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August 23, 2023 | Home Sales Plunge Further as Demand Vanished at these Prices. Even Cash Buyers Pull Back. Supply Keeps Rising
Sales of previously owned homes (houses, condos, and co-ops) fell further, by 2.2% in July from June, to a deep-dismal seasonally adjusted annual rate of sales of 4.07 million, the lowest since January, which had matched the March 2020 lockdown low, which had been the lowest since the Housing Bust in 2010, even as the median […]
August 15, 2023 | The Most Splendid Housing Bubbles in Canada: After a Rocking & Rolling BoC-Pause Season, the First Price Drops Reappear
The spring selling season, or rather the Bank of Canada “Pause” season, which had been a rocking and rolling hoot, is over, and the first price declines are here. The Canada Home Price Benchmark Index for single family houses fell by 0.5% in July from June, and by 0.9% year-over-year, to $834,500 (all prices in […]
August 12, 2023 | Consumer Foreclosures, Bankruptcies, Delinquencies, and Collections: Checking on the Hangover of our Drunken Sailors
Our Drunken Sailors have been out there spending money, and some of it comes from their surging income that has been outrunning inflation finally this year, and they’re spending money from their investment gains and from surging interest income from CDs, money market funds, Treasury bills, and savings accounts. And some are spending money they’ve […]
July 26, 2023 | Fed Hikes by 25 Basis Points, to 5.5% Top of Range, Highest since 2001, More Rate Hikes on the Table. QT Continues
The Fed’s FOMC raised its five policy rates by 25 basis points today, which pushed the upper limit of its policy rates to 5.5%, the highest since January 2001. The Fed had broadly telegraphed this move after the “very hawkish skip” meeting in June, when it projected two more rate hikes this year. The Fed […]
July 20, 2023 | Housing Market Faces Reckoning: Price of Used Houses now the Same as Price of New Houses
Sales of previously owned single-family houses fell by 3.4% in June from May, to a seasonally adjusted annual rate of sales of 3.72 million houses, the lowest since January, according to the National Association of Realtors today. This is deep-dismal sales territory, even as supply rose to 3.1 months, and inventories to 960,000 houses, both the […]
July 14, 2023 | Honey, the Dollar’s Collapsing Again: USD against Yen, Euro, Peso, Other Currencies amid Inflation, Rate Hikes, and QT (or Lack Thereof)
The dollar-collapse and dollar-crash folks are out in force. “The dollar crashed to its lowest in more than a year on Wednesday after data showed the rise in U.S. consumer prices moderated in June, suggesting the Federal Reserve may have to raise interest rates only one more time this year,” Reuters said, which put one […]
July 7, 2023 | Fed’s Balance Sheet Drops $667 Billion fr. Peak to $8.3 Trillion, Below Aug 2021, as QT Continues, Bank Panic Support Unwinds
The Fed’s total assets dropped by $87 billion in June, and by $667 billion since the historic peak in April 2022, according to the Fed’s weekly balance sheet today. In the 15 weeks since the height of the bank panic in March, the Fed has shed $435 billion in assets, the fastest-ever 15-week drop, as […]
June 27, 2023 | The Most Splendid Housing Bubbles in America, June Update: 2nd Overall YoY Price Drop since 2012. Biggest in Seattle, San Francisco, Las Vegas, Phoenix, San Diego, Portland, Dallas…
It’s still spring selling season, when sales volume and prices nearly always rise on a month-to-month basis, and they did this spring too, but not enough, and compared to a year ago, the 20 cities in the S&P CoreLogic Case-Shiller Home Price Index, released today, fell by 1.7%, the biggest year-over-year decline since 2012, following […]
June 23, 2023 | Core CPI in Japan Worst since 1981. Food Inflation Worst since 1976. But Energy Prices Plunge
The Bank of Japan has been the total outlier in its reaction to the surge of inflation: It’s still practicing QE under the guise of yield curve control, which keeps the 10-year yield below 0.5%; and it’s still pushing its short them yields below 0%. It’s clearly doing this on purpose, because these folks aren’t […]
June 14, 2023 | Powell on the New Hawkishness in the Dot Plot and on Inflation: “We See that it Tells Us that We Need to Do More”
Renewed hawkish sentiments are building up at the Fed for the second half this year. That’s what we saw today. While the Fed kept rates steady today “to assess additional information and its implications for monetary policy,” the median projection in the FOMC’s infamous “dot plot” today calls for two more rate hikes this year, […]
June 7, 2023 | The Bank of Canada Un-Pauses, Hikes 25 Basis Points, Second Central Bank to Un-Pause on Resurging Inflation Fears
The Bank of Canada un-paused today, after having “paused” following the January hike. The pause had been widely ballyhooed as the end of the rate hikes and a pivot toward rate cuts. Those hopes have now been bitterly disappointed. Everyone is figuring out that this inflation isn’t just fading away on its own. Today it […]
May 31, 2023 | That was Fast: Mortgage Rates Re-Spike to 7% Range as it Sinks in that the Fed Won’t Cut Rates “Anytime Soon,” Mortgage Applications Plunge to 1995 Levels. Even Investors Pull Out
The 7% mortgages are back. The average interest rate on 30-year fixed-rate mortgages with conforming balances jumped to 6.91%, the highest since November, according to the weekly measure by the Mortgage Bankers Association today. The daily measure by Mortgage News Daily already went over 7% a few days last week and earlier this week. “Inflation […]
May 26, 2023 | Fed’s Favored Core PCE Price Index Re-Accelerates, Driven by Services, Motor Vehicles: Inflation Stuck on High, Shifts from Item to Item
