Mr. Freeze! Natural Gas Futures UP 5.53% This Morning (UP 255% Under Biden), Housing Square Footage Goes Up With Fed Easing (Stay Warm!)

You better hope it doesn’t get Cold Outside. Because the cost of heating your house just rose 5.74% this morning (natural gas futures). To $9.01.

Between Biden’s anti-fossil fuel policies and the war in Ukraine, natural gas futures are up 255% under Biden.

With rising natural gas prices, one would think American consumers and American home builders would start building higher-density housing like duplexes.

But The Federal Reserve has helped America build BIGGER houses (as in greater square footage).

Note that following the financial crisis and the takeover of the US economy by The Fed, median square footage of US housing starts rose with Fed easing. Median square footage started falling as The Fed leveled-off its asset purchases (green line). But when Covid struck and The Fed really went to town (aka, monetary stimulypto), median square footage started rising again.

The above chart demonstrate the conflict that can arise between a Presidential Administration and The Federal Reserve. President Obama wanted more green apartments built and less suburban growth, but thanks to The Fed, we got median square footage of new builds rising. But once The Fed took its enormous foot off the monetary accelerator pedal, median square footage started falling. Then Covid struck, The Fed intervened, and median square footage rose again.

But with alleged Fed monetary tightening, we should should see the demand for larger homes decline relative to smaller homes.

Mortgage rates have been climbing rapidly, making housing acquisition relatively less affordable.

Black Knight’s monthly P&I payment to average purchase price says it all.

My version of the Black Knight chart is slightly different, but tells the same story: home prices and mortgage rates are rising FAST with Fed stimulus, but should slow down.

I guess we can call both Biden and Fed Chair Powell jointly “Mr Freeze” for housing.

The Fed has helped make housing not only more expensive, but larger in size. And the Biden Administration and war has helped make heating those large houses more costly.

The Fed’s Missouri Boat Ride! Housing Acquisition Index Rises 114.5% Under Biden As Housing Price Reductions Rise 70% YoY (House Price Growth Will Freeze)

I call this The Federal Reserve’s Missouri Boat Ride.

Meaning that The Fed has kept monetary stimulus in play for too long since late 2008 helping to lower mortgage rates from over 6% in November 2008 to 2.98% in November 2021. Then came “The Missouri Boat Ride” as The Fed signaled monetary tightening, leading to mortgage rates skyrocketing to their highest level since 2010.

The result of rising home prices AND mortgage rates? Housing acquisition prices (home prices * 30 year mortgage rates) have skyrocketed.

Between rising home prices and rising mortgage rates, we see that number of prices reductions increasing at nearly 70% YoY (chart courtesy of WolfStreet.com).

Of course, Congress and the media will never ask Janet Yellen (former Fed Chair [2013-2018] and current Treasury Secretary) WHY she kept massive monetary stimulus around for so long. Or why current Fed chair Powell did the same with Covid-related monetary stimulus.

Time to buy gold and silver??

Weekend Update! Gasoline Prices UP 101% Under Biden, Mortgage Rates UP 89%, Foodstuffs UP 58% (Crude Oil Futures UP 142%)

This is not the legacy that will endear President Biden to voters. Regular gasoline prices have risen 101% under Biden.

But it not just gasoline and diesel that are soaring (while the rest of us are sore!), CRB Foodstuffs are up 58% under Biden while the 30-year mortgage rate is up 89% under Biden.

And this morning, WTI crude futures are up +1.71%.

And up 142% under Biden.

Prices are sizzling and clobbering the American middle class and low wage workers. But former Federal Reserve Chair and current US Treasury Secretary Janet Yellen never saw it coming.

Biden’s just killing us. And Powell is making up for Yellen’s keeping monetary stimulus too high for too long. Price? Mortgage rates are soaring.

