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.
Federal Reserve policymakers are about to take their first break from an interest-rate hiking campaign that started 15 months ago, even as they confront a resilient US economy and persistent inflation.
The Federal Open Market Committee on Wednesday is expected to maintain its benchmark lending rate at the 5%-5.25% range, marking the first skip after 10 consecutive increases going back to March of last year. While officials’ efforts have helped to reduce price pressures in the US economy, inflation remains well above their goal.
Source: Bureau of Labor Statistics, Bloomberg
Investors’ focus will be on the Fed’s quarterly dot plot in its Summary of Economic Projections, which is expected to show the policy benchmark rate at 5.1% at the end of 2023.
By contrast, markets are pricing in the possibility of a quarter-point hike in July followed by a similar-sized cut by December, and some Fed policymakers have emphasized that a pause in the hiking cycle shouldn’t be seen as the final increase.
Fed Chair Jerome Powell, who’ll hold a press conference after the meeting, has suggested he favors a break from hiking to assess the impact both of past moves and of recent banking failures on credit conditions and the economy. His commentary will be scrutinized for hints of the committee.
Remember, there is still over $8 TRILLION in Fed assets held sloshing around the economy. The Fed never really removed the excess liquidity and it continues to stoke asset bubbles.
Bear in mind that The Fed is pausing at 5.25% Fed Target Rate, while the Taylor Rule suggests rate hikes to 10.12%. So, Foul Powell is pausing at just over the half way mark.
Of course, Biden’s and Congress’ massive spending spree is causing inflation, and The Fed has no control over Biden/Congress irresponsible spending.
Nicolas Maduro of Venezuela must be envious of Joe Biden. I don’t think even Maduro has the stones to have his politiical opponent charged with espionage in the run-up to a Presidential election. Particularly when the US President has been bribed by China and Ukraine and has similiar sensitive document hoarding issues (at least Trump didn’t leave boxes of sensitive documents in a garage like Biden did when he keeps his Chevy Corvette).
So where do we sit today after Biden has signed the debt ceiling increase and massive spending splurge?
First, look at the crashing bank deposit problem. Well, the solution is for The Fed to fire up the money printing press! Keep on printing!
This not surprising if you have read Nobel Laureate George Stigler’s treastise on regulatory capture. Essentially, big corporations (big media, big tech, big banking, big pharma, big defense, big agriculture, etc.) essentially own Congress, the Biden Administration and Federal regulators. After all, Biden has been bribed with millions of dollars by China and Ukraine and, like a Banana Republic, has is avoiding prosecution and instead prosecuting his political opponent, Trump. Don’t worry, if they get Trump that will indict DeSantis for something.
US debt stands at $31.8 TRILLION with $188 TRILLION in unfunded liabilities (which means higher personal taxes and much more debt).
The not-so-good news? A large diverengence between the Establishment survey and Household survey. +339k versus -310k. What’s it going to be?
The bad news? While US average hourly earnings YoY cooled to 4.3%, inflation is still roaring at 4.9% (headline) and 5.5% (core). So Americans are still losing ground to inflation.
The unemployment rate rose to 3.7% in May while the underemployment rate rose to 6.7%.
With unemployment rising to 3.7%, the Taylor Rule implies a Fed Funds Target rate of 10.12%. We are currently at 5.25%. Or just a little over halfway there. But The Fed is talking a pause in rate hikes.
Remember when former Fed Chair and current Treasury Secretary Janet Yellen said that inflation was transitory? As usual, Yellen was wrong. Look at April’s new home sales. Up 4.1% since March even through M2 Money growth has collapsed.
The Taylor Rule, based on Core CPI of 5.25% (persistent, not transitory inflation Janet) suggest a Fed target rate of 11.78%. The Fed is at 5.25% and likely to pause rate hikes and maybe even lower rates again.
The US middle class is wasting away in Bidenville. While Climate Envoy John Kerry threatens to seize farms in the name of … climate change? The moral hazard problems associated with farm seizures boggle the mind.
