Biden’s Follies! Banks’ Usage Of Fed’s Emergency Funds Jumps To New Record High, Money-Market Inflows Soar As Bank Deposit Growth Remains Negative

What a mess Biden and his Progressive backers have made. And we are forced to suffer the consequeinces of his policies. Or follies!

Money-market funds saw inflows for the 7th week of the last 8 with a $42BN jump (the most in 2 months) to a new record high of $5.625TN…

Source: Bloomberg

The inflow was dominated by a $24BN increase in Institutional fund assets while Retail also saw a sizable $17.7BN increase…

Source: Bloomberg

And the divergence between money-market fund assets and bank deposits continues to grow…

Source: Bloomberg

And while we actually saw huge deposit outflows (on a non-seasonally-adjusted basis) – despite The Fed’s seasonally-adjusted deposits increase – The Fed balance sheet shrank by another $20BN last week to its smallest since June 2021…

Source: Bloomberg

The Fed’s QT program continues apace with$18.4BN sold last week to its smallest since June 2021…

Source: Bloomberg

Usage of The Fed’s emergency bank funding facility jumped by $328 Million last week to a new high of $108BN…

Source: Bloomberg

Fed BS weekly change:

Fed balance sheet QT (Notes and bonds decline): $4.255 trillion, down $18,2BN
Discount Window $2.1BN, down $800M from $.29BN
BTFP new record $107.9BN, up $400MM
Other Credit Extensions (FDIC Loans): $133.8BN, down $0.6BN from $134.4BN

Finally, US equity markets and bank reserves at The Fed have converged a little recently, but the gap remains wide (thanks to the plunge in reverse repo balances)…

Source: Bloomberg

Tick, tock, banks!

Source: Bloomberg

You have six months to figure out how to clean up the $108 Billion hole in your balance sheet that you’re currently paying The Fed’s exorbitant rates to fill.

Bank deposit growth remains negative as The Fed tightens its overly accomodative monetary policy.

And then we have this chart showing plinging M2 Money (white line fever).

And the horrific unrealized losses on bank’s books.

Bidenomics is failing America. Primarily because Biden was one of the stupidest members of the US Senate. Not to mention nasty. Great President, America! /sarc

Fixed-income Update! REAL 10Y Yield Climbs To Near 2%, Mortgage Rate Climbs To 7.62%, Home Purchase Mortgage Apps Decline To 1995 Levels, 2Y Treasury Yield Breaches 2%, UST 10Y-2Y Yield Curve Remains Inverted (Wasting Away Again In Bidenomicsville)

As the late crooner Jimmy Buffet sang, the US economy is wasting away in Bidenomicsville, looking for our lost economy for the middle class and low wage worker.

As Bidenomics fails to do anything other than make big donors wealthier (green energy companies, big tech and union bosses, etc), we are seeing the impacts of Fed monetary tightening to combat inflation caused by Biden/Pelosi/Schumer’s spending spree.

First, the 10-year REAL Treasury yield is close to breaching 2%.

Second, 30-year mortgage rates are now 7.62%, up over 150% under Bidenomics.

Third, mortgage purchase applications crashed to the lowest level since 1995.

Fourth, the 2-year Treasury yield just breached 5%.

Fifth, the 10Y-2Y yield curve remains deeply inverted.

Bidenomics Strikes Again! US Mortgage Purchase Mortgage Demand Lowest in 28 Years As Bank Deposits Down -4% YoY (Purchase Demand Down -28% YoY)

Bidenomics’ new themesong, “I’ve youv’e got the money, honey, I’ve got the time.” Otherwise, sod off.

Speaking of Bidenomics, US mortgage purchase demand just declined to the lowest level in 28 years.

Mortgage applications decreased 2.9 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 1, 2023.

The Market Composite Index, a measure of mortgage loan application volume, decreased 2.9 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 5 percent compared with the previous week. The Refinance Index decreased 5 percent from the previous week and was 30 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index decreased 5 percent compared with the previous week and was 28 percent lower than the same week one year ago.

This is not good.

Bank deposits, a source of bank lending, are down -4% YoY as The Fed tightens rates.

Here is Lefty Frizzell’s original version of the Bidenomic’s themesong “If you’ve got the money, honey,I’ve got the time.” Like big donors receiving green energy subsidies. But not middle class mortgage borrowers.

US Beginning Credit Super Cycle (Bidenomics = Inflation, Rising Debt, Rising Delinquencies) Mortgage Rates UP 158% Under Bidenomics

Thanks to Bidenomics, code for massive Federal spending on green energy initiatives and payoffs fo large donors, we have agonizing inflation and consumers are borrowing more and more to cope with inflation. And with the increased use of debt comes …. drumroll … delinquenices!

Let’s start with mortgage loans, the overall delinquency rate is 63bps, near record lows, likely due to the huge home appreciation of the last few years which padded the equity cushion for most homeowners. Even the youngest cohort (18-29 years old) has a delinquency rate only 30bps higher than the aggregate. Unlike the 2007-2011 period, the credit cycle is not playing out in the real estate market.

