Rent Crisis! 41% in U.S. Couldn’t Pay Rent November (Bank MBS Holdings Collapse With Fed Tightening)

Interesting story on Alignable.

Due to high inflation, reduced consumer spending, higher rents and other economic pressures, U.S.-based small business owners’ rent problems just escalated to new heights nationally this month, based on Alignable’s November Rent Poll of 6,326 small business owners taken from 11/19/22 to 11/22/22.

Unfortunately, 41% of U.S.-based small business owners report that they could not pay their rent in full and on time in November, a new record for 2022. Making matters worse, this occurred during a quarter when more money should be coming in and rent delinquency rates should be decreasing. But so far this quarter, the opposite has been true.

Last month, rent delinquency rates increased seven percentage points from 30% in September to 37% in October. And now, in November, that rate is another four percentage points higher, reaching a new high across a variety of industries.

All told in Q4 so far, the rent delinquency rate continues to increase at a significant pace, up 11 percentage points from where it was just two months ago.

Well, this is not good.

And on the mortgage front, not all is quiet.

Commercial bank holding of Agency mortgage-backed securities (MBS) has collapsed with Fed tightening and mortgage rate increases.

Ain’t that a lot of bad news for real estate and the mortgage market.

US New Home Sales Surprise To The Upside, Median Price Up 8.2% MoM (It’s Now Clear That QE Was a Colossal Policy Mistake)

The good news today is new home sales surprised to the upside and grew 7.5% MoM in October. The bad news? Some are now realizing that The Fed’s QE program was a colossal policy mistake because there’s no convincing evidence that central banks’ purchases of trillions of dollars of bonds and other financial assets helped any economy. But it did help create massive asset bubbles!

But back to the surprising new home sales report where economists forecast a -5.5% MoM decline but +7.5% MoM materialized. Notice that The Fed’s balance sheet has barely come down after it exploded upwards with Covid. So, like with the velociraptors in Jurrasic Park, The Fed Balance Sheet is still out if force.

Not surprisingly, the median price of new home sales are up 8.2% MoM (since September).

The Fed’s minutes for their last FOMC meeting will be out at 2pm EST. Let’s see if they discuss WHY they haven’t reduced their balance sheet by much which is contributing to asset bubbles.

Here is The Fed’s Dots plot from the September meeting. I get the impression that The Fed thinks that their target rate will be coming down in 2024 and after.

US Mortgage Rates At 7.32%, Up 154% Under Biden (As Fed Fights Soaring Bidenflation)

Biden’s magic trick was to turn the economy into a train wreck.

Example? The 30-year mortgage rate was 2.88% on Biden’s inauguration day (January 20, 2021). They are now 7.32%, a 154% increase under Biden.

The US economy is suffering from knucklehead energy policies, reckless Federal spending and rampant inflation.

Here is Joe Biden doing economic magic tricks, turning a vibrant economy into an inflation-ravaged one.

And why I won’t watch of subscribe to Peacock.

Double Whammy! Mortgage Holders Lose $1.3 Trillion in Equity in Q3 As Price Correction Continues (Nationally, Homes Shed 2.6% of Value Over Past Three Months As Treasury Yield Curve Remains DEEPLY Inverted)

Yes, this is an economic double whammy!

First, according to Black Knight, US home values declined -2.6% over the past three months.

Second, the US Treasury 10Y-2Y yield curve remains near 1980s low.

There is a third whammy, rising utility costs (highest in a decade).

Yes, its a double whammy!

Powell’d! S&P 500 Index Drops -2.35% On Failure Of Fed Pivot (“Very Premature To Be Thinking About Pausing)

Markets are getting stranger than the Paul Pelosi hammer attack.

The S&P 500 index tanked -2.35% after Powell and The Fed failed to pivot.

Federal Reserve Chair Jerome Powell opened a new phase in his campaign to regain control of inflation, saying US interest rates will go higher than previously projected, but the path may soon involve smaller hikes.

Addressing reporters Wednesday after the Fed raised rates by 75 basis points for the fourth time in a row, Powell said “incoming data since our last meeting suggests that ultimate level of interest rates will be higher than previously expected.”

Powell said is it would be appropriate to slow the pace of increases “as soon as the next meeting or the one after that. No decision has been made,” he said, while stressing that “we still have some ways” before rates were tight enough.

“It is very premature to be thinking about pausing,” he said.

Fed Funds Futures data point now to a June peak in the target rate of 5.055%, then a decline.

