Weaning Wall Street Off of the Fed's Tits is Going to Be Tough

 “The market is worried about a very fragile economic outlook, as it should be,” said Joe LaVorgna, chief Americas economist at Natixis and former Trump White House economic adviser. “The economy is fundamentally soft: The Fed is going to hike next week, the situation in Ukraine is not getting better and high inflation is cutting into costs.”  

Allow me to translate:  Very soon, the Fed is going to have to put up or shut up.  At the moment, it looks like they are going to be forced to put up.  All of this bullshit year to date has been over a tiny 1/4 point rise in the overnight rate.  No QT has actually taken place.

The treasury market and the mortgage market are both still sucking on lovely Lael's wonderful jugs at the moment and it is only the threat that the sweet mother's milk of free Fed money is going "bye-bye" that is causing all of the bed wetting.  

There is a whole generation of money managers (and by default, "tourist investors") who have never known a time when the phrases "Don't worry, the Fed has your back" and "Buy the fucking dip" did not exist.  All of the coddling and cuddling has produced a generation of money managers who don't know shit about how to stand on your own two feet.  That time may be here as inflation doesn't show any signs of letting up and the US is looking at the possibility of losing the dollar's special world reserve currency status.  I say, "Bring it on".

No Housing Bubble Here

From Cleveland, Ohio news:  "Max Berger says, I think half our department is gone, it’s probably the biggest department in the company. At least 75 at least got laid off.

Max Berger, now a former employee of Union Home Mortgage found out last Tuesday he was out of a job along with dozens of others. Berger worked as a Connect Team Partner to find leads for loan officers. He’s heartbroken and angry, “I have no words.”

The company is not confirming exactly how many people were laid-off. It released a statement, saying in part:

“The residential housing market has turned quickly due to historically low inventory of homes for sale and a rapid rise in interest rates due to inflation.”

“They just told us we don’t have much business anymore. There’s not enough leads to go around for everyone to make money and for the company to make money,” Berger told 19 News.

When you're reading these types of stories out of places like Cleveland, Ohio and Detroit, Michigan, the entire narrative of "no nationwide housing bubble in the United States" is revealed to be total bullshit (just like last time in 2006 - 2007).

Thanks Fed!!

2006 All Over Again - I Laugh Every Time I Watch It

 https://www.youtube.com/watch?v=TxylHPnoloI

Goodbye Futon!!!

Why Inflation Will Not Abate Any Time Soon

"The Coronavirus State and Local Fiscal Recovery Funds (SLFRF) program, a part of the American Rescue Plan, delivers $350 billion to state, local, and Tribal governments across the country to support their response to and recovery from the COVID-19 public health emergency."  -  Treasury.gov

The Federal Reserve's response to inflation and "The Everything Bubble" has heretofore been timid at best.  They are way behind the curve.  Couple this weak Fed with the "herpes of the financial world" known as The American Rescue Plan and you have a recipe for disaster.  The funding provided to various governments throughout the country has been sitting idle on the sidelines.  The politicians are now starting to cook up plans on how to spend all of this newly minted money.  This is funding that was literally pulled out of thin air.  Or, as I am fond of saying, pulled out of Jerome Powell's ass.  When states and local governments begin spending all of this money sitting on the sidelines, it will put increased upward pressure on the prices of some items.  Who knows where the inflation will show up but it will show up - it's like a carnival Whack-a-Mole game.

The Fat Lady is Warming Up

 

• Wells Fargo has begun laying off an undisclosed number of its home lending employees, little more than a week after reporting mortgage origination volume had dropped 33% year over year, the bank confirmed Friday to Business Insider and American Banker.  
• Anonymous posts on the discussion board The Layoff indicate job cuts hit at least five markets — Phoenix; San Antonio; Minneapolis; Charlotte, North Carolina; and Des Moines, Iowa. “Processing, underwriting, and credit administration teams were notified ‘their position would be eliminated because of the changing mortgage market,’” one commenter wrote. “They were given a 2 week notice.” -- From "Banking Dive".  The US economy is 70% consumer spending and a lot of that spending is done on credit, especially large ticket items like homes and all of the necessary stuff that goes into them.  When someone borrows money to buy a house, there is a long line of lending staff that gets paid along the way.  When an 800 pound gorilla like Wells Fargo starts laying off, you know the gravy train is pulling into the station for a stop.  A Kenny Bing prediction: the return of the short sale of real estate is waiting in the wings and a lot of borrowers are going to have a serious case of buyer's remorse by 2023.

