Weekend Update! US 10Y Breakeven Inflation Rate Hits Record High As WTI Oil And Lithium Surge (Toronto Home Goes From $613k Over Asking Price)

Unfortunately, the US Breakeven 10Y inflation rate hit another all-time high as West Texas Intermediate Crude Oil (Cushing Spot) soars.

But note that the WTI Crude spot rate is still lower than it previous peak in June 2008. What is notable in the above chart is that M2 Money growth YoY has slowed after Covid “Stimulypto”. But M2 is still growing at an 11% YoY clip, much faster growth than pre-Covid rates. So, Federal stimulypto is still in place, helping to drive inflation to the moon.

Example of how crazy this is getting? A house in Toronto Canada (our cousins to the north) just went to $613,000 OVER ASKING PRICE! While some may dismiss this as “Well, that is Canada” it does show how inflation is ravaging home affordability in North America.

As The Biden Administration and Congress pushes Green Energy and demonizes fossil fuels, we are seeing Green Energy commodities such as Lithium (for batteries) soar even faster than oil prices.

Gold may be set to party like its 1999!

And just an update on The US Dollar, Crypto Currencies and Gold. This is just a sample of alternatives to the US Dollar for transactions. Freedom of choice is a great thing!

What a wonderful time to be a politician! As Winston Churchill once uttered, “Never let a crisis go to waste.” To quote Dwight Schrute from The Office, “It is part of the green initiative. And by green, I mean money.”

Headaches On Headaches! 10Y Treasury Rates Rises 8.6 BPS, But REAL 10Y Is -5.50% Thanks To 40-Year High Inflation

Headaches on headaches.

Overnight, the US Treasury yield rose to 2.38% as the number of forecast Fed rate hikes rose to 8.211. So, enjoy “low” rates while you can.

If we back out the highest inflation rate in 40 years, the REAL 10Y Treasury yield is -5.50%.

And the REAL 30Y mortgage rate is -3.57%.

Of course, the meteoric rise in inflation is due largely to Biden’s attack on the fossil fuel industry (until Russia’s invasion of Ukraine distracted from Biden’s inflation fiasco). Remember, Russia didn’t invade Ukraine until February 2022.

But rather than relax Biden’s anti-fossil fuel executive orders, Congress is now considering the “Gasoline Rebate Act” to give people gasoline stimulus checks to offset the alarming rise in gasoline prices. California governor Gavin “Nancy Pelosi’s nephew” Newsome is proposing a similar measure to give auto owners a $400 rebate to cover rising gasoline prices. Of course, Newsome is up for reelection and there are the midterm elections approaching, so I rule out true concern for citizens as a motive.

Wait. I thought the purpose of Biden’s executive orders was to reduce dependence on fossil fuels by driving up gasoline and natural gas prices producing a shift to “green energy.” Won’t these “gas rebates” simply continue the consumption of gasoline and natural gas? And increase inflation??

As Winston Churchill once said, “Never let a crisis go to waste.”

Simply Unaffordable! Soaring US Home Prices + Soaring Mortgage Rates + DECLINING Real Wages Makes US Housing Unaffordable For Millions (MBA Refi Applications Drop 14.37% From Preceding Week)

US housing is getting simply unaffordable.

US mortgage rates are soaring, US home prices are soaring, The Fed’s balance sheet is still growing, and US average hourly earnings are growing at a fraction of home price growth.

The unafforable nature of US housing prices is similar to that of 2005-2007 when home price growth greatly exceeded wage growth.

Another side effect of soaring mortgage rates: MBA refinancing applications plunged 14.37% from the preceding week.

Let’s see if The Fed actually tries to extinguish the affordability fire.

Fed Expected To Raise Rate 8+ Times Over Next 12 Months Leading To Surge In 2-year Treasury Yield And Mortgage Rates (Powell’s Money Gun To Slow Rate Of Fire)

This is the chart from hell as The Fed is expected to take interest rates higher.

At least mortgage rates are down slightly today.

With 8+ rate hikes forecast over the next twelve months. Meaning that Powell’s Fed money gun is going to slow.

US Existing Home Sales Plunge -7.2% In February (Median Price “Slowed” To 15% YoY, Inventory Increased Slightly) As Mortgage Rates Rise

US existing home sales fell -7.24% from January as mortgage rates soar. On a YoY basis, existing home sales declined by -2.43%.

The median price of existing home sales “slowed” to 15% YoY in February as inventory picked-up slightly. And yes, Fed Stimulypto is still around and hasn’t helped increase inventory for sale.

As I said earlier, we are seeing the Treasury yield curve plunging towards recession.

The Empire Strikes Out! US Producer Price Index Final Demand (Inflation) Hits 10% As NY State General Business Conditions Crash (Russia Winning Economic Demolition Derby With Ukraine)

Bad news. Its the same all over the world.

The US Producer Price Index (PPI) final demand rose 10% YoY in February, further evidence of spiraling inflation under Biden/Pelosi/Schumer’s reign of error.