US 30Y Mortgage Rate Rises To 7.22% As Fed Combats Near 40-year High Bidenflation, BUT 10Y Treasury Yield DOWN -12 BPS This AM (US Treasury 10yr-3mo Curve Falling Further Into Inversion)

US 30-year mortgage rates are above 7% as The Federal Reserve slowly withdraws its Covid-related monetary stimulus and attempt to combat near 40-year highs in inflation under Biden (aka, Bidenflation).

However, the US Treasury 10-year yield is down -12 basis points this morning.

And we have an important predictor of recession, the Treasury 10yr-3mo yield curve.

And if the Republicans win The House (and maybe the Senate) at the midterms, Biden can blame Republicans for the recession.

Joe Biden, Hunter and Biden’s brother James must be singing “Damn, it feels good to be a Biden!

MBS Returns Extend Negative Streak During Worst Year On Record (MBS Prices Dropping With Fed Tightening And M2 Money Growth Decline)

The housing and mortgage markets are suffering with impending recession and Fed monetary tightening.

MBS returns extended their negative run during their worst year on record as 10-year Treasury yields topped 4% and the trend in MBS spreads widened.

The MBS sector has had only two positive months in both total and excess returns this year — May and July.

Take a look at the 4.5% coupon agency MBS price and risk (duration) with Fed tightening (orange line) and crashing M2 Money growth (green line).

Time for something new in the MBS market?

The Fed’s BIG Green Bag (Of Money)! Goldman Sees Fed Rate Peaking In March At 5%, Core Inflation Rate UP > 400% Under Biden (US Yield Curve Inverted Prior To Nov 2nd FOMC Meeting)

The next Federal Reserve Open Market Committee (FOMC) meeting in on Wednesday, November 2nd. Let’s see what The Fed does with its BIG GREEN BAG … OF MONEY.

As I set here on Sunday morning waiting to see how the Cleveland Browns will lose to cross-state rival Cincinnati Bengals, I see that both the US Treasury 10yr-2yr and 10yr-3mo yield curves are inverted (below zero).

Core inflation (CPI less food and energy) YoY (blue line) was only 1.3% in February 2021 shortly after Biden was sworn-in as President and is now 6.6% in September 2022. That is over a 400% increase in core inflation!

We have this tantalizing headline on Bloomberg:

Goldman Sachs Now Sees Fed Rates Peaking at 5% in March By Simon Kennedy(Bloomberg) — 

Goldman Sachs Group Inc. economists said they now expect the US Federal Reserve to raise interest rates to 5%, higher than previously predicted.

The central bank will lift its benchmark rate to a range of 4.75% to 5% in March, 25 basis points more than earlier expected, economists led by Jan Hatzius wrote in an Oct. 29 research report.

The route to the new peak includes increases of 75 basis points this week, 50 basis points in December and 25 basis points in February and March, they said.

The economists cited three reasons for expecting the Fed to hike beyond February: “uncomfortably high” inflation, the need to cool the economy as fiscal tightening ends and price-adjusted incomes climb, and to avoid a premature easing of financial conditions.

Well, not exactly earth-shattering. Fed Funds Futures data point to a peak of near 5% (4.905%) for the May 2023 FOMC meeting, so Goldman Sachs is calling for an earliest peak at the March 2023 FOMC meeting,

Regardless of what Goldman Sachs thinks, Fed officials are expecting a peak in 2023 followed by a decline to 2.5%.

Brainard and Bostic are the only “doves.” Which is silly because Chicago’s Evans is a perma-dove. Let’s see how the Dots Plot changes at the November 2nd meeting.

America’s distressed debt pile is biggest since September 2020.

US Pending Home Sales Collapse -30.4% YoY In September (10th Negative Month In A Row) As Fed Plans MORE Rate Hikes (Personal Saving Rate DOWN -59.3% YoY)

I was in an MRI tube getting a scan of the brain tumor that is causing me problems. So, I missed this morning’s new dump. And what a dump it was!

First, pending home sales have collapsed (down -30.4% YoY) for September. Look at pending home sales against M2 Money growth.

Then we have the employment cost index, up 5%. This will encourage The Fed to tighten further, even if it causes a recession.

How about the US Personal Saving Rate YoY?? It is down -59.3%.

But were living on Washington DC time!

US New Home Sales Tank -17.6% YoY In September (Declines In 15 Of Last 16 Months) As Rates Soar With Fed Tightening (Median Price Of New Homes Sold UP 7.8% YoY)

Another day, another lousy economic report under Biden.

Today, we found out that new home sales declined -11% MoM (from August to September) and fell -17.6% from last year YoY. With 603k SAAR sold.

The median price of new home sales was UP 7.8% YoY.

Here is the rest of the story as Paul Harvey used to say.

The housing and mortgage markets seem broken. Time for a new approach??