Reverse Gear Yet?

"The wealth effect is a behavioral economic theory suggesting that consumers spend more when their wealth increases, even if their income does not."

My own observation is that for many people, the wealth effect is indeed real and not just a theory.  I have personally witnessed people borrow and spend far more money than they should feel comfortable with because their rationale has been that their homes and 401k accounts are showing sizeable gains every quarter and they believe that those gains are permanent.  They believe with all of their hearts that the future sale of all or a portion of those assets will allow them to retire the large debts they are incurring today.  The purposes behind all of those large loans can vary.  Home improvements (on a house that is already the envy of the neighborhood), a daughter's over-the-top lavish wedding, a son's drug rehabilitation program, a mulatto grandchild born out of wedlock, opening a pot dispensary, a vacation to Hawaii or....all of the above.  Go big or go home as they say.

For the sake of argument, what happens if the wealth effect "theory" is true but suddenly, assets begin to fall in real time valuation?  Does that play with the heads of the middle classes?  Does a "reverse wealth effect" exist or would that also be a theory?

Watching Paint Dry - It's All About The Yield. Remember to "Sell in May and Go Away"

 

Date	1 Mo	2 Mo	3 Mo	6 Mo	1 Yr	2 Yr	3 Yr	5 Yr	7 Yr	10 Yr	20 Yr	30 Yr
04/01/2022	0.15	0.37	0.53	1.09	1.72	2.44	2.61	2.55	2.50	2.39	2.60	2.44
04/04/2022	0.18	0.42	0.66	1.14	1.72	2.43	2.61	2.56	2.52	2.42	2.64	2.48
04/05/2022	0.18	0.42	0.65	1.13	1.77	2.51	2.69	2.69	2.65	2.54	2.74	2.57
04/06/2022	0.21	0.44	0.67	1.15	1.79	2.50	2.67	2.70	2.69	2.61	2.81	2.63
04/07/2022	0.21	0.50	0.68	1.15	1.78	2.47	2.66	2.70	2.73	2.66	2.87	2.69
04/08/2022	0.20	0.49	0.70	1.19	1.81	2.53	2.73	2.76	2.79	2.72	2.94	2.76
04/11/2022	0.22	0.54	0.77	1.23	1.85	2.50	2.73	2.79	2.84	2.79	3.02	2.84
04/12/2022	0.21	0.52	0.74	1.20	1.77	2.39	2.58	2.66	2.73	2.72	2.99	2.82
04/13/2022	0.26	0.52	0.75	1.20	1.78	2.37	2.57	2.66	2.71	2.70	2.97	2.81
04/14/2022	0.37	0.57	0.79	1.25	1.84	2.47	2.67	2.79	2.84	2.83	3.09	2.92
04/18/2022	0.38	0.60	0.81	1.27	1.84	2.46	2.68	2.79	2.85	2.85	3.12	2.95
04/19/2022	0.37	0.58	0.81	1.28	1.94	2.61	2.81	2.91	2.95	2.93	3.19	3.01
04/20/2022	0.35	0.56	0.82	1.29	1.93	2.60	2.79	2.87	2.88	2.85	3.08	2.90
04/21/2022	0.50	0.65	0.83	1.32	2.01	2.68	2.87	2.96	2.96	2.90	3.12	2.94
04/22/2022	0.46	0.64	0.83	1.34	2.06	2.72	2.88	2.94	2.95	2.90	3.14	2.95

Uncle Sam Needs YOU!

 https://www.zerohedge.com/markets/chris-hedges-pimps-war

Good Article by Chris Hedges today in Zerohedge

"They come from this cabal of moral and intellectual trolls that includes Kimberly Kagan, the wife of Fred Kagan, who founded The Institute for the Study of War, William Kristol, Max Boot, John Podhoretz, Gary Schmitt, Richard Perle, Douglas Feith, David Frum and others. Many were once staunch Republicans or, like Nuland, served in Republican and Democratic administrations. Nuland was the principal deputy foreign policy adviser to Vice President Dick Cheney.