Home Price Cost Index SOARS 114.5% Under Biden As Mortgage Rates AND Home Prices SOAR (Labor Market OVERHEATED As REAL Wage Rate Declines)

Instead of President Ronald Reagan saying ““Mr. Gorbachev, tear down this wall” we need someone to tell President Biden and Federal Reserve Jerome Powell to “Stop driving up prices and making housing unaffordable.” Unfortunately, The Fed thinks that raising interest rates will temper price increases — it won’t. But it could tamper home price growth.

So what we are left with is soaring home prices AND soaring mortgage rates, leaving this scary chart. The housing cost index has risen 114.5% under Biden.

Its only going to get worse from here.

Today’s jobs report for May showed that the U-3 unemployment rate remained the same as April, 3.60%. However, that is lower than the NATURAL rate of unemployment of 4.445% indicating that the labor market is overheated. Historically, The Fed has tightened monetary policy by raising rates when this has happened. So, look for The Fed to keep raising rates.

As I have mentioned before, REAL hourly wage growth is negative since March 2021, just after Biden signed his executive orders canceling drilling on Federal lands and cancelling the Keystone Pipeline. Later, he canceled off-shore drilling permits and Alaska drilling. Now we have REAL average hourly wages declining at -2.8% YoY as The Fed has been reducing M2 Money supply YoY.

Listings of homes is up 11% YoY, the highest in several years.

Let’s see how the housing market does with soaring mortgage rates.

How do you spell stagflation? M-O-N-E-Y … tightening.

The Federal Reserve Board of Governors playing “Hurting housing two times.”

Simply Unaffordable! Real Home Price Growth At 12% YoY, Real Wage Growth At -1.864% (Inflation Making Americans Suffer As Mortgage Rates Rise FAST)

Simply unaffordable!

President Biden met with Federal Reserve Chairman Powell to discuss how to control the inflation that is crushing the middle class and low-wage workers.

Here is a good example of why Biden is worried. There is a mid-term election on the horizon and people are angry and scared. Housing, generally the largest asset owned (or rented) by a household is simply unaffordable thanks, in part, to the over-stimulation of the economy by 1) The Federal Reserve in terms of money printing and 2) the Federal government in terms of fiscal stimulus in response to the Covid outbreak in March 2020.

In nominal terms, the gap between US home prices (Case-Shiller National Home Price Index YoY – US Average Hourly Earnings YoY) is near the all-time high.

Yes, home price growth exploded upwards when The Fed rapidly expanded their balance sheet in response to the Covid outbreak … and only now are considering shrinking the balance sheet.

In terms of house prices, CoreLogic has a nice chart depicted the odds of home prices dropping over the coming year. I circled Columbus Ohio because that is where I am moving (knock on wood).

And then we have the 30-year mortgage rate rising with The Fed’s expected tightening of monetary policy. That will certainly make housing even less affordable, unless house price growth cools dramatically.

You might as well face it, we’re addicted to gov.

Doctor, doctor (Yellen), we’ve got a bad case of UNAFFORDABLE HOUSING.

Memorial Day Update! US Dollar Declining, Gasoline UP 92.4% Under Biden, Food UP 60%, Rents UP 14.75x (Traveling Will Cost A Lot More! But So Does Renting)

Memorial Day weekend is one where families often travel to meet relatives and friends, or travel to Washington DC to remember those who have died in the service of our country.

But traveling has gotten a lot more expensive under Biden. Gasoline prices are up 92.4% under Biden, while food prices are up 60%. Those hamburgers and hot dogs for grilling are being replaced by … pizza? Or maybe plant-based products.

Zillow’s Rent Index All Homes YoY was only 0.6234% in February 2021, and has soared to 16.36% YoY under Biden. That is an increase of 14.75x. So, not only is it much more expensive to travel on Memorial Day weekend, but it is far more expensive to stay home in your rental property.

On the currency front, we are seeing the US Dollar falling (greenback line), along with the Yuan/USD cross currency. West Texas Intermediate Crude Cushing OK spot is at $115.07.

At least Venezuela and Iran are benefiting greatly by Biden’s energy policies, even if Americans are suffering. Perhaps this is the new foreign policy of Wynken (US VP Harris), Blynken (US SecState), and Nod (Biden).

