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It’s like a dam broke. And now higher interest rates and mortgage rates for much longer, with lower asset prices, as the Everything Bubble gets repriced. So now the media suddenly focuses on this big problem I’ve been screaming about for many months: Inflation has shifted from energy and from goods tangled up in […]
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Long-term stagnation turns into a sharp decline. Over the four weeks through September 9, gasoline consumption dropped by 11.7% from the same four-week period in 2019, to 8.56 million barrels per day on average, below the same periods in 2020 and 2021, according to EIA data today. The EIA measures gasoline consumption in terms of […]
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#Phoenix builder: “The positive is there’s light at the end of the tunnel for improving build cycle times. The negative is there won’t be customers on the other side of said tunnel.” We’ve seen the data from the Census Bureau about the downturn in the market for new houses: surging inventories – 11 months’ supply […]
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Interesting stuff happening in the labor market, suddenly. Employers added 315,000 workers to their payrolls in August, and 1.13 million over the past three months – solid growth. Households reported that the number of working people in regular jobs or self-employed jumped by 442,000 in August, after having been essentially flat for months. There […]
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The Case-Shiller index, which lags reality on the ground by 4-6 months, is starting to pick up the price drops in Seattle, San Francisco, San Diego, Los Angeles, Denver, and Portland. The housing market is going through some navel-gazing, as many buyers evaporated at current prices and mortgage rates. They’re still out there, but […]
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Sales Plunge to Lockdown Levels, Active Listings Surge, Prices Begin to Dip as Price Reductions Spike, Investors Pull Back Buyers moseyed away from sky-high prices but are still there, just a lot lower, while many sellers hang on to illusions. Inventory and supply of previously-owned homes of all types – single-family houses, condos, co-ops, and […]
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Biggest investors in single-family houses: “We need to be patient and allow the market to reset.” We’re now getting all kinds of commentary from housing industry insiders and big institutional investors in single-family houses. They’re talking about this during their earnings calls. American Homes 4 Rent is one of them. The company was founded […]
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Homebuilder stocks have been wobbling lower all year, now down between 24% and 40%. Homebuilders have struggled for well over a year with supply and labor shortages and ridiculously spiking costs. In addition, this year, the new holy-moly mortgage rates added to the woes, and unsold inventories surged to levels not seen since 2008, as […]
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That’s what’s different this time: Stuff blows up because of leverage and cascades through the crypto space because everything’s interconnected. Crypto lender and broker Voyager Digital, which also took deposits and offered yield products with huge interest rates of up to 12%, said in a series of tweets today that it is, “actively pursuing […]
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QE creates money. QT does the opposite: it destroys money. Total assets on the Fed’s weekly balance sheet as of July 6, released this afternoon, fell by $22 billion from the prior week, and by $74 billion from the peak in April, to $8.89 trillion, the lowest since February 9, as the Fed’s quantitative tightening (QT) […]
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A chart like this is an indictment of Wall Street and the hype-and-hoopla machine that pumped and dumped this stuff on the most gullible retail investors ever. Crypto-trading platform Coinbase hired Goldman Sachs in late 2020 as a financial advisor for its efforts to go public. They decided eventually to go public via a […]
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The June sell-off did a job on them. Manhattan luxury real estate vs. stock market downward spiral in June: In the week through June 19, only 12 sales contracts were signed for condos, co-ops, and townhouses with asking prices of $4 million and above, the worst week since the week of December 28, 2020 […]
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Margin debt issued warnings starting in early 2021 that the Big S would hit the fan. Folks blew it off. Editors’ Note: Wolf Richter makes a brief point about “securities-based lending” (SBL) that deserves some additional commentary. This has been all the craze at major brokerage houses, which encourage both advisors and clients to […]
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Mortgage applications to purchase a home drop to lockdown lows. “Bad Time to Buy” hits record amid sky-high prices, spiking mortgage rates. refinance mortgage applications collapsed to the lowest since the year 2000. This just keeps getting worse: Applications for mortgages to purchase a home dropped 7% for the week, and were down 21% from […]
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The shadow inventory emerges with perfect timing, just as holy-moly mortgage rates and sky-high prices keep buyers away. “Inventory” in housing means homes listed for sale. Then there’s the shadow inventory – vacant homes that owners want to sell eventually because they have already moved into a new place but want to ride up the […]
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Stocks of homebuilders swoon amid worst inflation in construction costs, shortages, and spiking mortgage rates that take buyers out of the market. Sales of new single-family houses in April plunged by 16.6% from March and by 26.9% from a year ago, to a seasonally adjusted annual rate of 591,000 houses, the lowest since lockdown in […]
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Predictions a few weeks ago of peak gasoline prices have been obviated by the inflationary mindset. The average price of all grades of gasoline at the pump spiked to a record $4.33 per gallon on Monday, May 9, the third week in a row of increases, and was up 46% from a year ago, edging […]
