Dark Night! Consumer Sentiment And Home Buying Sentiment Plunge With Bidenflation And Fed Monetary Tightening

A picture is worth a thousand words.

Nothing has been the same since Covid and The Federal Reserve’s massive overreaction to the government shutdowns of the economy.

Notice how the University of Michigan Consumer Sentiment Index (white line) has plunged since Covid and the ensuing rise in inflation. University of Michigan’s Buying Conditions for Houses has also plunged to new depths.

Yes, Bidenflation is just killing us.

Rising inflation (highest in 40 years) and hottest home price bubble (even hotter than the infamous housing bubble of 2005-2007) AND rising mortgage rates have placed a damper on home buying sentiment.

The theme song for the Biden economy is The Blasters’ Dark Night.

Meanwhile, the middle class is left with leftovers.

Good News! Flexible Price Inflation Cools To … 20%, Export Prices Cool To 18% YoY As Jerome “Slowhand” Powell Reappointed As Fed Chairman (Taylor Rule Suggests Fed Rate Of 13.89%)

The US Senate yesterday confirmed the reappointment of Jerome “Slowhand” Powell as Federal Reserve Chairman.

The good news? Atlanta Fed’s Flexible CPI YoY cooled to 20% in April. The bad news? Flexible prices are still growing at 20% while wages are growing at 5.5% YoY.

On the export front, export prices are cooling and were at 18% YoY in April, down slightly from March. Import prices cooled to 12% YoY as The Federal Reserve has slowed asset purchases.

I would have preferred President Biden appoint a serious Federal Reserve Chairman liked Stanford University’s John Taylor (of Taylor Rule fame). In his honor, here is the Mankin version of the Taylor Rule which calls for a Fed Funds Target Rate of 13.89% while the current Fed Funds Target Rate under Powell and the Gang is … 1%.

Call it the Powell Boogie. At a very slow speed.

Powell is indeed “Slowhand.”

Freddie Mac 30Y Mortgage Rate Skyrockets To 5.30% (Feddie And The Dreamers?)

The Freddie Mac 30-year mortgage rate is rising faster than a SpaceX moonshot!

I’m telling your now that The Fed is killing the dreams of millions of Americans by pricing them out of the housing market. Home price growth is lethal as is the increase in mortgage rates.

Do The Feddy!

April Inflation “Cools” To 8.3% YoY, But Food Up 9.4%, Gasoline Up 43.6%, Shelter Up Only 5.1%? (Real Avg Weekly Earnings At -3.4% YoY)

April’s inflation numbers are out and, at first glance, inflation seems to be cooling from 8.5% YoY in March to 8.3% YoY.

But the headline inflation numbers do not accurately reflect the pain and suffering of American households. Food is up 9.4% YoY and gasoline is up 43.6% YoY.

The strange way the BLS measure “shelter” shows that housing only grew at 5.1% YoY. That’s odd since home price growth is almost 20% YoY and rent growth is near 20%.

Runaway home prices and rents are especially painful given that inflation is destroying the purchasing power of the dollar for consumers. Real average weekly earnings YoY are at -3.4% YoY.

Hence, the purchasing power of the US Dollar keeps eroding.

Good luck out there with inflation still roaring, and food/housing/energy prices soaring.

Here is a photo of American children trying to create energy from flying a kite made from progressively devalued US currency.

Beat The Heat! Mortgage Purchase Applications RISE 5% From Previous Week As Homebuyers Scramble To Beat The Fed’s Monetary Tightening

Yes, homebuyers are jumping into a generally slowing housing market to “beat the heat.” That is, beat The Fed’s monetary tightening.

Mortgage applications increased 2.0 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 6, 2022.

The seasonally adjusted Purchase Index increased 5 percent from one week earlier. The unadjusted Purchase Index increased 5 percent compared with the previous week and was 8 percent lower than the same week one year ago.

The Refinance Index decreased 2 percent from the previous week and was 72 percent lower than the same week one year ago.

Beat the Heat!! Or Beat The Fed!!

As least inflation came in slightly cooler in April at 8.3% YoY. While housing (own or rent) is rising at over 2x CPI.

Weekend Update! Mortgage Rates UP 87% Under Biden, Gasoline UP 80%, Food UP 59%, Commodities UP 63%, WTI Crude UP, Rents UP 17% YoY (Ain’t That A Kick In The … Head!)

As crooner Dean Martin once said, “Let ’em have it!” Ain’t this a kick in the … head.

Perhaps Joe Biden and Fed Chair Jay Powell are channeling Dean Martin by letting us have it.

Since Obama’s 3rd term as President (aka, Biden’s installation as President on January 20, 2021), mortgage rates have risen 87%, regular gasoline prices have risen 80%, CRB foodstuffs are up 59% and Commodities are up 63%.

And don’t forget about America’s energy life force, WTI Crude Oil. It is UP 123% under Biden.