Remembering my Uncle Jack Sanders who served in the Battle of The Bulge during World War II, winning an individual Silver Star for bravery and two Purple Hearts. He rose from “buck” private to First Sergeant by the end of WWII.

The Biden Bowl! US Personal Savings Declines -65% YoY In April As Inflation Rages (Credit Card Debt Soars As Personal Savings Collapses)

Americans’ Savings Rate Drops to Lowest Since 2008 as Inflation Bites.

Yes, inflation really bites. In fact, as US inflation is near the 40-year high, US personal savings declined -65% YoY as consumers try to cope with rising prices.

Its not only that personal savings is crashing in the face of inflation, revolving debt has soared as consumers try to cope with rising prices. I call this chart “The Biden Bowl.” Soaring consumer credit card debt with crashing personal savings.

Consumer Sentiment For Home Buying Falls To Lowest Point In History, Even Lower Than Housing Bubble Burst And Financial Crisis Of 2008 (Housing Too Expensive, Mortgage Rates Soaring, Inflation Roaring)

The numbers keep getting worse.

The University of Michigan Consumer Survey showed a decline in May to 58.4 (100 is baseline). Soaring inflation is a likely culprit.

But the truly horrible survey result is the UMich Buying Conditions for Houses, plunging to 45. The reason? Crazy, expensive house prices courtesy of The Federal Reserve and rising mortgages (also, courtesy of The Federal Reserve).

The buying conditions for houses is now the lowest in the history of the University of Michigan consumer survey. In fact, consumer sentiment for housing is far lower than during the awful housing bubble burst of 2008 and the subsequent financial crisis.

And the US economic surprise index has turned negative.

Here is Fed Chair Jerome Powell wielding his monetary bat called “Lucille.”

AEI’s April Home Price Index UP 17.3% YoY As The Fed And “Slowhand” Powell Keep Monetary Stimulus In Place (Bostic Talking About A Pause?)

All I can say is “Wow.” Tobias Peter and Ed Pinto of the American Enterprise Institute (AEI) released their April housing report and it was a doozy. The AEI’s home price appreciation index came in at a blood curdling 17.3% YoY.

The reason why home prices are still raging at 17.3% YoY? The Fed’s monetary stimulypto is STILL in place! The Fed’s balance sheet (green line) is still staggering, and The Fed Funds target rate (white line) is a measly 1%.

Atlanta Fed President Raphael Bostic is talking about a pause in Fed tightening. Which they haven’t paused yet.

Fed Chair Jerome Powell is really “slowhand,” not Eric Clapton. Bostic is now a member of The Fed’s “Slowhand” strategy.

Mortgage Update! Mortgage Applications Fell 1.2% WoW, Refi Applications Down 75% YoY, Purchase Applications Down 16% YoY, Mortgage Rate UP 71% YoY

Mortgage applications decreased 1.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 20, 2022.

The Refinance Index decreased 4 percent from the previous week and was 75 percent lower than the same week one year ago. And under Biden, the refinance index is down -83.2%.

The good news? The seasonally adjusted Purchase Index increased 0.2 percent from one week earlier. The unadjusted Purchase Index decreased 1 percent compared with the previous week and was 16 percent lower than the same week one year ago. And the mortgage purchase applications index is down -12% under Biden.

While mortgage interest rates are up 71.7% than one year ago and mortgage rates are up 87% under Biden. As The Federal Reserve signals (but not yet accomplished) monetary tightening.

Once again, The Fed is dead set on cooling inflation caused by 1) Biden’s anti-drilling policies and 2) the remnants of the Federal government spending splurge to combat Covid. The Fed has been increasing their asset purchases (purple line) as inflation increase (blue line). Now they are signaling a decline in the balance sheet (green line) in the hope that it will cool inflation. Fat chance.

Let’s see how DEAD SET The Fed is about tightening monetary policy in the face of rising energy and food prices while a war rages in Ukraine and China in a Covid lockdown.

We are all goin’ down the road feelin’ bad under Biden.