104 Days Later! US 10Y-2Y Yield Curve Remains Inverted For 104 Staight Days, Mortgage Rate Falls As Fed Tightens (Ethereum Rises > 4%)

Yes, The US Treasury 10Y-2Y yield curve remains inverted, for the 104th straight day. And Bankrate’s 30-year mortgage rate has dropped -57 basis points since November 3, 2022.

This comes after a gruesome Pending Home Sales and mortgage applications reports today.

At least Ethereum is up over 4% today!

US Pending Home Sales Fall -36.7% YoY In October, MBA Purchase Applications Fall -31.22% YoY As Fed Tightens

The Federal Reserve continues to remove the monetary punch bowl despite the global yield curve inverting and The Fed fighting Bidenflation.

On the mortgage front, mortgage applications decreased 0.8 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending November 25, 2022. This week’s results include an adjustment for the observance of the Thanksgiving holiday.

The Refinance Index decreased 13 percent from the previous week and was 86 percent lower than the same week one year ago. The unadjusted Purchase Index decreased 31 percent compared with the previous week and was 41 percent lower than the same week one year ago.

On the housing front, US pending home sales fell for a fifth month in October as demand continued to sag under the weight of high mortgage rates.

The National Association of Realtors index of contract signings to purchase previously owned homes decreased 4.6% last month, according to data released Wednesday. And fell -36.7% YoY.

All together now. Look at pending home sales YoY and mortgage purchase applications SA compared with M2 Money YoY.

Is this part of The Great Reset??

World Yield Curve Inverts For First Time Since At Least 2000 (US Yield Curve Has Been Inverted For 107 Straight Days) Drums Along The Potomac??

Do I hear Drums Along The Potomac or East River??

The hawkish drumbeat from central bankers is raising fears of a downturn, with global bonds joining US peers in signaling a recession, as a gauge measuring the worldwide yield curve inverted for the first time in at least two decades. 

The US Treasury 10Y-2Y yield curve, on the other hand, has been inverted for 107 straight months.

And in Europe, 10-year sovereign yields are dropping like a paralyzed falcon.

The world and US yield curves are pointing to trouble. And drums along the Potomac (DC) and East River (NYC).

Trabucco Road? US Consumer Credit Outstanding SOARS As Inflation Soars And Personal Savings Collapses (Cryptos Rally As Jim Cramer And ARK’s Cathie Wood Buy The Dip!)

Wasting away again in Biden’s inflationville.

During the Covid crisis of 2020 (red box). consumer credit declined and households were saving. But following the end of US Covid economic shutdowns, we saw inflation soaring to 40-year highs as Biden declared war on fossil fuels and a Pelsoi-led Congress went on an epic spending spree. But with soaring inflation, came a decline in personal savings and soaring consumer credit outstanding in an attempt to cope with Bidenflation.

Meanwhile, in the crypto universe, CNBC’s Jim Cramer and ARK’s Cathie Wood are going big for cryptos. With Wood buying Bitcoin and Cramer touting Coinbase.

Hmmm.

But at least Litecoin and the others are up today. Likely because Cramer and Wood are touting cryptos with “buy the dip!” strategy.

And on the Sam Bankman-Fried fiasco front, I am watching the deflection of wrongdoing from SBF to his girlfriend and now the co-CEO of Alameda Research, Sam Trabucco.

Bloomberg: He has a degree from MIT and cut his teeth as a trader at Susquehanna International Group. Yet the former co-head of Alameda Research made it clear that poker and black-jack tables were where he honed the gambler’s instincts he applied to cryptocurrency trading. 

“I may or may not be banned from 3 casinos for this,” Sam Trabucco once tweeted about counting cards at black jack tables.

Trabucco Road?

Inflation Nation! Producer Price Index (PPI) Final Demand At 8% YoY In October (Cryptos Rallying On Isolation Of FTX)

The US is an inflation nation.

Today, the PPI Final Demand YoY index printed for October was it was still agonizingly high at 8% YoY (The Fed likes to see 2% for inflation).

True, PPI Final Demand YoY is down from its recent peak of 11.7% YoY in March. But notice that M2 Money YoY (liquidity) has collapsed following the Covid surge (green line).

Then I have this update on Sam Bankman-Fried of FTX and Alameda Research notoriety.

As Sam Bankman-Fried’s crypto empire imploded last week, costing him effectively all of his $15.6 billion fortune, other digital-asset billionaires sought to make clear that their steep losses in 2022 wouldn’t be similarly fatal.

Cameron Winklevoss, 41, who along with his twin brother Tyler founded cryptocurrency exchange Gemini, posted an 11-part series of tweets emphasizing that Gemini “has no exposure to FTT tokens or Alameda and no material exposure to FTX,” referring to Bankman-Fried’s trading house and crypto exchange.

And despite Spam Bankman-Fried’s disaster for his investors like Tom Brady, Steph Curry and the Democrat party, the crytpo market has done some recovery with most cryptos this morning.

Here is an interesting interview with Jeffrey Tucker on SBF’s debacle.

And why is Joe Biden following Canada’s Justin Trudeau wearing a Chairman Mao jacket? And why did Biden select the same color Mao jacket as Dr. Evil?

Or like WEF’s Klaus Schwab (aka, Dr. Evil)?

Keynesian Policies Have Left High Debt, Inflation and Weak Growth (Inflation Remains Near 40-year Highs And 19 Straight Months of NEGATIVE Real Wage Growth)

Daniel Lacalle wrote a nice piece about disastrous Keynesian policies that led the US with high debt, inflation and weak wage growth.

