Category: Oil

Middle Class Can’t Afford Homes In Nearly Half Of Top 100 US Metros (Mortgage Rates UP 168% Under Biden, Home Prices UP 32.5%)

Fed Chairs Ben Bernanke and Janet Yellen started the home price fire that Powell is trying to extinguish but can’t. Throw in a 10% burst in illegal immigration and Biden/Mayorkas just added fuel to an already out-of-control fire.

Housing is becoming an exclusively upper-class privilege in a growing number of cities.

According to a new study by Creditnews Research, in 2024, middle-class households could afford to buy an average home in just 52 of the country’s 100 largest metros.

Just five years earlier, they could afford a home in 91 of the top 100 metros.

The situation is far worse for lower middle-class households, as they can only afford a home in seven of the largest 100 metros.

In total, 41 out of the 100 metros require a gross annual income of $100,000 or more to qualify for an average home. In 13 metros, an average income of more than $155,000 is needed.

In those cities, even the upper-middle class doesn’t qualify for an average home.

The study determined affordability by looking at how much income households need to earn to afford a down payment, mortgage payment, and related fees for an average home.

A home is considered affordable if monthly housing and mortgage costs don’t exceed 28% of a household’s gross income.

“There’s no two ways about it: Housing affordability has worsened significantly since Covid,” the report said. Since the pandemic, 39 of the most populous metros have fallen below the affordability threshold.

As expected, the most affordable areas for the middle class are located in the Midwest, Rust Belt, and parts of Texas, while the West Coast, Tri-State Area, and Hawaii are largely out of reach.

Affording a home is no longer a guarantee for the middle class

Being considered “middle class” doesn’t carry the same significance as it did just a few years ago.

“In the past, if you were middle class, it was almost assumed you would become a homeowner,” said Ali Wolf, chief economist of Zonda, a housing market research firm.

“Today, the aspiration is still there, but it is a lot more difficult. You have to be wealthy or lucky.”

That’s all thanks to a “perfect storm” of elevated mortgage rates, sky-high home prices, and a lack of inventory, making housing more unaffordable.

The result is that middle-income buyers, or those with an annual income of up to $75,000, could only afford about one-quarter of listings on the market last year.

According to Nadia Evangelou, the director of real estate research at the National Association of Realtors, “Middle-income buyers face the largest shortage of homes among all income groups, making it even harder for them to build wealth through homeownership.”

Mortgage rates (blue line) creep closer to 7%. Mortgage rates are UP 168% under Vacation Joe and home prices are up 32.5%.

After falling between November and January, mortgage rates are creeping back up.

According to Freddie Mac, 30-year fixed-rate mortgages reached 6.88% in the week of April 11 and at some point climbed well above 7%.

The reversal seems to be driven by a surprise spike in inflation, which has come out higher than expected for four consecutive months

“For homebuyers, the latest CPI report means mortgage rates will stay higher for longer because it makes the Fed unlikely to cut interest rates in the next few months,” said Chen Zaho, Redfin’s economic research lead.

“Housing costs are likely to continue going up for the near future, but persistently high mortgage rates and rising supply could cool home-price growth by the end of the year, taking some pressure off costs.”

Mortgage Purchase Applications Rise 3.3% Since Last Week, But DOWN -10% Since Same Week Last Year (Goin’ Down!)

Mortgage application increased on the latest survey from the Mortgage Bankers Association, but mortgage purchase application are still down compared to one year ago.

Mortgage applications increased 3.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending April 12, 2024.

The Market Composite Index, a measure of mortgage loan application volume, increased 3.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 4 percent compared with the previous week.  The seasonally adjusted Purchase Index increased 5 percent from one week earlier. The unadjusted Purchase Index increased 6 percent compared with the previous week and was 10 percent lower than the same week one year ago.

The Refinance Index increased 0.5 percent from the previous week and was 11 percent higher than the same week one year ago.

Bidenomics, a massive subsidy to the political donor class, but heartless towards the middle class.

US 30Y Mortgage Rate At 7.30%, Up 160% Under “Working Class Joe”, US Treasury 10Y Rate Climbs To 4.632% (Homeownership Rate Falls To 65.7%)

Joe Biden likes to sell himself as “working class Joe” or “union Joe.” The truth is anything but. He is “Washington DC insider Joe” or “big corporate Joe.”

The US mortgage 30 year rate is down slightly today to 7.30%. That is a whopping 160% increase since Biden’s Presidency began.

Mortgage rates will continue to climb as the US Treasury 10-year yield climbs.

The US homeownership rate is falling as mortgage rates climb.

Debtflation Nation! Fed Gov’t Spending $2 Billion PER DAY, Debt To GDP Headed To 200%, Electricity Costs SOARING

Biden and Congress have never met a project that they weren’t willing to fund (except a border wall with Mexico, of course).