And speaking of Senate Majority Leader Chuck Schumer (D-NY), the Empire State Manufacturing Survey (General Business Conditions) crashed to -11.8.

And Russia is losing the economic demolition derby with Ukraine (at least for sovereign debt).

I am still trying to figure out what House Speaker Nancy Pelosi (D-San Francisco) meant by “When we’re having this discussion, it’s important to dispel some of those who say, well it’s the government spending. No, it isn’t. The government spending is doing the exact reverse, reducing the national debt. It is not inflationary.”

Really Nancy?

Here is a chart of Federal government outlays and inflation. Massive expenditures and growth in Federal debt and the resulting inflation. Nancy?

Here is House Speaker Nancy Pelosi trying to figure out the cause of inflation in the US.

US Gasoline Prices UP 48% YoY In February, But Gas Prices Were UP 62% In April 2021 BEFORE Russia Invaded Ukraine

Well, so much for rising gasoline prices being the fault of Vlad “The Ukrainian Impaler” Putin and Russia invading Ukraine. In fact, gasoline prices were rising at a 62% YoY pace in April 2021, well before Russia’s invasion of Ukraine.

REAL gasoline prices (nominal gasoline prices less inflation) are up 32.72% YoY in February.

Press secretary Jen Psaki can take the opportunity to proclaim that REAL gasoline prices have actually declined in February.

Hi diddly dee, a President’s press secretary’s life for me!

I keep waiting for the Biden Administration and Congress to launch price controls and supply rationing rather than simply allow the Keystone Pipeline to be built and allow drilling on Federal lands.

Pelosi Cola! Latest Congressional Spending Spree Includes 21% Increase In Congressional Staff Allowance While Social Security Increases (COLA) By Only 5.9% (Pelosi/Schumer Prioritize DC Staffers Over Retirees)

US Speaker of the House and American Oligarch Nancy Pelosi together with Senate Majority Oligarch Charles Schumer passed yet another massive spending bill that seemingly benefited them and not the American middle class.

As part of the $1.5 trillion omnibus spending bill released Wednesday, the $5.9 billion fiscal 2022 Legislative Branch funding portion would substantially boost the office budgets of House members to pay staff more.

This legislation would provide $774.4 million for the Members Representational Allowance, known as the MRA, which funds the House office budgets for lawmakers, including staffer salaries. This $134.4 million, or 21 percent, boost over the previous fiscal year marks the largest increase in the MRA appropriation since it was authorized in 1996, according to a bill summary by the House Appropriations Committee. For paid interns in member and leadership offices, the House would get $18.2 million.

Unfortunately, retirees received a Social Security Cost of Living Adjustment (COLA) of only 5.9%.

This is especially unfortunate given at inflation is growing at 7.9%. If we remove food and energy (two important categories for consumers and retirees), core inflation is growing at 6.4% YoY. As such, Social Security COLA doesn’t even keep pace with CORE inflation, let alone food and energy costs.

In August, Speaker Nancy Pelosi announced staffers’ salaries could exceed those of lawmakers. Members in both the House and Senate, with the exception of leadership, make an annual salary of $174,000. Staffers can make up to $199,300.

The Hill has a nice summary of the latest Pelosi/Schumer Spendapalooza, “Lawmakers feast on pork in omnibus.”

After an 11-year drought, congressional earmarks are back with vengeance.

The $1.5 trillion, 2,741-page omnibus spending package is loaded with funding for lawmaker pet projects, some of which could help incumbents in this fall’s elections.

The legislation includes more than 4,000 earmarks, according to a list of projects provided to The Hill by a Senate Republican aide that spanned 367 pages.

One of the biggest winners was New York — thanks to Senate Majority Leader Charles Schumer (D-N.Y.), who is up for reelection this year.

Schumer’s name is attached to 59 earmarks totaling nearly $80 million in the omnibus’s transportation and housing and urban development (HUD) section alone, according to a review by The Hill. He successfully requested funding for the projects either individually or with other lawmakers from his home state.

Is wild-spending Pelosi actually “The Bride of Chucky (Schumer)”?

Consumer Confidence Plunges As Inflation Worsens (UMich Conditions For Buying Homes Declines To 70)

As inflation worsens, the University of Michigan survey of consumers fell again as US inflation worsens.

On the housing front, buying conditions for houses fell to 70 as a result of soaring home prices.

MY confidence in Biden and Congress has certainly declined.

Friday Update: US Mortgage Rate Rises To 4.32% As 10-year Treasury Yield Breeches 2% (6+ Rate Increases Baked Into Fed Futures Data)

Good morning!

US 30-year mortgage rates rose to 4.32% (Bankrate) as the 10-year Treasury yield broke through the 2% barrier. This is happening as Fed Funds Futures are pointing toward 6+ rate increases over the coming year.

Actually, Fed Funds Futures are pricing in 7 rate increases over the coming year.

At least all is quiet on the commodities front.

So, it appears that Fed Chair Jay Powell will follow-through with numerous rate hikes over the coming year.

I guess Powell is tired of being a low-rate chump instead of a high-rate champ?