The Great Biden/Pelosi/Schumer Powell (4 Horsemen) Inflation Tax In One Chart (Personal Savings DOWN -64.8%, Consumer Credit UP, Real Weekly Earnings Growth NEGATIVE For 21 Straight Weeks)

I must admit, Joe Biden has a horribly misleading nickname “Middle Class Joe.” Between Biden’s horrible energy policies and Pelosi’s/Schumer’s spending binges, the US middle class and low wage workers have suffered mightely with the inflation tax. Throw in Jerome Powell and The Federal Reserve’s manic money printing and the American middle class has a problem.

US inflation peaked at 9.1% year-over-year (YoY), but has declined to a still painful 7.1% YoY as The Fed removes it aggressive monetary stimulus. But to cope with persistent US inflation, consumers have had to dip into savings and use more credit cards. As a consequence, personal savings plunged -64.8% YoY while consumer credit rose 7.9% YoY.

The other tax on the middle class and low-wage workers is the 21 straight months of negative REAL weekly earnings growth.

On the housing front, REAL home prices are growing at 1.5% YoY while REAL weekly wage growth is still NEGATIVE at -3.13% YoY.

Make no mistake, inflation caused by The Fed and Federal governments spending is a tax on the middle class and low wage workers.

Biden, Pelosi, Schumer and Powell are the 4 Horseman of the Inflation Apocalypse.

Sign Of The Times? Citi Economic Surprise Index Falls To -17.70 As US CDS (Default Insurance) And Fed Reverse Repos Remain Elevated

Its a sign of the times!

First, US default risk as measured by credit default swaps remains elevated (primarily because Biden and Democrats refused to cut wasteful spending or reign in non-retirees on Social Security). And NY Fed’s Reverse Repos remain elevated.

And then we have Citi’s economic surprise index for the US at -17 as The Fed slows money growth to 0%.

I wish I knew a place where inflation and insane Federal government spending and policies doesn’t exist.

The Thrill Is Gone! US Existing Home Sales Decline -34% Year-over-year For 17 Straight Months (Median Price Of EHS Falls -1.53% MoM)

The Thrill Is Gone from the US housing market as M2 Money growth fells to 0%.

US Existing Home Sales fell -1.5% from November to December (MoM) to 4.02 SAAR units sold. That translates to a depressing -34% decline since December 2021 (YoY).

On the positive side, these numbers are better than expected (-3.4% MoM expected). Still, these numbers are pretty dismal.

Existing home sales MEDIAN PRICE fell to $366.9k as M2 Money growth vanishes. And inventory of existing homes for sale remains lower than pre-Covid levels.

Let’s see what Powell and the Gang (aka, The Federal Reserve Board of Governors) does with interest rates going forward.

Today, the 10-year Treasury yield is up 7.1 basis points, but the real action is in Europe where sovereign yields are up 11.5 bps in France, 9.8 bps in Germany and 18.6 bps in Italy.

Janet Yellen And Treasury Tap Retirement Funds (Social Security) to Avoid Breaching US Debt Limit (US CDS Elevated To 2013 Debt Crisis Level)

US Treasury Secretary Janet Yellen has signalled that she will “tap” into Social Security to avoid breaching the US debt limit. Of course, if she does, it is unlikely that she will return the dollars.

The Credit Default Swaps 1-year for the US (insurance against default) sits at 68.55, near the highest since 2013 debt ceiling crisis.

Notice that the debt ceiling keeps on climbing once the Kabuki Theater of Democrats and Republicans is over.

The Volatility Cube for the US CDS 1 year signals that it will all be over soon.

So, Yellen and Treasury are threatening us with taking away Social Security and Medicare if we don’t agree with their lavish Pelosi-like spending sprees and debt.

And why exactly is Janet Yellen flying to China? I admit Washington DC has lousy Chinese food, but at least I hope Yellen takes Hunter Biden with her to negotiate the impending US default and debt workout.

