Cooler Kings! As Biden Keeps Going Green And Fed Raises Rates, Everything Is Cooling (Mortgage Rates UP, Venture Capital Down 53%, Stocks Crushed, Etc)

The Biden Administration and The Federal Reserve together should be called “The Cooler Kings” in that their policies are putting a Big Chill on the mortgage market and equities.

Mortgage rates are skyrocketing thanks to the Federal Reserve.

The 30-year fixed-rate mortgage averaged 5.27% for the week ending May 5, according to data released by Freddie Mac FMCC, -1.62% on Thursday. That’s up 17 basis points from the previous week — one basis point is equal to one hundredth of a percentage point, or 1% of 1%.

House price growth to wage growth is below the all-time high, but remains above housing bubble levels of 2005-2007.

The Refinitiv Venture Capital Index is down 53% since November ’21 as The Fed cranks up interest rates.

Well, at least commodities are soaring under “The Cooler Kings.” Pretty much everything else is sucking wind.

Home prices are actually falling in some cities, like Toledo Ohio, Detroit Michigan, Rochester NY, and Pittsburgh PA. Even La-La Land (Los Angeles CA) is seeing a drop in median listing price since 2021 of -5.0%.

The question, of course, is whether The Federal Reserve will back off its plans to aggressively raise interest rates in lieu of crashing stock market, venture capital, and possibly home prices.

This is Scorcher VI: Global Meltdown.

Does Biden and The Fed Feel Like We Do?

Powell-Yellenburg Omen? Dow Drops 1,000+ Points, NASAQ Down 5%, Commodities Rally After Lunch As Fed Fear Strikes

It has been a miserable day for markets as The Federal Reserve struggles to get inflation under control.

The Dow fell over 1,000 points today and NASDAQ was down a cool 5%.

Is the Hinderburg Omen back in fashion? Better yet, the Powell-Yellenburg Omen?

While equity markets have gotten clobbered by Powell and the Gang, commodities at least rallied in the afternoon.

Don’t Panic! NASDAQ Plunges 5% As 10Y T-Note Yield Rises +16.1 BPS (NASDAQ Simply Back To Before Fed Announcement, But Treasury Rates Higher)

The headline screamed “NASDAQ PLUNGES 5%!

True, it did, but it simply lost the gain’s from yesterday’s surprisingly mild Fed announcement.

But the 10-year Treasury yield is rising faster than my blood pressure. The 10-year Treasury yield is up to 3.09%.

Cryptos? Bitcoin is down -7.27% and Dash is down -8.23%.

Watch out mortgage rates!!

Don’t panic … about the NASDAQ. EVERYBODY PANIC about rising mortgage rates.

Fear The Talking Fed! Fed Jacks Target Rate Up By 50 BPS, 9 More Rate Hikes A Comin’ (Yield Curve Rises)

Well, the Fed’s talking heads have been saying a 50 basis point hike was coming in May … and it appeared!

And it looks like 9 rate hikes are a comin’ by February 2023.

The Fed’s Dot Plots shows a cooling of Fed rate hikes by 2024 and beyond.

Here is the path of Balance Sheet peel-off.

The US Treasury actives curve is up by 14 bps at the 10-year tenor and up 17 bps at the 2-year tenor.

The plan will see $30 billion of Treasuries and $17.5 billion on mortgage-backed securities roll off. After three months, the cap for Treasuries will increase to $60 billion and $35 billion for mortgages.

I could read the Fed’s speech on their decision, but since The Fed has been so highly politicized, I don’t really care what they say. Only what they do.

Bond Rout! Treasury Curve Settles In At 20BPS (10Y-2Y), SOFR Coupons Slow To Adjust To Fed Rate Hikes, While Mortgages FAST To React (CoreLogic March Home Prices UP 20.0% YoY In March)

The U.S. Treasury market is showing signs of stress that may have implications for whether the curve keeps steepening.

Over the past month the curve has retraced from an inversion to a steepening driven by a surge in yields on benchmark 10-year bonds. That has led to interesting outlier indications, as traders weigh the outlook for Federal Reserve interest rate increases and inflation.

The US Treasury yield curve has settled-in at 20.383 bps (effectively zero) as The Fed continues its war on inflation.

On the SOFR front, we see SOFR Coupons being slow to benefits from Fed rate hikes. So, SOFR Coupons are behaving like Stouffer’s lasagna, frozen and tasteless.

On the other hand, mortgage rates continue to soar on EXPECTATIONS of Fed rate hikes.

Meanwhile, CoreLogic revealed that March 2022 home prices were still sizzling at 20.9% YoY.

Phoenix AZ leads the top ten at 30.4% with Washington DC lagging at 9.9%.

