Alarm! Fed’s Bullard Says US Recession Fears Overblown With Consumers Healthy (My Response In One Chart: REAL Average Wage Growth At -3.34% YoY, Real GDP Growth At … 0%)

No problemo, says James “Bully” Bullard, President of the St Louis Federal Reserve. Bullard said that US recession fears are overblown with consumers “healthy.”

Really Jim?

Inflation is so bad they REAL average hourly earnings growth keeps falling and is now -3.34% YoY.

Apparently, real GDP growth of ZERO doesn’t bother Bullard either.

Apparently, we are still Under The Thumb of The Federal Reserve.

Weekend Update! Fed Quantitative Frightening, Growing Recession Likelihood, Mortgage Rates And Gasoline Prices Drop Slightly (Out Of Time?)

The US economy is out of time.

As a recession approaches, we are seeing the WIRP implied Fed o/n rate (green line) declining. And with The Fed chickening-out, we saw a surge in equities (NASDAQ composite index in blue).

Gasoline prices are falling too (orange line), but due to rising global economic slowdown. But notice that The Fed’s balance sheet (yellow line) is still growing despite repeated signals that Covid stimulus would be removed (I call this Quantitative Frightening).

As I mentioned above, The Fed has stopped trimming their balance sheet despite signals to the market of getting rid of the Covid stimulus. As Billy Preston sang, “Nothing From Nothing.”

The Atlanta Fed GDPNow Q2 forecast is for … 0% GDP growth despite the massive monetary stimulus and fiscal stimulus from Biden/Pelosi/Schumer.

And yes, the S&P 500 has officially entered a bear market under the leadership of Joe “The Bear” Biden.

So, Biden’s economic agenda (read, just spend more money and inflation declines?) is failing. Hence, The Fed is backing off a bit helping to drive up stock prices.

US markets are addicted to gov.

Four Horsemen! US Consumer Sentiment Plunges To Lowest Level In History (Home Buying Sentiment Falls To Lowest Since 1982) As Inflation And Home Price Growth Rage

What a legacy for Biden/Pelosi/Schumer/Powell, the four horsemen of the inflation apocalypse.

As inflation soars, the University of Michigan Consumer Sentiment index plunged to its lowest level in history.

None of the contributions to consumer sentiment are positive.

The good news? The University of Michigan Buying Conditions for housing only fell to its lowest level since 1982.

Speaking of housing, more than 8 million Americans are late on rent as prices increase.

The four horsemen of the inflation apocalypse.

Slippin’ Into Darkness! US Mortgage Rates Decline Slightly As Recession Probability Spikes (Will Fed U-turn From Inflation Fighting To Recession Fighting?)

Slippin’ Into Darkness!

Despite what Biden and his muppets say, there is a good chance that the US will slip into recession over the next 24 months. And with that, we are seeing a slight drop in US mortgage rates.

Inflation is surging, and The Fed seems intent on “inflation fighting” but may have to pause that fight the impending recession. This is called a “U-turn” although Powell didn’t mention that is his testimony yesterday.

According to Mortgage News Daily, the 30-year fixed dropped below 6% to 5.88%.

Europe is signaling their u-turn to recession fighting as 10-year sovereign yield have dropped over 10 basis points this morning. Australia and New Zealand are dropping hard as well.

Here is the Federal Reserve’s open market committee deciding on the direction of interest rates … inflation fighting or recession fighting?

Hot, Hot, Hot! Mortgage Purchase Applications UP 6% WoW, Refi Applications DOWN -3.1% WoW As Fed Keeps Massive Covid Stimulus In Place (AEI Home Price Index UP 17% YoY In May)

Although mortgage rates have been rising quite fast, The Fed’s balance sheet is only being reduced quite slowly, leading to a continuation of the hot, hot, hot housing market.

But the expectation of Fed rate hikes is causing mortgage rates to soar and borrowers are trying to get buy housing before The Fed chokes off rates.

Mortgage applications increased 4.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 17, 2022.

The seasonally adjusted Purchase Index increased 8 percent from one week earlier. The unadjusted Purchase Index increased 6 percent compared with the previous week and was 10 percent lower than the same week one year ago.

The Refinance Index decreased 3 percent from the previous week and was 77 percent lower than the same week one year ago.