The inflation index favored by the Fed, the core PCE price index – which, by excluding the food and energy products, is a measure of underlying inflation – re-accelerated in April, as services inflation re-accelerated back into the red-hot zone, and as durable goods prices rose, after falling for months, driven by a jump in […]
May 14, 2023 | Fast QT, Fewer Rate Hikes? Bank of Canada Has Shed Nearly Half of Pandemic QE Assets. And QT Continues Despite “Pause” in Rate Hikes
The Bank of Canada, which has paused its rate hikes for the second meeting in a row at 4.5%, isn’t pausing at all its Quantitative Tightening. Au contraire. It seems to follow the policy of faster QT instead of rate hikes. Total assets on the balance sheet today fell to C$365 billion, down by C$210 […]
May 11, 2023 | EVs Made the First Visible Dent into Gasoline Consumption
Gasoline consumption in the US dipped by 0.4% in 2022, from 2021, to 369 million gallons per day, all grades of gasoline combined, below where it had been in 2002, and down by 5.7% from 2019, and by 5.9% from the peak in 2018, according to data from the Energy Department’s EIA. And yet, in […]
May 3, 2023 | Powell Swats Down Rate Cut in 2023, Purposefully Leaves in Doubt a “Pause” for June Meeting
Fed chair Powell was bombarded by essentially the same question over and over again today during the press conference after the FOMC hiked its policy rates to 5.25% at the top of the range. Reporters were trying to nail him down: Has a decision been made about “pausing” the rate hikes in June? And he […]
April 27, 2023 | Fed’s Balance Sheet Plunges $171 Billion in Five Weeks since Peak Bank Bailout as QT Continues and Liquidity Support Cools
The Federal Reserve’s balance sheet, released today, dropped another $30 billion for the week, to $8.56 trillion, bringing the plunge in the five weeks since peak bank bailout to $171 billion, as quantitative tightening (QT) continued at the normal pace and liquidity support shifts and unwinds, though First Republic seems to be sucking hard on […]
April 20, 2023 | Housing Market Takes Another Step Back: Home Prices Drop Year-over-Year for Second Month. Already Dismal Sales Fell
The median price of all types of previously owned homes – houses, condo, co-ops – whose sales closed in March, fell year-over-year by 0.9% to $375,700, according to the National Association of Realtors. This was the second year-over-year decline in a row since February 2012, when the market emerged from Housing Bust 1 (historic data […]
April 15, 2023 | The Most Splendid Housing Bubbles in Canada: Spring Selling Season in a Housing Bust
he spring selling season is now in full swing in Canada. So let’s see. Sales of all types of homes rose by 1.4% in March from February, after the 1.4% increase in February from January, so on a year-over-year basis, sales plunged by only 34% from a year ago, the smallest decline since September. And […]
April 12, 2023 | Services Inflation Rages, Durable Goods Prices Rise Again after 6 Months of Declines. Food Inflation Backs Off, Energy Plunges
he Consumer Price Index (CPI) for March, released today by the Bureau of Labor Statistics, was marked by plunging energy prices and surging services prices. Food inflation slowed, and month to month actually dipped for the first time in nearly three years. But durable goods inflation month-to-month suddenly rose again, after having been negative for […]
April 6, 2023 | Fed’s Balance Sheet Plunges by $101 Billion in Two Weeks, as QT Continues and Bank Liquidity Support Begins to Unwind
The Federal Reserve’s balance sheet plunged by $101 billion in two weeks – by $74 billion in the current week and by $27 billion in the prior week – as quantitative tightening (QT) continued at the normal pace and as banks have started paying back the liquidity support offered by the Fed when Silicon Valley Bank […]
March 28, 2023 | Battle for Deposits: Tired of Getting Screwed by Banks, People Yank their Cash Out, Forcing Banks to Pay Higher Interest Rates. Treasury Yields Are a Mess Though
People – and I mean massive numbers of people – have finally figured out that they’ve been getting screwed by near-0% interest rates on their bank deposits, and they’re moving huge sums of money around, as deposits have suddenly turned into hot money, forcing banks to respond by offering better deals. And the land is […]
March 22, 2023 | Powell Explains the Fed’s New Regime: Rate Hikes & QT to Fight Inflation while Offering Liquidity to Banks to Keep them from Toppling
It makes sense in this era of high inflation, QT, rising policy interest rates, and high financial fragility in the banking system, after years of money printing and interest rate repression. The new regime was already tested successfully by the Bank of England last fall: Tightening through rate hikes and QT while simultaneously providing liquidity […]
March 19, 2023 | The Most Splendid Housing Bubbles in Canada: March Update on the Housing Bust
This is the beginning of spring selling season. So let’s see. Home sales in Canada rose by 2.3% in February from January, but that was less of an uptick than it should have been, and on a year-over-year basis, sales plunged 40%, compared to the 37% plunge in January. Prices of single-family houses in February […]
March 14, 2023 | Services Inflation Rages at Four-Decade High: Fueled by Rents, Auto Insurance, Repairs, Airfares, Hotels, Pet Services, Food Services, Delivery
The Consumer Price Index (CPI) for February showed once again that inflation rages in services at the worst levels in four decades, while inflation in many goods categories continue to back off: Services without energy services: annual inflation jumped by 7.3%, a four-decade high, driven by housing, food services (food away from home), auto insurance, […]