Tag: Mish Talk

Suddenly, there’s a 59 Percent Chance of Half-Point Interest Rate Cut by the Fed

Mary Pat Campbell

Link: https://mishtalk.com/economics/suddenly-theres-a-59-percent-chance-of-half-point-interest-rate-cut-by-the-fed/

Graphic:

Excerpt:

A month ago I expected a 50 basis point cut by the Fed based on weakening data.

The data weakened alright, but following the the CPI report last Wednesday, I checked the odds at 15 percent.

Late Sunday, I decided to check the probabilities again and captured the above chart.

There was a huge rally in the odds on Thursday and Friday as noted by the Wall Street Journal in the chart below.

Author(s): Mike Shedlock

Publication Date: 16 Sept 2024

Publication Site: Mish Talk

The Housing Bubble Keeps Expanding, Case-Shiller Home Prices Hit New Record

Mary Pat Campbell

Link: https://mishtalk.com/economics/the-housing-bubble-keeps-expanding-case-shiller-home-prices-hit-new-record/

Graphic:

Excerpt:

Housing affordability continues to soar out of reach of most buyers. Not only are prices at a new record level, mortgage rates remain close to 7.0 percent.

Chart Notes

  • Case-Shiller measures repeat sales of the same price over time. It is the best measure of price, but it lags. Current data is as of May which reflects sales 1-3 months prior.
  • The CPI, OER, and Rent of Primary Residence are all from the BLS.
  • OER stands for Owners’ Equivalent Rent. It is the rent one would pay if someone was renting instead of paying a mortgage.

Author(s): Mike Shedlock (Mish)

Publication Date: 30 July 2024

Publication Site: MishTalk

Bonds Yields Jump Again Wiping Out the May Treasury Rally

Mary Pat Campbell

Link: https://mishtalk.com/economics/bonds-yields-jump-again-wiping-out-the-may-treasury-rally/

Graphic:

Excerpt:

Yield on the 10-year treasury is 4.59 percent on May 29, right where it started the month. A quarter-point rally on hopes of rate cuts vanished today.

Yields are still lower than the 2024 intraday peak of 4.74 percent, but they are nearly 70 basis points higher than the start of the year as rate cut after rate cut hopes keep getting priced out.

Minneapolis Federal Reserve President Neel Kashkari says he wants to see “many more months” of positive inflation numbers before interest rates start to come down — and refused to rule out a rate hike if needed.

Author(s): Mike Shedlock

Publication Date: 29 May 2024

Publication Site: Mish Talk

Quotes of the Day on Rent Inflation By the Fed and Property Managers

Mary Pat Campbell

Link: https://mishtalk.com/economics/quotes-of-the-day-on-rent-inflation-by-the-fed-and-property-managers/

Graphic:

Excerpt:

According to data from the U.S. Census Bureau, moving rates for Americans declined from 12.8% in 2021 to 12.6% in 2022.

But what is it for 2024?

My guess has been 9 percent in a range of 8 to 11 percent or so. But we will not know that for two more years.

Author(s): Mike Shedlock

Publication Date: 13 May 2024

Publication Site: Mish Talk

Fed Rate Cut Expectations Drop on Unexpectedly Strong CPI Data

Mary Pat Campbell

Link:https://mishtalk.com/economics/fed-rate-cut-expectations-drop-on-unexpectedly-strong-cpi-data/

Graphic:

Excerpt:

  • A month ago, the market thought there was no chance the Fed would hold pat through May.
  • A week ago, the odds were 33.4 percent.
  • Yesterday, the odds were 39.3 percent.
  • Today, the market says there is a 62.1 percent chance the Fed did not cut in March or May. There is no April meeting.

Author(s): Mike Shedlock

Publication Date: 13 Feb 2024

Publication Site: Mish Talk

The Fed Is Very Concerned Over Spending and Interest on the National Debt

Mary Pat Campbell

Link: https://mishtalk.com/economics/the-fed-is-very-concerned-over-spending-and-interest-on-the-national-debt/

Graphic:

Excerpt:

  • The current setup is nothing like the situation following WWII. Don’t expect another baby boom.
  • Instead, expect a massive wave of boomer retirements (already started) that will pressure Medicare and Social Security.
  • Depending on the kindness of foreigners to increase demand for US treasuries is not exactly a great plan.
  • Artificial Intelligence (AI) will undoubtedly increase productivity. But that is not going to offset the willingness of Congress to spend more and more money on wars, defense, foreign aid, child tax credits, free education, and other free money handouts, while trying to be the world’s policeman.

Author(s): Mike Shedlock

Publication Date: 12 Feb 2024

Publication Site: Mish Talk

Tweets of the Day on Bonds, Jobs, Leverage, China, Oil, and Artificial Intelligence

Mary Pat Campbell

Link:https://mishtalk.com/economics/tweets-of-the-day-on-bonds-jobs-leverage-china-oil-and-artificial-intelligence/

Graphic:

Excerpt:

Everyone knows, or at least should know, that the “Big 3” rating agencies that rate about 98 percent of all debt all issue trash ratings. Here’s the background on how that happened.

Rating agencies used to get paid by investors on the basis of how well they did at estimating the likelihood of default. The better your ratings, the more sought out your opinions.

In the mid 1970s, the SEC created nationally recognized statistical ratings organizations (NRSROs). Following that idiotic regulation, the rating agencies got paid on the basis of how much debt they rated, not how accurate their ratings were. Fees come from corporations issuing debt, not investors seeking true default risk.

