Real Negative Mortgage Rates Abound As Do House Price Bubbles (Pfandbriefe 10Y Rate Negative Too) The Case Of Germany Versus USA

Living in a negative rate world

It is not surprising that the REAL German Pfandbriefe 10-year rate is negative, since the NOMINAL rate is also negative. Especially since the NOMINAL German sovereign yield is negative.

When we subtract German inflation from the Pfandbriefe 10-year rate, we get a REAL Pfandbriefe rate of 2.365%.

A Pfandbriefe is a type of covered bond. A covered bond is a debt security that is common in Europe. It issued by a bank or mortgage institution and collateralized against a pool of assets that, in case of default of the issuer, can cover claims at any point of time.

On the short end of maturity, the REAL 1-2 year Pfandbriefe rate is -2.55.

Then we have negative REAL 30-year mortgage rates in the US.

Housing prices? Germany looks positively tame in terms of house price growth compared to the US, although the Eurostat data for German house price growth is lagged behind the already lagged Case-Shiller data.

Like the US, there is a considerable gap between house price growth and income growth.

Here is a chart for the US pointing to unsustainable house price growth.

How is the ECB impacting German house prices? Much like the USA.

Housing in a negative rate and housing bubble world.

Bitcoin Back Over $40,000 (+12%) And Technical Analyses (Bollinger, Ichimoku, Elliott Wave, Elder Impulse)

Bitcoin surged to over $40,000 as a flurry of short-covering intensified a rally apparently sparked by speculation over Amazon.com Inc.’s involvement in the crypto industry.

A job posting from the retail giant seeking an executive to develop the company’s “digital currency and blockchain strategy” stirred questions among analysts over whether the move could eventually lead to Amazon accepting Bitcoin as a method of payment.

As the largest digital token gained on the speculation, investors rushing to cover bearish bets fueled the rally, with the coin up as much as 15% to $39,681 on Monday. More than $950 million of crypto shorts were liquidated on Monday, the most since May 19, according to data from Bybt.com.

Compass Crypto Volatility Index Bitcoin – 20%

Both Bitcoin and Ethereum are up big today.

Bitcoin and Bollinger Bands.

Bitcoin and Ichimoku.

An Elliott Wave Analysis of Bitcoin.

Elder Impulse System and Bitcoin.

Elder Impulse does not refer to President Biden’s rambling, often incoherent speeches.

Bitcoin Falls Below 30,000 As Dow Rallies 600 Points (Ichimoku Cloud Points To Further Declines)

Yesterday’s dive in equity markets have been nearly erased as the Dow rose 600 points today. But the alternative asset Bitcoin fell below 30,000.

Bitcoin is down around 3% today with Dash down 9%. It seems like winter for cryptos.

What does the Ichimoku cloud look like for the New York Stock Exchange? The cloud is below the current NYA level (white line).

Bitcoin/USDollar cross? The same. Bitcoin/USDollar cross lies above the cloud.

If you trust technical studies like Ichimoku, that is.

US New Home Sales Rise 6.3% Since May, Back To Pre-Housing Bubble Levels

U.S. housing starts increased in June by more than forecast, suggesting residential construction is stabilizing despite lingering supply-chain constraints and labor shortages.

Initial home construction rose 6.3% last month to a 1.64 million annualized rate, a three-month high, according to government data released Tuesday. The median estimate in a Bloomberg survey called for a 1.59 million pace.

Both 1 unit and multifamily (5+ unit) starts for June increased over 6% from May.

So, 1-unit housing starts are back to 2000-2003 levels prior to the housing bubble.

You can see the housing bubble of post-2001 recession in terms of single-family home construction, the peak in January 2006 then the demise of SF housing starts until 2009, then the upswing in starts following The Great Recession. Housing starts have increased following the ultra-short Covid recession of 2020.

Existing home sales inventory remains low (orange box) despite rising new home sales.

Once again, why all the monetary stimulus since the Covid recession ended in April 2020?

Treasury 10-Year Yield Plunges Below Widely Watched 1.2% Level (Fed’s Balance Sheet Hits $8.2 Trillion)

Its just another Manic Monday in both bond and equity markets.

(Bloomberg) — Surging Treasuries drove the yield on the 10-year note below 1.2% for the first time since February as coronavirus concerns weighed on the prospects for the global economy and drove investors toward havens.

The yield on the 10-year security dropped as much as 9 basis points to 1.197%.

The resurgence of Covid-19 is stoking a risk-off mood as investors consider whether new lockdown restrictions will sap the economic rebound and reverse an equity rally that had driven stocks to record highs. The decline in Treasury yields may be a signal of cracks in the global recovery, putting the onus back on monetary and fiscal authorities to support ailing economies even as inflation remains elevated.

And global equities are getting clobbered.

As The Fed’s balance sheet hits $8.2 trillion and near zero effective funds rate.

The US Treasury 10Y-3M curve slope is down … again.

At least Nickel futures are up.

There’s something on the wing. Some-thing.