The American Enterprise Institute (AEI) national home price index for May 2022 averaged 17.0%, down from 17.5% a month ago but up from 15.3% a year ago.

So, the housing market remains hot, hot, hot but not mortgage refi applications. But Powell and Company will likely choke-off purchase applications as well.

WTI Crude Oil Futures Breaks $110 Barrier As Crack Spread UP 535% Under Biden (Diesel Fuel UP 121%)

The US is a movin’ on up to the high side … of energy prices.

Today, WTI crude oil futures broke through the $110 barrier.

The WTI Crude crack spread, the differential between the price of crude oil and petroleum products extracted from it, is up 535% under President “I HATE OIL!” Biden and diesel fuel is up 121%.

WTI crude is up 1% today.

“Crack? I thought crack was something that Hunter did!” – Joe Biden

Mr Freeze! Existing Home Sales Drop -3.39% MoM In May, Median Price Growth At 14.8% YoY, Inventory Rises Slightly As Fed Stimulus Continues

Rising energy prices, rising home prices, rising mortgage rates, declining hope.

But as The Federal Reserve begins to withdraw it Covid stimulus, existing home sales declined -3.39% in May from April.

But like Covid itself, The Fed’s outrageous monetary stimulus is still in place, helping caused median home prices to rise 14.8% YoY. And inventory for sale is rising, but still remains low.

Jointly, Treasury Secretary Yellen and Fed Chair Powell are “Mr Freeze.”

Winter Is Coming 2! Mortgage Rates Hit 6%, Gasoline Prices Hit $5, Inflation Continues To Rage (Taylor Rule Implies 22.10% Target Rate, Only At 1.75%)

Where is Stanford’s John Taylor when we need him?

Even since the housing bubble burst and ensuing financial crisis on 2007-2008, The Federal Reserve under Ben “The Savior!” Bernanke, Janet Yellen and Jerome Powell let their zero/low interest rate policies be too low for too long that anyone with common sense knew would lead to serious problems when The Fed was forced (this time by inflation) to end the massive OVER monetary stimulus. We are now living through The Great Reset of the US economy.

Since Biden was sworn-in as President (or El Presidente) in January 2021, 30-year mortgage rates are up 108% to 6%, regular gasoline prices are up 108% to $5 a gallon nationally. Inflation is up to 8.6% YoY.

Bernanke, Yellen and Powell did not follow any rule per se, just a “seat of the pants” panic button approach. Using the Mankiw specification of the Taylor Rule model, the Fed Funds target rate should be 13.25% based on CORE PCE. Notice starting in 2014, The TR suggested target rate started to be higher than the actual Fed target rate. And since the Covid monetary blast of 2020, the gap between the Taylor Rule and Fed target rate (red area) has grown to near the highest level in history. Even now Mohamed A. El-Erian, Chief Economic Advisor at Allianz, is starting to admit that The Fed’s ZIRP policies are beginning to hurt.

But if we use total inflation rather than core inflation, the measure that picks up the actual pain that Americans are feeling from rising gasoline prices and mortgage rate, we get a Fed Target rate of 22.10%. Since The Fed’s current target rate is only 1.75%, The Fed has “Room To Move.”

And in a painful. bad way.

Bernanke, Yellen and Powell must think that The Taylor Rule is the New Jersey ham pork roll.

US Recession Odds At 71.7%, NASDAQ Tanks -4%, Fed Dots Plot Sags (I Couldn’t Sleep At All Last Night)

I couldn’t sleep at all last night … after The Fed cranked up their target rate 75 basis points.

The odds of a recession grew to 71.7% as The Fed hikes rates.

Over the next 24 months, the probability of a US recession is 98.5%.

The NASDAQ index tanked -4% today on the fallout from yesterday’s Fed actions.

Do I detect a trend in The Fed’s latest Dot Plot??

So, will The Fed continue to go head-over-heels on monetary tightening?

Fed Raises Target Rate By 75 Basis Points To 1.75% Despite Negative Q2 GDP Forecast

Sometimes I wonder if The Federal Reserve Board of Governors pays attention to economic news. For example, the Atlanta Fed’s GDPNow forecast for Q2 was released today at -0.002%. So what does The Fed do? They raised their target rate by 75 basis points to 1.75%.

Apparently, The Fed has chosen to fight inflation rather than help the economy.

The Fed has chosen poorly.