Inflation is heating up again as the Federal government continues to spend.

4-5% by November…

US CPI on trend for 4-5% at US election in November.

Source: BofA

Above 5%…?

Strong CPI raises market probability of YE25 rates above 5%.

Source: Goldman

Cyclical inflation remains too elevated

“Our measure of cyclical inflation–which should capture the impact of excess demand on prices–appears to be stuck at around 5%, which is too elevated”

Source: Safra

US alone

The US is the only economy in the G10 where the latest inflation print surprised to the upside.

Source: Goldman

200% of GDP

Under current policies, government debt outstanding will grow from 100% to 200% of GDP.

Source: Apollo

Close to $9 trillion in maturities

That’s a significant amount of government debt maturing within the next year.

Source: Apollo

Every year a deficit

OMB forecasts 5% budget deficit every year for the next 10 years.

Source: Apollo

A billion per day….is long gone

US government interest payments per day have doubled from $1bn per day before the pandemic to almost $2bn per day in 2023.

Source: Apollo

Biggest Story of 2020s…Ugly End of 40-year Bond Bull

Chart shows long-term US government bond (15+ year) rolling 10-year annualized returns, %.

Source: Flow Show

Highest yields in 15 years

The intermediate part of the yield curve still offers the highest yields in over fifteen years.

Source: Piper Sandler

Finally, electricity costs keeps rising, ESPECIALLY with the misnamed Inflation Reduction Act (IRA). The real name of the IRA should have been the Large Green Donor Increase Act (LGDIA).

The Alligator People! The Fed Is Reporting Billions in Losses Weekly And Still Paying High Interest Income To The Mega Banks on Wall Street (As Biden Recklessly Transfers Student Loans To Taxpayers)

Joe Biden, his Administration, and The Federal Reserve are really “The Alligator People.” Despite what they tell you, they have small brains (particularly Biden) and are hyperfocused on spending.

A good example comes from “Wall Street On Parade” where they show that The Federal Reserve is still paying BILLIONS to US Treasury in the form of remittances (losses). While at the same time, paying the mega banks on Wall Street high interest loans.

As of April 3 of this year, the Federal Reserve (Fed) has racked up $161 billion in accumulated losses. We’re not talking about unrealized losses on the underwater debt securities the Fed holds on its balance sheet, which it does not mark to market. We’re talking about real cash losses it is experiencing from earning approximately 2 percent interest on the $6.97 trillion of debt securities it holds on its balance sheet from its Quantitative Easing (QE) operations while it continues to pay out 5.4 percent interest to the mega banks on Wall Street (and other Fed member banks) for the reserves they hold with the Fed; 5.3 percent interest it pays on reverse repo operations with the Fed; and a whopping 6 percent dividend to member shareholder banks with assets of $10 billion or less and the lesser of 6 percent or the yield on the 10-year Treasury note at the most recent auction prior to the dividend payment to banks with assets larger than $10 billion. (This morning the 10-year Treasury is yielding 4.41 percent.)

Operating losses of this magnitude are unprecedented at the of Fed, which was created in 1913. In a press release dated March 26, the Fed stated this: “The Reserve Banks’ 2023 sum total of expenses exceeded earnings by $114.3 billion.”

As of March 13 of this year, the Fed’s accumulated losses stood at $156.24 billion and yet on March 20 the Federal Reserve voted to sustain those high 5+ percent interest rates to its member banks – making it look like the captured regulator it is considered to be by millions of Americans.

As the chart above indicates, the Fed’s ongoing weekly losses have ranged from a high of $3.3 billion for the week ending Wednesday, January 31, 2024, to $1.86 billion for the most recent week ending Wednesday, April 3, 2024.

American taxpayers have good reason to sit up and pay attention to the Fed’s giant and ongoing losses. That’s because when the Fed is operating in the green, as it was on an annual basis for 106 years from 1916 through 2022, the Fed, by law, turns over excess earnings to the U.S. Treasury – thus reducing the amount the U.S. government has to borrow by issuing Treasury debt securities. According to Fed data, between 2011 and 2021, the Fed’s excess earnings paid to the U.S. Treasury totaled more than $920 billion.

The loss of remittances from the Fed means the U.S. government will go deeper into debt, putting a heavier tax burden on the U.S. taxpayer and raising the risk of another credit rating agency downgrade of U.S. sovereign debt.

Of course, The Allgator People like Joe Biden, Treasury Secretary Janet Yellen and Fed Chair Jerome Powell, will Treasury remittances as “free money” to spend. And its an election year, so Joe Biden (aka, King Gator) is canceling $7.4 billion in student debt for 277,000 borrowers. Only alligators in Washington DC considered this action to have no consequences.

