Fear The Talking Fed! Fed Likely To Pause Tightening Despite Being Only Half Way Home (3.7% Unemployment Implies Target Rate Of 10.12% Versus 5.25% Rate, Fed Balance Sheet Still At > $8 TRILLION)

Don’t kid yourself. The talking heads at The Federal Reserve (more like Feral Reserve) are only about halfway there in terms of rate hikes. There is still over $8 trillion in monetary stimulus sloshing around the economy.

The Taylor Rule implies a target rate of 10.12% while the current target rate is just over half that rate at 5.25%. A little over halfway there and The Fed is likely to pause rate hikes.

Of course, Yellen and Powell think The Taylor Rule is a pork roll product from Trenton, New Jersey.

Fear the talking Fed!

May Jobs Report Adds 339k Jobs, But Unemployment Rate Rises To 3.7% (Avg Hourly Earnings Cool To 4.3% YoY, Too Bad Core Inflation Still Sizzling At 5.5%)

The May jobs report is out and, under normal circumstances, would led The Fed to raise rates. But these are not normal times, my friends.

The US economy (allegedly) added 339k jobs in May. That is the good news.

The not-so-good news? A large diverengence between the Establishment survey and Household survey. +339k versus -310k. What’s it going to be?

The bad news? While US average hourly earnings YoY cooled to 4.3%, inflation is still roaring at 4.9% (headline) and 5.5% (core). So Americans are still losing ground to inflation.

The unemployment rate rose to 3.7% in May while the underemployment rate rose to 6.7%.

With unemployment rising to 3.7%, the Taylor Rule implies a Fed Funds Target rate of 10.12%. We are currently at 5.25%. Or just a little over halfway there. But The Fed is talking a pause in rate hikes.

Even Powell is getting a headache.

Biden’s Economy! ISM Manufacturing In May Falls To 46.9, 7th Straight Month Of Contraction (McCarthy Surrenders To Biden And Allows 2 Years Of Uncontrolled Spending And Debt)

Another day under Biden/Yellen.

Last night, “Republicans” joined Democrats to allow unlimited Federal spending and debt for the next two years. Way to go “Benedict McCarthy”!

But today, we saw that ISM Manufacturing printed at 46.9 for May, the 7th consecutive month of contraction.

Meanwhile, the Biden family twists the night away while Americans are ravished by inflation caused by bad energy policies and runaway Federal spending.

The new flag of the National Republican Party!

Biden/Yellen Dare McCarthy To Step Over The Line! Treasury Cash Balance Goes Low, Large Company Bankrupties Highest Since 2010 As Biden Goes On Vacation (Vacation Joe!)

US Treasury Secretary Janet Yellen changed the drop dead date on a US default from June 1 to June 5, daring Speaker McCarthy to step over the line. The debt ceiting is so urgent that Biden went on vacation to Delware for Memorial Day weekend. In fact, Biden and Yellen expect McCarthy to dance.

White House and Republican negotiators tentatively narrowed differences but were still clashing Friday on key issues as the Treasury Department signaled extra time was available before a potential US default. 

Treasury Secretary Janet Yellen announced the department expects to be able to make payments on US debts up until June 5 if lawmakers fail to act on the US debt ceiling. That set a more pointed date for a potential default but is also four days later than her previous comments eyeing trouble as soon as June 1.

The new so-called X-date buys negotiators for House Speaker Kevin McCarthy and President Joe Biden more time to strike a deal. The negotiating teams haven’t met in person since Wednesday but spoke late into the night Thursday and were in regular communication throughout the day Friday. 

Yes, there isn’t really a crisis folks. Treasury collects tax dollars continuously so Treasury can prioritze debt payments and other disbursements. The only crisis is in the minds of the media.

Deputy Treasury Secretary Wally Adeyemo warned Friday that payments to Social Security beneficiaries, veterans and others would be delayed if there’s a default. But he said he’s gaining some confidence an agreement will be reached.

We’re making progress and our goal is to make sure that we get a deal because default is unacceptable,” Adeyemo said in an interview on CNN. “The president has committed to making sure that we have good-faith negotiations with the Republicans to reach a deal because the alternative is catastrophic for all Americans.”

The accord would also include a measure to upgrade the nation’s electric grid to accommodate sham renewable energy, a key climate goal, while speeding permits for pipelines and other fossil fuel projects that the GOP favors, people familiar with the deal said.

The deal would cut $10 billion from an $80 billion budget increase for the Internal Revenue Service that Biden won as part of his Inflation Reduction Act (big whoop). Republicans have warned of a wave of agents and audits while Democrats said the increase would pay for itself through less tax cheating.

What is taking shape would be far more limited than the opening offer from Republicans, who called for raising the debt ceiling through next March in exchange for 10 years of spending caps. House conservatives were already balking Thursday at the notion of a small deal, with the House Freedom Caucus sending a letter to McCarthy demanding he hold firm. 

Treasury’s cash balance is at a low point and The Administration threatens Social Security recipients and veterans of delayed payments … while Biden goes on vacation for Memorial Day weekend to honor veterans??

Of course, Yellen know that all The Fed has to do to increase M2 Money growth again.

Meanwhile, bankrupties among large companies are highest since 2010.

In the mortgage market, current coupon nominal spreads 9Agency MBS 30Y coupon over Treasuries) are soaring.

Meanwhile, to honor US veterans, Biden goes on Memorial Day weekend and threaten veterans with delays in veteran benefits. Sigh.

Is Joe Biden REALLY Reverend Kane from Poltergeist II??

