Thunderstruck! Housing Starts Collapse In January As Producer Prices Soar (Back In Red?)

Its as if the US economy is thunderstruck! US housing starts collapsed in January as Producer Prices soared. NOT a good sign for the US economy.

After single-family home starts plunged in December, analysts did not expect much of a bounce back in January as rates remain high and some regions were affected by weather.

Analysts were way off. Housing Starts puked 14.8% MoM in January (vs unchanged exp), but December’s 4.3% MoM decline was revised up to a 3.3% MoM rise. Building Permits also tumbled, down 1.5% MoM (vs +1.3% exp) and well down from the +1.8% MoM in December…

Source: Bloomberg

This pushed the Housing Starts SAAR back near post-COVID lows…

Source: Bloomberg

DO NOT BLAME THE WEATHER! It’s January – we know there are weather issues and that should be more than ‘priced-in’ on a seasonal adjustment basis.

Multi-family permits cratered to their lowest since Oct 2020. Permits for one-family homes edged higher after rising consistently throughout 2023

And multi-family starts were even worse, plunging from 489k SAAR to 314k SAAR – the lowest since May 2020 (when the economy was closed)…

The government’s report showed housing starts fell in all four of the nation’s regions, led by the Midwest and Northeast. The number of single-family homes completed plunged to the lowest level since May 2020.

They built it, but no one came… the inventory of new houses for sale remains elevated and suggests builders may be cautious about beginning new projects.

Don’t expect Permits to be reaccelerating anytime soon as mortgage rates have started to rise once again…

Source: Bloomberg

Which is not good news for CPI either as it suggests there is little rent relief coming soon.

And finally, there is a record gap between what the government tells us about construction employment and actual construction activity…

Makes you wonder, eh? Did builders all suddenly get massively less productive? Or is the BLS just making shit up as usual?

And then we have producer price spiking in January.

After the hotter-than-expected CPI (which has been shrugged off entirely by the stock market), Producer Prices were expected to rebound very modestly MoM but continue to slow on a YoY basis in January. Instead, like CPI, it re-accelerated with headline rising 0.3% MoM (+0.1% MoM exp), which left PPI up 0.9% YoY (down from December but hotter than the +0.6% exp)…

Source: Bloomberg

The picture was even worse under the hood with PPI ex food and energy up 0.5% MoM (vs +0.2% prior and +0.1% exp) and ex-food, energy, and trade up 0.6% MoM (vs +0.1% exp).

This was the biggest ‘beat’ for Core PPI since Jan 2021…

In fact, core PPI reached a new record high (reminder, disinflation does not mean lower prices), now up 17.4% since Biden was elected…

Services PPI soared MoM, and energy continues to be a driver of deflation (but is losing its power)…

Source: Bloomberg

And on a YoY basis, Services PPI is also re-accelerating (+1.47% from +1.14%). Energy continues to be the deflationary driver…

Source: Bloomuberg

This is not good news for the disinflationistas. And it will stop President Biden’s narrative that ‘prices are coming down’…

Looks like the US economy is back in red.

The Bidenomics Plunge! US Retail Sales Plunged In January, Worst YoY Growth Since COVID Lockdown (Stagflation Warning!)

Like the old Nestea plunge, the US economy is plunging as well.

The Biden matter is about to hit the rotating object as they saw retail sales declining bigly (more than expected) in January judging by real-time credit card spending data…

Source: BofA

After they unexpectedly surged in November and December (driven in large part by a jump in Food Services), headline retail sales in January were expected to decline just 0.2%, but BofA nailed it once again with a large 0.8% MoM drop. That dragged the YoY retail sales down to just 0.6%…

Source: Bloomberg

That is the worst monthly decline since March 2023 and worst YoY rise since May 2020.