So, its official. The Federal Reserve is best exemplified by former Yankee/Mets first baseman “Marvelous” Marv Throneberry. When players presented Mets’ manager Casey Stengel with a birthday cake but neglected to give piece of cake to Throneberry, Stengel replied to Throneberry when asked why no cake, “Because I was afraid your were going to drop it.”

Just like The Federal Reserve, the honorary Marv Throneberry of the the global economy.

Here is Marv’s baseball card from better days with the Yankees before they figured out that Marv was a terrible fielder. And strikeout quite a bit, like The Federal Reserve.

10Y Treasury Yield Hits 3% Then Retreats, Europe Suffers A Flash Crash (US Dollar Rises As Powell & The Gang Signal Tightening)

Today we saw the 10-year Treasury Note yield break through the 3% barrier, then retreat as is there was a reflecting barrier at 3%.

And in Europe, we saw a flash crash allegedly caused by Citi’s trading desk.

The selloff was triggered by a large erroneous transaction made by the U.S. bank’s London trading desk, according to people with knowledge of the matter who asked not to be identified discussing private information. A knee-jerk selloff in OMX Stockholm 30 Index in five minutes wreaked havoc in bourses stretching from Paris to Warsaw toppling the main European index by as much as 3% and wiping out 300 billion euros ($315 billion) at one point.

The US Dollar rose again as expectations of Fed monetary tightening due to inflation become a reality.

Bond Rout Boogie by Powell and The Gang!

Is YET another Fed error in the making??

Consumer Sentiment For Home Buying Crashes To Lowest Level Since 1982 As Bear Sentiment Takes Hold In Stock Market

Rising home prices and The Fed signaling an end to the perpetual punch bowl have resulted in the University of Michigan buying conditions for houses to hit the lowest level since 1982.

While bearish sentiment in markets highest since 2009 in the stock market.

I don’t get why Biden created a “Disinformation Control Board” led by Nina Jankowicz – a disinformation spewer. We already have disinformation media outlets like CNN, MSNBC, ABC, CBS, NBC, New York Times, Washington Post, etc., so why create a Federal control board? All in time for the midyear elections!!

If this move by Biden doesn’t terrify you, then you didn’t study history.

US Real GDP Q1 Goes Negative -1.4% QoQ As Price Growth Hits 8% (It’s Official! The Biden Economy Stinks!)

It’s official! The Biden economy stinks!

US real GDP growth for Q1 slipped into negative territory (-1.4% QoQ) while GDP price growth rose to 8%. So, negative real GDP growth is negative coupled with horrid inflation.

Personal consumption expenditures were below expectations at 2.7%.

Now that the Biden Administration has created an old Soviet Union-style Ministry of Disinformation (called the “Disinformation Governance Board”), I hope that I don’t get censored for reporting that the Biden economy officially stinks.

Good luck to The Federal Reserve in withdrawing the monetary stimulus.

Heartaches In Heartaches! US Q2 Real-time GDP Stumbles To 0.446% As Fed Continues Monetary Stimulypto (What Will Happen When The Fed Pulls The Plug??) March Pending Home Sales Decline -8.90% YoY

Heartaches in heartaches. US GDP growth for Q2 has stumbled to 0.446% as The Fed is launching quantitative tightening (QT) to fight the inflation that they caused in the first place.

According to the Atlanta Fed’s GDPNow real-time GDP tracker, US GDP growth has stumbled to a meager 0.446%. Despite the massive stimulus from The Federal Reserve and Washington DC’s massive fiscal stimulus.

Biden, Powell and Congress are driving me crazy with inflation/price changes.

No corporate economists, inflation is NOT a good thing.

Pending home sales decline 8.9% in March, another heartache for Americans.

Will The Fed say good bye to its Snake Juice??

Commodities Versus S&P 500 And The New World Order (Crashing Currencies And Flight To Commodities) The End Of US Dollar Hegemony?

Here is Dvorak’s New World Symphony, an appropriate piece the global turmoil that has taken place after Russia’s invasion of Ukraine.

Here is the ratio of the S&P 500 index against the Bloomberg Commodity Price Index. This ratio is plotted against The Federal Reserve’s balance sheet of assets. Notice the decline in the Commodity Ratio in 2022, even ahead of the Russian invasion of Ukraine.

Global currencies, on the other hand, have been really crushed since the Russian invasion of Ukraine. The Japanese Yen, China’s Renminbi and Europe’s Euro relative to the US Dollar are falling due to a variety of reasons. Covid lockdown in China, Japan’s insistence on monetary easing while other Central Banks are tightening and the Euro with Russia threatening nuclear war.

WTI Crude is back to $100 a barrel. Critical metals are down today related to a slowing global economy and wheat is up 2.75%.

Could it be that US Dollar hegemony is nearly over and commodity-backed currencies are the way of the future?