Taking The Credit For The Post-Covid Recovery In Unemployment (Trump, Biden, Pelosi Or Powell?)

I watched Biden’s Press Secretary Karine Jean Pierre giving Biden credit for the lowest unemployment rate in US history thanks to his economic policies. And Biden mentioned that he inherited a terrible economy from Trump.

Hmmm.

Let’s let the data talk.

Covid was horrific (I almost died from it), but it was the government response to Covid there was disastorous. Government shutdowns (and the masking of the populace) killed off numerous small businesses and sent jobless claims soaring in 2020 (white line) and U-3 unemployment rate rose to the highest level since The Great Depression.

The response from The Federal Reserve was a massive printing of money (green line). And after governments stopped their economic shutdowns (coupled with massive money printing), we saw jobless claims and unemployment shrink rapidly BEFORE Biden took office as President.

The 1981 recession begat an epic borrowing of money by The Federal government (under House Speaker Tio O’Neill D-MA) and we saw another explosion in Federal debt under House Speaker Nancy Pelosi D-CA TWICE, once in 2009 following the financial meltdown and again in 2020 following the Covid economic lockdowns.

So does Trump get any thanks for the rapidly improving labor market before his ouster by Biden? Of course not. But who gets the blame for the staggering growth in Federal debt? House Speaker Nancy Pelosi.

The US did get positive wage growth under Biden, but due to inflation, American workers have experienced 21 straight months of NEGATIVE wage growth.

While Trump tried deregulation to free-up the US economy, Biden has consistently used regulation as a weapon of obidience. His slavish obidience to activist groups on the environment, which is a shame since temperatures have actually been coming down since 2016.

When you look at the data, Trump actually set in motion the jobs recovery, not Biden. Other than helping to create inflation, I can’t think of one positive thing Biden has done for the economy.

On an unrelated note, why is US FBI Director Chris Wray at the World Economic Forum in Davos Switzerland when there is a top secret document fiasco going on in DC and Delaware?

US Housing Starts Plunge -21.8% Since Last December (But 1 Unit Starts UP 11.26% Since November)

December’s housing construction numbers are a mixed bag. On the one hand, US housing starts are down -1.36% from November to December, but down -21,8% since December 2021 (YoY).

The good news? 1-unit (single family detatched) rose 11.26% from November to December (MoM). But 5+ (multifamily) starts are down -18.91% MoM.

But 5+ unit PERMITS are up 7.14%. Perhaps Hunter Biden can now rent an apartment rather than pay his father $50,000 a month in rent for Joe’s Wilmington Delaware house.

KB Homes experienced a 68% cancellation rate in Q4 2022.

This version of The Scream is one of four made by Edvard Munch, and the only one outside Norway. It is coming up for auction at Sotheby’s in New York.

Markets Are Strange! Mortgage Applications Rise 27.9% Since Previous Week, But Purchase Applications Remain 35% Lower Than Last Year (Refi Apps 81% Lower Than Last Year)

Markets are strange.

Mortgage applications increased 27.9 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 13, 2023. But mortgage applications are 60% lower than the same week last year.

The Refinance Index increased 34 percent from the previous week and was 81 percent lower than the same week one year ago. The seasonally adjusted Purchase Index increased 25 percent from one week earlier. The unadjusted Purchase Index increased 32 percent compared with the previous week and was 35 percent lower than the same week one year ago.

Here are the stats.

One lender in particular, Wells Fargo, smells blood in the economic waters, and has cut back mortgage originations.

Just remember, mortgage applications generally rise in the first part of the year until May, then start slowing until the last week of the year. This is called seasonality. But despite the fast growth this year, purchase applications are still down -35% compared to last year at this time.