It wasn’t pretty…

Motor Vehicles and Parts and Building Materials saw the largest decline MoM…

Source: Bloomberg

On a YoY NSA basis, Gas Stations and Building Materials were the biggest drag, while online retailers and Food Services were the biggest upside drivers…

Source: Bloomberg

Core Retail Sales also declined (-0.5% MoM vs +0.2% exp), which dragged the YoY levels down to their lowest since the COVID lockdowns…

Source: Bloomberg

Adjusted (crudely) for inflation, this was a huge drop in ‘real’ retail sales. REAL retail sales have declined for 11 of the last 15 months – in other words, on a crude basis (Ret Sales – CPI), Americans aren’t buying more shit.

Source: Bloomberg

Finally, the control group – used to feed through to the GDP calculation – tumbled 0.4% MoM (vs expectations of +0.2%).

Soft-landing morphing into a stagflationary crash-landing?

The Empire Strikes Out! NY Empire Manufacturing Survey Declines To -2.4 In February (Treasury Yield Curve Remains Inverted For 420 Straight Days)

The Empire State Manufacturing Survey struck out in February.

The Empire State manufacturing survey was down -2.4 in February.

Note how expectations are always higher than realized figures.

The US Treasury 10Y-2Y yield curve remains inverted, now for 420 straight days.

Biden’s Mortgage Market! Mortgage Demand Down 2.3% From Last Week, Purchase Demand Down -12% From Last Year (Mortgage Rate UP 151% Under Bidenomics)

Wake Joe up before the economy go goes … down any further.

Mortgage applications decreased 2.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending February 9, 2024.

The Market Composite Index, a measure of mortgage loan application volume, decreased 2.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 2 percent compared with the previous week. The seasonally adjusted Purchase Index decreased 3 percent from one week earlier. The unadjusted Purchase Index increased 4 percent compared with the previous week and was 12 percent lower than the same week one year ago.

The Refinance Index decreased 2 percent from the previous week and was 12 percent higher than the same week one year ago.

Mortgage rates (30Y fixed) are up 151% under Bidenomics.

Gimmie (Cheap) Shelter! Shelter Index CPI Increased 0.6 Percent In January (Largest Factor In Monthly Increase In Index) As Inflation Comes In Hotter Than Expected

Gimme (cheap) shelter!

As soon as Joe Biden started bragging on his low-energy campaign trail about inflation declining I knew it would go up. And it is increasing again.

Shelter cost (aka, housing) is still growing.

Expectations were for a big drop in the YoY consumer price index (from +3.4% to +2.9%) but instead it surprised to the upside (just as we warned) with a +3.1% YoY print for headline CPI (spoiling the sub-3% partiers). Consumer prices rose 0.3% MoM (more than the 0.2% exp) but the headline did decline from +3.4% to +3.1% YoY…

Source: Bloomberg

Core CPI fell below 4.00% YoY for the first time since May 2021, but the +3.86% YoY print was hitter than the 3.7% exp (with prices rising 0.4% MoM – the biggest jump since April 2023)…

Source: Bloomberg

CPI Core: The index for all items less food and energy rose 0.4 percent in January.

The shelter index increased 0.6 percent in January, and was the largest factor in the monthly increase in the index for all items less food and energy.
- The index for owners’ equivalent rent rose 0.6 percent over the month, while the index for rent increased 0.4 percent.
The lodging away from home index increased 1.8 percent in January. The motor vehicle insurance index increased 1.4 percent in January, and the recreation index rose 0.5 percent in January.
Among other indexes that rose in January were communication, personal care, airline fares, and education.
The medical care index rose 0.5 percent in January.
The index for hospital services increased 1.6 percent over the month and the index for physicians’ services increased 0.6 percent.
- The prescription drugs index fell 0.8 percent in January.
The index for used cars and trucks fell 3.4 percent in January.
The index for new vehicles was unchanged in January.
The apparel index also decreased, falling 0.7 percent over the month.