The US conforming mortgage rate is UP 158% under Bidenomics.

Let’s move on to some forms of consumer loans, where the story is a little more daunting.

Auto loans are definitely the epicenter of the credit cycle. While the overall average is a still somewhat tame 2.41%, younger borrowers are not keeping up. Younger borrowers have delinquency rates that are 1-2% higher than the average while the inverse is true for older borrowers. Eighteen-to-thirty-nine year-old borrowers have the highest delinquency rate in 13 years.

Somehow, I sense that used car lots are going to start filling up again as these vehicles get repossessed. This should put downward pressure on used car prices, bringing that element of inflation down. This is one of the channels through which monetary policy works.

Lastly, I’ll take a look at credit card delinquencies.

Here is where we can really see the stresses building.

First, the overall delinquency rate has about doubled from 2.5% to 5% over the last couple years.
Second, older borrowers have seen a tick up in delinquency rates, a feature we don’t really see in other credit products.
Third, one in 12 younger 18-29 year-old borrowers are 90+ days late making their credit card payments.

Credit Card Delinquency Rate across all commercial banks hit 2.77% in the 2nd quarter, the highest level in more than a decade.

In conclusion, we are in the early days of a consumer credit cycle. Younger borrowers are the weakest link in this analysis, and this makes me wonder where rates go when student debt payments turn back on at the end of the month.

Slippin’ Into Darkness! St Louis Fed Nowcast Q3 GDP Growth At -0.07% As M2 Money Growth Collapses (While Atlanta Fed GDPNow At 5.6% Growth?)

Slippin’ into darkness! Bidenomics, that is! Joe Biden is not a friend of the US middle class.

The St Louis Fed’s real time GDP tracker known as Nowcast has Q3 GDP at -0.07%. This happening at M2 Money growth collapses.

If you want to feel good, check out Atlanta Fed’s GDPNow estimate (housing economist Raphael Bostic is its President) which has Q3 GDP at 5.6%.

When will The Fed return to it low riding rates days?

Reverend Biden.

Bidenomics 101 (Immigration): Native Born Labor Force UP 3.6%, Foreign Born Labor Force UP 14.6% Under Biden (>1 Millon Foreign Born Jobs Added While 1+ Million Native Born Jobs Lost In August)

Face it. No one in Washington DC wants to close the border. Republicans supporting big agriculture support open borders and cheap labor, Democrats love open borders for political gains, despite open borders meaning a flood of migrants and depressing job prospects for native born Americans.

Case in point. Under the leadership of Biden (more like a followship because Biden clearly isn’t in charge of anything), the native born labor force (blue line) grew by 3.6%. However, the foreign born labor force (red line) grew by 14.6%.

The media focused on 1 million jobs lost for native-born and a gain of 697k jobs for foreign-born. But this claim is misleading. Look at the month to month changes in the labor force since 2020 (pink box). In several past months, we witnessed the same thing … native born job losses when foreign born gained jobs. But several months had the exact opposite. It is the overall trend that is alarming: native born jobs only grew 3.6% under Vacation Joe Biden while foreign born jobs grew 14.6%.

If we look at Employed full time: Earnings of foreign born as percent of native born: Median usual weekly nominal earnings (second quartile): Wage and salary workers: 16 years and over, we see that the YoY growth rate of earnings for foreign born declining. I attribute this to open borders and the influx of unskilled, largely uneducated immigrants pouring over the southern border.

Biden’s biographer claims that Biden is worried that he will be remembered as “Stupid.” Well, Biden IS stupid. But he is also the most corrupt President in history.

Simple Joe is what he will be remembered as.

Biden’s ShamWow Economy! Real Home Price To Real Median Earnings Not As Bad As 2006’s Housing Bubble (Home Prices UP 32% Under Biden While Mortgage Rates UP 155%)

You know Bidenomics isn’t working at all when the best I can say about it is … the current housing bubble isn’t as bad as the house price bubble of 2006. We are truly in Biden’s ShamWow economy!

Yes, if I look at real home prices less real median earnings we can see that the ratio, while terrible, is still not as bad as the housing bubble of 2006.

If I look at Case-Shiller National home price index less REAL median earnings, it is now far worse than in 2006.

But home prices are still up 32% under Biden

While the 30-year conforming mortgage rate is up 155% under Vacation Joe.

It should be GREEN ShamWow!. The money seems to be disappearing into the pockets of green energy donors, and Ukraine.

Bidenomics 101 (Mortgage Rates) Conforming 30Y Rate UP 155% Under Biden, Home Prices UP 32% (Fed Balance Sheet Still Exceeds $8 Trillion, UP 10% Under Vacation Joe)

Under Bidenomics, there is still too much Fed monetary stimulus in the form of >$8 trillion on its balance sheet. While the biggest surge in Fed activity occurred with Covid, The Fed has added 10% to its balance sheet under Billions Biden.

Despite not backing off the assets purchases by The Fed, conforming 30Y mortgage rate is still up 155% under Bidenomics.

