Confounded Interest – Anthony B. Sanders
Financial Markets And Real Estate
The Empire State Manufacturing Survey struck out in February.
The Empire State manufacturing survey was down -2.4 in February.
Note how expectations are always higher than realized figures.
The US Treasury 10Y-2Y yield curve remains inverted, now for 420 straight days.
Wake Joe up before the economy go goes … down any further.
Mortgage applications decreased 2.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending February 9, 2024.
The Market Composite Index, a measure of mortgage loan application volume, decreased 2.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 2 percent compared with the previous week. The seasonally adjusted Purchase Index decreased 3 percent from one week earlier. The unadjusted Purchase Index increased 4 percent compared with the previous week and was 12 percent lower than the same week one year ago.
The Refinance Index decreased 2 percent from the previous week and was 12 percent higher than the same week one year ago.
Mortgage rates (30Y fixed) are up 151% under Bidenomics.
As soon as Joe Biden started bragging on his low-energy campaign trail about inflation declining I knew it would go up. And it is increasing again.
Shelter cost (aka, housing) is still growing.
Expectations were for a big drop in the YoY consumer price index (from +3.4% to +2.9%) but instead it surprised to the upside (just as we warned) with a +3.1% YoY print for headline CPI (spoiling the sub-3% partiers). Consumer prices rose 0.3% MoM (more than the 0.2% exp) but the headline did decline from +3.4% to +3.1% YoY…
Source: Bloomberg
Core CPI fell below 4.00% YoY for the first time since May 2021, but the +3.86% YoY print was hitter than the 3.7% exp (with prices rising 0.4% MoM – the biggest jump since April 2023)…
CPI Core: The index for all items less food and energy rose 0.4 percent in January.
Core Service inflation picked up MoM…
Under the hood, food and Energy services costs jumped MoM along with transportation services…
Here’s the biggest component upside surprises…
And one step deeper – the so-called SuperCore: Core CPI Services Ex-Shelter index – soared 0.7% MoM (the biggest jump since Sept 2022…
… driving the YoY change up to +4.4% – the hottest since May 2023….
Finally, as a reminder, lower inflation does not mean lower prices.
The actual index of consumer prices hit a new record high this month – and is up over 18% since President Biden’s term began (it was up 8% over President Trump’s full four year term).
And it gets worse…
And on the higher than expected inflation report, we are still seeing bets on Fed Funds rate falling from 5.50% to 4.233% over the coming year.
The re-accleration of inflation means wage growth is back in the red relative to prices.
As some fans celebrate the Kansas City Chiefs Superbowl victory over the San Francisco 49ers (the game was so much like bread and circuses from the Roman Empire except for who is being thrown to the lions), we have been distracted from the horrible state of the US economy. Just review that horrible December Jobs report where the US actually LOST full-time jobs, replaced by part-time jobs.
And with the God awful jobs report, serious delinquencies on auto loans is SOARING. To the highest rate since The Great Recession.
The Producers Price Index is deflating.
At least inflation is cooling down, but still higher than under he that can’t be mentioned on The View, Rachel Maddow or Morning Joe, Donald Trump, the Left’s Voldemort.
I admit, Travis Kelce should have been benched for shoving Head Coach Andy Reid during The Super Bowl. “Damn it, Taylor (Swift) flew here from Tokyo to watch me play and you aren’t throwing enough to me!” Welcome Travis Kelce to the elitist 1% who think the rules don’t apply to them. And your 2.0 GPA at University of Cincinnati certainly qualifies you to opine on the economy … on The View or MSNBC.
As Commander Cody sang, “We have too much debt.”
“The prices of some things will decline. Others will go up. But we don’t expect to see a decline in the overall price level,” said Federal Reserve Chair Jerome Powell, Nvidia stock hitting new highs, its market cap soaring to $1.78trln.