Core Service inflation picked up MoM…

..and accelerated YoY

Source: Bloomberg

Under the hood, food and Energy services costs jumped MoM along with transportation services…

Here’s the biggest component upside surprises…

And one step deeper – the so-called SuperCore: Core CPI Services Ex-Shelter index – soared 0.7% MoM (the biggest jump since Sept 2022…

… driving the YoY change up to +4.4% – the hottest since May 2023….

Source: Bloomberg

Finally, as a reminder, lower inflation does not mean lower prices.

Source: Bloomberg

The actual index of consumer prices hit a new record high this month – and is up over 18% since President Biden’s term began (it was up 8% over President Trump’s full four year term).

And it gets worse…

Source: Bloomberg

And on the higher than expected inflation report, we are still seeing bets on Fed Funds rate falling from 5.50% to 4.233% over the coming year.

The re-accleration of inflation means wage growth is back in the red relative to prices.

That Foul Jobs Report! Full-time Jobs Tank Under Bidenomics As Serious Delinquencies On Auto Loans Soar To Highest Level Since The Great Recession (PPI Is Deflating But Inflation Remains Higher Than Under Trump)

As some fans celebrate the Kansas City Chiefs Superbowl victory over the San Francisco 49ers (the game was so much like bread and circuses from the Roman Empire except for who is being thrown to the lions), we have been distracted from the horrible state of the US economy. Just review that horrible December Jobs report where the US actually LOST full-time jobs, replaced by part-time jobs.

And with the God awful jobs report, serious delinquencies on auto loans is SOARING. To the highest rate since The Great Recession.

The Producers Price Index is deflating.

At least inflation is cooling down, but still higher than under he that can’t be mentioned on The View, Rachel Maddow or Morning Joe, Donald Trump, the Left’s Voldemort.

I admit, Travis Kelce should have been benched for shoving Head Coach Andy Reid during The Super Bowl. “Damn it, Taylor (Swift) flew here from Tokyo to watch me play and you aren’t throwing enough to me!” Welcome Travis Kelce to the elitist 1% who think the rules don’t apply to them. And your 2.0 GPA at University of Cincinnati certainly qualifies you to opine on the economy … on The View or MSNBC.

Daddy (Ukraine) Warbucks Biden’s Hideous Debt Mess! (Biden Has Added $6.5 Trillion In Debt With Only $1.95 Trillion In Real GDP Growth As Jobs Report Reveals Weakness In Economy)

I watched Tucker Carlson’s interview with Russian President Vladimir Putin. Putin is an amazing contrast to our 81-year old President with dementia who can barely speak while Putin was articulate. Not at all what Hillary Clinton was raving about (she is still furious about losing to Trump after losing to Obama). One thing that caught my attention was Putin talking about The Fed’s endless printing of money. Well, THAT is how the US grows GDP these days. Borrow and spend with the private sector as an after thought.

Let’s revisit the HORRIBLE jobs report from December. Not only were all job gains in the past year entirely thanks to part-time workers, but native-born workers plunged by a another whopping 560 thousand, bringing the two-month total drop to just under 2 million. This meant that not only has all job creation in the past 4 years been exclusively for foreign-born workers, but there has been zero job-creation for native-born American workers since July 2018 (don’t believe us? go ahead and check the data directly from the Fed).

So, the Federal government is borrowing trillions of dollars so that 1) part-time jobs are created and 2) foreign born workers have jobs, but not native born Americans?? (Blogger Paul Krugman thinks that immigration will add $7 trillion in real GDP over the next 10 years and this will save Social Security and Medicare. Huh? I admit, millions of immigrants will spend money, but many will be on the Federal and State doles, so its tax dollars going to immigrants to spend.) This seems like Obama/Biden are using Cloward-Piven tactics to overwhelm Social Security, Medicare and other social services, NOT grow the economy as Krugman projects.

Typically, economists look at measures like M2 Money Velocity (Real GDP/M2). M2 Money Velocity is rising … but still remains below where it was pre-Covid under Donald Trump.

