Confounded Interest – Anthony B. Sanders
Financial Markets And Real Estate
Thunderstruck! Interest rates should be thunderstruck when realization dawns that the recend BLS jobs reporr was grossly mismeasured.
National unemployment was 8.7% in this month’s Rasmussen Reports Real Unemployment and significantly more than double the 4.1% rate officially reported by the Bureau of Labor Statistics today.
Mortgage rates are rising again with Friday’s surprising jobs report. But as it just a false election report. If Rasmussen is correct, mortgage rates should FALL again.
It turns out that Powell’s “emergency” 50bps rate cut was – drumroll – another major policy mistake by the Fed. Or it is Presidential election interference by The Biden/Harris Administration giving Cacklin’ Kamala as talking point?
Moments ago, the BLS reported that at a time when prevailing consensus was for jobs to continue their recent downward slide sparked by the near-record annual jobs revision and several months of downbeat jobs reports, in September the US unexpectedly added a whopping 254K jobs, the biggest monthly increase since March…
… and above the highest estimate (which as noted last night was from Jefferies at 220K). In fact, the number was a 4-sigma beat to the median estimate!
There’s more: unlike previous months where we saw repeat downward job revisions, the BLS said that both prior months were revised up, to wit: the change in total nonfarm payroll employment for July was revised up by 55,000, from +89,000 to +144,000, and the change for August was revised up by 17,000, from +142,000 to +159,000. With these revisions, employment in July and August combined is 72,000 higher than previously reported.
Some context: as UBS notes, the moving six-month average on nonfarm payrolls is 167k. The estimate is that 150k is about consistent with a return of the economy to trend growth. Which means that inflation is about to come back with a vengeance, just as the Fed launches its easing cycle.
Remarkably, while payrolls jumped by the most in half a year, the number of employed people also surged, rising by a whopping 430K, also the biggest one-month jump since March.
It wasn’t just the payrolls, however, which came in far stronger than estimates: the unemployment rate also came in stronger than expected, and thanks to the jump in employed workers coupled with the decline in unemployed workers (from 7.115MM to 6.834MM), it dropped from 4.2% to 4.1% (and down from 4.3% two months ago which spared the entire recession panic).
Among the major worker groups, the unemployment rate for adult men (3.7 percent) decreased in September. The jobless rates for adult women (3.6 percent), teenagers (14.3 percent), Whites (3.6 percent), Blacks (5.7 percent), Asians (4.1 percent), and Hispanics (5.1 percent) showed little or no change over the month.
And here is the rub, because in a vacuum the super strong jobs numbers would have been fantastic, the only issue is that the September blowout comes as the Fed launches an easing cycle and as wages are once again rising as we have warned for the past 3 months. Indeed, in September, the average hourly earnings rose 0.4% sequentially, beating the estimate of 0.3%, while on an annual basis, wage growth was 4.0%, up from an upward revised 3.9% and beating the 3.8% estimate.
One note here: the average workweek for all employees edged down by 0.1 hour to 34.2 hours in September, which means the hourly earnings increase is not “pure” but rather a function of denominator adjustments. In manufacturing, the average workweek was unchanged at 40.0 hours, and overtime edged down by 0.1 hour to 2.9 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls remained at 33.7 hours.
What sector had the biggest growth? UNPRODUCTIVE government workers! A record 785,000 government workers were added in September, pushing total govt workers also to a new record high.
The Biden/Harris Administration has given away billions of dollars to foreign nations (like Ukraine) and illegal immigrants so far this year,
– $24,400,000,000 to Ukraine.
– $11,300,000,000 to Israel.
– $1,950,000,000 to Ethiopia.
– $1,600,000,000 to Jordan.
– $1,400,000,000 to Egypt.
– $1,100,000,000 to Afghanistan.
– $1,100,000,000 to Somalia.
– $1,000,000,000 to Yemen.
– $987,000,000 to Congo.
– $896,000,000 to Syria.
– $9,000 per illegal immigrant that has entered the U.S.
And claim that FEMA has no money left for Hurricane Helene victims who have received only $750 per person. So I have plenty of reasons to have no trust or confidence in the Biden/Harris Mal-administration.
