading the decline at -6.91%.

All aboard the SS Biden!

Not Always Sunny! Philadelphia Fed Admits US Jobs “Overstated” By At Least 1.1 Million From March To June 2022 (Will Biden Retract “Greatest Economy In History Statement?)

Its NOT always sunny in Philadelphia. Here is a video of the Philly Fed economists explaining massively overstated job numbers to Fed Chair Jerome Powell.

The Federal Reserve Bank of Philadelphia estimates that the employment data was vastly overstated in 2022. 10k jobs added instead of 1.1 million reported from March to June of 2022.

Here is a chart (courtesy of Zero Hedge) showing reported payrolls and REVISED payrolls. Somehow, I don’t think Jean Pierre (Biden’s spokesperson, not the French chef) will be touting “Unlike Trump, our administration barely added any jobs in March, April, May and June 2022.

How will this revelation influence the Fed’s open market committee (FOMC) going forward knowing that the Biden Administrations job creation claims are wildly overstated?

Perhaps it doesn’t matter since Bernanke, Yellen and Powell don’t follow any rules (like the Taylor Rule), but generally with job creation almost nonexistant in March through June of 2022, The Fed should be cutting rates like mad. But wait! Can they with significant inflation?

The good news is that inflation is coming off its peak, but will take a while to get to The Fed’s 2% target. Hence The Fed may raise their target rate since they cannot achieve it will energy price up substantially since Biden became President.

Gone In November? US Inflation Growth Slows To 7.1% YoY, Real Hourly Wage Growth “Improves” To -1.9% YoY (Fuel Oil UP 65.7%, Food At Home UP 12%)

Is inflation “gone in November”? Nope. Slowing, yes, but at 7.1% YoY and core inflation at 6.0% YoY, it is still considerably higher than The Fed’s target of 2%.

And the American middle class and low wage workers are still suffering with REAL average hourly earnings growth at -1.9% YoY.

The biggest losers in the inflation report for November? Food at home up 12% YoY, Fuel Oil up 65.7% YoY and “shelter” up 7.1% YoY. I call this the household bundle … of pain.