They are united by the demand for larger and larger defense budgets and an ever-expanding military. Julian Benda called these courtiers to power “the self-made barbarians of the intelligentsia.”

They once railed against liberal weakness and appeasement. But they swiftly migrated to the Democratic Party rather than support Donald Trump, who showed no desire to start a conflict with Russia and who called the invasion of Iraq a “big, fat mistake.” Besides, as they correctly pointed out, Hillary Clinton was a fellow neocon. And liberals wonder why nearly half the electorate, who revile these arrogant unelected power brokers, as they should, voted for Trump."

They are now entrenched in the Biden Administration and are edging toward a war with Russia.  The article states that they have not served in the military and their children do not serve in the military.  They are not opposed to sending the children of "the little people" to fight the wars that they bait the country into fighting.  NATO should have been dissolved after the fall of the Soviet Union.  It served no purpose beyond that point.  Instead, NATO has been used as a tool to bait Russia into a conflict.  Imagine if the tables were turned and the Russians decided to allow Mexico into a "defense treaty" that allowed them to station troops and armaments along the southern border of the US.  What would our response be?

Rand Paul on the expansion of NATO to extend membership to Montenegro in 2016:  “There is no national security interest that an alliance with Montenegro will advance. If we invite Montenegro into NATO, it will be a one-way street, with the U.S. committing to defend yet another country, and you, the taxpayer, being stuck with the bill. Even the advocates of Montenegro joining NATO admit as much,” stated Dr. Paul on the Senate floor.  

Montenegro has been a member of NATO since 2017.

The Beatings Shall Continue Until There is an Improvement In Morale

From CNBC: The prices that goods and services producers receive rose in March at the fastest pace since records have been kept, the Bureau of Labor Statistics reported Wednesday.

The producer price index, which measures the prices paid by wholesalers, increased 11.2% from a year ago, the most in a data series going back to November 2010. On a monthly basis, the gauge increased 1.4%, above the 1.1% Dow Jones estimate.

Stripping out food, energy and trade services, so-called core PPI rose 0.9% on a monthly basis, nearly double the 0.5% estimate and 7% on a year-over-year basis.

When You Doubt the MSM, Turn to The Onion For the Unvarnished Truth

 "After going over various options with a new client, local financial advisor Gary O’Malley reportedly recommended fraud this week.  There are some government subsidies you shouldn’t be able to apply for but absolutely can, if you tweak the details a little bit. I’ll get you the information on those. And you know you can trust it, because it’s what I do with my own business. Don’t you ever want to retire? Try fraud.”

https://www.theonion.com/financial-advisor-recommends-fraud-1848769307

PPP Loan Fraud Exposes Our System As A Rotten Apple

 

From the National Law Review:

https://www.natlawreview.com/article/first-doj-enforcement-action-against-ppp-lender-presages-increased-government

"The next phase of enforcement can be viewed as beginning last month when federal prosecutors in New York charged Rafael Martinez, the chief executive officer of a PPP lender, with multiple federal crimes for what might be termed a PPP fraud triple-play: (1) making misrepresentations on an application for a PPP loan for his own business, MBE Capital Partners, LLC; (2) misrepresenting MBE’s qualifications to the SBA for MBE to become a non-bank PPP lender with the SBA; and (3) making further representations to obtain collateral for use in borrowing through a Federal Reserve liquidity facility known as the Payment Protection Program Liquidity Facility (PPPLF). The crimes charged in that case include wire fraud, bank fraud, and making false statements to the SBA. The case, which appears to be the first criminal prosecution of a PPP lender, was highly touted by the DOJ as a major step in combatting COVID-19 relief fraud."

