South Of The Border? Price Of Insuring Against US Debt Default Rises To 76.75, More Expensive Than Mexico, Almost As Expensive As Guatemala

South of the border, down Mexico (and Guatemala) way.

What a mess in Washington DC. While House Republicans are at lagerheads with Senate Democrats and Resident Biden over Federal spending cuts, the price of insuring against a debt default just rose to 76.75.

How bad it that? Put it this way. Millions are fleeing Mexico and Guatemala and coming to the US. But Mexico has a lower cost of insuring against a debt default than the USA. And Guatemala is almost as expensive as the USA.

It will all be over soon, according to CDS prices.

Maybe the USA needs Gene Autry as Homeland Security Chief instead of Alexander Mayorkas. Even Smiley Burnette would be better at securing the border than Mayorkas.

Dazed And Confused! Treasury Flows Show Bullish $2.5 Billion Shift to ST Sovereigns Versus S&P 500 (Credit ETFs Hammered by Record Outflows of Almost $12 Billion As Fed Worries About Inflation)

The Federal Reserve is dazed and confused about inflation.

As The Federal Reserve reaffirms their draining of the monetary punch bowl, we are seeing investors flock towards the bond market. Particularly the iShares Short Treasury ETF. $2.5 BILLION to be exact.

Meanwhile, credit ETFs are hammered by record outflows of almost $12 Billion.

The reason why? Inflation remains elevated which is leading The Fed to keep their foot on the monetary brake pedal.

I’m an economist.

Here We Go Again! ISM Manufacturing Prices Paid Rises For 2nd Straight Month As Fed Slow Walks Balance Sheet Shrinking (Growing Inflation Warning!)

Treasury Secretary (and former Federal Reserve Chair) Janet Yellen kept saying inflation was simply transitory. And for a while, the US saw cooling inflation. But we just saw ISM Manufacturing prices paid rise in February for the second straight month.

Yellen is over in Ukraine handing Zelenksyy yet another couple of billions. This is after Biden just visited Ukraine. Why not VP Kamala Harris?? Or war monger Adam Schiff??

Mortgage Purchase Demand Decreases, Lowest Level Since 1995 As Fed Removes Punch Bowl (Punch Bowl To Dust Bowl)

Today’s mortgage application (demand) numbers from the Mortgage Bankers Association was disappointing to say the least. Mortgage purchase demand just sank to it lowest level since 1995.

Typically, mortgage purchase applications peak in May or June of each year before beginning their annual lemmings drive downwards. But this year is seeing a early turn for the worse.

The unadjusted Purchase Index decreased 3 percent compared with the previous week and was 44 percent lower than the same week one year ago. The Refinance Index decreased 6 percent from the previous week and was 74 percent lower than the same week one year ago.

The Fed is hell bent on removing the punch bowl to fight inflation. Looks like Biden’s economic plan is turning the punch bowl into a dust bowl.

Simply Unaffordable! US Housing (Un)affordability Hits An All-time Low As Fed Tightens (22 Straight Months Of NEGATIVE Real Wage Growth Isn’t Helping)

US housing is simply unaffordable.

Janet Yellen and The Federal Reserve held rates too low for too long and now we are paying for it. Now, after a massive run-up in home prices, The Fed is raising rates helping make US housing the most unaffordable in history (or at least since the early 1980s).

And negative real wage rate growth for 22 straight months isn’t helping!

Case-Shiller National Home Price Index Cools To 5.76% YoY As Fed Tightens The Monetary Noose (But Only Seattle And San Francisco Have Negative YoY Price Changes, All 20 Metro Areas Fell In December From November)

The December CoreLogic Case-Shiller home price indices are out … for December 2022. And it shows that the CS National home price index growth continues to slow as The Fed tightens its monetary noose. December’s YoY growth was 5.76%.

Only Seattle and San Francisco experienced negative growth in home prices on a year-over-year basis. All of the top twenty metro areas experience negative month-over-month price declines from November to December.

US Pending Home Sales UP 8.1% MoM In January, But Down -22.4% YoY (Negative YoY Growth For 19 Of Last 20 Months)

US pending home sales rose 8.1% in January. At the same time, pending home sales declined -22.4% on a year-over-year (YoY) basis.

So, YoY pending home sales growth has been negative for 19 of the last 20 months.

US Durable Goods NEW ORDERS Fall -4.5% In January As Fed Retreats (Defense Capital Goods New Orders UP 25.4% YoY)

The Federal Reserve is retreating from its Covid-era monetary expansion. And with the retreat, US durable goods NEW ORDERS fell -4.5%% in January. The worst reading since … Covid in 2020.

A breakdown of new orders shows that while NONDEFENSE capital goods orders dropped -5.4% YoY in January, DEFENSE capital goods orders increased by 25.4% YoY.

Damn, it feels good to be a gangster.

Gap Between VIX Put-Call Volume And CBOE Put-Call Ratio Is Widest Since 2006, Precursor To Major Volatility Spike (The Deregulation That Buttiegieg Blamed Trump For Would NOT Have Prevented The East Palestine Ohio Train Derailment)

The gap between the VIX Put-call volume and CBOE Put-call ratio is the widest since 2006, the precursor of a major volatility spike.

Meanwhile, for those of you interest in railroad regulatory issues, as a general matter, regulations are rarely ever “reversed,:” but rather modified or replaced with changes. No administration would be able to outright “repeal” a major safety regulation because it almost certainly be immediately enjoined by a court and found to be counter to Congressional delegation.

I assume most of the attention will be on this final rule (https://www.federalregister.gov/documents/2020/10/07/2020-18339/rail-integrity-and-track-safety-standards) published and effective on Oct 7, 2020. It is considered”deregulatory” in the sense that it results in an economic or compliance cost savings, mostly owing to a change in the permissible type of track integrity monitoring, and decrease in the resulting number of “slow orders.”

Unlike Pete Buttigieg who apparently did not read the regulations when he blamed Trump, read the actual published “deregulation.” A faulty railcar axel which was the cause of the East Palestine Ohio trail derailment was NOT impacted by the “deregulation.” Instead of Mayor Pete, he should be called “Cheap Shot Pete.”

US New Home Sales Collapse (-19.4% YoY) In January As Fed Withdraws Stimulypto

Another sign of a not healthy economy is housing. New Home Sales collapsed -19.4% from January 2022 (aka, year-over-year or YoY).

If I were Joe Biden, I would be touting the month-over-month numbers, up 7.20% from December to January. But the reality is that year-over-year new home sales are down -19.4%.

Also, on the “Alarm!” front, US banks are expecting higher delinquencies, including on residential mortgages.

University of Michgan consumer sentiment for housing is rising, but still woefully below the 100 benchmark.