Pennies From The Fed! Who Gained The Most From Fed Stimulypto? The Top 1%, Of Course! (Fed Helps Homeowners, Not Renters)

Pennies from Heaven. That is what the bottom 50% received from The Federal Reserve’s massive doses of monetary stimulus (or stimulypto).

There was one big dose of monetary stimulus in late 2008 surrounding the financial crisis and housing bubble burst, another doses (aka, QE 2 and QE3) then the biggest dose of all with the outbreak of Covid in early 2020.

President Biden should have mentioned on Jimmy Dimmel last night that The Federal Reserve has helped the bottom 50% with its endless monetary stimulus.

But if you were fortunate enough to own a home (the top 1% are likely homeowners), then you benefited from The Fed’s monetary stimulypto.

And I noticed that Biden didn’t mention plunging REAL average weekly earnings YoY.

The Federal Reserve’s monetary “policies” have benefited the top 1% and homeowners relative to the bottom 50% (who often rent and got clobbered with 20% growth in rents).

Great job, Fed! Making housing more unaffordable for rents (combine rising rents and declining REAL wages and we have a real affordability problem).

Home affordability for first time homebuyers?

And what is with Biden’s ear lobes? As inflation is rising, his ear lobes are shrinking.

Weird, wacky stuff.

The inflation numbers are out tomorrow. I noticed that Biden and Jimmy Dimmel only discussed gun control, not the sad state of the economy under Biden.

April Inflation “Cools” To 8.3% YoY, But Food Up 9.4%, Gasoline Up 43.6%, Shelter Up Only 5.1%? (Real Avg Weekly Earnings At -3.4% YoY)

April’s inflation numbers are out and, at first glance, inflation seems to be cooling from 8.5% YoY in March to 8.3% YoY.

But the headline inflation numbers do not accurately reflect the pain and suffering of American households. Food is up 9.4% YoY and gasoline is up 43.6% YoY.

The strange way the BLS measure “shelter” shows that housing only grew at 5.1% YoY. That’s odd since home price growth is almost 20% YoY and rent growth is near 20%.

Runaway home prices and rents are especially painful given that inflation is destroying the purchasing power of the dollar for consumers. Real average weekly earnings YoY are at -3.4% YoY.

Hence, the purchasing power of the US Dollar keeps eroding.

Good luck out there with inflation still roaring, and food/housing/energy prices soaring.

Here is a photo of American children trying to create energy from flying a kite made from progressively devalued US currency.

Clubbed By The Fed? REITs, Like The S&P 500 Index, Are Getting Clubbed By The Fed’s Rate Hike Expectations

As The Federal Reserve seems hellbent on raising interest rates to fight the rapid increases caused by Biden’s follicies, we see the S&P 500 index taking a hit in 2022, but NAREIT’s all equity index as well.

An example of how a REIT can be impacted by The Fed is the Industrial REIT index that tanked with Amazon’s declining earnings prospects.

While industrial REITs is a broad category, Amazon’s crashing EPS has certainly shocked the market.

Retail REITs? How about Simon Properties? Simon Properties, a large mall REIT, go “Fauci’d” as the Covid economic shutdown really caused pain for shopping malls. Simon’s occupancy rate has increased as the economy opens back up (we hope).

Meanwhile, Simon Properties equity has declined along with the S&P 500 index as The Fed raises rates. In other words, both the S&P 500 and shopping mall REITs are getting “Fauci’d” by The Fed. Or Powell’d.

Clubbed by The Fed.

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).