“That doesn’t tend to happen in economies, except in very negative circumstances. What you will see, though, is inflation coming down,” explained the Fed Chairman, the average American neither understanding nor caring about the nuance.
Bitcoin raced upward, its market cap roughly half of Nvidia. The market now values this remarkable maker of the semiconductor chips necessary to create an artificial life form at roughly twice the value of the most secure network in human history.
Fidelity added Bitcoin to a model portfolio, spurring investors to consider what happens to the price of a digital asset, whose supply is fixed at 21mm for all eternity, once passive investment products start really stacking Satoshis.
You see, the supply of everything in the universe expands as its price increases, but no matter how high the price of Bitcoin goes, its pre-defined pace of production will only ever decrease.
Nvidia (or any other stock) can be created at the click of a new issuance, or an executive equity option grant for that matter. The average investor neither understands this yet, nor cares for the nuance.
“I would say this. In the long run, the US federal government is on an unsustainable fiscal path,” said Powell, pointing out one of the most important top-down investment themes of the coming decade.
“And that just means that the debt is growing faster than the economy. So, it is unsustainable. I don’t think that’s at all controversial. And I think we know that we have to get back on a sustainable fiscal path. And I think you’re starting to hear now from people in the elected branches who can make that happen,” he added, without naming names, because there really aren’t any.
Under Brainless Joe and Dr. Janet Yellen, the US economy has experienced real GDP growth YoY only once (Q1 2021). Otherwise, debt growth YoY has always exceeded real GDP growth under Biden.
I admit I am rooting for the SF 49ers over the Kansas City Swifties. At least we won’t have to listen to Brainless Biden ramble on during the Super Bowl, unless they issue a pre-recorded propaganda piece for half time similar to the John Gill character from Star Trek.
Blank stares matter should be Biden’s new campaign slogan!
I watched Tucker Carlson’s interview with Russian President Vladimir Putin. Putin is an amazing contrast to our 81-year old President with dementia who can barely speak while Putin was articulate. Not at all what Hillary Clinton was raving about (she is still furious about losing to Trump after losing to Obama). One thing that caught my attention was Putin talking about The Fed’s endless printing of money. Well, THAT is how the US grows GDP these days. Borrow and spend with the private sector as an after thought.
Let’s revisit the HORRIBLE jobs report from December. Not only were all job gains in the past year entirely thanks to part-time workers, but native-born workers plunged by a another whopping 560 thousand, bringing the two-month total drop to just under 2 million. This meant that not only has all job creation in the past 4 years been exclusively for foreign-born workers, but there has been zero job-creation for native-born American workers since July 2018 (don’t believe us? go ahead and check the data directly from the Fed).
So, the Federal government is borrowing trillions of dollars so that 1) part-time jobs are created and 2) foreign born workers have jobs, but not native born Americans?? (Blogger Paul Krugman thinks that immigration will add $7 trillion in real GDP over the next 10 years and this will save Social Security and Medicare. Huh? I admit, millions of immigrants will spend money, but many will be on the Federal and State doles, so its tax dollars going to immigrants to spend.) This seems like Obama/Biden are using Cloward-Piven tactics to overwhelm Social Security, Medicare and other social services, NOT grow the economy as Krugman projects.
Typically, economists look at measures like M2 Money Velocity (Real GDP/M2). M2 Money Velocity is rising … but still remains below where it was pre-Covid under Donald Trump.
But a more relevant velocity is the velocity of DEBT. As in GDP/Debt. Under Biden, the US has added almost $6.5 TRILLION in debt while real GDP has risen by only $1.949 trillion. That amounts to a DEBT velocity of 0.30. Meaning that the US gets an anemic $30 in real GDP for every $100 in additional Federal debt.
Yes, the US economy is broken and requires endless money printing and debt financing to pay for endless wars and now millions of illegal immigrants getting on “the dole.” Then we have Biden’s forgiving student loan debt (inappropriately) and now Big Tech wants $7 trillion to develop AI (in a normal economy, tech companies would develop AI themselves, but under Obama/Biden, we are not in a normal economy).
