Tag: Mish Talk

Credit Default Swaps Imply a Two Percent Chance the US Defaults

Mary Pat Campbell

Link: https://mishtalk.com/economics/credit-default-swaps-imply-a-two-percent-chance-the-us-defaults

Graphic:

Excerpt:

The implied odds are two percent but contract trading is very thin. And some of the protection is mandatory.  If regulators raise risk flags, some banks feel compelled to buy insurance. 

So most likely the true odds of default are much lower.

There is also a three day grace period. We could have a default, but if it is rectified within three days, those betting on a default will be technically correct yet receive no payout.

I believe the odds of a payout on these contracts is essentially zero. But yeah, if there is a default for a couple of days, there will be “chaos” as several people on Twitter have commented. 

Author(s): Mike Shedlock

Publication Date: 21 Apr 2023

Publication Site: Mish Talk

Social Security is Running Out of Time and Money, What Do Biden and Trump Propose?

Mary Pat Campbell

Link: https://mishtalk.com/economics/social-security-is-running-out-of-time-and-money-what-do-biden-and-trump-propose

Graphic:

Excerpt:

Please consider the Biden-Trump Plan to Cut Social Security

  • Joe Biden: “I guarantee you I will protect Social Security and Medicare without any change. Guaranteed,” the president said in March. 
  • Donald Trump: “I will do everything within my power not to touch Social Security, to leave it the way it is.” A pro-Trump super PAC launched an ad attacking Florida Gov. Ron DeSantis for his efforts as a member of Congress to restructure benefits.

While Trump promised to not touch SS, Biden said he would protect SS “without any change“.

Biden’s “guarantee” is impossible, by existing law. 

The pledge to not change a thing means automatic benefit cuts starting in 2033 according to the bipartisan Congressional Budget Office (CBO). 

Author(s): Mike Shedlock

Publication Date: 15 April 2023

Publication Site: Mish Talk

Yellen Said “No Bailout” But It’s a Huge Bailout of the Banking System

Mary Pat Campbell

Link: https://mishtalk.com/economics/yellen-said-no-bailout-but-its-a-huge-bailout-of-the-banking-system

Excerpt:

It won’t matter but I am pleased the Journal blasted Bill Ackman and venture investor David Sacks,  as “frantic panic spreaders“.

There’s more in the article about how Rohit Chopra, an Elizabeth Warren acolyte on the FDIC board, is hostile to bank mergers on ideological grounds, perhaps preventing a merger.

The Journal speculates how Biden might illegally act to guarantee all deposits or pressure House Speaker Kevin McCarthy.

….

Once again, the Fed kept interest rates too low, too long, encouraged speculation, then bailed out the banks.

Spare me the sap about this was a depositor bailout not a bank bailout. 

When you value assets at par so that banks don’t have losses, what the hell is it.

Author(s): Mike Shedlock

Publication Date: 12 Mar 2023

Publication Site: Mish Talk

How Many Rate Hikes Does the Market Now Expect of the Fed?

Mary Pat Campbell

Link: https://mishtalk.com/economics/how-many-rate-hikes-does-the-market-now-expect-of-the-fed

Graphic:

Excerpt:

Now Vs a Month Ago

  • The market now sees a terminal rate of 5.36 percent in September, call it 5.25-5.50 percent.
  • A month ago the market thought the terminal rate was 5.00 percent in June. 
  • Previously, the market expected a peak in June followed by two or three 25-basis point cuts all the way to 4.32 percent. 
  • The market now sees a a cut from 5.36 percent to 5.0 percent.

Author(s): Mike Shedlock

Publication Date: 11 Feb 2023

Publication Site: Mish Talk

Unemployment Rate Hits New Low of 3.4 Percent as Jobs and Employment Jump But…

Mary Pat Campbell

Link: https://mishtalk.com/economics/unemployment-rate-hits-new-low-of-3-4-percent-as-jobs-and-employment-jump-but

Graphic:

Excerpt:

If you work one hour, you are employed. If you don’t have a job and fail to look for one, you are not considered unemployed, rather, you drop out of the labor force.

Looking for job openings on Jooble or Monster or in the want ads does not count as “looking for a job”. You need an actual interview or send out a resume.

These distortions artificially lower the unemployment rate, artificially boost full-time employment, and artificially increase the payroll jobs report every month.

Q&A What’s Going On?

Q: Hey Mish, What’s Going On?
A: People are taking on second part time jobs to make ends meet. But full time employment is stagnant no matter how one slices and dices the revisions. 

Author(s): Mike Shedlock

Publication Date: 3 Feb 2023

Publication Site: Mish Talk

One and Done for Fed Rate Hikes in 2023?

Mary Pat Campbell

Link: https://mishtalk.com/economics/one-and-done-for-fed-rate-hikes-in-2023

Graphic:

Excerpt:

The market says it’s odd-on for the Fed to cut rates later this year. 

So is it one and done then one cut? Not quite.

The market believes there is a 90.1 percent chance the Fed gets in at least one more hike in 2023.

There’s a 36.4 percent chance of 2 or more quarter-point hikes through June. 