The evidence from the last thirty years is clear. Keynesian policies leave a massive trail of debt, weaker growth and falling real wages. Furthermore, once we look at each so-called stimulus plan, reality shows that the so-called multiplier effect of government spending is virtually inexistent and has long-term negative implications for the health of the economy. Stimulus plans have bloated government size, which in turn requires more dollars from the real economy to finance its activity.

As Daniel J. Mitchell points out, there is evidence of a displacement cost, as rising government spending displaces private-sector activity and means higher taxes or rising inflation in the future, or both. Higher government spending simply cannot be financed with much larger economic growth because the nature of current spending is precisely to deliver no real economic return. Government is not investing; it is financing mandatory spending with resources of the productive sector. Every dollar that the government spends means one less dollar in the productive sector of the economy and creates a negative multiplier cost.

When society decides to use a certain part of the resources generated by the productive sector for non-economic return activities, be it social spending or mitigation of threats, it can only do it by understanding how much of the productive capacity of the economy is able to sustain a larger cost. When costs are not considered as a burden, but considered as entitlements that can only grow, the productive capacity is not strengthened, but weakened.

The main problem of the past decades, but particularly since 2008, is that government spending and monetary policy have become solutions of first resort to any slump in economic activity, even if that decline was created by government decisions, such as shutting down the economy due to a health crisis. Furthermore, government spending increases and loose monetary policy continued even in growth periods. This, in turn, creates an unsustainable public deficit that needs to be monetized or refinanced. Both mean a larger harm for the productive sector as the debt increase leads to higher taxes for everyone but also a soaring cost of living coming from the destruction of purchasing power of the currency.

Government spending does not boost private sector activity, even less so when the entire budget is spent on non-investment outlays. It is even worse when citizens believe that infrastructure or real economic return investments should be conducted with taxpayers’ money. If an investment is productive and economically viable there is no need to involve the government. At best, the government should only participate as a co-investor, as the example of technology and defence shows, but never as a resource allocator for a simple reason. Public intervention is always aimed at perpetuating the existing inefficiencies and maximizing the budget. Efficient resource allocation cannot come from entities that have a core interest in expanding the budget and always perceive any inefficiency or poor result as the consequence of not having spent enough.

Yes, US public debt has exploded, particularly since the 2008 financial crisis and then again the Covid outbreak of 2020.

And inflation is near a 40-year high.

Then we have 19 consecutive months of negative wage growth in the US.

Biden is apparently doubling down on “Green Schemes” now that the US House of Lords (aka, Senate) remain under Keynesian control (aka, Democrat). So watch for inflation to start increasing again.

Cryptos Rebound After Zhao Announces Plans An Industry Recovery Fund (Cronos UP 24% Overnight)

Major cryptocurrencies erased losses and turned higher after Binance Holdings Ltd.’s Chief Executive Officer Changpeng Zhao said the world’s largest digital-asset exchange plans to set up an industry recovery fund.

Zhao said Monday the goal was to “reduce further cascading negative effects” of the bankruptcy of rival exchange FTX, adding the fund will assist otherwise strong projects that are facing a liquidity squeeze. 

So, cryptos are up today with Cronos up 24% overnight. Of course, Cronos is trading near zero, so any upturns in price register as large turns.

But across the board, cryptos are up. Of course, if Zhao changes his mind, look out.

I am waiting for the list of pension funds that invested in Sam Bankman-Fried’s schemes.

Let’s see if Alameda Research’s CEO Caroline Ellison faces any wrath from the DOJ or SEC. I doubt it.

Alarm! REAL Average Hourly Earnings At -2.8% YoY In October, Negative Growth Since March 2021 (19 Straight Months Of Negative Earnings Growth!)

Alarm!

The inflation numbers are out for October and they still stink (headline inflation still sizzling at 7.7% YoY).

But the number that really irks me is … REAL average hourly earnings growth is at a horrifying -2.8% YoY because of Biden’s terrible policies (aka, Bidenflation).

Real average hourly earnings growth YoY has been negative since March 2021. That is 19 straight months of negative earnings growth under Biden/Pelosi/Schumer’s reign of error.

Overall, airfares are leading followed by gasoline and household energy.

So, Pennsylvania elects this guy to perpetuate Biden/Pelosi/Schumer’s awful policies?

Double Whammy! Mortgage Holders Lose $1.3 Trillion in Equity in Q3 As Price Correction Continues (Nationally, Homes Shed 2.6% of Value Over Past Three Months As Treasury Yield Curve Remains DEEPLY Inverted)

Yes, this is an economic double whammy!

First, according to Black Knight, US home values declined -2.6% over the past three months.

Second, the US Treasury 10Y-2Y yield curve remains near 1980s low.

There is a third whammy, rising utility costs (highest in a decade).

Yes, its a double whammy!

The US Midterm Election In One Chart (Hint: Republicans Favored As Inflation Soars, Biden Unpopular On Kitchen Table Issues)

Here is the US midterm election in one chart.

According to Real Clear Politics, the generic Republican polling data FAVORABLE (red line) is at 47.9% while Democrat polling data favorable polling data (yellow line) is at 45.4%, advantage Republicans.

Biden has been a disaster as President (energy mandates, Afghanistan debacle, endless funding of Ukraine, highest inflation in 40 years, and every time he opens his mouth. But it is the “kitchen table” issues where Biden is getting clobbered: inflation, rising gas, food and diesel prices. One Democrat Congressman, Sean Patrick Maloney, said “Let them eat Chef Boyradee.” I can’t believe how tone deaf some politicians can be.

Biden’s UNFAVORABLE polling numbers (orange line) are directly related to the US headline inflation rate. Inflation was 1.4% YoY when Biden became President and it is now 8.2% YoY (blue line).

And I don’t think Biden’s hateful rhetoric toward “MAGA Republicans” is helping him. I thought his set looked like the movie “Doom” with Duane “The Rock” Johnson and Karl Urban.