Trouble In Potomac City! US Treasury 10Y-2Y Yield Curve Now Inverted For 135 Straight Days, Real Wage Growth Now Negative For 21 Straight Months

We got trouble in Potomac City! No, I’m not talking about the numerous Top Secret documents that Biden carelessly left in his garage in Delaware and the UPenn Biden Center. And they found more over the weekend. I’m talking about the US Treasury 10Y-2Y yield curve being inverted for 135 straight days. And thanks to inflation, REAL wage growth has been negative for 21 straight months.

All this is happening while M2 Money growth (green line) stalls to 0% YoY.

Swaps 5Y are rising as The Fed withdraws monetary stimulus.

The Great Dislocation! M2 Money Growth Crashes To 0% As M2 Velocity Near Lowest In History (21 Straight Months Of Negative Weekly Earnings Growth)

The 2020 Covid outbreak and the resulting government shutdowns and school closures begat a Washington DC spending spree and Federal Reserve monetary stimulus barrage unlike anything other time in history. Congress and Administrations love to spend other people’s money, but as Rahm Emanuel once said “You never let a serious crisis go to waste. And what I mean by that it’s an opportunity to do things you think you could not do before” And wow, did they ever binge spend and expand the M2 Money supply. I call it “The Great Dislocation” of the economy and we never recovered from it.

Or as Ray Wylie Hubbard sang, “Drinking with my low life companions, dancin’ with a woman who is not my wife.” This should be the theme song for Washington DC and their manic spending.

But after the massive spending splurges and Fed monetary stimultypto, The Fed finally started withdrawing “the punch bowl” to combat inflation. M2 Money growth year-over-year (YoY) is now 0%. And with inflation, US average weekly earnings growth YoY turned negativc and has been negative for 21 straight months.

After the spending explosion under Pelosi/Schumer and Powell’s monetary, M2 Money velocity (GDP/M2 Money) crashed to it lowest level in history. So now we have depressed money velocity and no M2 money growth. And the US still has 21 straight months of negative weekly earnings growth.

But former Fed Chair and current Secretary of Treasury Janet Yellen is pleased that inflation is FINALLY slowing which Yellen attributes to relaxing supply chains. Or is it declining M2 Money growth, Janet?

Now that the Federal government’s spending spree and The Fed’s monetary stimulypto dislocated the US economy, we are headed for a recession with no ammunition left in The Fed’s arsenal.

After all. The Federal Reserve has been destroying consumer purchasing power since 1913. And we may be at the end of The Fed’s monetary rope.

Even worse, we have Joe Biden as President, who curiously has been found to have classified documents in his possession from when he was Vice President, at least, at two locations (his Wilmington DL home that his son Hunter had access to and the now infamous Penn Biden Center in Washington DC). Even worse, Biden seems to be talking to dead world leaders like Germany’s Schmidt and France’s Mitterand.

Knowing Biden’s penchant for blatant lying and carelessness, I wouldn’t be surprised if this is a stack of classified documents on the table during his meeting with Treasury Secretary Janet Yellen.

Let’s hope Biden isn’t saying that he is talking to late Robert Kennedy, the former US Attorney General.

Magic? US Inflation Cools To -0.1% In December, 6.5% Year-over-Year YoY (REAL Weekly Earnings NEGATIVE For The 21st Straight Month At -3.1% YoY)

I don’t think this is a record that Biden can run on for re-election: 21 straight months of NEGATIVE REAL WAGE GRWOTH. Fortunately for Fed Chair Jay Powell, he is not an elected official.

The December inflation report still shows elevated inflation in the US, but only -0.1% since November (MoM), but still high compared to last year (6.5% YoY). That is still over 3x The Fed’s target inflation rate of 2%.

While headline inflation fell to 0.1% MoM, CORE inflation (removing food and energy) rose again 0.3% MoM and 5.7% YoY.

What exactly went up in price in December? Food and energy were all over 10% YoY growth.

At 6.50% YoY headline inflation, the Taylor Rule suggests a Fed Funds Target rate of … 13.13%. Well, I guess that Powell will say there is more rate hikes to be done.

As if The Fed follows any sensible rule. Instead, The Fed relies on magic tricks.