Author(s): Mike Shedlock

Publication Date: 22 Jan 2023

Publication Site: Mish Talk

Fed Chair Warns President Biden “We will not be a climate policymaker”

Mary Pat Campbell

Link: https://mishtalk.com/economics/fed-chair-warns-president-biden-we-will-not-be-a-climate-policymaker

Excerpt:

  • Central Bank Independence: “Price stability is the bedrock of a healthy economy and provides the public with immeasurable benefits over time. But restoring price stability when inflation is high can require measures that are not popular in the short term as we raise interest rates to slow the economy. The absence of direct political control over our decisions allows us to take these necessary measures without considering short-term political factors.”
  • New Goals: “Taking on new goals, however worthy, without a clear statutory mandate would undermine the case for our independence.”
  • Stick to Mandates: “It is essential that we stick to our statutory goals and authorities, and that we resist the temptation to broaden our scope to address other important social issues of the day.”
  • Climate Change: “Without explicit congressional legislation, it would be inappropriate for us to use our monetary policy or supervisory tools to promote a greener economy or to achieve other climate-based goals. We are not, and will not be, a ‘climate policymaker.‘” 

Author(s): Mike Shedlock

Publication Date: 10 Jan 2023

Publication Site: Mish Talk

The 2-10 Treasury Yield Spread Note Has Been Inverted Since July 6, 2022

Mary Pat Campbell

Link: https://mishtalk.com/economics/the-2-10-treasury-yield-spread-note-has-been-inverted-since-july-6-2022

Graphic:

Excerpt:

The 2-year to 10-year inversion is one of the most widely followed recession indicators. It has been inverted continually since July 6, 2022.

The 3-month to 10-year inversion is even more extreme. It has been continually inverted since October 18, 2022.

Author(s): Mike Shedlock

Publication Date: 9 Jan 2023

Publication Site:

Massive Collapse in Used Car Prices and Bankrupt Dealers Is Coming Right Up

Mary Pat Campbell

Link: https://mishtalk.com/economics/massive-collapse-in-used-car-prices-and-bankrupt-dealers-is-coming-right-up

Graphic:

Excerpt:

https://threadreaderapp.com/thread/1604114489133223937.html


CarDealershipGuy

Carvana may have just quietly started liquidating:

The company is now advertising its *retail* inventory to *wholesale* dealers.

Look at the $5,000 price difference. Wild times.

These are all retail-ready cars being advertised to other dealers – likely at a big loss.

(h/t RayMF for submission)

Alright everyone is asking how to take advantage – here you go:

Dealers: If you’re willing to buy one of these cars for consumers at a flat $600 mark-up, please comment below.

Consumers: If you want one of these cars and willing to pay a flat $600 mark-up, DM the dealer.

Author(s): Mike Shedlock, CarDealershipGuy

Publication Date: 17 Dec 2022

Publication Site: Mish Talk, Twitter

NAHB Housing Sentiment and Present Conditions Crash to Covid-19 Lows

Mary Pat Campbell

Link: https://mishtalk.com/economics/nahb-housing-sentiment-and-present-conditions-crash-to-covid-19-lows

Graphic:

Excerpt:

Please consider the NAHB/Wells Fargo Housing Market Index (HMI) for December 2022.

The NAHB/Wells Fargo Housing Market Index (HMI) is based on a monthly survey of NAHB members designed to take the pulse of the single-family housing market. The survey asks respondents to rate market conditions for the sale of new homes at the present time and in the next six months as well as the traffic of prospective buyers of new homes.

Bloomberg Econoday Consensus Outlook

“Spiraling downward, the housing market index has missed Econoday’s consensus every month this year. November’s 33 was 3 points short of the consensus. December’s consensus is 34.“

December’s 31 was also 3 points lower than consensus and 1 point lower than the entire consensus range of 32-35.

Well done! Perfection for 12 months is very difficult. 

Author(s): Mike Shedlock

Publication Date: 19 Dec 2022

Publication Site: Mish Talk

Inflation Around the World: How Does the US Compare to Canada and the EU?

Mary Pat Campbell

Link: https://mishtalk.com/economics/inflation-around-the-world-how-does-the-us-compare-to-canada-and-the-eu

Graphic:

Excerpt:

  • Inflation in the US was the first to peak.
  • US inflation peaked in June at 9.06 percent and is currently (through September) at  8.20 percent.
  • Inflation in France peaked at the lowest rate, 6.08 percent.
  • France also has the lowest current rate of 5.55 percent.  
  • Inflation in Germany is 9.99 percent and still rising
  • Inflation in Italy is 8.87 percent and still rising
  • Inflation in Spain was the highest peak so far at 10.77 percent
  • Inflation in the UK is 8.80 percent matching the July high.
  • Inflation in Canada peaked at 8.13 percent and is now 6.86 percent

Author(s): Mike Shedlock

Publication Date: 3 Dec 2022

Publication Site: Mish Talk

The 2-10 Yield Curve Inversion Recession Signal is the Strongest in Over 40 Years

Mary Pat Campbell

Link: https://mishtalk.com/economics/the-2-10-yield-curve-inversion-recession-signal-is-the-strongest-in-over-40-years

Graphic:

Excerpt:

The 10-year to 2-year inversion is 71 basis points, the steepest since October 1981 (see chart)

Never before have we seen such strong inversions except right before or in recessions.

It will not be different this time. A recession is on the way, assuming it’s not already started.

Author(s): Mike Shedlock

Publication Date: 22 Nov 2022

Publication Site: Mish Talk