Confounded Interest – Anthony B. Sanders
Financial Markets And Real Estate
In addition to soaring sellers to buyers ratio in US housing markets, we now have surging mortgage default risk (CDR) after mortgage rate resets.
Did Powell and The Fed (aka, Jay Powell and the Blackhearts) wait too long to cut rates?
Here is the soaring ratio of home sellers to buyers. OOOGG!!!
It’s Friday and the US Treasury yield curve is rising/steepening at the 10-year tenor.
As of yesterday, the 30-year mortgage rate fell to 6.17%
Thanks in part to Funky Cold Jerome!
Under The Federal Reserve, the purchasing power of the US Dollar has declined -97% since the establishment of The Federal Reserve in 1913. It is the House of the Dying Dollar.
Under The Federal Reserve, the purchasing power of the US Dollar has declined -97% since the establishment of The Federal Reserve in 1913.
Of course, Trump II is only 9 months old and Biden had 4 long years to destroy the dollar.
The good news? The US 30-year mortgage rate fell slightly to 6.64%.
The bad news? It seems to be a milder repeat of the Ford/Carter years of the late 1970s/early 1980s. Rising 10-year Treasury yields and 30-year mortgage rates during the Ford/Carter years … and early Reagan years. The difference? The Federal Reserve is fundamentally different today than previously. With Bernanke/Yellen, The Fed became more “activist” (like Obama/Biden-appoointed District Judges). Powell is returning to the Yellen model of Fed activism … not doing much.
Now the market awaits a rate cut from The Fed at the next FOMC meeting. But 30-year mortgage rates are most closely related to the 10-year Treasury yield than the short-term Fed Funds rate. Theoretically, The Fed could cut their target rate by 25 basis points and mortgage rates could be uneffected. Or even rise.
Here is a video of Fed Chair Jerome Powell trying to lower mortgage rates.
What about the mortgage rates, Fawlty?
New USDA data reveals a third consecutive week of price declines at supermarkets.
But the media is always willing to blame Trump for anything, including eggs prices.
Velocity of M2 Money is back to where is was when Trump left office the first time.
Eggs versus M2 Money.
Riding the Trump wave of economic optimism!
Sweet home Chicago … NOT!
The Biden/Harris economic “miracle” was simply massive Federal spending (and borrowing) combined with hiring Federal workers. This can be seen in the following chart of Chicago Fed manufacturing index compared with Federal spending. Great times in the first months of 2021, but as Federal spending slowed, so did the manufacturing index. Last seen at -10.71 in December 2024.
Joe Biden, sold his soul for family wealth at the crossroads in Delaware.
It is a brave new world as the US attempts an Argentina-like shift from an over-regulated, corrupt economy to a more free economy. While Argentina has Javier Milei, the US is stuck with greedy Democrats and RINOs and their bloated spending sinking any attempt to cut wasteful spending.
So as we transition from woefully corrupt and demented Joe Biden to Donald Trump, the labor market is … terrible. The job finding rate of unemployed workers has collapsed.
This occurred as the Philly Fed Business Outlook plummeted.
Here is Javier Milei of Argentina and The View’s image of a libertarian leader, Javier Bardem from No Country For Old Men.
Apparently, the late Hawaiian crooner Don Ho foresaw Biden’s irresponsible spending spree. That is, BIG BUBBLES.
Let’s start with the Buffett Indicator (Warren, not Jimmy!). It indicates that the stock market is STRONGLY OVERVALUED.
The S&P 500 Mean Reversion Model also shows the stock market to be STRONGLY OVERVALUED.
How about the Shiller P/E Ratio? Also showing strong overvaluation.
House prices under Biden have exploded partly due to the outrageous Federal spending following COVID.
The Feral Reserve also had a hand in the housing bubble. While mortgage rates remain high (relative to the Trump years), The Fed’s balance sheet remains elevated.
To be sure, some Republicans were complicit in the spending spree. But mostly it was Democrats and the Biden/Harris Administration … which is still doling out millions.
All aboard the Biden/Pelos/Schumer crazy spending train!
Wage and salary income as a percentage of GDP has fallen from over 50% back in 1970 to 43.1% in 2022. And look at the post Covid decline! And the increase in M2 Money.
Meanwhile the US budget balance as a % of GDP has been plunging downwards in recent years.
Despite the slowing economy, pre-tax profits post Covid have SOARED!
Primarily due to reckless/wasteful Federal spending and FEDERAL DEBT that soared.
There you have it! The Biden/Harris economic “miracle” was simply Federal government malspending that benefitted large corporations and few people.
Joe Biden and his woefully corrupt son Hunter of laptop fame.
It is the Biden Boogie!
Joe Biden is leaving the Presidency with an attrocious record. While saying he is leaving Trump with the strongest economy in modern times, the is actually leaving Trump and Republicans with a hollow shell for an economy. It is the final punch in the jaw from an angry, failed President.
The following chart shows that in October and November, the US deficit exploded to a staggering $624.2 billion, and even though this included several calendar adjustments – which explains the freak September surplus which as we said was due to calendar effects – the November deficit of $367 billion was $14 billion more than consensus estimates of $353 billion. Worse, combining October and November we find that not only was the combined number of $624 billion some 64% higher than the corresponding period one year ago, but it was also the highest deficit on record for the first two-months of the year (and that includes the spending insanity during the covid crisis).
Putting the deficit in context, the budget deficit in October and November – the first two months of fiscal 2025 – are now officially the worst start a year for the US Treasury on record.
No wonder even Statist Janet Yellen (Treasury Secretary who failed utterly at her job) apologized that her abysmal performance. “I am concerned about fiscal sustainability and I am sorry that we haven’t made more progress,” she said adding that “I believe that the deficit needs to be brought down especially now that we’re in an environment of higher interest rates.” Meanwhile Biden keeps handing out $$$ to Ukraine, Africa, Syria, illegal immigrants and anything else that asks … unless it it American citizens. Man, does Biden HATE America!
Here is Yellen’s record on debt. A total of $15.2 TRILLION under her leadership.
Under Biden/Yellen (don’t forget Senate fools like Schumer and McConnell!), debt interest has surpassed Social Security and Medicare as the second largest government agency expense.
Biden is a classic progressive Democrat, spending other people’s money like a wild man (sort of like California Governor “Greasy Gavin” Newsom’s father. Or grandfather. And let’s not forget the $222 TRILLION in UNFUNDED liabilities such as Social Security and Medicare.
“See Joe, I can destroy California’s economy just like you destroyed the US economy!”
Confounded Interest - Anthony B. Sanders 
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