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.