Yes, The Fed is raising its target rate to cool inflation, but doing little with its balance sheet.

The Case-Shiller national home price index is up 32% under Vacation Joe!

It seems prices are out of control and The Fed refuses to trim its balance sheet. But don’t worry, Vacation Joe is probably on yet another vacation while Maui and Flordia suffer and The Ukraine war is seeing bodies pile up. Meanwhile, he still hasn’t visited East Palestine Ohio like promised.

“Soviet Joe” Biden Bails Out US Auto Industry With Up To $12 Billion In Loans/Grants As Green Energy Mandates Crush Auto Industry (Shades Of Banking Crisis, Another Federally Created Monster!)

Soviet Joe Biden, who is a believer in Soviet-style command economies where rather than rely on free market capitalism, we now have CC (Crony Communism) running the US economy. Into the ground. But in the tradition of bad Federal policiies, Soviet Joe and Energy Secretary Granholm (with help from Congress) mandate green energy transition at all costs, watch the auto industry suffer, then bail them out. Sounds a lot of like the banking crisis of 2008 where The Federal government pushed homeownership until it helped almost collapse the banking sector, then the Federal government bailed out the banks. Rinse, repeat, bailout. And the bailout of banks in going! (Notice that The Fed has barely shrunk its $8+ trillion balance sheet!).

Automakers are looking to finish the week with strength after it was announced on Thursday that the Biden administration would be making “up to $12 billion” available to retrofit facilities to make both EVs and hybrids.

The money will include $10 billion from a US Energy Department loan program for clean vehicles and an additional $3.5 billion in financing to expand domestic battery manufacturing, according to Bloomberg.

The United Auto Workers, currently in negotiations with Detroit, has argued that a shift to EVs will cost the industry union jobs. US Energy Secretary Jennifer Granholm said on Thursday that the funding would help Detroit retain workers.

However, we’ve seen this “bailout” business model to save jobs before – at banks and during Covid, to name two examples – and it always winds up turning into a company cash grab before ultimately firing workers regardless. The UAW will try to prevent such a situation from taking place as it negotiates.

UAW President Shawn Fain “cautiously” welcomed the news after warning earlier this month that the White House should not push an EV agenda if it means the loss of jobs in Detroit.

Almost like the government should stay out of the auto industry as a whole, right? But that would make too much sense.

“The EV transition must be a just transition that ensures auto workers have a place in the new economy,” Fain said this week. Meanwhile, the Alliance for Automotive Innovation, a Washington lobby group that represents most Detroit automakers, said this week the funding “will further advance the domestic automotive supply chain and globally competitive battery manufacturing platform that automakers have already made sizable investments.”

Instead, Bloomberg calls the move the Biden administration “doubling down on efforts to support carmakers’ transition to EVs”. In a statement this week, President Biden said: “This funding will help existing workers keep their jobs and have the first shot to fill new good jobs as the car industry transforms for future generations.”

The Biden administration continues to aim for half of all vehicles on the road being EVs by 2030.

Oh and now that UAW Boss seeks 46% raise and 32-hour work week. Reminds me of Federal student loans where students run up massive amounts of debt to major in useless degrees like political “science” and gender/race studies, yet universities hire more admininstrators.

About The Jobs Report! Two-month Drop In Full-time Jobs Was 670K, Biggest Plunge Since Covid Lockdowns In 2020 (Mulitple Job Holders Rise To Cope With Inflation)

Covid is the gift that keeps on giving … to lazy bureaucrats and teachers union members. And a horror for small businesses and students since small businesse go bankrupt and students suffer from lack of education. And now The Federal Government is fearmongering (hey, that’s all they do!) ANOTHER Covid outbreak with Deep State Joe Biden advocating for more Federal spending on vaccines and telling everyone to get yet ANOTHER vaccination. And wear useless masks as a sign of obidience to The Democrat Party.

The Bureau of Labor Statistics (BLS) reported that in August the number of full-time jobs dropped again, sliding by 85K to 134.2 million, and followed the whopping 585K plunge in July which brings the two-month total drop in full-time jobs to a whopping 670K, the biggest 2-month plunge since the covid lockdowns in early 2020 when 12.5 million full-time jobs were lost in one month!

But if full-time jobs crashed how did the BLS get an increase of 222,000 employed workers? Simple: it was all in the latest jump of part-time workers. Indeed, in August the number of reported part-timers jumped by 32K and when added to the near-record 972K surge in July, the 2-month total was just over one million – 1,004,000 to be precise – to 27.185 million.

Going back to a quantitative read of the data, we look at the number of multiple jobholders – those workers who have to work more than one job at a time to make ends meet. In August this number was actually a modest silver lining, as it dropped by July, that number dropped by 85K to 8.028 million, but it remains just shy of the pre-covid record.

Given the extreme level of corruption in the Biden Administration, the Democrat Party should be renamed after New York’s Tammany Hall.

And require all people to wear a Tammany Hall fez instead of a mask.