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.

US New Home Sales Rose 5.8% MoM In November, But DOWN -15.3% YoY For The Ninth Straight Month (M2 Money Is Vanishing)

A classic good news, bad news story. The good news? US new home sales rose 5.8% in November, better that the expected -5.1%, The bad news? On a year-over-year basis, US new home sales FELL

Sales of new US homes unexpectedly rose in November, suggesting some stabilization in demand as mortgage rates eased late in the month from their highs.

Purchases of new single-family homes increased 5.8% to an annualized 640,000 pace last month after rising in October, government data showed Friday.

A mid-month retreat in 30-year mortgage rates back below 7% along with an increase in builder incentives may have helped support demand. Still, the sales data are volatile from month to month. With home prices remaining elevated and the Federal Reserve poised to raise interest rates further, headwinds for the housing market will persist into 2023.

The increase in sales last month was concentrated in the West and Midwest.

The report, produced by the Census Bureau and the Department of Housing and Urban Development, showed the median sales price of a new home was up 9.5% from a year earlier to $471,200.

There were 461,000 new homes for sale as of the end of last month, though the grand majority remain under construction or not yet started. The number of homes sold in November and awaiting the start of construction — a measure of backlogs — rose to the highest since the beginning of the year.

But for all the cheerleading, new home sales were DOWN -15.3% on a year-over-year basis. The ninth straight month of negative new home sales growth.

At least the median price of new home sales was down -2.79% from October to November.

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.

Mortgage Bomb Cyclone! Mortgage Rates Drop 82 Basis Points Since October 21, Yet Purchase Apps Down -17.25% (Purchase Apps Down 36% Since Last Year, Refi Apps Down 85% Since Last Year)

The mortgage market is behaving like today’s bomb cyclone in terms of the weather. Bomb cyclone in that mortgage rates have dropped 7.16% on October 21, 2022 to 6.34% on December 16, 2022 (a drop of 82 basis points), but mortgage purchase and refinancing applications are not increasing like one would hope.

Mortgage applications increased 0.9 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending December 16, 2022.

The Refinance Index increased 6 percent from the previous week and was 85 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 0.1 percent from one week earlier. The unadjusted Purchase Index decreased 3 percent compared with the previous week and was 36 percent lower than the same week one year ago.

But remember, The Federal Reserve is going to be lowering their target rate after they keep raising it.

My Kuroda! BOJ’s Kuroda Shocks Markets By Loosening Rate Band (Final End To Uber-loose Japanese Monetary Policy)

My Kuroda!

(Bloomberg) — Bank of Japan Governor Haruhiko Kuroda just gave investors a glimpse of what to expect when the world’s boldest experiment with ultra-loose monetary policy comes to an end.

In the face of sustained market pressure, Kuroda shocked markets Tuesday by saying he’ll now allow Japan’s 10-year bond yields to rise to around 0.5%, double the previous upper limit of 0.25%.

Whether this is a strategic tweak to buy time for his yield-curve control settings until his decade-long term ends in Aprilor the start of the end for his unprecedented monetary easing remains to be seen.

Here are the BOJ’s rate. bands being widened.

The yen?

And with the ECB, Fed and now Bank of Japan all tightening, we are seeing sovereign yields rising across the board.

The Japanese sovereign yield curve is upward sloping unlike the humped US Treasury yield curve.

Will the US Treasury Secretary Janet “Statist” Yellen comment?

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.