The US has fallen into a Ring of Fire under Biden/Harris horrid economic policiies.
But Biden/Harris had help from their deep state partner, The Federal Reserve.
The purchasung power of the US dollar has fallen by a whopping -20% under Biden/Harris. No wonder Harris is afraid to talk to reporters about her plans.
The children in Congress went on a spending spree as a result of COVID resulting in record inflation.
The deep state’s financing arm, The Federal Reserve, certainly helped create inflation by ramping up M2 Money supply around Covid.
Of course, children in Congress and Harris/Walz will use ANY excuse to tax and spend (and borrow/spend). The most recent inflation report had CPI growng at 2.5% YoY resulting in a further decline of purchasing power of the US dollar of -2.5% YoY.
Harris/Walz fully intend to keep shoveling TRILLIONS into green energy transformation and supporting illegal immigrants.
Washington DC Saturday Night! Or at least Monday night. 13 will get you 20, unless you are in Washington DC.
S&P Global US Manufacturing PMI 47.0 (48.6 exp, 47.9 prior) – lowest since June 2023.
Gold continues to soar!
No, not cold sores, GOLD SOARS!
Like in the film The Poseidon Adventure, we are living in “The Morning After.”
When The Fed lowered their target rate by 50 basis points yesterday, we saw the 2 year Trreasury rate take a plunge.
With a declining 2-year Treasury yield, we see the 10Y-2Y yield curve going positive.
Of course, mortgage rates are falling with declines in the Fed Funds target rate.
Rates will continue to decline.
If HarrsWalz are elected in two months, we will see a repeat of The Poseidon Adventure. Call it the Harris/Walz Adventure!
The US is on a highway to hell!
The US Federal government just hit a dubious landmark — $1.6 TRILLION in interest payments expected by year end. It is already at $1.2 TRILLION.
Biden/Harris’s spending spree (which Harris wants to continue).
Interest payments will crowd out other expenditures, like Social Security, Defense and Medicare.
Eternal deficits are not sustainable, especially since much of government spending rerpresents payoffs to political donors.
Interest on the federal debt this FY is equal to about half of all personal income taxes collected – we’re a nation of debt slaves.
Yes, under Biden/Harris, the US is on a HIGHWAY TO HELL.
08/24/2024•Mises Wire•Daniel Lacalle
These are the essential pillars of “21st century socialism” and the radical left Peronism that obliterated Argentina. These are also the main elements of the economic plan presented by Kamala Harris and the Democratic Party. Undoubtedly, this is the most radical socialist economic plan ever announced by the Democrats.
According to the Committee for a Responsible Federal Budget (CRFB), Harris’s proposals will cost $1.95 trillion over 10 years. However, it emphasizes that if certain measures become permanent, this figure could increase to $2.25 trillion.
The Harris campaign has stated that these costs will be offset by a classic excuse of socialism in any election: “higher taxes on corporations and high earners.” This is, obviously, ludicrous, because there is no revenue measure that will cover the already bloated $2 trillion annual deficit and an added $2 trillion. The mantra of “higher taxes for the rich” always means higher taxes and more inflation, a hidden tax, for you.
The Congressional Budget Office (CBO) has already warned of the fiscal disaster of the United States, with an annual deficit of 6% of GDP. Despite not accounting for a recession and projecting record tax revenues from 2024 to 2034, the CBO predicts an explosion in the budget deficit from $1.9 trillion to $2.8 trillion by 2034, even before factoring in Harris’s new spending plan. This means that the adjusted deficit will rise above 6.9 percent of GDP by 2034, almost twice the average of 3.7 percent over the previous 50 years.
Following the Harris plan, the United States public debt will likely increase by $24 trillion in a decade. As I have explained, there is no set of revenue measures that can bring $2 trillion per year in additional tax receipts, and tax hikes will harm both investment and growth.
An economy that generates an annual deficit of 6 percent of GDP to achieve a mere 2 percent annual growth is already on a dangerous path, and Harris’ plan would make it even worse.
Kamala Harris promises to cut inflation by spending and printing more money, reducing competition, and attacking businesses. It has never worked and never will because it is upside-down economics. Welcome to the US “Peronism.”.