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Credit card balances up 3.0% from March 2019, but CPI inflation up 13%, LOL. Auto sales plunged, but auto loans jumped. You guessed it, ridiculous price increases. Credit card balances ticked up 1.9% in March from February, not seasonally adjusted, to $1.036 trillion, according to the Federal Reserve today. Compared to three years ago, […]
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The boom is over. And there are broader effects. Spiking mortgage rates multiply the effects of exploding home prices on mortgage payments, and it has taken layer after layer of homebuyers out of the market for the past four months. And we can see that. Mortgage applications to purchase a home fell further this week […]
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The Shanghai Composite and Hang Seng fall to where they’d first been in 2007 during the run-up of the bubble. The Shanghai Composite Index plunged 5.1% to 2,928 on Monday, the biggest one-day drop since February 2020, during the Wuhan crisis. The index is now down 20% year-to-date and down 14% from a year […]
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The ECB created the greatest corporate bond bubble ever. Now junk bonds get crushed, yields already doubled, set to double again, and again, cleansing out the zombies. The end of QE “is very likely to happen in the course of the third quarter with a high probability that it will be early in the […]
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The Fed is still pumping fuel on the fire. The Consumer Price Index today – a measure of how fast the dollar and everything denominated in dollars, including labor, lost its purchasing power – is a horror show, the likes of which the majority of Americans have never experienced in their lives. The reality on […]
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The wealthy got immensely wealthier. Everyone else paid for it via rampant inflation. The Fed’s own data on the distribution of wealth in the US is a quarterly report card on the Fed’s official policy goal of the “Wealth Effect.” It has now released the data for Q4. The Fed uses monetary policies, such as […]
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Is this spread heading to what happened in the 1970s and 1980s when the Fed battled blow-out inflation? The average 30-year fixed mortgage rate tracks the 10-year Treasury yield, running roughly in parallel but higher. It tracks the 10-year yield because the average 30-year mortgage gets paid off in just under 10 years, either through […]
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Food for thought in light of the biggest stock market bubble in the US ever. Major European stock indices plunged below their bubble highs from over two decades ago. This is not to say that they plunged that much this week, but that they had finally risen past their prior bubble highs from over two decades ago, […]
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Personal Income and Spending under Red-Hot Inflation and Omicron. Not adjusted for inflation, the personal income of all Americans combined, from all sources – from wages, salaries, interest, dividends, rental income, unemployment compensation, stimulus checks, Social Security benefits, etc. but not including capital gains – was essentially flat (seasonally adjusted) in January from December, fell […]
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The Magic Number in 2018 was around 4.8%. In 2006, it was around 6%. But with today’s super-inflated home prices? Here are the signs. The average weekly contract interest rate for 30-year fixed-rate mortgages with conforming loan balances rose to 4.06 percent for the week ended February 18, the second week in a row above […]
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The numbers are already baked in and will show up over the next 24 months. Two rent factors account for 32% of the Consumer Price Index. Despite the massive spike in “asking rents” across the US, those two CPI rent factors have been much lower than CPI and have thereby repressed CPI so far. Unlike […]
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Inflation burns out of control, but the Fed is still pouring fuel on it. You can no longer just blame supply chains. This is far bigger. OK, the Fed and American consumers and wage earners have, excuse the technical jargon here, a serious-ass problem on their hands that has just gotten worse. The broadest Consumer […]
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In 34 of the largest 100 cities, rents spiked by 15%-28%. Tenants get to pay for your reckless monetary policies that made the wealthy far wealthier In January, the median asking rent for one-bedroom apartments increased by 10% or more in 56 of the 100 largest cities in the US, compared to a year earlier. […]
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The market finally gets it: The Fed is going to tighten to get a handle on its massive inflation problem. Since February last year, the hottest most hyped stocks, many of them recent IPOs and SPACS, have been taken out the back and brutalized, either one by one or jointly. The stocks that have by […]
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Even most junk bonds have negative “real” yields. And the Fed is still fueling this madness. After a year of brushing off inflation as temporary, while inflation spread deeper and further into the economy, and got worse month after month, the Fed is finally talking about tightening. But so far, it’s just talking about it. […]
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An extra-special cocktail of three powerful ingredients with no cherry on top awaits us in 2022. Super-inflated asset prices such as housing, stocks, and bonds; massive inflation; and central banks that have started to react. Many central banks have started pushing up interest rates; others have ended asset purchases. And Quantitative Tightening (QT) – central […]
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Central banks jacked up rates to catch up with run-away inflation, but most fell further behind; only Russia caught up. The Fed didn’t even try. The Czech National Bank dished out another surprise today, raising its main policy interest rate by 100 basis points to 3.75%, the highest since February 2008, and the fifth rate […]
