Category: Stocks

Here We Go Again! ISM Manufacturing Prices Paid Rises For 2nd Straight Month As Fed Slow Walks Balance Sheet Shrinking (Growing Inflation Warning!)

Treasury Secretary (and former Federal Reserve Chair) Janet Yellen kept saying inflation was simply transitory. And for a while, the US saw cooling inflation. But we just saw ISM Manufacturing prices paid rise in February for the second straight month.

Yellen is over in Ukraine handing Zelenksyy yet another couple of billions. This is after Biden just visited Ukraine. Why not VP Kamala Harris?? Or war monger Adam Schiff??

Case-Shiller National Home Price Index Cools To 5.76% YoY As Fed Tightens The Monetary Noose (But Only Seattle And San Francisco Have Negative YoY Price Changes, All 20 Metro Areas Fell In December From November)

The December CoreLogic Case-Shiller home price indices are out … for December 2022. And it shows that the CS National home price index growth continues to slow as The Fed tightens its monetary noose. December’s YoY growth was 5.76%.

Only Seattle and San Francisco experienced negative growth in home prices on a year-over-year basis. All of the top twenty metro areas experience negative month-over-month price declines from November to December.

Gap Between VIX Put-Call Volume And CBOE Put-Call Ratio Is Widest Since 2006, Precursor To Major Volatility Spike (The Deregulation That Buttiegieg Blamed Trump For Would NOT Have Prevented The East Palestine Ohio Train Derailment)

The gap between the VIX Put-call volume and CBOE Put-call ratio is the widest since 2006, the precursor of a major volatility spike.

Meanwhile, for those of you interest in railroad regulatory issues, as a general matter, regulations are rarely ever “reversed,:” but rather modified or replaced with changes. No administration would be able to outright “repeal” a major safety regulation because it almost certainly be immediately enjoined by a court and found to be counter to Congressional delegation.

I assume most of the attention will be on this final rule (https://www.federalregister.gov/documents/2020/10/07/2020-18339/rail-integrity-and-track-safety-standards) published and effective on Oct 7, 2020. It is considered”deregulatory” in the sense that it results in an economic or compliance cost savings, mostly owing to a change in the permissible type of track integrity monitoring, and decrease in the resulting number of “slow orders.”

Unlike Pete Buttigieg who apparently did not read the regulations when he blamed Trump, read the actual published “deregulation.” A faulty railcar axel which was the cause of the East Palestine Ohio trail derailment was NOT impacted by the “deregulation.” Instead of Mayor Pete, he should be called “Cheap Shot Pete.”

Uh-oh! January Personal Consumption Expenditures Soar 1.8% MoM, PCE Deflator UP 5.4% YoY, 2-year Treasury Yield Rises 10 Basis Points (Here Comes The Fed!)

Not really a surprise, but January’s personal spending numbers came in hot at 1.8% MoM. Also, Personal Consumption Expenditures PRICE index (aka, inflation) rose to 5.4% YoY.

Here comes The Fed! The 2-year Treasury yield rose 10 basis points this morning.

Pelsoi and Schumer (with McConnell) got the gold mine and American consumers got the shaft.

Is That All There Is? US Q4 Real GDP Up Only 0.91% YoY Despite $54.8 TRILLION In Federal Debt (+36%) Added Since January 2020

The US Federal government reminds me of the Peggy Lee song “Is That All There Is?” Since the outbreak of Covid in 2020 and the absurb spending spree by Pelosi and Schumer, the Federal government has increased their debt by 36% to help pay for the Federal spending spree. That amounts to $54.8 TRILLION in additional Federal debt since January 2020.

What did the US economy get for all that Federal spending? In Q4 2022, Real GDP rose by … 0.91% YoY. Seriously? Is that all there is from $54.8 TRILLION in additional Federal debt?

What do you expect when low-life lobbyists shuffle in and out of Congressional offices and the White House. Lobbyists don’t represent middle class America, but represent the elites.

Another bit of lousy news. Look at the trend in S&P 500 Earnings Surprise (5 year).

On the housing front, the US housing market was hit with the biggest six-month wipeout since 2008.

At least US Transportation Secretary “Pothole Pete” Buttigieg FINALLY showed up (three weeks after that East Palestine Ohio train disaster). Here is Buttigieg practising for his press conference.

Summertime Blues! US Treasury 3m30y Curve In Bear Steepening Mode, Indicating A US Recession By Summer 2023

The US economy has a case of the summertime blues.

Bull steepenings in the yield curve are generally seen as a precursor to a recession, but they are often preceded by bear steepenings. The 3m30y curve is currently bear steepening, indicating a recession could begin as early as the summer. In fact, the 3m30y curve is now inverted at -94.628 basis points pointing to a recession in summer 2023.

This is happening as the US house payment to income ratio near all-time highs.

Is Biden’s Economic Plan Working? Real Disposable Personal Income Down -6.4% YoY In 2022 (Worst Since The Great Depression)

President Biden touts his economic plan as being a great success. But the data says otherwise. Real Disposable Personal Income, for examplge, was down -6.4% year-over-year (YoY) in 2022. That is the WORST reading since The Great Depression.

And to cope with inflation, Americans have expanded their credit useage, but credit card delinquencies are through the roof.

So much for “Middle Class Joe” and The Forgotten Man. Biden hasn’t forgotten, he just doesn’t care.

US Treasury 6-Month Yield Back Over 5% (Back To 2007 And The Financial Crisis As The Fed Withdraws Liquidity)

Well, here we are again. Back to 2007 and the housing bubble and subsequent financial crisis. The US Treasury 6-month yield is back over 5%, a yield we haven’t seen since August 8, 2007.

Well, there is one notable difference. The Fed’s balance sheet is still at $8.4 TRILLION whereas it was only $866 billion on August 8, 2007.

The US Treasury yield curve? It remains deeply inverted as The Fed withdraws liquidity.

And then we have this diddy. US household debt balances increase, the largest nominal quarterly increase in 20 years.

Also, we have the year-over-year EPS growth has turned negative for the first time since Covid.

MIA. Transportation Secretary Pete Buttigieg.

The West Is A Mess! US Home Prices Decline From 2022 Peak Most In The Western US (SF Down -13%, Seattle Down -11.3%, Phoenix Down -10.5%)

Black Knight’s December Mortgage Report is out and the house price graphs show the west is a mess.

While much of the US is down from 2022 peaks in home price. but it is The West where home prices are down the most (just like 2008 where the Inland Empire of California, Phoenix and Las Vegas crashed in term of home prices).

At least Columbus Ohio is down only -2.1% from the 2022 peak. While Austin TX is down almost -10% from 2022 peak.

US inflation numbers are out tomorrow. Let’s check on home price and rent growth tomorrow. But the forecast for January inflation is a increase.