Imagine all those United States citizens who have escaped Latin American or European economies impoverished by interventionism to find a better opportunity in the United States only to find that the same policies will be implemented by Harris.
The narrative of price gouging and greedflation is simply false. In 2023, profit margins in the grocery industry hit the lowest level since 2019, at 1.6%, according to the IMF. Corporations, even if they were stupid and reckless, cannot make all prices rise constantly. Competition would eat away at their market share; newcomers would eliminate them, and aggregate prices would fall. Furthermore, stores and businesses cannot make aggregate prices soar, maintain the increase, and consolidate it, which is the measure of inflation (CPI) we read every month. The only thing that can make all prices rise and continue increasing at a slower pace is printing money and eroding the purchasing power of the currency.
The only thing that can make aggregate prices rise constantly is the destruction of the purchasing power of the currency, which comes from massive government spending and printing currency to disguise fiscal imbalances.
Kamala Harris and her team know that their spending plan will make the national debt soar and that price controls do not reduce prices. In fact, these should not be called “price controls” but “limits to competition.” If corporations were the cause of inflation and price controls were the solution, Peronist Argentina would have enjoyed the lowest inflation in the world in the past decades.
Harris’ proposals to forgive debt are profoundly anti-social. They do not forgive any debt; they just add it to the national debt and make you pay for it. This enormous increase in public debt will be a burden for every American, particularly the poorest, with persistent inflation and lower real wages. US citizens have already endured negative real wage growth since January 2021, when Biden took office, according to the Federal reserve of St Louis. Expect worse.
Why does Harris promote the same policies that have failed everywhere? Promising free stuff and blaming others for the negative consequences is the defining strategy of socialist politicians.
Are you surprised to see how Germany, France, and other historically rich nations slump into stagnation, high debt, persistent inflation, enormous taxes, and the destruction of the middle class? Those policies are what Harris is promising. Who benefits? The vast government and its surrounding corporations reap the benefits.
Many people hold the belief that a nation cannot be considered socialist if it contains private companies. It makes no sense. State control does not limit itself to capital ownership but also to the imposition of increasingly restrictive laws, regulations, and confiscatory taxes. In fact, the government likes to absorb most of the wealth created by the private sector without the inconvenience of managing the businesses. Huerta de Soto defines socialism as “any system of institutional, methodical aggression against the free exercise of entrepreneurship” and that is precisely what Harris promises.
Higher taxes and more debt.
The government will print money to provide subsidies in a currency that is constantly losing value. It will blame stores and businesses for inflation. Interventionist policies will continue to erode the private sector. And they will repeat.
The makers of these policies are aware that they will negatively impact the economy, yet they will also engender a substantial number of enslaved citizens who rely on the government and must abide by its decisions. Voters see an alleged tsunami of free money but ignore the fact that they will pay for it through higher inflation, lower real wages, and diminishing opportunities for small businesses and families.
Yes, under Obama/Biden, then Biden/Harris,
The Harris team believes deficits do not matter and that the Federal Reserve can always disguise any budget imbalance. However, cracks have already appeared. Persistent inflation is the consequence of years of excessive spending and monetization. The next step is the risk of losing the US dollar as the world reserve currency when the world stops accepting the ever-increasing debt.
Under Obama/Biden and Biden/Harris, we have seen massive money printing and devaluation of the US Dollar. Trump/Pence too, but they were nailed with Covid. And the Democrat shut down off schools and local economies.
But all Harris (America’s Eva Peron) wants to do is dance. And not answer serious questions.
Big bubbles! US home pricest hit an all-time high as The Fed keeps its foot on the monetary gas pedal following the Covid economic shutdown in 2020.
Home prices in America’s 20 largest cities rose for the 16th straight month in June (according to the latest data from S&P CoreLogic – Case Shiller – data today), up 0.42% MoM (hotter than expected and accelerating from May). On a YoY basis, prices rose 6.47%, but notably that is the third straight monthly slowdown in the pace of price appreciation…
Overall, US home prices reached a new record high in June (as median new home prices continued to tread water)…
Home prices continue to track Fed Reserves closely, but a turning point may come soon…
Given the smoothing and heavy lag in the Case-Shiller data, it’s hard to find a causal relationship between prices and mortgage rates…
But, with prices reaccelerating and mortgage rates already back below 7.00% – in anticipation of The Fed – WTF does Powell think is going to happen when he actually starts cutting with prices at these record highs.