Here is Daddy (Ukraine) Warbucks Biden with his biting dog and daughter Ashey.
Biden is apparently too demented to be prosecuted for illegally sharing top-secret documents, but is able to be President?? And people wonder why Bitcoin is so popular??
The net inflow yesterday meant that 8,698 BTC were taken off the market and put into cold storage.
“We think bitcoin could be one of the most talked about brands on Wall Street in the next decade,” Mike Willis, CEO and founder of ONEFUND, told CoinDesk.
“You’re at the beginning of the ‘bitcoin era’ on Wall Street.” Although remiss to offer a price prediction, Willis said he thinks bitcoin could easily catch up to gold’s market cap.
That has pushed the total net inflow into spot bitcoin ETFs up to $2.23 Billion…
IBIT also became the first ETF to exceed GBTC’s daily trading volume. However, the total trading volume of all 11 spot Bitcoin ETFs fell below $1 billion for the first time since they launched.
The result of all this is that bitcoin prices have soared back up near $48,000, erasing all the post-launch ‘sell the news’ losses…
Interestingly, this is a seasonally positive period for crypto:
“The next few days are of paramount statistical importance as bitcoin tends to rally by +11% around Chinese New Year, starting on February 10 (Saturday),” Markus Thielen, head of research at Matrixport and founder of 10x Research.
“During the last 9 years, Bitcoin has been up every time traders would have bought bitcoin 3 days before and sold it ten days after the start of the Chinese New Year.”
Coinbase just issued a report that suggests Bitcoin spot ETF activity accounts for around 10-15% of total bitcoin trading activity across centralized exchanges.
Smaller tokens such as Ether, Solana and Cardano also pushed upward…
As CoinTelegraph reports, Coinbase analysts say there have been more important crypto themes emerging in the aftermath of the spot Bitcoin ETF launches in the U.S., including the rising decentralized finance (DeFi) activity, which could “add meaningfully” to the value proposition for Ether.
Ethereum community member and investor Ryan Berckmans believes that Ethereum’s switch from a proof-of-work to a proof-of-stake consensus mechanism could drive ETH’s price to as high as $27,000 during the bull cycle.
“Bitcoin appears set to resume its march up after the Grayscale outflows finally tapered off,” said Caroline Mauron, co-founder of digital-asset derivatives liquidity provider Orbit Markets.
The “halving narrative” will gather momentum, potentially taking Bitcoin past $50,000 in the next few weeks, she said.
The quadrennial halving cuts the quantity of Bitcoin that miners receive for operating power-hungry computers that secure the network by solving complex puzzles.
Halving is key to capping the supply of Bitcoin at 21 million tokens. Rewards drop to 3.125 coins per block from 6.25 coins in the upcoming event.
Previous halving events “preceded strong bull runs,” a team including DBS Bank Ltd. Chief Economist Taimur Baig wrote in a note.
“There is a simple economic reason why prices should rise. As the reward for mining decreases, the price for mining output (namely Bitcoin) must increase to compensate and not trigger a withdrawal of computational resources by miners,” the team said.
With the growing demand from institutional investors, the diminishing supply could help BTC hit new market highs.
The US has gone full Kafka where no news is too insane. Maybe this should be Biden’s campaign slogan?
This reminds me of “The Human Farm” episode of Parks and Recreation.
USDA forecasts net farm income, a broad measure of profits, to plunge $39.8 billion, or 25.5%, to $116.1 billion in 2024. This follows a forecasted decrease of $29.7 billion, or 16%, from 2022 to $155.9 billion in 2023.
If the estimate holds, farmers face the largest income drop since 2006 and back-to-back years of financial pain.
“With this expected decline, net farm income in 2024 would be 1.7 percent below its 20-year average (2003–22) of $118.2 billion and 40.9 percent below the record high in 2022 in inflation-adjusted dollars,” USDA wrote in the report.
