Category: Wages

The Empire Strikes Out! Business Conditions Expectations Plunged To Lowest Since 9/11

The Emperor is actually China’s Xi Jinping! Causing the Empire Fed Manufacturing index to decline.

Despite the slump in ‘soft’ survey data, analysts expected Empire Fed Manufacturing to bounce back from March’s tumble to one year lows and they were right with the headline index rising from -20.0 to -8.1 (considerably better than the -13.5), but still negative. However, while current conditions jumped, expectations plunged to the lowest since 9/11/.

China Trade Uncertainty Causes VIX To Fall By 18.7 Pts, Largest In History (Correlation Between Stocks And Bonds Reverse To Positive)

Obama/Biden/Harris/Schumer/Pelosi have let the US be the punks for China. Trump is simply trying to level the playing field and China’s Xie doesn’t like the new equilibrium.

VIX Index fell by 18.7 points yesterday … largest one-day decline in history.

The correlation between stock prices and bond yields has returned to positive territory — hinting at a period of distress in equities and a regime shift in equity and bond markets where recession fears, rather than inflation, may be starting to drive direction of both. The correlation between the two asset classes was positive for the better part of 20 years prior to the pandemic, suggesting equities trended in the direction of yields as inflation mostly coincided with growth. Stocks held a negative correlation to yields throughout most of the 1980s and 1990s, when inflation hurt stocks — and that phenomenon returned for the 2022-24 bear market and recovery period.

Notably, major stock corrections occurred each time the correlation jumped out of its primary regime.

China’s Xi flashes a Hitler salute!

Hello Hello! March US Consumer Prices Fall Most In 5 Years (Rent Inflation Back To Pre-Biden Levels)

Hello Hello pre-Biden inflation levels!

The normally crucial consumer price index measure of inflation printing today for March is likely to take a back seat to the next red flashing headline on tariffs on everyone’s Bloomberg terminal, but under the hood – with the Trump Put now exposed – can a cooler than expected CPI print raise the Powell Put strike enough to enable a true tradable bottom here?

Having dipped lower in the previous month (following a few straight months of re-acceleration), expectations were for both headline and core measures to continue trending lower on a YoY basis… and they were.

Headline CPI FELL 0.1% MoM (vs +0.1% exp), which dragged the YoY CPI to +2.4%, matching the September lows…

Source: Bloomberg

That is the weakest MoM print since May 2020.

Core CPI also printed cooler than expected (+0.1% MoM vs +0.3% MoM exp), pulling the YoY print down t0 +2.8% YoY – the lowest since March 2021…

Source: Bloomberg

Services inflation tumbled…

Source: Bloomberg

CPI breakdown:

Headline:

  • CPI decreased 0.1% after rising 0.2% in February, and below the +0.1% estimate. Over the last 12 months, CPI rose 2.4%, below the 2.5% estimate.
  • Energy CPI fell 2.4% in March, as a 6.3% decline in the index for gasoline more than offset increases in the indexes for electricity and natural gas.
  • Food CPI rose 0.4% in March as the food at home index increased 0.5% and the food away from home index rose 0.4 percent over the month.

Core CPI:

  • The index for all items less food and energy rose 0.1% in March, following a 0.2% increase in February.
    • Indexes that increased over the month include personal care, medical care, education, apparel, and new vehicles.
    • The indexes for airline fares, motor vehicle insurance, used cars and trucks, and recreation were among the major indexes that decreased in March.

Core CPI details (MoM increase):

  • The shelter index increased 0.2% over the month.
    • The index for owners’ equivalent rent rose 0.% in March and the index for rent increased 0.3%.
    • The lodging away from home index fell 3.5 percent in March.
  • The personal care index rose 1.0%in March.
  • The index for education rose 0.4% over the month, as did the index for apparel.
  • The new vehicles index also increased over the month, rising 0.1%.
  • The index for airline fares fell 5.3% in March, after declining 4.0% in February.
  • The indexes for motor vehicle insurance, used cars and trucks, and recreation also fell over the month.
  • The household furnishings and operations index was unchanged in March.
  • The medical care index increased 0.2% over the month.
  • The index for hospital services increased 1.1% in March and the index for physicians’ services rose 0.3% over the month. In contrast, the prescription drugs index fell 2.0% in March.

Core CPI details (YoY increase):

  • The index for all items less food and energy rose 2.8 percent over the past 12 months.
  • The shelter index increased 4.0 percent over the last year, the smallest 12-month increase since November 2021.
  • Other indexes with notable increases over the last year include motor vehicle insurance (+7.5 percent), medical care (+2.6 percent), recreation (+1.9 percent), and education (+3.9 percent).