Rents? Rising at a 16.8% rate.

Rents rising, food costs rising, energy costs rising, Biden and The Fed are taking us higher. In terms of prices and cost of living.

Cooler Kings! As Biden Keeps Going Green And Fed Raises Rates, Everything Is Cooling (Mortgage Rates UP, Venture Capital Down 53%, Stocks Crushed, Etc)

The Biden Administration and The Federal Reserve together should be called “The Cooler Kings” in that their policies are putting a Big Chill on the mortgage market and equities.

Mortgage rates are skyrocketing thanks to the Federal Reserve.

The 30-year fixed-rate mortgage averaged 5.27% for the week ending May 5, according to data released by Freddie Mac FMCC, -1.62% on Thursday. That’s up 17 basis points from the previous week — one basis point is equal to one hundredth of a percentage point, or 1% of 1%.

House price growth to wage growth is below the all-time high, but remains above housing bubble levels of 2005-2007.

The Refinitiv Venture Capital Index is down 53% since November ’21 as The Fed cranks up interest rates.

Well, at least commodities are soaring under “The Cooler Kings.” Pretty much everything else is sucking wind.

Home prices are actually falling in some cities, like Toledo Ohio, Detroit Michigan, Rochester NY, and Pittsburgh PA. Even La-La Land (Los Angeles CA) is seeing a drop in median listing price since 2021 of -5.0%.

The question, of course, is whether The Federal Reserve will back off its plans to aggressively raise interest rates in lieu of crashing stock market, venture capital, and possibly home prices.

This is Scorcher VI: Global Meltdown.

Does Biden and The Fed Feel Like We Do?

Don’t Panic! NASDAQ Plunges 5% As 10Y T-Note Yield Rises +16.1 BPS (NASDAQ Simply Back To Before Fed Announcement, But Treasury Rates Higher)

The headline screamed “NASDAQ PLUNGES 5%!

True, it did, but it simply lost the gain’s from yesterday’s surprisingly mild Fed announcement.

But the 10-year Treasury yield is rising faster than my blood pressure. The 10-year Treasury yield is up to 3.09%.

Cryptos? Bitcoin is down -7.27% and Dash is down -8.23%.

Watch out mortgage rates!!

Don’t panic … about the NASDAQ. EVERYBODY PANIC about rising mortgage rates.

Simply Unaffordable! Mortgage Purchase Applications Rise 5% From Previous Week, But Remains DOWN 11% From One Year Ago As Fed Tightens (ARM Share Rises To 9.3%)

Simply unaffordable! US housing, that is. As The Federal Reserve tries to fight inflation caused by Biden’s Medusa-like policies, mortgage rates are soaring and we are seeing an INCREASE in mortgage purchase applications ahead of Fed tightening. Panic in (Fed) Needle Park!

Mortgage applications increased 2.5 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending April 29, 2022.

The Refinance Index increased 0.2 percent from the previous week and was 71 percent lower than the same week one year ago.

The seasonally adjusted Purchase Index increased 4 percent from one week earlier. The unadjusted Purchase Index increased 5 percent compared with the previous week and was 11 percent lower than the same week one year ago.

Adjustable rate mortgage (ARM) share has risen to 9.3% along with mortgage rates.

Between Biden’s energy policies, Congressional Covid relief and seemingly perpetual monetary stimulus from The Fed, we have 20% growth in home prices despite mortgage rates soaring.

And as The Fed is expected to tighten, mortgage rates hit 5.50%.

Is the US housing market addicted to gov? We will find out if and when The Federal Reserve actually tightens monetary policy.

The Great Reset … In Housing? Typical Buyer’s Monthly Payment Up 39.4%—The Biggest Annual Gain on Record (Mortgage Rates SOARING With Anticipated Fed Monetary Tightening)

We now have the proverbial double whammy happening … soaring home prices AND soaring mortgage rates.

The theory is, of course, that The Federal Reserve will slowly remove its staggering monetary stimulus leftover from 1) the financial crisis of 2008 and 2) the Covid recession of 2020. As you can see, the sheer volume of monetary stimulus remains outstanding and it is the EXPECTATIONS of The Fed tightening that is caused the 30-year mortgage rate to rise.

So, The Federal Reserve is participating in The Great Reset by helping send mortgage rates to the moon. But with soaring mortgage rates and still red-hot home price growth, a typical buyer’s monthly payment is up 39% —the biggest annual gain on record.

While I used the Case-Shiller National Home Price Index YoY, Redfin shows more contemporaneous home price data with April 24 median home sales price at 16.8%.

Thanks to The Fed, we are seeing homebuyer mortgage payments are up 39.4% YoY.

As inflation continues to damage America’s middle-class and low- wage workers, we may see regulations going into effect from the Consumer Financial Protection Bureau protecting consumers from … themselves.