The total amount stolen via this boondoggle will never be known by mortals.

Originating Mortgages Has Been Turned Into a Boom / Bust Business

 At one time, making home loans was a pretty stable job.  The 2000 - 2007 housing bubble changed all of that and the root of the problem was government policy and the Federal Reserve.  Mortgage backed securities became a swindle and the AAA ratings they received as investments were bullshit.

Fast forward to the ninny state we exist in and the enabling government ass clowns in charge and you have housing bubble part two.  When this Hindenburg of a housing bubble is laying on the ground in flames and ashes, there will be a great many borrowers and lenders who will say "Who could have known this was all just a bubble??"

"Rising mortgage rates are putting pressure on lenders as applications decline.

Movement Mortgage is the latest to face struggles, laying off around 170 employees, HousingWire reported this week. Employees in the processing, underwriting and closing departments were most affected by the cuts, according to the report."

When the executive class at mortgage lending businesses start laying off the front line staff, the fat lady is singing.

Get Out of the Way and Let It Rain

 

"Ten-year U.S. yields climbed through 2.75% for the first time since March 2019 as investors priced in the impact of the Federal Reserve’s tightening plan and accelerating inflation. Traders are betting on nine quarter-point Fed rate hikes by year-end, which -- including last month’s 25-basis-point increase -- would be the fastest policy tightening pace since 1994. Short-dated rates in the U.K. hit the highest in more than a decade as money markets ramped up bets on Bank of England rate increases by year-end."

"The Fed last week added aggressive quantitative tightening proposals to its plan for a rapid increase in interest rates to cap surging inflation."

Politico Headline Says Voters Are Going to Take Democrats to the Woodshed

"Angry voters slammed by higher prices and scarred by two years of fighting the pandemic are poised to punish Democrats in midterm elections, according to some of the leading experts in consumer sentiment and behavior."

But, remind oneself that this is in fact the political party chosen by OVER 81 million great American voters just a few short months ago.  The majority of the Mensa Member Electorate overwhelmingly voted in this shit show of circus freaks to govern over them (and by default, anyone opposed to the Democrat philosophy).

At the same time, Russia is urging other "BRIC" nations to form its own SWIFT system.  This would take the Dollar and the Federal Reserve to the woodshed for a good ole fashioned (and well deserved) ass whoopin'.

Personally, I hope they are successful.  This country is so full of shit that its eyes are brown and it has severely abused its long standing privilege of having the world's reserve currency since the end of World War II.

It is about time that the rest of the world opened its eyes to the idea that the best way to win the Dollar game is to simply not play it.

Another headline reads that 7 out of 10 Americans believe that Russia is an enemy of the USA.  Good job Fox News, CNN, social media outlets, talk radio on both sides of the aisle and Deep State - the brainwashing is nearly complete.  It probably was not that difficult given that a large number of Great Americans thought that having Kamala Harris one heartbeat away the Presidency was a good idea just a few months ago.  On the whole, we are truly a stupid and arrogant nation.  Most of these idiots could not find Ukraine on a map if their lives depended upon it.  No where do you read any headline stating that NATO encroachment upon Russia's borders is the possible (and very likely) provocation for their invasion.

You Know It's Bad When...

 

....the Fed's Token "Hot Girl" Lael Brainard who has in the past been the mindless blonde Barbie of the Eccles Building that thinks MMT is just swell comes out with the following press release:

"She said that the central bank would move to “rapidly” shrink its nearly $9 trillion balance sheet this year, unraveling the huge bond-buying program launched at the start of the pandemic, while also hiking rates.

Brainard’s commentary “cleared the way” for a super-sized interest rate hike at the Fed’s next meeting in May, according to Bespoke Investment Group.

That sparked a strong response across financial markets. After Brainard spoke, the yield on the benchmark 10-year US Treasury note hit its highest level in nearly three years, soaring to 2.56%. Bond yields move opposite prices, so that indicates a sharp sell-off.

Stocks also fell. The S&P 500 finished down 1.3%, while the Nasdaq Composite shed 2.3%. Investment-grade corporate bonds logged their biggest one-day decline since March 2020."