But a more relevant velocity is the velocity of DEBT. As in GDP/Debt. Under Biden, the US has added almost $6.5 TRILLION in debt while real GDP has risen by only $1.949 trillion. That amounts to a DEBT velocity of 0.30. Meaning that the US gets an anemic $30 in real GDP for every $100 in additional Federal debt.

Yes, the US economy is broken and requires endless money printing and debt financing to pay for endless wars and now millions of illegal immigrants getting on “the dole.” Then we have Biden’s forgiving student loan debt (inappropriately) and now Big Tech wants $7 trillion to develop AI (in a normal economy, tech companies would develop AI themselves, but under Obama/Biden, we are not in a normal economy).

Here is Daddy (Ukraine) Warbucks Biden with his biting dog and daughter Ashey.

Biden Too Demented To Be Prosecuted, But Remains President? Bitcoin Soars To Post-ETF-Launch Highs As Net Inflows Explode (US Goes Full Kafka!)

Biden is apparently too demented to be prosecuted for illegally sharing top-secret documents, but is able to be President?? And people wonder why Bitcoin is so popular??

Yesterday saw the third largest net inflow into spot Bitcoin ETFs, totaling over $400 million with iShares Bitcoin Trust (IBIT) seeing over $200 million inflows alone, dominating the $101 million outflow from GBTC…

Source: Bloomberg

The net inflow yesterday meant that 8,698 BTC were taken off the market and put into cold storage.

“We think bitcoin could be one of the most talked about brands on Wall Street in the next decade,” Mike Willis, CEO and founder of ONEFUND, told CoinDesk.

“You’re at the beginning of the ‘bitcoin era’ on Wall Street.” Although remiss to offer a price prediction, Willis said he thinks bitcoin could easily catch up to gold’s market cap.

That has pushed the total net inflow into spot bitcoin ETFs up to $2.23 Billion…

Source: Bloomberg

IBIT also became the first ETF to exceed GBTC’s daily trading volume. However, the total trading volume of all 11 spot Bitcoin ETFs fell below $1 billion for the first time since they launched.

Source: Bloomberg

The result of all this is that bitcoin prices have soared back up near $48,000, erasing all the post-launch ‘sell the news’ losses…

Source: Bloomberg

Interestingly, this is a seasonally positive period for crypto:

“The next few days are of paramount statistical importance as bitcoin tends to rally by +11% around Chinese New Year, starting on February 10 (Saturday),” Markus Thielen, head of research at Matrixport and founder of 10x Research.

“During the last 9 years, Bitcoin has been up every time traders would have bought bitcoin 3 days before and sold it ten days after the start of the Chinese New Year.”

Coinbase just issued a report that suggests Bitcoin spot ETF activity accounts for around 10-15% of total bitcoin trading activity across centralized exchanges.

Smaller tokens such as Ether, Solana and Cardano also pushed upward…

Source: Bloomberg

As CoinTelegraph reports, Coinbase analysts say there have been more important crypto themes emerging in the aftermath of the spot Bitcoin ETF launches in the U.S., including the rising decentralized finance (DeFi) activity, which could “add meaningfully” to the value proposition for Ether.

Ethereum community member and investor Ryan Berckmans believes that Ethereum’s switch from a proof-of-work to a proof-of-stake consensus mechanism could drive ETH’s price to as high as $27,000 during the bull cycle.

“Bitcoin appears set to resume its march up after the Grayscale outflows finally tapered off,” said Caroline Mauron, co-founder of digital-asset derivatives liquidity provider Orbit Markets.

The “halving narrative” will gather momentum, potentially taking Bitcoin past $50,000 in the next few weeks, she said.

The quadrennial halving cuts the quantity of Bitcoin that miners receive for operating power-hungry computers that secure the network by solving complex puzzles.

Halving is key to capping the supply of Bitcoin at 21 million tokens. Rewards drop to 3.125 coins per block from 6.25 coins in the upcoming event.

Previous halving events “preceded strong bull runs,” a team including DBS Bank Ltd. Chief Economist Taimur Baig wrote in a note.