Biden’s Peggy Lee Economy: Is That All There Is? GDP QoQ Prints At Anemic 1.3%, Core Inflation Prints Hotter At 5.0% QoQ Despite Trillions In Federal Spending

Peggy Lee sang it best about the US economy under Biden: Is that all there is?

According to the Bureau of Economic Analysis (BEA), US GDP QoQ rose slightly to an anemic 1.3%. Actually, this is a terrible print given the trillions in Federal spending after Covid.

Even worse, Core Inflation (PCE core prices) rose to 5%. So, unlike what Treasury Secretary Janet “Transitory” Yellen said, core inflation remains high despite M2 Money growth crashing.

Here is the rest of the story.

Before conservatives have a meltdown over the comments that will be forthcoming from Biden’s Press Secretary Karine Jean=Pierre, bear in mind that she was senior advisor and national spokesman for hard-left progressive advocacy group MoveOn.org.

She will feel obligated to howl and scream about the debt ceiling and budget with idiocy like “the economy will crash and burn if you cut Biden’s proposed budget.” Gee, for the trillions that Biden has spent, we only got 1.3% GDP growth. So her logic will be “President Biden spent trillions and we got only 1.3% GDP growth! Imagine if we spend less????”

Biden Won’t Default, US Dollar Sinking, Gold Up As Fed Shrinks M2 Money, Cryptos Down (Yellen Running Out Of Money To Spend)

I have gotten a flood of emails and text messages asking about what happens if Biden defaults on the US debt. In short, Biden has made a career out of spending money, as has Speaker McCarthy. They both have an incentive to raise the debt ceiling, but whether it is cuts to Biden’s insane budget (higher than Covid-era spending) and wants to raise taxes on the middle class to pay for it. McCarthy wants a trimmed budget (aka, back to pre-Covid spending levels) and NOT raises taxes. They will eventually agree somewhere in the middle (US Congress member Pramila Jayapal will be outraged, but then again, she is ALWAYS outraged like Senator Elizabeth Warren) and AOC.

The Federal Reserve has taken a brief respite from fighting inflation that they helped cause. But with $188 TRILLION in unfunded entitlements promised by politicians, The Fed will undoubtedly start buying assets again (aka, QEInfinity) and the debt ceiling will keep being raised. In essence, the DC merry-go-round is broken and politicians will keep pushing it around until it collapses.

For the moment, The Federal Reserve is reducing M2 Money (green line). With it, the US Dollar (blue line) has declined. Gold (white line fever) is on the rise along with The Fed’s effective funds rate.

WTI crude is up over 1% this AM. And gold is up 2.29%. Heating oil is up 3.56%.

Face it, I have no confidence in Treasury Secretary Janet Yellen, one of the biggest propronents of MMT (modern monetary theory or borrow and spend without consequences). Yellen is NOT making lose my blues.

Cryptos are down this morning across the board.

Like Persistent Inflation, New Home Sales Rise 4.1% MoM In April Despite M2 Money Collapse (Taylor Rule Suggests Target Rate Of 11.78%, So The Fed Is STILL Overstimulating Markets)

Remember when former Fed Chair and current Treasury Secretary Janet Yellen said that inflation was transitory? As usual, Yellen was wrong. Look at April’s new home sales. Up 4.1% since March even through M2 Money growth has collapsed.

The Taylor Rule, based on Core CPI of 5.25% (persistent, not transitory inflation Janet) suggest a Fed target rate of 11.78%. The Fed is at 5.25% and likely to pause rate hikes and maybe even lower rates again.

Babbling Biden! The US Budget Deficit Remains Higher Than Before Covid (Biden Lying … Again) Lagarde Trusts in US Common Sense to Avert Catastrophic Default

Joe Biden is the worst public speaker of any President in history. Here is “Babbling Biden” lying about the great reduction in Federal budget deficit.

First, Biden didn’t “balance the budget” liked he claimed at Hiroshima. In fact, the Federal budget deficit, while improving, is still worse than it was before the 2020 Covid economic shutdown.

Biden, Schumer and Yellen are ignoring the $187 TRILLION in UNFUNDED entitlements promised America, even though Biden keeps threatening to halt Social Security payments if Biden and Yellen default on the debt. No discussion of the runaway train of entitlemennts.

I love this Bloomberg headline: “(ECB’s) Lagarde Trusts in US Common Sense to Avert Catastrophic Default.” Has Lagarde actually talked to Biden, Harris or Yellen? America’s REAL 3 Stooges??

Here is a video of Joe Biden tackling the debt ceiling.

US Treasury Cash Balance Down To $68 Billion As Fed Crashes M2 Money Growth (Clock Is Ticking With One Day Of Spending Left!)

Yes, the clock is ticking on a possible debt default and Biden is off in Hiroshima Japan instead of negotiating with House Speaker McCarthy.

The treasury cash balance is only $18 billion away from Yellen’s minimum balance redline of $50 billion. That’s one day of spending in crazy spending Washington DC.

Jobs Friday! US Avg Hourly Earnings In April Increase To 4.4% YoY, Too Bad Core Inflation Is At 5.6% YoY (Jobs Revision Loses -149K Jobs)

The good news? The US economy added 253k jobs in April. The bad news? Last months jobs report of 236k jobs added was revised downwards to 165k jobs added.

US average hourly earnings year-over-year (YoY) rose in April to 4.4%. Too bad core inflation at the last reading also rose to 5.6% YoY.

Yes, Biden and his talking heads will talk about the 253k jobs added, but will ignore (of course) the huge downward revision of March’s jobs added. 236k revised downwards to a mere 165k.

And on the good jobs report, the 10-year Treasury yield jumped by 10.9 basis points.

And the US Treasury 2Y-3M curve has dropped off the end of the earth.