This is the same stupid bitch that in 2016 was a Janet "easy money" Yellen ally who drug her high heels against raising rates off of the floor.  This dumb ass is only now having a come to Jesus moment in the realization that keeping rates at zero and buying up every security at full face value for years has consequences.  Now she is "steppin' and fetchin' like her sweet ass is on fire and her hair is catchin'".  Way to go dumb ass - my guess is that you, crazy eyes Kashkari and token black gay man Bostic have a little more in common than just a penchant for easy money policy.  

Make no mistake, the Fed is only just now realizing that by playing with matches for the past several years, it has stupidly managed to set its own house ablaze.

From James Kunstler's "Clusterfuck Nation"

"What you have here is an interesting chain of circumstance: Ukraine, 2014, the astounding flop of Hillary… RussiaGate… the mystifying Democratic primary race… the Ukraine-based impeachment… the Covid-19 fiasco (including deadly mRNA vaccines) … the election of “Joe Biden”… and now Ukraine again. The American Deep State is in a heap of deep trouble. It’s impossible anymore to hide its turpitudes. Even The New York Times and the WashPo have been forced to confess that Hunter Biden’s laptop is for-real, including the thousands of incriminating memoranda and emails on it, along with all the selfie-porn and drugging. It’s obvious that the “president” of the US is corrupt and compromised. Doesn’t look too good."

https://kunstler.com/clusterfuck-nation/a-theory-of-the-case/

Now, what you should know about Mr. Kunstler is that, by his own admission, he has in the past been a fairly reliable Democrat - just not your "modern and woke Democrat".  A thinking man's Democrat.  More like your grandpa's brand of Democrat.  You know, a rational and pragmatic person that you might not always agree with but a person who you could actually work out compromises with - a Tip O'Neill type of Democrat.

Today's average "enlightened" Democrat is an illogical, screeching ball of histrionics and virtue signaling.  Overall, the average "Mensa Member Democrat" is truly a gullible lemming of a human being who fully believes in identity politics.  In the wonderful world of full participation democracy, this is the "enlightened voter" that would best serve the country by simply sitting down and shutting up so that the nation will not be cursed with the likes of Joe Biden.

The Grammy's Ain't What They Used To Be

 

Sharona Alperin was hot in 1979 and she remains hot to this day.  I watched as much of the Grammys as I could stomach last night.  I sure miss the late 70's through the late 90's for music.  Since we're going full 1979 today and present times are rhyming with that year - might as well enjoy the silver lining around the cloud.  I will state for the record that I would take Jimmy Carter over Joe Biden any day as Carter was not a crook and a sellout.

https://www.youtube.com/watch?v=BR2JtsVumFA

The Fed is Out of Touch Because Fed Presidents are Out of Touch

 Perhaps it is time to give Consuela a few weeks off and buy your own fucking groceries and gas.

"An ominous sign about today's high inflation environment, and quite clearly the Federal Reserve is behind the hiking curve, is a contact close with the Fed complaining about out-of-control golf membership prices. 

Yes, you heard that correctly. Federal Reserve Bank of Philadelphia President Patrick Harker's speech cited "one of our contacts," presumably a Wall Street banker or corporate elite, complained about the "whopping membership fee increases at his golf club."

"The Fed member continued to say "generous fiscal policies, supply chain disruptions, and accommodative monetary policy have pushed inflation" to a four-decade high. 

Notice Harker's listing of inflation's culprits and how "accommodative monetary policy" is last. In our view, that should be first, though the Fed will never admit creating money out of thin air is the root of all inflation." 

The perfect example of what the Fed did is the story of how Jay Gould and Jim Fisk swindled Cornelius Vanderbilt out of millions by printing up new shares of the Erie Railroad Line as he was attempting to take over the lucrative rail line that ran from Chicago to New York.  It was not illegal at the time according to the company's charter but it was highly unethical.  Gould and Fisk got rich and Vanderbilt lost a lot of money.  Watering down the stock - watering down the currency.  No difference.  The Fed is mostly a collection of swindlers and hustlers.