“There is a simple economic reason why prices should rise. As the reward for mining decreases, the price for mining output (namely Bitcoin) must increase to compensate and not trigger a withdrawal of computational resources by miners,” the team said.

With the growing demand from institutional investors, the diminishing supply could help BTC hit new market highs.

The US has gone full Kafka where no news is too insane. Maybe this should be Biden’s campaign slogan?

Bidenomics Failing Farmers As Expected Incomes Crash The Most Since 2006 (Food Prices UP 21% Under Biden’s Reign Of Error)

This reminds me of “The Human Farm” episode of Parks and Recreation.

A new report from the US Department of Agriculture forecasts that US farmers are poised for another year of financial misery, facing the most significant decline in incomes in almost two decades as crop prices slide and US dominance in ag exports wanes.

USDA forecasts net farm income, a broad measure of profits, to plunge $39.8 billion, or 25.5%, to $116.1 billion in 2024. This follows a forecasted decrease of $29.7 billion, or 16%, from 2022 to $155.9 billion in 2023.

If the estimate holds, farmers face the largest income drop since 2006 and back-to-back years of financial pain.

“With this expected decline, net farm income in 2024 would be 1.7 percent below its 20-year average (2003–22) of $118.2 billion and 40.9 percent below the record high in 2022 in inflation-adjusted dollars,” USDA wrote in the report.

Simultaneously, farmers are witnessing a rapid decline in their leading role in the global grain market. Decades of corn export dominance were shredded by Brazil last year.

Bidenomics is failing blue-collar workers who put food on America’s table.

Food prices (CPI) are up 21% under listless, dementia Joe Biden.

I am surprised that Orin from Parks and Recreation hasn’t been appointed to Biden’s cabinet as Secretary of Agriculture.

US Jobs In The Underworld! Mass Layoffs Plague Bidenomics For 2024 (Credit Card Delinquency Rate SOARS As Bidenomics Dies)

Like Offenbach’s “Orpheus in the Underworld,” the US economy under Joe Biden is going to hell. Like the tech sector! Thanks to the massive hiring surge related to Covid and Covid spending, now trimming the bloat.

In the real world labor market – in 2024... (not the one Biden, Yellen and Powell occupy) … companies are slashing jobs.

1. Twitch: 35% of workforce
2. Roomba: 31% of workforce
3. Hasbro: 20% of workforce
4. LA Times: 20% of workforce
5. Spotify: 17% of workforce
6. Levi’s: 15% of workforce
7. Xerox: 15% of workforce
8. Qualtrics: 14% of workforce
9. Wayfair: 13% of workforce
10. Duolingo: 10% of workforce
11. Washington Post: 10% of workforce
12: Snap: 10% of workforce
13. eBay: 9% of workforce
14. Business Insider: 8% of workforce
15. Paypal: 7% of workforce
16. Charles Schwab: 6% of workforce
17. Docusign: 6% of workforce
18. UPS: 2% of workforce
19. Blackrock: 3% of workforce
20. Citigroup: 20,000 employees
21. Pixar: 1,300 employees

And here’s the government-supplied statistics…

The number of Americans filing for jobless benefits for the first time last week dropped from 227k to 218k (below the 220k exp). On an NSA basis, claims tumbled even more…

Source: Bloomberg

We assume there was some impact in here from the ice storms, but still, Oregon, Ohio, and California saw the biggest declines in claims while Missouri and Texas saw the biggest increase…

Continuing jobless claims also decline (of course, it’s an election year) from 1.894mm to 1.871mm…

Source: Bloomberg

We give the Richmond Fed’s Tom Barkin the last word:

“I am cautious about accuracy of numbers around the turn of the year.”

Cautious is one word…

Not to mention 2024 is an election year, so expect mega nonsense spewing from The White House and the BLS and other government agencies.

With massive job cuts in the real world (unlike the protected, ivory tower of Biden and Congress), the serious delinquency rate on credit cards.