Simultaneously, farmers are witnessing a rapid decline in their leading role in the global grain market. Decades of corn export dominance were shredded by Brazil last year.
Bidenomics is failing blue-collar workers who put food on America’s table.
Food prices (CPI) are up 21% under listless, dementia Joe Biden.
I am surprised that Orin from Parks and Recreation hasn’t been appointed to Biden’s cabinet as Secretary of Agriculture.
The infamous jobs report from the BLS is like a scene from the film “Phantoms.” Where nothing is what is seems.
The cumulative number of jobs reported each month was 1,255,000 less than previously thought, with new seasonal and census data affecting total employment estimates, according to data from the BLS calculated by the Daily Caller News Foundation. The huge downward revisions are in spite of a 115,000 upward revision in December, the only month that saw an upward revision to the employment level in 2023.
The biggest revision was for March, which was revised down by a total of 266,000 jobs, followed by January at 234,000 and April at 205,000, according to the BLS. The lowest downward revision was in November, with only 2,000, followed by 11,000 in October.
“Revisions are a normal part of the reporting process, but large changes, or adjustments that consistently move in the same direction, are not normal,” E.J. Antoni, a research fellow at the Heritage Foundation’s Grover M. Hermann Center for the Federal Budget, told the Daily Caller News Foundation. “Instead, they’re indicative of something problematic with the BLS’ methodology. That can happen when market conditions change drastically enough to be outside of the assumptions used in their models.”
The revisions are due in part to an overestimate of the number of jobs in the U.S. economy in January 2023 at 155,007,000 instead of the revised 154,773,000, according to the BLS. The job level increased to a revised 157,347,000 by December, totaling an increase of 2,340,000 positions in the year.
The most recent jobs report in February also released an adjustment to the total jobs level, lowering March by 266,000 positions, according to the BLS. The jobs totals were also adjusted to recent census data, throwing off past estimates.
Recent years have not seen the same high downward revisions as 2023, with 2022 only seeing negative revisions in five months, equating to a downward revision of 66,000 for the year. March was the only month that was revised down in 2021, with the total number for the year being revised up by nearly 2 million as the country recovered from the COVID-19 pandemic.
Growth in government positions has bolstered recent job numbers, adding a total of 601,000 jobs to the U.S. economy in the past 12 months. The gains have led to an all-time record for government positions at 23,091,000, outdoing a surge in hiring from the 2010 census collections.
“When the economy was rapidly deteriorating at the onset of the Great Recession, the BLS repeatedly and consistently overestimated job levels, which then had to be revised down,” Antoni told the DCNF. “The worsening economic conditions fell outside of the assumptions used by the BLS statisticians, so the estimates became inaccurate. There could be similar problems today due to fallout from the government-imposed recession in 2020 because the labor market still hasn’t recovered.”
Biden is the Negan of economic growth.
I think the Biden Presidency is nicely summed-up by Biden confusing France’s President Macron with former French President Mitterand. Particularly since Mitterand died in 1996. Is Biden seeing dead people??
Anyway, the Biden economy and his Bidenomic strategy is based on massive debt expansion, both public and private debt. Household Debt reached $17.5 Trillion in Fourth Quarter; Delinquency Rates Rise
Credit card delinquecies (90+ days) rose to almost 10% in Q4 2023.
Credit card delinquencies surged more than 50% in 2023 as total consumer debt swelled to $17.5 trillion, the New York Federal Reserve reported Tuesday.
Debt that has transitioned into “serious delinquency,” or 90 days or more past due, increased across multiple categories during the year, but none more so than credit cards.
Rising credit card delinquencies combined with the worst job additions in January on record.
But at least the 10Y-2Y US Treasury yield curve is ALMOST flat (h
Huh?
Confounded Interest - Anthony B. Sanders 
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