Duel Of The Fiats! Bitcoin And Ethereum Plunge (Goldman Analyst Says Gold Is A Value Buy)

Ever since the US Dollar went off the gold standard, it is only the good faith and credit of the Federal government with its taxing authority that stands behind it. Ethereum and Bitcoin and also Fiat currencies with no backing. And while Goldman Sachs prefers Ethereum to Bitcoin (as risk-on devaluation bets), “Gold is a value buy” according to Goldman Sachs’ Jeff Currie and his Commodities Research group.

But today it looks a race to the bottom for fiats.

Since May, we have seen both Bitcoin and Ethereum fall from record highs as the US Dollar crawls back.

And while Goldman Sachs prefers Ethereum to Bitcoin (as risk-on devaluation bets), “Gold is a value buy” according to Goldman Sachs’ Jeff Currie and his Commodities Research group.

Ah, the good ol’ days of the gold-backed dollar.

Not …

Housing Rents Soar 22% Since Jan 2020, Food Up 67.25% Since July 2020, Laguna Beach CA Condo Prices UP 272% Since July 2020 (Fed Worsens Wealth Inequality)

Talk about government making wealth inequality worse. But The Federal Reserve, part of wealth inequality problem, apparently just can’t say no to worsening inequality.

Median asking rent for housing (white line) in the US rose 22% since January 2020, the beginning of the Covid epidemic. The Federal Reserve intervened (again) in March with a massive surge in mortgage-backed securities (orange line). The median price of existing home sales rose 27.6% over the same time period.

A Realtor friend of mine in California sent me this graphic for Laguna Beach, California. Condo median prices up 272.2% since last year. Great news for households that already own housing, really bad news for renters.

I just shook my head when The White House proclaimed that food for July 4th BBQs are down compared to last year.

Odd, because food is actually up 67% since the same time last year. Talk about cherry-picking data.

It is less that Biden’s economic plans are working(?), but rather it is The Federal Reserve printing wealth inequality by benefiting some and not others.

The Federal Reserve is here to blow asset bubbles and kick wealth inequality’s ass. And they are all out kick ass for wealth inequality.

US Banks Cautiously Wading Into Cryto Markets (China And Senator Warren Calling For Crytpo Crackdowns)

Banks like JPMorgan Chase & Co., Goldman Sachs Group Inc. and Morgan Stanley are taking a cautious approach as they wrestle with how best to offer their clients access to cryptocurrencies. While several now clear crypto futures, most have largely steered clear of other services, according to a Bloomberg analysis of the offerings from some of the world’s biggest banks. The Basel Committee on Banking Supervision said June 10 that lenders will face the toughest capital requirements for holdings in Bitcoin and other crypto assets.

Cryptos are acting very crypt-like (as in dying) with most of the cryptos down 15% today.

Why? A good guess would be China’s crackdown on non-PBOC crytos. And then we have Senator Elizabeth Warren advocating for the US government to seize control of the crypto market and have The Fed offer a cypto alongside it normal money printing functions.

The banks have been quicker to embrace the underlying technology that underpins such digital assets. JPMorgan has been a longtime proponent of Ethereum, the world’s most-used blockchain that uses smart contracts to accomplish blockchain-based tasks that are impossible with Bitcoin.

In one example, JPMorgan is using its private version of Ethereum to conduct overnight repurchase agreements where digitized U.S. Treasury bonds are swapped for JPM Coin, the bank’s version of a digital dollar. It says it’s doing more than $1 billion of such trades a day.

Not surprised that Elizabeth Warren wants to regulate cryptocurrencies.

Producer Price Index Final Demand Hits All-time High Of 16.8% YoY! Consumer Purchasing Power Hits All-time Low

Students, go to Fred and type in PPI Final Demand. Create a chart and choose Change From Year Ago.

What you will find is that the PPI Final Demand is up 16.8% in May since the same month last year.

Consumer purchasing power keeps declining since the creation of The Federal Reserve System in 1913. This chart shows the decline in purchasing power since the peak of the housing bubble in 2005.

Margin debt hits another all-time high.

Now ain’t this a kick in the head.

Not enough physical silver to cover paper – former U.S. Mint Director (silver up 135%, us dollar down 12.3% since covid outbreak) a sign of the times

As Petula Clark once sang, “A sign of the times.”

As I tried to buy physical silver from GoldSilver.com, I was denied. Item currently not available!

Unfortunately, we are seeing shortages of both physical gold and silver. Check out gold and silver prices against the US Dollar since Covid outbreak in March 2020. Gold is up 27% since March 18, 2020 and silver is a whopping 135%!

The US Dollar has lost 12.3% since March 20, 2020.

Ed Moy, who was the director of the U.S. Mint between 2006 and 2011, cites the inability of the mints around the world to keep up with physical coin and bar demand as a reason for this shortage.

Not only the U.S. Mint, but other Mints around the world, Australia’s Perth Mint, the Mexican Mint, have all run out of gold, they can’t keep it in spot and there’s so many shortages retailers are having problems accessing that gold,” Moy told Michelle Makori, Kitco’s editor-in-chief.

Want to be scared into buying physical gold and silver? Or gold/silver mining stocks?