Weekend Update! Crude Oil Above $100, Diesel Fuel UP 155%, Coal UP 256% Under Biden, Mortgage Rates Now Above 4.5%

The news just keeps getting worse and worse. Russia is still assaulting Ukraine, WTI Crude prices are above $100 a barrel and climbing, the Cleveland Browns signed Deshaun Watson to replace Baker Mayfield at quarterback, etc.

But back to energy prices. Since Biden was sworn-in as President, WTI Crude Oil futures are up 125%, regular gasoline prices are up 89%, and diesel fuel prices are up 155%. Diesel is important since America uses diesel-powered trucks to transport goods to market.

Globally? The world inflation rate has grown from 2% in January 2021 to 6.82%. Global food prices are up 24%.

Yes, WTI Crude and Brent Crude are above $100 per barrel.

And coal prices are up 256% under Shoeless Brainless Joe.

Mortgage rates? Bankrate’s 30-year mortgage rate is now above 4.50%.

Let’s see if Dr. StrangeFedpolicy raises rates as aggressively as signaled.

Feeling Hot, Hot, Hot! US Home Prices Grew At 19.1% YoY In January (Is US Housing Market Addicted To Gov?)

Feeling hot, hot, hot!

Corelogic released their January housing report and its a doozy.

Home prices nationwide, including distressed sales, increased year over year by 19.1% in January 2022 compared with January 2021. On a month-over-month basis, home prices increased by 1.4% in January 2022 compared with December 2021 (revisions with public records data are standard, and to ensure accuracy, CoreLogic incorporates the newly released public data to provide updated results).

But Corelogic is still forecasting only 3.8% YoY growth in 2022.

Home prices are hot, hot, hot in all states except North Dakota and New York. The fastest growing states are lower taxes, higher growth states.

Phoenix, Las Vegas and San Diego are booming. But Chicago and Washington DC are growing at near 9% YoY.

Case-Shiller’s December report show home prices growing at 18.84% YoY thanks to Fed stimulypto and historic low inventory of homes available for sale.

Is the US housing market addicted to gov?

Let’s see if the five expected rate hikes from The Fed materialize.

Weekend Update: US Q1 GDP Falls To 0.6%, Treasury 10Y-2Y Curve Flattens and Commodity Prices UP 52% Under Biden (Ports Still Clogged)

Russia is still attacking Ukraine and I am still seeing stories about actor/comedian Bob Saget’s cause of death. So now for something completely different.

After last week’s Personal Consumption Expenditures, GDP and new home sales reports, the Atlanta Fed’s GDPNow real GDP estimate for Q1 shriveled to 0.6%.

The US Treasury yield curve? It is flattening rapidly as it typically does prior to a recession.

Commodities? Commodity prices are UP 52% under Biden. And that includes prices dropping slightly from 2/24 to 2/25.

And then there is average port delays in US ports. Hey, I thought Mayor Pete the port Czar was supposed to unclog the ports!

Hopefully this coming week will be better! Particularly for the Ukrainian people.

The Shadow Knows! Wu-Xia Shadow Fed Rate Is -0.1974% As Inflation (7.5%) Dwarfs Wage Growth (5.1%) And Q1 GDPNow Falls To 1.285%

The Shadow Knows!

Wu-Xia employs an approximation that makes a nonlinear term structure model extremely tractable for analysis of an economy operating near the zero lower bound for interest rates. It can be used to summarize the macroeconomic effects of unconventional monetary policy (ZIRP + QE). The Shadow Rate is now -0.1974%.

The good news? The Atlanta Fed Wage Growth tracker is showing a 5.1% wage growth. The bad news? Inflation is ruining that growth at a whopping 7.5% rate leaving REAL wage growth at -2.4%.

And the Atlanta Fed’s GDPNow Q1 forecast is a measly 1.285%. Apparently, the fiscal and monetary stimulypto has worn out.

And liquidity in the equity market has seemingly vanished.

The Biden Administration and Congress need a distraction from the awful inflation news caused by Biden’s energy policies, sheer wasteful spending and Federal Reserve policy errors (too much monetary stimulus for too long).

Zoltan! On Why the Fed Needs to Spark a Market Crash (As US Housing Starts Decline With Rising Mortgage Rates)

Zoltan!

Credit Suisse’s Zoltan Pozsar thinks The Federal Reserve needs to spark a market crash. Really Zoltan??

If The Fed does its expected “shock and awe” (or shock and awful), it will be more than the stock markets will crash. The housing market could crash too.

Take the current US housing situation with its limited inventory of listings combined with massive Fed stimulypto.

US 1-unit housing starts are down -4.1% in January. But heck, it is January! But on a year-over-year basis, 1-unit housing starts are down -2.4%. But what will happen if The Fed ACTUALLY withdraws its gargantuan monetary stimulus (green line)?

Existing home sales inventory continues to decline as Bankrate’s 30-year mortgage rate starts to climb with expectations of Fed “Shock and Awful.”

Say hello to The Federal Reserve Board of Governors!

Think 7.5% Inflation Was Bad? How About FLEXIBLE Core Inflation At 19%! (2-year Treasury Yield Skyrocketing Along With Mortgage Rates)

I thought the last inflation report of 7.5% inflation was bad. But then the Atlanta Fed updated their inflation measure for flexible prices. Flexible inflation, less food and energy, is roaring at 19% YoY!

Flexible prices are those prices that adjust rapidly. Along with commodity prices.

Speaking of rapid rises, take a look at the 2-year US Treasury yield since COVID struck in early 2020.

We did see 2-year Treasury yields generally correlated with The Fed Funds Target Rate … at least until COVID struck. Since mid-2020, The Fed Funds Target Rate remains at 0.25% while the 2-year Treasury yield is roaring back with fuzzy expectations from The Fed’s leadership.

The 10-year Treasury yield is not rising as rapidly as the 2-year Treasury yield, but it is hovering around 2%.

But Bankrate’s 30-year mortgage rate is rising like a comet, similar to the 2-year Treasury yield.

Rapidly rising inflation may cause anxiety attacks. Here is a cure: an emotional support honey badger!

May be an image of animal and text that says 'DO YOU SUFFER FROM ANXIETY ATTACKS? ARE THEY OFTEN CAUSED BY STUPID PEOPLE? GET ΑΝ EMOTIONAL SUPPORT HONEY BADGER! RAPOንC FYARADA ANXIETY COMPANION HONEY BADGER Unlike other companion animals that snuggle up to provide physical comfort and a safe space during Anxiety Attacks, the Emotional Support Honey Badger instead physically attacks and savages the absolute living hell out of the stupid idiot bothering you, thus removing the source of the anxiety. Much more efficient! Ask your Doctor if Honey Badger is right for you.'