WHO pays for the student loan forgiveness? It just doesn’t vanish, it is transferred to taxpayers. Alligators like Alexandria Ocasio Cortez going on talk shows to argue the benefits of being free from financial obligations that student voluntarily agreed to. Say, can AOC get my mortgage forgiven?? Just kidding. Now those same students can borrow additional money to get MBA degrees with the expectation that the student loan is “free money.”

Yes, Biden is acting recklessly (no surprise). Here is a picture of King Gator, Joe Biden.

The Biden Administration and The Federal Reserve ARE the alligator people. Except these gators are hungry for your money and votes constantly.

Prosit! REAL Inflation Rate Under Biden Peaked At 18% In 2022 (Highest Inflation Rate In 50 Years)

Despite Biden’s rambling that inflation is improving, bear in mind that the inflation rate is at it highest in 50 years. Yes, it has improved from 18% in 2022 to above 10% today.

A recent research paper by four noted economists, including Larry Summers, the former Treasury Secretary under Barack Obama and former Harvard President, discovered that the real inflation rate during the Biden years, using pre-1983 calculations reached 18% in 2022.

The number is the highest inflation rate the country has seen in over 50 years.

Here is the source paper by Summers et al from the NBER.

Prosit!

Hi Ho Silver (And Gold)! Gold Futures Surge To Above $2,400, Up 19.61% Since Last Year (Bitcoin UP 133.44% Since Last Year) FEAR!

Hi Ho Silver (and Gold)!

Gold futures prices are soaring and are at $2,422.00. Gold futures prices are up 19.61% over the past year.

Silver futures prices are also soaring and are at $29.64. Silver futures prices are up 16.40% over the past year.

Bitcoin is almost at $70,000 and is up 133.44% over the past year.

Returning to gold, we are seeing another gold breakout, like the breakout in 2008.

Even central banks are loading up on gold, silver, and cryptos. Why? Primarily fear of US reckless budgets and exploding debts/deficits (don’t listen to Biden talk about how “he” reduced deficits and debt (both have risen to dangerous levels under he inattentive eyes).

However, calming the jangled nerves of pension funds is that the S&P 500 stock market index is up 26.04% over the past year.

Overall prices are up by 19.4% since Biden took office.

Of course, the S&P 500 is not sustainable given that it has been driven by excessive spending by the Biden Adminstration coupled with still massive monetary stimulus from The Federal Reserve.

In summary, gold, silver and cryptos are rising on FEAR! Of Biden, Congress and The Fed.

Newsomnomics! US Deficit Tops $1.1 Trillion For First Six Months Of Fiscal 2024 As Spending Hits 2024 High (Producer Prices Rose At Fastest Pace In A Year In March)

It looks like “10% Joe” Biden is an older, more demented version of California Governor “Greasy” Gavin Newsom. They both loved spending taxpayer money and running up enomous budget deficits.

Under Biden’s “Reign of Error”, the interest on US debt just hit a record $1.1 trillion and the US deficit for just the first six months of fiscal 2024 is also $1.1 trillion.

According to the latest Treasury Monthly Statement, in March the US deficit hit $236 billion, some $40 billion more than the $196 billion expected, if below February’s $296 billion…

… which was the result of $332 billion in govt tax receipts – translating into $4.580 trillion in LTM tax receipts, and which was down 5% compared to a year ago…

… offset by the now traditional ridiculous monthly outlays, which in March amounted to $568 billion, up from $567 billion in February and the highest monthly spending total in calendar 2024, which translated into a 6 month moving spending average (for smoothing purposes) of $542 billion. Take a wild guess what will happen to the chart below during and after the next recession.

This, incidentally, is a reminder that the US does not have a tax collection problem – it has a spending problem, and no amount of tax changes will fix it; in fact all higher taxes will do is force more billionaires to move to Dubai where they pay zero taxes.

Putting the YTD deficit in context, in the first six months of fiscal 2024, the US deficit hit $1.065 trillion, just shy of the $1.1 trillion reached last year, which was the 2nd highest on record and only the post-covid 2021 was worse. Annualized, we expect total deficit to hit $2.2 trillion in fiscal 2024, a year when the US is supposedly “growing” at a nice, brisk ~2.5% pace. One can only imagine what the GDP growth would be if the US wasn’t set to have a wartime/crisis deficit…

… and we can’t even imagine what US deficit will be after the next recession/depression.

Meanwhile, as reported previously, total US interest continues to explode, and after surpassing total annual defense spending about a year ago, just the interest on US debt will soon become the single largest government outlay as it surpasses social security by the end of 2024, when according to BofA’s Michael Hartnett it hits $1.6 trillion…

.. and surpasses Social Security spending as the single largest spending category in the US government.

