Sunday Update On Commodities And Cryptos: Surviving Country Joe Biden’s La Vida Loco Economy (Silver Up 1.46%)

I know, the Soviet Union’s Josef Stalin was known as Country Joe. Here is Country Joe singing “I feel like the US economy is fixin’ to die.”

On the commodity side, Spot Silver is up 1.46%. Iron Ore is up 1.60%, but I don’t think my neighbors would appreciate me taking delivery on 10 tons of iron ore on my driveway! Heating oil is up 2.90%.

On the crypto side, bitcoin is up 20.84 (0.08%) with Ethereum up slightly more.

Bitcoin and silver doing well as the US Dollar loses ground since September 2022.

Biden is out of touch with everyday Americans. Except for trying to grope Eva Longoria’s breasts in full view of the world.

Biden would have been better off groping Ricky Martin as he sings “Living La Vida Loca Economy.” (the crazy life of Biden’s economic policies).

Trouble In Potomac City! US Treasury 10Y-2Y Yield Curve Now Inverted For 135 Straight Days, Real Wage Growth Now Negative For 21 Straight Months

We got trouble in Potomac City! No, I’m not talking about the numerous Top Secret documents that Biden carelessly left in his garage in Delaware and the UPenn Biden Center. And they found more over the weekend. I’m talking about the US Treasury 10Y-2Y yield curve being inverted for 135 straight days. And thanks to inflation, REAL wage growth has been negative for 21 straight months.

All this is happening while M2 Money growth (green line) stalls to 0% YoY.

Swaps 5Y are rising as The Fed withdraws monetary stimulus.

US Housing Starts Plunge -16.4% Since Last November As Fed Tightens (Permits Plunge -22.4% YoY)

US housing starts plunged -16.4% since the same time last year (aka, YoY) as The Federal Reserve continues tightening its monetary policy.

Since October (aka, MoM), housing starts only dropped -.049% in November. 1-unit detached starts were down -4.06%. But multifamily (5+) starts were up 4.85% MoM.

Building permits were down -11.24% from October to November (baby, its cold outside!) and down -22.4% since November 2021 (aka, YoY).

Now, watch as President Biden and The Fed make housing construction disappear.

Lightning Strikes? US Recession May Strike In September 2023 As Fed Continues To Fight Bidenflation (10Y-2Y Yield Curve Inverted For 112 Straight Days)

Lightning strikes!

The 12-month-ahead probability of recession spiked in November across all of yield curve models. The deterioration in the outlook was most significant in the one that relies on the 3-month/18-month forward spread — Fed Chair Jerome Powell’s favored model — which now sees a 59% chance of recession next year, compared with almost 0% six months ago. Yield curve models see the strongest signal for recession starting around September 2023.

We assess the probability of recession in the months ahead by looking at a suite of models: three yield curve models — which take as their sole input the spreads between 2-year/10-year, 3-month/10-year, and 3-month/18-month forward US Treasury yields, respectively — as well as a model that takes 13 financial and macroeconomic indicators as inputs.

All three yield curves inverted further in November, indicating higher probability of a downturn next year. Notably, the 3-month/18-month forward curve inverted for the first time this year, and the model based on that indicator suggests a 59% chance of recession in 12 months (vs. 32% for the same reference period in the prior update) — that would be in November 2023.

My favorite yield curve is the 10-year – 2-year curve which has been inverted for 112 straight days.

Winter is coming ,,, in September.

US Real GDP Growth Forecast To Be Dismal 0.50% In 2023, Personal Savings Rate -67.9% YoY In October, US Mortgage Rates Headed Down (Economic Lights On But Nobody’s Home)

Albert Collins said it best about the US economy under Joe Biden: “Lights Are On But Nobody’s Home”.

The Federal Reserve forecast for the US economy is a dismal 0.50% YoY. Do I detect a trend?

The FOMC forecast for 2023 and 2024. Core PCE YoY (inflation) is forecast to drop to 3.50%, still considerably higher than The Fed’s target rate of inflation of 2%. And unemployment is forecast to be 4.60%.

To cope with Bidenflation, US personal savings rate as of October is -67.9% YoY. The “good” news is that rents YoY are crashing. But food prices under Inflation Joe remain very high. But most everything is slowing down, not due to Biden’s policies, but a global and US economic slowdown.

With a big slowdown coming our way, you can understand why The Fed’s December Dot Plot is showing declining Fed Funds Target rate starts declining in 2024.

