Category: SPX

Buying Conditions For Housing Drops To 21, All-time Low

Harris has released her “vision” for the US economy, but it is what you would expect. $25k subsidy for first-time homebuyers which will make housing even MORE expensive. According the University of Michigan consumer survey, buying conditions for housing has already plummeted to 21, the lowest in history.

Cause? Already high housing prices and relatively high mortgage rates.

Kama Kameleon! Fed Loses Record Amount, Bankrupty Filings (Chap 11) Highest In 13 Years, Foreign Investors Pulling Out Of China

Kama Kameleon.

Kamala Harris, despite being VP for almost 4 years, is going to annouce her plans for taming inflation. Why doesn’t she do it now?? What Harris can’t control is The Federal Reserve that is losing money at breakneck speed.

Here is The Fed’s balance sheet.

I shudder to think what Harris will propose to solve the highest bankrupty (Chap 11) rate in 13 years. Probably more Bidenomics (big wealth transfers to large corporations/donors).

Meanwhile, foreigns pulled a record amount of funds from ailing China.

Kamala Harris will say anything to get elected, then fall back on her Communist agenda.

VIX Vapo Rub! VIX Explodes Last Monday (Only Two Other VIX Episodes Higher Than 60)

I have another use for VIX … to wipe out stock market gains. VIX is the S&P 500 volatility index, also known as “The Fear Index.”

Over the last 35yrs, the whole life of VIX history, there have only been 2 prior episodes of VIX trading >60: The 1st was during GFC, the collapse of Lehman, the 2nd episode occurred during Covid and we had a 3rd occurrence: that was last Monday.

VIX … wiping out stock returns!

Trouble With The Curve! US Yield Curve Rises Above 0 Slope While Mortgage Rates Fall

We know several things about the yield curve. First, it goes negative before recessions. Second, it is related to the inverse of The Fed’s target rate (blue line).

How about the US mortgage rate? Generally, US Mortgage rates are inverse to the 10Y-3M yield curve, but lately the US mortgage rate (pink circle) have declined with the 10Y-3M yield curve.

The yield curve does forecast recessions, but is unreliable in forecasting mortgage rate movements.

The Fed Money Printing And Stock Prices And Housing Prices (Why The Fed Must Keep On Printing!)

The Fed’s theme song: Keep on printing!

Look at this chart of the S&P 500 index against M2 Money stock.

And this chart of Case-Shiller home prices against M2 Money.

Bottom line? The Fed has to keep on printing money. Otherwise, the US economy will collapse like a cheap building.

Here is Fed Chair Jerome Powell creating assets bubbles.

The Wheels Came Off Biden/Harrisnomics: Record Low Savings Rate And Record High Consumer Debt

The wheels are coming off Bidenomics. Code for corporate welfare and massive government spending. Coupled with misguided and burdensome regulations, we got gut wrenching inflation.

The result? A disastrous stock market showing yesterday.

What has Biden/Harris’ economic agenda wrought? Record high personal debt and record low savings rates.

Manic Monday? VIX Fear Index Soars To 52.2 (Head Over Heels For Harris?)

Like the Go-Go’s song Manic Monday, it is a manic Monday for stocks. The awful jobs report from last Friday is reverberating through markets. The VIX (fear index) soared to 52.2 this morning.

MY fear is that Congress will go wild and start (mis)spending trillions of dollars again on hare-brained projects like green energy (and electric cars) when our electric grid can’t support the increase in electric cars.

US 2s/10s yield spread is now flat for the 1st time since 2022 on aggressive repricing of Fed rate cuts. US 2y yields have plunged by 70bps to 3.69% since last Wed while US 10y yields only dropped by 40bps in the same time.

Voters are head-over–heels for Kamala Harris, a dim-witted Marxist authoritarian.

Biggest Loser? Fed Posts Record Loss Of $114 BILLION In 2023

Remember the TV show “The Biggest :Loser”? That show was about weight loss.

Now The Federal Reserve has posted a record loss of $114 BILLION IN 2023.

The cause of the loss? Massive expansion of The Fed’s balance sheet coupled with rising interest rates. The two year track record of The Fed is truly appaling. With a bloated balance sheet, rising interest rates have caused staggering losses.

The Fed is the biggest loser!

And the biggest losers!

What Is The Fed Doing? Mortgage Rates Up 102% Since 2022 As The Fed Still Has A Long Way To Go In Shedding Its $2.4 TRILLION MBS Holdings

What’s it going to be? Mortgage rate increases or balance sheet (MBS) reductions?

Since the Covid outbreak in early 2020, The Fed went wild with rate cuts and massive and unpredented balance sheet expansion.

Let’s look at The Fed’s puchase of agency MBS and mortgage rates. From 2020 2022, The Fed continued to buy agency MBS. But in 2022, all hell broke loose as The Fed went crazy RAISING rates, but slowly began unwinding their balance sheet. The result? Mortgage rates began to climb. In fact, the US conforming mortgage rate for 30 years has risen 102% since early 2022. The Fed is only slowing unwinding their MBS holdings.

Despite the struggles in the residential housing market, the COMMERCIAL mortgage market is a trainwreck.

What will The Fed do?? After all, nothing from nothing beats nothing.