Fear The Talking Fed! US Industrial Production/Capacity Utilization Rise In The Face Of Inflation (M2 Velocity Near All-time Low As M2 Money YoY Still Sizzling At 9.85% YoY)

Most of us are painfully aware of rising food prices, particularly with the US fighting a proxy war with Russia. Wheat prices have doubled under Biden and the Russian invasion of Ukraine.

But inflation is everywhere. Rising home prices, rising gasoline and diesel prices, etc. When Jeep can see a Wagoneer for $100,000+, you know we have inflation.

The surprise this morning was retail sales, up 0.9% MoM (though still less than expected), despite rising prices. Odd since REAL wage growth is negative.

But the other bit of good news this AM is that US industrial production rose +1.1% MoM in April. And US Capacity Utilization is rising dangerously towards 80%, it is at 79% in April.

You will notice that Fed monetary tightening occurs when capacity utilization hits 80%, indicating an overheated (or OVERSTIMULATED) economy. Yes, we still have The Fed Funds Target Rate (Upper Bound) at only 1% and The Fed Balance Sheet still near $9 trillion. So, Fed stimulypto is still in play.

Meanwhile, M2 Money Velocity is near its historic low and M2 Money YoY is still sizzling at 9.85% YoY.

Wheat prices have doubled under Biden, and you can see how wheat futures soared when Russia invaded Ukraine.

So, despite The Fed’s intent to tighten, The Federal Reserve and Fed government are still overstimulating the economy. But what happens when the stimulus is gone?

Fear the Talking Fed!

Medusa Touch! Goldman’s Blankfein Warns Of Recession, Fed Reverse Repos Soar With Inflation, Stock Futures Down While S&P 500 Forward 12-Month P/E Ratio Falls To Pre-Covid (2016) Levels

Goldman Sachs Senior Chairman Lloyd Blankfein urged companies and consumers to gird for a US recession, saying it’s a “very, very high risk.”

I am not surprised. Take a look at The Fed’s Overnight Reverse Repo operations. As inflation surged in 2021 and 2022, banks are parking more funds at The Fed. Fear?

We are seeing the S&P 500 futures down today after a nice rally on Friday. The &P 500 forward 12-month P/E ratio is back to pre-Covid, pre Federal spending surge, pre Fed monetary Stimulypto of 2016.

Goldman Sachs see the 10-year Treasury yield rising to 3.3%. That bodes ill for 30-year mortgage rates, perhaps push mortgage rates up another 40 basis points to 5.80%.

And NASDAQ is having its worst year since 2008.

Its The Medusa Touch of Big Government.

Inflation Inferno! Bidenflation Still Soaring, But Metals Dive -15% Since May 4th (Food UP 61.5% Under Biden, Gasoline UP 86%, Diesel UP 111%, Rents UP 16%)

Americans are suffering under Joe Biden. Call it Inflation Inferno!

Foodstuff are up 61.5% under Biden’s Reign of Error. Gasoline prices are up 85.8%, diesel prices are up 111%. Yet the government inflation index (aka, CPI) is up only 8.3% in April.

But while energy and food prices are soaring, the CRB Spot Metals Index has plummeted -15% since May 4 as Covid is ravaging the Chinese economy. Recession alter anyone?

And then we have soaring home prices and rents. But notice that Zillow’s Rent index is slowing down as mortgage rates soar.

We have a stalling Chinese market, down 28% since October. Is Biden President of China??

On the currency front, the Russian Ruble is soaring relative to the US Dollar while the Chinese Renminbi, the Japanese Yen and the Euro (or in this case, the Gyro) are sinking like a rock.

If I compare the Russian Ruble and Ukrainian Hryvnia, you can see Ukraine is losing the currency war with Russia.

Inflation Inferno thanks to Biden’s misguided energy executive orders and cancellation of Alaskan and Gulf of Mexico drilling leases.

Biden’s economic mismanagement team: American Gothics Treasury Secretary Janet Yellen and Fed Chair Jay Powell.

Demolition Men! Gasoline Prices UP 85% Under Biden, Mortgage Rates UP 93.4% Under Powell

I feel like we are in an economic demolition derby under Joe Biden and The Federal Reserve (with freshly reappointed Fed Jerome Powell at the helm).

Under Biden, regular gasoline prices are UP 85%. The Biden Administration recently cancelled 0il-and-gas drilling leases in Gulf of Mexico and Alaska Coast, helping to drive up gasoline prices even higher.

In the two-pronged attack out of Washington DC, The Federal Reserve is tightening their monetary policy in an effort to combat 40-year highs in inflation (caused by excessive Federal spending and Biden’s ill-advised energy policies), causing residential mortgage rates to soar 93.4% under Biden’s Reign of Error.

It is almost like the Biden Administration and The Federal Reserve are engaged in an economic demolition derby to see who can cause the most destruction to America’s middle class and lower-wage workers.

We should call the current administration and The Federal Reserve “Demolition Men.”

And here is Biden’s Disinformation Chief giving out penalties for whatever Biden doesn’t like.

1984 anyone?

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.”

Putting Cryptos In A Crypt? Bitcoin Rallies, Ethereum Down As Cryptos Collapse (Microstrategy Bond Plunges To $78.34)

Call this “Nobody’s Everything.” Crytpocurrencies are getting clobbered. But then again, the S&P 500 is not doing so well. But crypto stalwarts Bitcoin and Ethereum have down even worse.

At the dollar strengthens, Bitcoin has gotten pummeled.

But at least Bitcoin rose this morning along with Bitcoin Cash. And XRP. But the others are getting clobbered.

Microstrategy bonds are getting crushed.

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.

Morning Update! S&P 500 Futures UP, Mortgage Rates UP To 5.57%, Apartment Rents UP 20% YoY, WTI Crude Down -1.76%

At least S&P 500 futures are up this morning, an opportunity to buy the dip.

But on the housing front, we see that mortgage rates have pieced the 5.50% barrier and is now at 5.57%.

On the rent side, apartment rents are growing at 19.3% YoY for both Class A and Class B units.

Commodities are down this AM. WTI Crude is down -1.71%, iron ore is down -4.06% and nickel is down -6.29%.

Whoops! After a positive futures reading before opening, the Dow is down near a full percentage point, but the NASDAQ is almost breakeven for the day.

And the 10-year Treasury yield is down 8.6 bps.

As The Boss sang, “We’re going down.”

Blue Monday Or Stagflation? Commodities Signal Stagflation (WTI Crude DOWN 2.72%, Iron Ore DOWN 5%, S&P 500 Futures DOWN 1.7%, 10Y Treasury Yields Rise To 3.20% Then Sinks)

As the US is engulfed in inflation while The Federal Reserve is engaged in trying to fight inflation (well, sort of), we are seeing markets taking a shellacking, particularly commodities.

One indicator of a slowdown is declining commodity prices. Crude oil futures are down around -2.5%. Iron Ore is down -5% and steel rebar is down -3.21%.

Inflation numbers are due out Wednesday and are forecast to be 8.1% YoY (based on headline CPI). But combined with a slowing global economy, we get the dreaded “STAGFLATION.”

Meanwhile, the S&P 500 index futures are down around 1.726% for Monday open. Asian markets already got clobbered with the Hang Seng down almost -4%.

On the bond side, the 10Y Treasury Note yield rose to 3.20% early in the morning, but has retreated to 3.1447% as of 8:40am EST.

Both stock and bond market volatility measures are increasing.

So, is it a Blue Monday effect? Or global stagflation?

Time for supplemental income under the Biden Administration.