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Inflation for Urban Wage Earners & Clerical Workers (CPI-W) = 7.6%. Fed is still pouring fuel on the raging fire. Most reckless Fed ever. The broadest Consumer Price Index (CPI-U) spiked by 0.8% in November from October, and by 6.8% from a year ago, the highest since June 1982, according to data released by the Bureau of […]
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Watch out for the costs of housing, medical care, and gasoline. Social Security benefits are adjusted for inflation – the Cost of Living Adjustments or COLAs – based on the “Consumer Price Index for Urban Wage Earners and Clerical Workers” (CPI-W), released by the Bureau of Labor Statistics. By this measure, inflation was 6.9% in […]
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A look at per-worker personal income, what’s left of it after inflation. Adjusted for inflation, consumers’ personal income from all sources – from wages, interest, dividends, rental income, unemployment compensation, stimulus checks, Social Security benefits, etc. – so “real” personal income dipped by 0.2% in October from September to a seasonally adjusted annual rate of […]
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“Potentially Destabilizing Outcome could emerge if elevated risk appetite among retail investors retreats rapidly.” But what the heck. Only part of the leverage in the stock market is tracked and disclosed on a monthly basis. Much of the leverage happens in the shadows, including Securities Based Lending (SBA) that banks may or may not disclose […]
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Americans, as they struggle with the meaning of the Fed’s terms “transitory” and “temporary,” expect that inflation one year from now will rise to 5.7%, the 12th month in a row of relentless increases, the highest in the data going back to 2013, creating a beautiful record spike (red line), according to the New York […]
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While the Fed is still printing $120 billion a month and repressing short-term rates to near 0% in the most monstrously overstimulated economy. The lowest lowball inflation measure that the US government releases, the PCE price index without food and energy rose by 3.64% in September, compared to a year ago, the hottest inflation reading since May […]
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For retirees, 2021 was a nasty year: Red hot inflation and a stingy COLA. In 2022, they might fall behind more slowly. Among the red-hot inflation data released today was the Consumer Price Index for All Urban Wage Earners and Clerical Workers (CPI-W), which is used to calculate the Cost of Living Adjustment (COLA) for Social […]
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Editor’s Note: It is amusing, if not tragic, that those who complain the most about “inequality”, pursue monetary, fiscal, and tax policies, that make it much worse for the poor. Asset price inflation favors obviously those with the means to own assets: stocks, bonds, and real estate. While inflation is a tax on all of […]
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Even the Fed is getting antsy about this raging mania house-price inflation. Housing Bubble 1 is starting to look cute in comparison. House prices spiked 19.7% from a year ago, the biggest year-over-year increase in the data going back to 1987, according to the National Case-Shiller Home Price Index today. But the national index of this raging […]
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The property sector and its debts are possibly the biggest financial mess in China’s history. The crackdowns by Chinese authorities on some of the biggest hype-and-hoopla industries have sent investors heading for the exits. There is a crackdown on debt to keep the financial system from imploding. There’s a crackdown on property speculation to tamp […]
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One of the largest central banks ends QE. End of an era for Japan: Large-scale money printing was one of the three official legs of Abenomics. In terms of the absolute mountain of assets the Bank of Japan purchased over the years, it is one of the top three QE monsters, along with the Fed […]
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Free money destroyed the pricing mechanism, and demand has soared despite much higher prices. The shortages are not at Costco or Safeway, though they too might run out of a few weird items here and there. But other retailers are complaining about them, including apparel retailers and shoe retailers – yup, it took five weeks […]
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“Normalization” or “deceleration,” as this phenomenon is called, is setting in Prices of existing single-family houses, condos, and co-ops dipped in July, reverting to seasonality for the first time since 2019, amid surging price reductions. Single-family house sales dropped 4.1% in July, from a year ago, the first decline since the lockdowns. Condo sales rose. […]
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Over-stimulated demand, tangled supply chains: shortages for some, plenty of supply for others. The historic stimulus from $5 trillion in government deficit-spending and from $4 trillion in Fed money-printing within a 16 month period resulted in a historic spike in consumer spending on goods. When the demand shock hit retailers and other companies, they were suddenly […]
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Now it’s new vehicles, restaurants, energy. Game of Whac-A-Mole as some price spikes slow while others begin. But it’s a lot worse than it seems. The Consumer Price Index (CPI) jumped 0.5% in July from June, after having jumped 0.9% in June, 0.6% in May, for a three-month annualized rate – the three-month momentum – […]
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Raging mania house-price inflation. House prices spiked 16.6% from a year ago, the biggest increase in the data going back to 1987, according to the National Case-Shiller Home Price Index today, which was for the three-month moving average of closed sales entered into public records in March, April, and May. But in some cities, the raging housing […]