So, everyone keeps talking about the debt ceiling and the fact that America is about to run out of money. How did we just find $375 million dollars AGAIN to ship on over to Zelenskyy?
Biden and McCarthy met on the debt ceiling and nothing has been resolved. They both represent the BIG donor class and big Pharma, big defense, big tech, big media, big tech, anything that is big runs Congress and the Administration. So of course they will finally agree to raise the debt ceiling and continue their insane spending on the donor class.
As of right now, there is no deal to raise the debt limit. Biden wants to raise the already insane and irresponsible Federal budget. McCarthy wants no new taxes. Who will cave in this game of chicken? My guess is that McCarthy will cave. Biden may whip out the 14th Amendment to bypass McCarthy and Congress, but this makes Biden a dictator (which would suit him fine, but would be a horrible precedent).
Core Inflation Rate UP 244% under Biden, Food UP 46%, Gasoline Prices UP 60%, Rental Growth UP 268%. What a disaster under Biden’s Reign of Error.
But at least the Biden family are getting wealthy beyond comprehension. Isn’t that Ashley Biden in the blue?
But that is where we are in the US. A President who acts like a spoiled 12 year old bully, members of Congress like Cori Bush and AOC who think The Fed can just print trillions MORE and give it to preferred groups. Senator Diane Feinstein (soon to be replaced by a horrible human being in the person of Adam Schiff). John Fetterman, the next Bernie Sanders?? C’mon DC. A true ship of fools. And dangerous ones at that.
So since September 26, 2022, we have seen a fundametal shift in markets. The US Dollar is down -21% since September 26, 2022 while Bitcoin is up 41%, Gold is up 21% and Silver is up 28%.
Biden is sitting pretty, If McCarthy chickens out and agrees to Biden’s outrageous budget, Biden looks like a hero. If Biden defaults, the MSM media will blame McCarthy and Republicans, so Biden wins. No wonder Biden said he isn’t worried about the debt ceiling negotations. He wins no matter what, And we the 99% get screwed.
Reminder, the US already has $32 TRILLION in debt and politicians have promised $188 TRILLION in entitlement spending. yet we are sending billions to Ukraine, etc. Yet Biden is visiting Japan (hide your little girls, Hiroshima!) and Biden/Congress still haven’t solved the debt limit crisis and Biden’s insane budget yet. Meanwhile, Americans are suffering from Biden’s inflation (aka, Bidenflation) and bad economic policies.
As many as 89.1 million American adults (or about 38.5%) were found to experience some form of difficulty in covering expenses between April 26 and May 8, according to Bloomberg, citing new data from the Household Pulse Survey. This is up from 34.4% in 2022 and 26.7% during the same period in 2021.
The rising trend is alarming but not surprising. Consumers have been battered by two years of negative real wage growth.
As wages fail to outpace the cost of living, many consumers have burned through savings and resorted to credit cards. The latest revolving credit data shows consumers appear to be ‘strong,’ but that’s only because they use their plastic cards more than ever to survive.
The Household Pulse Survey found struggling households were primarily based across West Coast and the South.
Compared with the same period last year, the survey found 2.7 million more households were relying on credit cards to cover expenses.
Consumers have record card debt and ultra-low savings rates and are paying some of the highest borrowing costs in a generation (the average interest rate on cards now exceeds 20%). This debt is becoming insurmountable for some as delinquencies rise.
And what we have now is new debit and credit card data published by the Bank of America Institute that shows not just spending slowdown for lower-income consumers, but also the upper-income cohort is finally starting to crack.
However, it is appropriate that Biden is visiting Hiroshima Japan where a nuke was detonated to help end World War II.. Biden is doing the same to the US.
The biggest positive contributor to the leading index was stock prices at 0.16
The biggest negative contributor was average consumer expectations at -0.26
This is the 13th straight monthly decline in the LEI (and 14th month of 16) – the longest streak of declines since ‘Lehman’ (22 straight months of declines from June 2007 to April 2008).
Let’s go Brandon! He needs to finish the job! Or destroying the US economy and making the US a vassal state to China.
Confounded Interest - Anthony B. Sanders 
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