Even US mortgage rates are headed down.

Speaking of going down, cryptos are down across the board with Cardano leading the decline at -6.91%.

All aboard the SS Biden!

US Treasury Yield Curve Inverts To -82 Basis Points, Worst Since 1981 As Fed Tightens Policy (112 Straight Days Of Inversion)

Whoop there it is!

The US Treasury 10y-2y yield curve descended further into inversion at -82 basis point, the worst since 1981.

This is not a good sign, since the 10Y-2Y curve typically inverts just prior to a recession.

The current US Treasury curve is currently humped at 1 year, then declining rapidly. The swaps curve is peaking at 9 months, then declining rapidly.

The Fed Funds Futures market is pointing to a peak Fed Funds rate of 5% at the May 3rd FOMC meeting.

Yes, a recession is headed our way.

Fed Dead Redemption! US Treasury 10Y Yield Up 10 BPS As US Debt And Unfunded Liabilities Hits $204 TRILLION (50 BPS Rate Hike Expected At Fed’s 12/14 Meeting)

The start of a new week and the US Treasury 10-year yield is up 10 basis points, always a noteworthy change. And with it, the 30-year mortgage rate should climb.

Meanwhile, the political elite party in Washington DC as the US National Debt hit $31.4 TRILLION and unfunded liabilities (the amount that the political elites promised Americans) hit $173 TRILLION for a grand total of … $204 TRILLION.

Since Biden/Pelosi/Schumer are in a lame duck session with Republicans taking the House in January, let’s see if Republicans can halt the insanity in Washington DC.

Be that as it may, Fed Funds Futures are pointing at a 50 basis point rate hike at the December 14th FOMC meeting.

Seriously, how is The Federal Reserve going to cope with $204 TRILLION … and growing Federal debt AND unfunded liabilities?

US Home Price Growth Slows To 10.65% YoY In September As Fed Tightens

The Covid outbreak of early 2020 begat a massive surge in monetary stimulus which has dissipated. Notice that home price growth is dissipating as well.

Also causing problems for housing is NEGATIVE REAL WAGE GROWTH. While the US is suffering from inflation and decling real wage growth, trading partner Germany has even a worse REAL WAGE GROWTH problem.

Where? Florida is doing great!!

Do I detect a trend?

World Yield Curve Inverts For First Time Since At Least 2000 (US Yield Curve Has Been Inverted For 107 Straight Days) Drums Along The Potomac??

Do I hear Drums Along The Potomac or East River??

The hawkish drumbeat from central bankers is raising fears of a downturn, with global bonds joining US peers in signaling a recession, as a gauge measuring the worldwide yield curve inverted for the first time in at least two decades.

The US Treasury 10Y-2Y yield curve, on the other hand, has been inverted for 107 straight months.

And in Europe, 10-year sovereign yields are dropping like a paralyzed falcon.

The world and US yield curves are pointing to trouble. And drums along the Potomac (DC) and East River (NYC).

Bad Sign! What Interest Rates Are Telling Us (US 10Y-2Y Curve Inverts To -80 Basis Points, Euro 10Y Yields Falling, Fed Funds Rate Priced At 2.301% By January 2024)

What interest rates are telling us is a bad sign.

With an impending railroad strike that can torpedo the US economy (but if that is possible, why is the Biden Clan vacationing in Nantucket for Thanksgiving weekend when Joe should be talking with railroads and the unions to not let this happen?), let’s see what interest rates are telling us.

First, the US Treasury 10Y-2Y yield curve continues to descrend into the abyss (now at -80 basis points).

Second, the latest Fed Dot Plot (from September, new one will be issued during December) show that The Fed thinks that their target rate, while rising in 2023, will likely start falling again in 2024.

Third, since it is Thanksgiving Day, US bond markets are closed. But in Europe, the 10-year sovereign yields are falling, a sign that the ECB is reversing course by increasing monetary stimulus and/or a European are slow down.

Fourth, US mortgage rates have cooled since peaking (locally) at 7.35% on November 3, 2022 and now sit at 6.81%, a decline of 54 basis points. A clear sign of cooling.

Fifth, how about Fed Funds Futures data? It is pointing to a peak Fed Funds Target rate of 4.593% at the June FOMC meeting. Then a decline in rates to 2.301% by January 2024.

Now, go and enjoy your Thanksgiving dinner with friends and family (up 20% since last year), courtesy of Jerome Powell, Joe Biden, Nancy Pelosi and Chuck Schumer.