Reverse Repos Parked Overnight At Fed Remain Near $1,418 BILLION As UBS Warns Of Stagflation And 50% Stock Plunge

When something is wrong with the economy.

Banks park funds at The Federal Reserve in an attempt to soothe themselves.

Nothing has been the same since the housing bubble of the 2000s, the resulting banking meltdown and the takeover of the economy by The Federal Reserve.

And since the 2000s housing bubble and financial crisis, The Federal Reserve has taken control of the economy resulting in M2 Money Velocity crashing to historic lows.

UBS ran a simulation that shows stocks could lose up to 50% under rare stagflation scenario.

And The Fed says “Hold on, we’re coming!”

My reaction to Biden’s Build Back Better spending spree and The Fed keeping rates repressed.

US Dollar, Gold, Ethereum SOARING As Fed Loses Control Of Inflation

As inflation seems unstoppable by The Federal Reserve, we are seeing the US Dollar, Gold and Ethereum soaring in price.

Persistent inflation is here to stay.

Yup, The Fed is firing blanks.

JOLT! Job Openings Changed Little (10.4 Million In September) As UMich House Buying Sentiment Declines Even Further (To 62 From 144 Last Year On This Date)

The Federal Reserve continues to JOLT markets with excessive monetary stimulus despite numerous reasons why they should back off.

For example, today’s JOLT report (US job openings) revealed that 10.4 million jobs were open in September. This is the fourth consecutive month of 1 million plus job openings, yet The Fed refuses to raise their target rate.

At the same time, the University of Michigan survey revealed that buying conditions for houses dropped to 66 (baseline of 100). To show how bad this is, buying conditions for houses was at 144 this time last year.

UPDATE: UMich revised their number downward to 62, the lowest since 1981.

In The Fed’s mind, they are still chasing at least 3.5% unemployment, the lowest rate under President Trump prior to COVID. But with perpetual million plus job openings GOING UNFILLED, trying to get to pre-COVID unemployment rate of 3.5% is a fool’s errand.

Of course, with The Fed helping to pump up house prices to largely unaffordable levels, it makes sense that enthusiasm for buying expensive homes has crashed.

Meanwhile, The Fed continues to JOLT the economy with excess stimulus.

Overall inflation fears are leading to lowest consumer confidence since 2011.

PLEASE stop JOLTING US!!

The Shadow Knows! The Xu-Xia Fed Shadow Rate Is -1.7021% (US Effectively Has Negative Interest Rates And Inflation Is Expected To Continue And NOT Be Transitory)

The Shadow Knows!

Wu-Xia employs an approximation that makes a nonlinear term structure model extremely tractable for analysis of an economy operating near the zero lower bound for interest rates. It can be used to summarize the macroeconomic effects of unconventional monetary policy (ZIRP + QE). The Shadow Rate is now -1.7021%.

And you wonder why we have inflation and house prices going into orbit?

With inflation also going into orbit, we see that breakeven 10 year inflation rate rising above the 5Y5Y (nominal forward 5 years minus US inflation-linked bonds forward 5 years). In other words, the US has abnormally high inflation and is expected to grow and NOT be transitory.

The Shadow knows … that the US is hyperstimulated. And inflation isn’t going away anytime soon.

Ethereum Is A Runaway Train! $4,358 Versus $129 On April 1, 2020 When COVID And The Fed Struck

Cryptocurrencies are a runaway train. In particular, Ethereum has gone from $129 on April 1, 2020 to $4,358 today.

Yes. March 2020 is when Covid struck and The Federal Reserve counterattacked.

Has volatility increased for the cryptos? Of course. The skew to the upside is steep on Bitcoin.

Ethereum Jumps to Record High As People Lose Faith In Central Banks To Control Inflation

Instead of Bonjovi singing “Keeping the faith,” they should sing “Losing the faith” with regard to central banks and inflation.

Ethererum, the cryptocurrency, is now at $4,298. It under $200 as the Covid crisis took shape in March 2020. Since Covid, The Federal Reserve went loco and massively increased their money supply and asset purchases. With that response (and economic bottlenecks), inflation has increased to 5.4% YoY.

The Fed’s new moto should be “Policy errors ARE our business!”

No, we don’t look to President Beavis to do much of anything positive about inflation.

Powell Flags Rising Inflation Risk While Playing Down Rate Hikes (US Dollar, 10Y Treasury Yield, Gold Fall With Powell’s Comments)

Like the old EF Hutton ads, “When Powell speaks, people listen.”

Federal Reserve Chair Jerome Powell sounded a note of heightened concern over persistently high inflation as he made clear that the central bank will begin tapering its bond purchases shortly but remain patient on raising interest rates.

“The risks are clearly now to longer and more persistent bottlenecks, and thus to higher inflation,” Powell said Friday during a virtual panel discussion hosted by the South African Reserve Bank and moderated by Bloomberg’s Francine Lacqua.

“I would say our policy is well-positioned to manage a range of plausible outcomes,” he said. “I do think it’s time to taper and I don’t think it’s time to raise rates.”

Good luck with that, Jay! You are going to raise the short-end of the yield that will lead to a flattening of the Treasury yield curve. But you are going to continue to buy Treasuries and Agency MBS in order to monetize the rampant spending by Congress and the Biden Administration? C’mon man!

You can see where Powell spoke today. It is when gold tanked along with the 10-year Treasury yield. Both rebounded a bit, but the 10-year Treasury yield continue its fall to 1.6324%.

The US dollar (green) fell when Powell opened his pie-hole. But Bitcoin (blue) fell in advance as if they knew what Powell was going to say.

705742? Bitcoin Hits 63983 As US Treasury Curve Steepens (As Mortgage Rates Rise?)

I have no idea why Jack Dorsey tweeted “705742.” But I do know that Bitcoin hit 63,982.92 this morning as the US 10Y-3M curve has been steepening.

Since the 3-month Treasury yield has been repressed to near zero, the 10Y-3M curve is pointing to rising 10-year yields. Which likely means that 30-year mortgage rates will be rising too.

UPDATE! Bitcoin hits 66,615 as Proshares Bitcoin Strategy E rises as well.

Bitcoin Surges To $62,314.75 On SEC Approval Of Bitcoin Futures ETF

SEC approves first Bitcoin Future ETF, opening crypto to wider investor base. First product will track bitcoin futures, rather than price of bitcoin directly. SEC Chair Gensler indicated he believes futures-based products might provide stronger protections.

The reaction? Bitcoin surges to $62,314.75!