A measure of U.S. manufacturing activity unexpectedly dropped in April to the lowest level since 2020 as growth in orders, production and employment softened.
The Institute for Supply Management’s gauge of factory activity fell to 55.4 last month from 57.1, according to data released Monday. The Manufacturing Prices index remained elevated.
As the 10-year Treasury yield tries to breech the 3% barrier.
And as The Fed continues to threaten tightening of their monetary follicies, the S&P 500 index is down 14% since Dec 31, 2021.
And the NASDAQ had it worst monthly loss since 2008.
We now have the proverbial double whammy happening … soaring home prices AND soaring mortgage rates.
The theory is, of course, that The Federal Reserve will slowly remove its staggering monetary stimulus leftover from 1) the financial crisis of 2008 and 2) the Covid recession of 2020. As you can see, the sheer volume of monetary stimulus remains outstanding and it is the EXPECTATIONS of The Fed tightening that is caused the 30-year mortgage rate to rise.
While I used the Case-Shiller National Home Price Index YoY, Redfin shows more contemporaneous home price data with April 24 median home sales price at 16.8%.
Thanks to The Fed, we are seeing homebuyer mortgage payments are up 39.4% YoY.
As inflation continues to damage America’s middle-class and low- wage workers, we may see regulations going into effect from the Consumer Financial Protection Bureau protecting consumers from … themselves.
President Biden (or whoever is pulling his strings) is inflicting a “Medusa Touch” on the US. That is, everything his administration touches turns to stone.
Let’s look at average hourly earnings. Thanks to “progressive” energy policies from Biden, REAL average hourly earnings growth has crashed and burned.
But here is the chart that the Biden Administration touts showing average hourly earnings growth at 5.6% YoY (although I doubt if Jen Psaki would leave out the massive distortion caused by The Federal Reserve’s “Let’s go crazy!” monetary policy.
Another Medusa Touch moment is the reverse repo market. When I wrote about reverse repos before, several people wrote me saying “You don’t understand. This is a temporary problem and will vanish shortly.” However, The Fed’s reverse repo facility has now climbed to an all-time high.
Then we have the disruptive effects of The Federal Reserve deciding for us that mortgage rates are too low and should be higher.
Now look at lithium prices, a key element for electric car batteries. Making the switch from Internal combustion engines to electric motors far more costly.
The list goes on and on.
Suffice it to say, everything the Biden Administration touches turns to stone.
But I wager that the Biden Administration wishes that Hunter Biden’s laptop would turn to stone.
Only an elitist DC bureaucrat like Joe Biden would laugh at inflation that is ruining the lives of millions of Americans.
Rising home prices and The Fed signaling an end to the perpetual punch bowl have resulted in the University of Michigan buying conditions for houses to hit the lowest level since 1982.
While bearish sentiment in markets highest since 2009 in the stock market.
I don’t get why Biden created a “Disinformation Control Board” led by Nina Jankowicz – a disinformation spewer. We already have disinformation media outlets like CNN, MSNBC, ABC, CBS, NBC, New York Times, Washington Post, etc., so why create a Federal control board? All in time for the midyear elections!!
If this move by Biden doesn’t terrify you, then you didn’t study history.
Not only has The Federal Reserve driven M2 Money Velocity to near historic lows, but now we find out that the Employment Cost Index just rose to a historic high.
Of course, a variety of minimum wage laws have helped drive up employments costs. Don’t tell lawmakers that minimum wage laws lead to higher inflation since they typically deny responsibility for anything. But I can almost picture the 4 Horsemen of the Inflation Apocalypse (Powell, Biden, Pelosi, Schumer) sitting around asking “What we can do to make inflation worse?”
We did see the PCE Deflator YoY rise to 6.6%, the highest since 1982, the highest in 40 years.
Personal spending increased to 1.1% in March, probably panicking buying over further inflation.
A PCE Deflator of 6.60% leads to a Taylor Rule estimate of 9.05% for The Fed Funds Target Rate.
M2 Money Velocity (GDP/M2 Money) peaked in Q3 1997, but after several bouts of Fed money printing, M2 Money Velocity is near the all-time low at 1.1216 In Q1 2022. And M2 Money stock is still growing at a torrid pace of 9.9% YoY. But the massive overreaction of The Federal Reserve in response to the Covid outbreak has led to near zero money velocity.
Now with The Federal Reserve considering removing the monetary stimulus, what will happen to US GDP left to survive on its own?
An example of how The Fed’s expected tightening of monetary policy can be seen in the meteoric rise in mortgage rates.
So, the US has hit terminal money velocity. I wish The Fed lots of luck going forward.
Is Charlie Sheen the Chairman of The Federal Reserve Board of Governors?? That must be Lael Brainard falling out of the sky with Charlie Sheen (aka, Jerome Powell).
While headline inflation is growing at 8.6% YoY in March, flexible price inflation grew at a terrifying 25% YoY rate.
Even with headline inflation of “only” 8.56% YoY, today’s Q1 real GDP growth checked in at -1.4% QoQ. Clearly, Bidenflation isn’t help the economy or anyone else.
Diesel prices have skyrocketed under Biden.
Instead of Shoeless Joe, we have Clueless Joe as President.
I hope America’s foreign policy wizards (Biden, Harris and Blinken) weren’t relying on the Russian Ruble staying pulverized, because the Ruble (relative to King Dollar) has regained all its losses.
On the other hand, the Japanese Yen and Chinese Yuan have crashed harder than Biden’s popularity.
Actually, The Atlanta Fed’s flexible price inflation rate is 25%, up from 3.90% Pre-Joe.
Perhaps Biden, Harris and Blinken think Putin is a pasta sauce.
Particularly if you are a pension fund and hold US Treasuries and Agency Mortgage Backed Securities.
The bad news is that the 10-year US Treasury Note declined in price, sending the yield up over 10 bps today.
As The Fed is projected to raise its target rate over 10 times by February 2023, 10-year Treasury Note prices and agency MBS 3.5% prices continue to decline.
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