The Perils Of Fed Tightening In One Chart (Or Sweet Home DC!) Treasury Yield Curve Remains In Reversion And Stock Market Declining As Fed Reduces Money Supply Growth

Sweet home DC! At least for the ruling elites. For the rest of us mortals, Bidenflation is crushing our finances.

To combat Bidenflation, The Fed has signaled that they will continue to raise interest rates. But at what cost?

(Bloomberg) — The world’s leading central banks are finally pushing their interest rates into restrictive territory, causing fears of overkill in financial markets and stoking chatter that policymakers may need to pivot at some point.

And with the withdrawal of monetary stimulus comes the slowdown of US M2 Money growth (green line). And with that slowdown, we see a declining stock market and an inverted US Treasury yield curve.

Of course, Biden could reverse his green energy agenda and allow for oil and natural gas exploration … again. Or begin building nuclear power plants again. But nooooo.

Another peril is rising mortgage rates.

Here is the S&P 500 against global liquidity.

Speaking of Freddie King, here is Joe Biden’s favorite song: hideaway.

US Mortgage Rates Rise To 7.04% As Housing Market Chills (WTI Crude And Gasoline Prices On The Rise Again As Biden Fails To Convince OPEC To Pump More Oil)

Under “Nuclear Joe” Biden, the US is truly the land of confusion.

As the Biden Administration touts “affordable housing,” we are seeing the 30-year mortgage rate rise above 7% as The Federal Reserve fights inflation … caused by the Biden Administration. Meanwhile, US home prices are falling.

The Biden Administration launched a war on domestic energy production, resulting in crude oil prices rising 74% under Biden and regular gasoline prices rising 62.4%.

As Biden pleaded with OPEC to increase oil production, he was embarrassingly rejected. Hence, West Texas Crude Oil prices have begun to rise again along with gasoline prices (pink box).

How about unemployment and the 10yr-2yr yield curve?

US Economy Adds 263K Jobs In September, REAL Average Hourly Earnings Growth At -3.06% (100 Million NOT In Labor Force)

Yesterday, I told my family “The good news is that Rotolo’s Pizza tastes even better reheated in the morning. The bad news? I ate the only two piece left.”

Which brings me to the September jobs report. The good news is that 263k jobs were added to the US economy. That means 10,521k jobs have been added in the 21 months under Biden! (Bear in mind that 12,100k jobs were added in the 7 months under Trump following the Covid economic shutdown, yet no media outlet trumpeted that accomplishment).

The bad news? While nominal average hourly earnings grew by 5% YoY, when I subtract Bidenflation from that number I get -3.06% growth. Or should I say that REAL wages are shrinking under Biden.

Now for the “Biden Miracle” of jobs being added. Here is a chart of NFP jobs added (white line) against M2 Money and headline inflation. Both The Fed and the Federal government pumped trillions into the economy leading to the highest inflation rate in 40 years. Once governments stopped with their Covid shutdown nonsense, jobs would return regardless of who was President. BUT Federal spending and Fed money printing went off the rails in early 2020.

As Paul Harvey used to say, “Here is the rest of the story.” Labor force participation fell in September and the U-3 unemployment rate fell slightly to 3.5%.

But labor force dropouts increased leading U-3 unemployment to decline. The number of people NOT in the labor force grew to nearly 100 million. Nothing has been the same since Covid.

So what will The Fed do? According to Fed Funds Futures data (WIRP), The Fed will keep raising rates until March ’23 then slowly start lowering interest rates again.

And with that “positive” jobs report, The Dow is down almost -500 points and the NASDAQ is down over -3%.

And with Fed tightening, we are seeing a collapse in M2 money supply.