While goods inflation is flat (zero-ish), services cost inflation is fading fast…

Source: Bloomberg

Shelter and Rent inflation is slowing fast:

  • Shelter inflation +0.3% MoM, +3.99% YoY, down from 4.25% in February (lowest since Nov 2021)
  • Rent inflation +0.3% MoM, +3.99% YoY, down from 4.09% in February (lowest since Jan 2022)

The so-called SuperCore CPI – Services Ex-Shelter – dropped 0.1% MoM dragging it down to +3.22% YoY – the lowest since Dec 2021…

Source: Bloomberg

Source: Bloomberg

Drill Baby Drill (and tariffs recession fears) have dragged energy prices lower and pulled CPI lower with it…

Source: Bloomberg

Bubble Or Tariffs? China Retaliates With 84% Tariffs On US Goods, Will The Fed Counterattack? (S&P 500 UP 81% Since April 8, 2020 While M2 Money Is UP 27.4%)

The Federal Reserve has created massive asset bubbles in financial markets. And the “tariff war” between the US and China. Since April 8, 2020, the S&P 500 index is up 81% while The Federal Reserve has printed a staggering amount of money as M2 Money is up 27.4% over the same period.

So, it is not surprising (except to Barstool Sports’ Dave Portnoy) that the stock market has declined with China’s childish petulance over Trump’s tariffs. While Trump levied a 104% tariff on Chinese goods, China counterattacked with a 84% tariff on US goods.

Will The Fed counterattack with more money printing?

US Payrolls Unexpectedly Soar To 228K (Federal Government Employment Lost 4K Jobs)

Most people are focused on the Great Reset in Global Trade, caused by Obama/Biden/Schumer/Pelosi letting US trading partners getting away with massive disparate tariffs against the US. Now that Trump is trying to level the playing field, we will see short-term losses in the stock market. But the jobs report for March shows that Trump’s economic policies are working.

The March jobs report ended up being far stronger than expected, as the US added a whopping 228K jobs, the highest since December and more than double the 117K in February (revised lower from 151K).

The better news? Federal government employment declined by 4,000 in March, following a loss of 11,000 jobs in February.

Soothe Me? Q1 GDP Now At -2.8% As 10Y Treasury Yield Falls To 4.157% (Recession Jitters?)

Soothe me? As we move further away from Sleepy Joe’s horrid economic policies, we should see an improvement in GDP from the current Atlanta Fed GDP Now Q1 Forecast of -2.8%.

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2025 is -2.8 percent on March 28, down from -1.8 percent on March 26.

The alternative model forecast, which adjusts for imports and exports of gold as described here, is -0.5 percent. After recent releases from the US Census Bureau and the US Bureau of Economic Analysis, the nowcast of the contribution of net exports to first-quarter real GDP growth declined from -3.95 percentage points to -4.79 percentage points in the standard model and from -1.92 percentage points to -2.53 percentage points in the alternative model.

The US Treasury 10Y yield has fallen to 4.157% as recession fears mount.

Keep On Printing? Case-Shiller National Home Price Index Up 4.1% YoY As Mortgage Applications Decline 2% Since Last Week

The Fed keeps on printing money M2! The Case-Shiller National home price index is up 4.1% since last year YoY as The Fed continues to print money.

Mortgage applications decreased 2.0 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 21, 2025.

The Market Composite Index, a measure of mortgage loan application volume, decreased 2.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 2 percent compared with the previous week. The seasonally adjusted Purchase Index increased 1 percent from one week earlier. The unadjusted Purchase Index increased 1 percent compared with the previous week and was 7 percent higher than the same week one year ago.

The Refinance Index decreased 5 percent from the previous week and was 63 percent higher than the same week one year ago.

Existing-Home Sales Increased to 4.26 million SAAR in February, But Down 1.16% YoY (M2 Money Printing Isn’t Helping)

Existing-home sales rose in February, according to the National Association of REALTORS®. For both monthly and year-over-year sales, two major U.S. regions experienced growth, one region remained stable and the other registered a decline.

Total existing-home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – progressed 4.2% from January to a seasonally adjusted annual rate of 4.26 million in February. Year-over-year, sales slid 1.2% (down from 4.31 million in February 2024).

But Fed M2 Money printing isn’t helping existing home sales of a YoY basis!

The Empire Strikes Out! NY’s Empire State Activity Survey Drops To -19.30 (Biden Hangover)

The Imperial March from Star Wars should have been the theme for Bidenomics, the top-down government-directed economy (mainly to political donors). It will take a while for the economy to recover from its addiction to Federal government spending.

Speaking of The Empire, the New York Fed’s Empire State business activity survey declined to -19.30. Would Jerome Powell and The Fed have cut rates had they known about the Empire activity survey yesterday?

Emperor Palpatine. Aka, 10% Joe.

Keep On Printing! Mortgage Applications Decreased 6.2 Percent From Previous Week

Keep on printing!

Mortgage applications decreased 6.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 14, 2025.

The Market Composite Index, a measure of mortgage loan application volume, decreased 6.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 6 percent compared with the previous week. The seasonally adjusted Purchase Index increased 0.1 percent from one week earlier. The unadjusted Purchase Index increased 1 percent compared with the previous week and was 6 percent higher than the same week one year ago.

The Refinance Index decreased 13 percent from the previous week and was 70 percent higher than the same week one year ago.

Mortgage rates increased for the first time in nine weeks, with the 30-year fixed rate rising to 6.72 percent. This increase in rates led to a decrease in refinance volume. However, purchase application volume inched up to its highest level in six weeks, led by a 3 percent increase in FHA purchase applications. Overall, purchase application volume is up 6 percent compared to last year at this time. Growing inventories of homes on the market and steadier mortgage rates are supporting homebuying activity thus far this spring.

Keep on printing!