The Freddie Mac HP index shows the variation in home price growth. New Jersey coastal towns of Atlantic City and Ocean City grew at 10% YoY while Lake Charles LA declined by -2% YoY.
After the unoriginal Vice President Kamala Harris stole former President Trump’s proposed ‘no tax on tips’ policy, she’s at it again with yet another recycled idea. This time, she’s echoing President Biden’s actions and rhetoric to crack down on sky-high food prices by proposing the first-ever federal ban on “corporate price-gouging in the food and grocery industries”—a move that reeks of socialism.
“There’s a big difference between fair pricing in competitive markets, and excessive prices unrelated to the costs of doing business,” the Harris campaign wrote in a statement, adding, “Americans can see that difference in their grocery bills.”
The Harris campaign said the vice president will unveil the new federal proposed ban on Friday at a campaign rally in the battleground state of North Carolina as part of a broader economic policy platform. The proposal will ensure food companies can’t exploit consumers to increase profits, according to CBS News, citing Harris-Walz campaign officials.
Harris’ policy speech will also call on the Federal Trade Commission and state attorneys to examine corporations violating price-fixing rules. Her remarks are expected to echo Biden’s actions and rhetoric, especially with his war against meat processing companies that he alleges are responsible for higher burger prices at the supermarket.
VP Harris’ campaign argues that lowering Americans’ costs is a function of socialist-style price controls. Yet this is the quickest way to understand that Harris’ economic team has no actual understanding of inflation.
Heritage Foundation’s EJ Antoni explained, “Here’s your “price gouging” narrative: average costs paid by businesses have risen just as much as costs charged to consumers – if businesses are being “greedy,” they’re doing it all wrong…”
Instead of curbing out-of-control government spending, which debt rises $1 trillion every 100 days, and understanding that monetary inflation driven by the Federal Reserve’s money creation is the root cause of inflation, Harris deflects the actual problem: The Fed. She instead goes after big corporations for ‘illegal price gouging.’
Here’s a snippet of Money Metals Midweek Memo’s Mike Maharrey commenting on Harris’ proposed price-fixing ban on big food companies:
The second “dumb” idea Maharrey discussed came from Vice President Kamala Harris, who was recently asked about her plan to combat inflation. Maharrey criticized her response, which he described as “word salad,” pointing out that she merely acknowledged the problem without offering any concrete solutions. Instead, she promised to take on “big corporations” engaging in “illegal price gouging,” corporate landlords, and big pharma.
Maharrey argued that Harris’s approach misses the root cause of inflation, which is monetary inflation driven by the Federal Reserve’s money creation. He cited the July budget deficit data, revealing that the Biden administration spent another $574 billion in just one month, running a $243 billion deficit. Maharrey emphasized that inflation is not caused by corporate greed but by the government’s excessive spending and borrowing.
“Price inflation is a symptom of monetary inflation, which has everything to do with money creation by the Federal Reserve,” Maharrey explained. He warned that Harris’s proposed policies, including price controls, would likely lead to shortages and exacerbate the problem rather than solve it.
Kamalanomics = ‘communist economics’ as some X users describe…
“We are no longer talking about hypothetical communism, we are talking about two straight up communists who want to institute a federal price ban on food and a federal minimum wage that is going to make every corporation go out of business.
…
Voting for communism is not the solution to your precious feelings.”
Grocery stores have a 3-4% profit margin if they are lucky.
Freddie King said it best! Interest rates are goin’ down!
Yes. traders expect The Fed to cut their target rate from 5.50% (current rate) tp 4.297% by the December meeting. That is a whopping 120 basis points.
And expect another 100 basis points of cuts by the September 2025 Fed FOMC meeting. Down to 3.232%.
Mortgage rates will fall.
Like the Roman Empire. Et tu Kamala?
Confounded Interest - Anthony B. Sanders 
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