Confounded Interest – Anthony B. Sanders
Financial Markets And Real Estate
The Fed will have to whip it good with rate cuts if the recession warnings are an indicator of what lies ahead for the US economy.
The ratio of The Conference Board’s Leading Economic Indicators (LEI) vs. The Conference Board’s Coincident Economic Index (CEI) ratio hasn’t been this low since 2008.
Fed Funds Futures are signalling rate cuts at the September 17th FOMC meeting and December 10th meetings.
On the crypto front, Ethereum is soaring.
Debt stress is mounting!
People get ready! Powell and the Fed might actually lower their target rate at The Fed’s Open Market Committee meeting on September 17.
The Fed hasn’t touched rates under Trump, but were hyperactive under Biden.
Let the good times roll? I wonder if Jay Powell and the other Fed honchos are taking Jackalope Rides in Jackson Hole, WYO?
The Federal Reserve is Dazed and Confused. Their money printing is making housing progressively more expensive and unaffordable.
Existing-home sales increased by a measley 2.0% in July, according to the National Association of REALTORS® Existing-Home Sales Report.
Month-over-month sales increased in the Northeast, South, and West, and fell in the Midwest. Year-over-year, sales rose in the South, Northeast, and Midwest, and fell in the West.
• 2.0% increase in existing-home sales – seasonally adjusted annual rate of 4.01 million in July.
• Year-over-year: 0.8% increase in existing-home sales
Median existing-home price for all housing types, up 0.2% from one year ago ($421,400) – the 25th consecutive month of year-over-year price increases.
It will be hard to make housing more affordable as long as The Fed keeps printing money.
Powell et al cutting rates 25 basis points won’t really matter as long as they continue to print money. Unfortunately, M2 VELOCITY peaked under the Clinton Administration and has declined since despite frantic money printing.
What happended in 1995? Clinton’s National Homeownership Strategy that mandated HUD partners (GNMA, FHA, Fannie Mae, Freddie Mac, banks, etc.) to lower credit standards to encourage homeownership.
We need FHFA Director Bill Pulte to avoid doing what Democrats love (everything free or cheap).
The Fed didn’t try, but mortgage rates fell and mortgage applications rose 10.9% week-over-week.
Mortgage applications increased 10.9 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending August 8, 2025.
The Market Composite Index, a measure of mortgage loan application volume, increased 10.9 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 10 percent compared with the previous week. The seasonally adjusted Purchase Index increased 1 percent from one week earlier. The unadjusted Purchase Index increased 1 percent compared with the previous week and was 17 percent higher than the same week one year ago.
The Refinance Index increased 23 percent from the previous week and was 8 percent higher than the same week one year ago.
The 30-year fixed mortgage rate declined to 6.67 percent last week, which spurred the strongest week for refinance activity since April. Borrowers responded favorably, as refinance applications increased 23 percent, driven mostly by conventional and VA applications. Refinances accounted for 46.5 percent of applications and as seen in other recent refinance bursts, the average loan size grew significantly to $366,400. Borrowers with larger loan sizes continue to be more sensitive to rate movements.
Let the good times roll! Booming business applications under Trump and calm inflation.
The latest inflation report continues to show no negative impact from tariffs. Core goods prices were up 0.2% in July. They are up just 1.1% over the past 12 months and are actually up a lesser 0.8% since President Trump began phasing in tariffs.
Business applications are booming under Trump’s economy.
While consumer prices are calm (2.7% YoY).
Shelter inflation is higher than the average price increase (3.7% YoY).
The US housing market is finally slowing down in terms of price growth. But this is after 3 Federal government-fueled house price bubbles.
In addition to record-high housing prices, mortgage rates are higher than levels going back to 2006.
Throw in the “woke” movement, and we have a problem. The percentage of 30-year-olds who are both married and homeowners has plummeted to the lowest level since 1950.
Simply lowering interest rates won’t fix this problem. Much of the housing “crisis” is due to local and state level politicians and their restrictive housing policies. Like LA Mayor Karen “Venceremos Brigade” Bass allocating the burnt-down Pacific Palisades area on the Pacific Ocean to “affordable housing.”
US home prices fell for the 3rd straight month In May. The MoM decrease in the seasonally adjusted (SA) Case-Shiller National Index was at -0.29% (-3.5% annual rate).
Despite continued money printing by The Fed.
The media and Democrat politicians love to fear monger about how Trump’s tariffs would cause inflation and unemployment. But June’s import prices showed no inflation at all. In fact, import prices FELL -0.2% YoY.
The latest jobs report revealed that U-3 unemployment FELL to 4.10%.
But don’t worry. Elizabeth Warren (D-MA) will get hysterial about Trump firing Fed Chair Jerome Powell. And, as usual, be wrong.
Tavi Costa at Crescat Capital (founded by my former MBA student at University of Chicago Kevin Smith) produced this excellent chart of silver prices showing the cup and handle of silver prices.
The rise in silver prices corresponds with a deterioration of the US bond market. Look at Treasury futures courtesy of Bravos Research.
Of course, Washington DC’s insane spending has led to insane money printing by The Feral Reserve.
Everyone in Washington DC deserves a “Silver Cup of Failure” for uncontrolled government waste and spending and mismanagement by The Feral Reserve.
So much for the doom porn from the media about the US economy collapsing due to Trump’s tariffs! The US economy (real GDP) in Q2 is still growing at 2.9%.
Latest estimate: 2.9 percent — June 27, 2025
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2025 is 2.9 percent on June 27, down from 3.4 percent on June 18. After recent releases from the US Census Bureau and the US Bureau of Economic Analysis, an increase in the nowcast of the contribution of net exports to second-quarter real GDP growth from 2.07 percentage points to 3.49 percentage points was more than offset by a decrease in the nowcasted GDP growth contribution of inventory investment from -0.42 percentage points to -2.22 percentage points.
Here is the data.
And with Democratic Socialist (aka, Communist) Zohran Mamdani winning the Democratic nomination for mayor, New York City will likely become the new Detroit.
Confounded Interest - Anthony B. Sanders 
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