The more stuff you rate AAA, the more business you get from companies who want their debt rated. The new model is ass backward, and why ratings are trash. A genuine fiasco happened with ratings during the Great Financial Crisis with tons of garbage rated AAA went to zero.

There should not be NRSROs. The SEC made matters much worse, except of course for the Big 3 who have a a captured, mandated audience, coupled with massive conflicts of interest.

Author(s): Mike Shedlock

Publication Date: 5 Aug 2023

Publication Site: Mish Talk

Real Personal Spending Rises Twice as Much as Income in June

Mary Pat Campbell

Link:https://mishtalk.com/economics/real-personal-spending-rises-twice-as-much-as-income-in-june/

Graphic:

Excerpt:

Real (inflation-adjusted) consumer spending rose 0.4 percent in June. Real disposable income rose 0.2 percent.

….

Real PCE goods peaked in March of 2021. All of the growth in consumer spending for 27 months is due to an increase in demand for services.

Author(s): Mike Shedlock

Publication Date: 28 July 2023

Publication Site: Mish Talk

Despite CPI Surprise to the Downside, Higher for Longer Interest Rate Outlook Holds

Mary Pat Campbell

Link: https://mishtalk.com/economics/despite-cpi-surprise-to-the-downside-higher-for-longer-interest-rate-outlook-holds/

Graphic:

Excerpt:

Two things on the Fed’s mind are the core rate of inflation (all items excluding food and energy) and rent. Both have proven stubborn.

Despite constant talk of falling rent prices please note that Rent of primary residence has gone up at least 0.4 percent, every month for 23 straight months!

The falling rent meme has been wrong for at least a full year.

Author(s): Mike Shedlock

Publication Date: 12 July 2023

Publication Site: Mish Talk

Biden Seeks to End Cheaper Obamacare Alternatives, Expect Another Supreme Court Smackdown

Mary Pat Campbell

Link: https://mishtalk.com/economics/biden-seeks-to-end-cheaper-obamacare-alternatives-expect-another-supreme-court-smackdown/

Excerpt:

Biden’s efforts to produce more inflation are nonstop, 24×7. His latest move is a set of regulations to force people into Obamacare despite the fact a District Court already ruled against his proposed regulations.

Biden Attempts to Make Healthcare Even More Expensive

To understand what Biden wants to do, and why the Supreme Court is likely to smack it down, we need to review a District Court ruling from 2020.

On July 24, 2020, CATO reported In a Win for Consumers, a Court Ruling Affirms the Legality of Short‐​Term Health Insurance Plans

….

Jam City, Dateline July 7, 2023

The Wall Street Journal comments on Biden’s Short-Sighted New Health Rule

Behold the President’s plan to limit short-term health insurance plans in order to jam more consumers into the heavily subsidized and regulated ObamaCare exchanges. The Health and Human Services, Labor and Treasury Departments on Friday proposed rules to roll back the Trump Administration’s expansion of short-term, limited-duration insurance (STLDI) plans. Since 2018 these plans have been available in 12-month increments, and consumers have been able to renew them for up to 36 months.

These plans are especially attractive to young people whose employers don’t provide coverage. Why would a healthy 26-year-old want to pay for maternity, pediatric and other services he probably won’t use in the near future?

The Inflation Reduction Act sweetened ObamaCare’s insurance premium tax credits that are tied to income. As a result, a 60-year-old making just above four times the poverty level has to pay only 8.5% of his income toward his insurance premium while the government picks up the rest. If premiums increase, government is on the hook for more.

Author(s): Mike Shedlock

Publication Date: 9 July 2023

Publication Site: Mish Talk

The Fed’s Dot Plot of Interest Rate Projections Show It’s Totally Confused

Mary Pat Campbell

Link: https://mishtalk.com/economics/the-feds-dot-plot-of-interest-rate-projections-show-its-totally-confused

Graphic:

Excerpt:

The Fed’s Summary of Economic projections is far more interesting. I highlighted the median economic forecast in pink. Each dot represents the position of someone at the meeting.

Looking ahead to 2025, the Fed is clueless. 

Actually, that’s not a bad thing. Someone on the committee is likely to be correct.

Moreover, the results look like one of my favorite sayings: I don’t know and no one else does either, especially the Fed.

Author(s): Mike Shedlock

Publication Date: 14 Jun 2023

Publication Site: Mish Talk

Hello President Biden, the Ball Is In Your Court

Mary Pat Campbell

Link: https://mishtalk.com/economics/hello-president-biden-the-ball-is-in-your-court

Graphic:

Excerpt:

Key Provisions 

  • Claw back unspent Covid-19 funds.
  • Impose tougher work requirements for recipients of food stamps and other government aid.
  • Halt Biden’s plans to forgive up to $20,000 in student loans.
  • End many of the landmark renewable energy tax breaks Biden signed into law last year. It would tack on a sweeping Republican bill to boost oil, gas and coal production.

Hello Joe, the Ball is in Your Court

Republicans only had 4 votes to spare but with some last minute haggling, the bill passed 217-215. 

It wasn’t a pretty serve by McCarthy, but the ball cleared the net and landed in play.

The only way to get the ball back in the Republican court would be for the Senate to pass a measure or amend the House bill.

Author(s): Mike Shedlock

Publication Date: 8 May 2023

Publication Site: Mish Talk