Biden has wanted to get rid of Social Security for a long-time and now wants to get rid of Medicare Advantage programs and put everyone on Medicare. Looks like Cloward-Piven!

On top of skyroceting budget deficits, we have Producer Prices rising at fastest pace in a year in March.

After yesterday’s CPI-surge, PPI followed along, with headline producer prices rising 0.2% MoM (+0.3% MoM exp), pushing the YoY PPI to +2.1% (+2.2% exp) from +1.6% – the highest since April 2023…

Source: Bloomberg

Core CPI rose 2.4% YoY (hotter than the expected 2.3%) – the third hotter-than-expected core PPI print in a row…

Under the hood, Services prices rose while goods prices declined MoM.

One thing that stands out as rather odd is the 1.6% MoM decline in Energy costs in the month… as prices soared for crude and gasoline?

Leading the March decline in the index for final demand goods, prices for gasoline decreased 3.6 percent…

And blame the markets for why the print was hot:

A major factor in the March increase in prices for final demand services was the index for securities brokerage, dealing, investment advice, and related services, which rose 3.1 percent.

And on a YoY basis, Services costs are accelerating…

Pressure continues to build in the inflation pipeline too…

While some may cling with grim hope to the ‘cooler than expected’ headline PPI print, core PPI is hot, damn hot, and headline PPI is rising. Not at all what The Fed, or Biden, wants to see – no matter how hard they spin it.

This is Victor Davis Hansen from Stanford’s Hoover Institute.

Biden’s Mortgage Market Getting Hammered! Unadjusted Mortgage Purchase Demand (Applications) Fall 4% Since Last Week, Fall 23% Since Last Year

Well, the US mortgage market is getting hammered by inflation and The Federal Reserve.

Mortgage applications increased 0.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending April 5, 2024.

The Market Composite Index, a measure of mortgage loan application volume, increased 0.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 0.2 percent compared with the previous week. The seasonally adjusted Purchase Index decreased 5 percent from one week earlier. The unadjusted Purchase Index decreased 4 percent compared with the previous week and was 23 percent lower than the same week one year ago.

The Refinance Index increased 10 percent from the previous week and was 4 percent higher than the same week one year ago.

Funky Cold Joe Biden! Inflation Comes In HOT For 4th Consectutive Print (Core Inflation Hotter Than Expected At 3.8% YoY)

Funky cold Joe Biden is his reaction to inflation caused by his outragous spending. His legion of sycophants are now saying inflation is a good thing or don’t notice it. But Biden will never stop spending .

Coming into today’s CPI number, which followed three previous red-hot inflation prints, we said that it’s time for a “miss” (the first of 2024) not because the data demands it – on the contrary, prices continue to rise at a frightening pace – but because a dovish CPI print today would be the last opportunity for the Fed to set a timetable for a rate cut calendar ahead of November’s election.

Well, you can wave goodbye to all that, because we just got the 4th consecutive “inflation beat” in a row…

… with supercore inflation coming in blazing hot…

… thanks to a boiling inflation print which saw every single CPI metric coming in hotter than expected – was a shock, not because it reflected reality, but because it effectively sealed Biden’s fate because as Bloomberg’s Chris Antsey writes, “obviously, this is very bad news for Joe Biden… we’re approaching the point where high inflation is bound to still be in voters’ minds when they head to the polls, regardless of how the price figures come in over summer.”Easy financial conditions continue to provide a significant tailwind to growth and inflation. As a result, the Fed is not done fighting inflation and rates will stay higher for longer.”

It’s about to get even worse: recall today we have a $39 billion 10-year auction which is already being dubbed “sloppy” and a definitive break of 4.5% could easily extend if underwriting dealers are left holding the bag. As it stands, the 10yr has popped above the 4.5% parapet. Ian Lyngen at BMO Capital Markets says:“We expect the setup to the auction will break 4.50% in 10-year yields with ease.”  

Obviously, this is very bad news for Joe Biden. It’s still only April, and we’ll have another half-a-year’s worth of inflation reports before the election. But we’re approaching the point where high inflation is bound to still be in voters’ minds when they head to the polls, regardless of how the price figures come in over summer.

Joe Biden continues to act like a gangsta giving away student loan forgiveness despite being told no by the US Supreme Court. As I said, Funky Cold Joe Biden. But Biden’s gangstaism favors the top 0.5% of net worth people, not the masses.

As Biden gropes for more voters, claiming he was raised in Puerto Rican, Greek, Black, and every other race on the planet, he probably sings “Ride The White Horse” to The Presidency. Reminiscint of Hillary Clinton claiming she kept a packet of hot sauce in her purse when talking to a black commentator.

Biden versus Trump?