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June 24, 2022 | “Inflation Forecasts Aren’t Worth the Paper They’re Written on”: This Is about the Bank of Canada’s Reaction to Inflation, But it’s the Same in the US and Everywhere

When Canada’s Consumer Price Index for May was released a couple of days ago, it was – “as expected,” I would say – a lot lot worse than expected, and exceeded once again by a huge margin the inflation forecasts by the Bank of Canada. According to the exasperated economists at the National Bank of […]

June 17, 2022 | New Vehicle Inventory, Stuck Near Record Lows, Gets Worse as Buyers Shift from Trucks to Economical Cars, which Vanish

Inventories of new vehicles at dealers are still desperately short, even as sales have plunged due to vehicle shortages. That has been a given now for over a year, and it hasn’t gotten better, and depending on who is talking, it might get a little better, or it might get worse, if that’s even possible. […]

May 31, 2022 | The Most Splendid Housing Bubbles in America, May Update: Mania at the Eve of Holy-Moly Mortgage Rates

The home price data released today by the S&P CoreLogic Home Price Index represents the three-month average of closed home sales that were entered into public records in January, February, and March, reflecting deals that were agreed to a few weeks earlier, roughly in December, January, and February, funded with mortgages that were pre-approved before […]

May 24, 2022 | Housing Bubble Getting Ready to Pop: Unsold Inventory of New Houses Spikes by Most Ever, to Highest since 2008, with 9 Months’ Supply, Sales Collapse at Prices below $400k

Sales of new single-family houses in April plunged by 16.6% from March and by 26.9% from a year ago, to a seasonally adjusted annual rate of 591,000 houses, the lowest since lockdown April 2020, according to the Census Bureau today. Sales of new houses are registered when contracts are signed, not when deals close, and […]

May 18, 2022 | Housing Bubble Getting Ready to Pop: Mortgage Applications Plunge amid Holy-Moly Mortgage Rates, Croaking Stocks, Ridiculous Home Prices

Pieces of evidence are lining up in increasing density. The number of potential future homebuyers that need a mortgage has been thinning out for months. Today, another milestone: Applications for mortgages to purchase a home dropped 12% from the prior week and were down 15% from a year ago. In its report, the Mortgage Bankers […]

May 14, 2022 | Massive Stock Market Leverage Unwinds amid Brutal Bloodletting

The total amount of leverage in the stock market is unknown and takes many forms. The only form that is tracked and reported on a monthly basis is margin debt. The other forms, such as Securities Based Lending (SBL) and hedge funds leveraged at the institutional level are not tracked. Not even banks and brokers […]

May 6, 2022 | State of the American Debt Slaves: Borrowing More to Buy Less due to Raging Inflation

Credit card balances ticked up 1.9% in March from February, not seasonally adjusted, to $1.036 billion, according to the Federal Reserve today. Compared to three years ago, March 2019, the last March before the pandemic, this was up by only 3.0%. In other words, credit card balances are now just 3% higher than there were […]

April 27, 2022 | Mortgage Volume Gets Crushed by Spiking Interest Rates: What it Means for Future Home Sales and Consumer Spending

Spiking mortgage rates multiply the effects of exploding home prices on mortgage payments, and it has taken layer after layer of homebuyers out of the market for the past four months. And we can see that. Mortgage applications to purchase a home fell further this week and were down 17% from a year ago, hitting […]

April 21, 2022 | The Most Splendid Housing Bubbles in Canada, April Update, as Yields Spike & Bank of Canada Hikes

The rate of inflation in Canada spiked to 6.7% in March, from 5.7% in February. The Bank of Canada hiked its policy rates twice so far this year, including by 50 basis points in April, and announced that QT would start on April 25. Government of Canada bond yields have spiked. And home buyers, after […]

April 20, 2022 | As Mortgage Rates Begin to Bite, Home Sales Fall to Lowest since June 2020, Supply Rises for Second Month

The spike in mortgage rates – a result of the Fed’s widely telegraphed future crackdown on inflation – would sooner or later have to impact the crazy housing bubble. We knew that. Now the average 30-year fixed mortgage rate has spiked to well above 5%. For example, the Mortgage Bankers Association reported this morning that […]

April 13, 2022 | Front-Running the Fed: Bank of Canada Hikes 50 Basis Points to 1.0%, Starts Official QT. Unofficial QT Already Shrank Assets by 15%

The Bank of Canada, after telegraphing it for weeks, hiked its overnight rate by 50 basis points today, the first 50-basis-point hike since 2000, after having hiked by 25 basis points at its March meeting. This brought its overnight rate to 1.0%. “Interest rates will need to rise further,” governor Tiff Macklem said in the […]

April 8, 2022 | Homebuyer “Pessimism” Hits Bleak Record on Sky-High Prices, Spiking Mortgage Rates. Great Time to Sell, Though. Just Do It

We just knew this would be coming, given the sky-high home prices and the spike in mortgage rates: Homebuyer sentiment deteriorated further to a new low. The percentage of people who said that now is a “bad time to buy” a home jumped to 73%, another record-worst in the data going back to 2010, according […]

March 31, 2022 | Bond Massacre, Inflation Prick Biggest Bond Bubble in History

We’ve seen the headlines in recent days. “Worst Bond-Market Drawdown on Record.” Drawdown means drop in prices. “Global Bond Market loses $2.6 Trillion,” was another one. This was based on the Bloomberg Global Aggregate Bond Index, which tracks total returns of government and corporate bonds. And this index of global bonds has plunged 11% from […]

March 29, 2022 | The Most Splendid Housing Bubbles in America, March Update: Just Before the Great Spike in Mortgage Rates

So now we have a new snapshot of the incredibly spiking home prices, topping out at over 30% year-over-year in Phoenix and Tampa, according to the S&P CoreLogic Case-Shiller Home Price Index today. But these prices predate the Great American Mortgage Rate Spike. What time span are we talking about? The “January” home price data […]

March 25, 2022 | Mortgage Rates Are Rising Much Faster than Treasury Yields. What’s the Deal?

The average 30-year fixed mortgage rate tracks the 10-year Treasury yield, running roughly in parallel but higher. It tracks the 10-year yield because the average 30-year mortgage gets paid off in just under 10 years, either through the sale of the home, or through a refi. But they don’t move in lockstep, and the difference […]

March 23, 2022 | Inventory of New Houses Piles Up to Highest since 2008. Sales & Prices Drop. Stocks of Homebuilders Swoon

  The inventory of new single-family houses for sale rose to 407,000 houses in February (seasonally adjusted), the largest unsold inventory since August 2008, up by 40% from a year ago. This represents 6.3 months of supply at the current rate of sales, according to data from the Census Bureau today. A problematic mix. Homebuilders […]

March 18, 2022 | The Most Splendid Housing Bubbles in Canada, March Update, amid Jumping Yields, Bank of Canada’s Rate Hike and QT

The Bank of Canada’s interest rate repression and QE during the pandemic have done a marvelous job on Canada’s epic housing bubbles that had started to wheeze. But crazy money-printing fixes everything. But having gotten increasingly nervous about the raging-mania it fueled, the Bank of Canada started to exit some of its money-printing programs in […]

March 16, 2022 | Gazillion Miles Behind the Curve, the Fed Gets Hawkish: More Rate Hikes, “Faster and Much Sooner” Quantitative Tightening

Folks kept saying for many months that the Fed is “trapped,” that it can never raise interest rates, that it can never end QE, that it can never-ever shrink its balance sheet. And now the Fed has ended QE, and it has hiked its key policy rates by 25 basis points today, and it indicated […]

March 2, 2022 | Bank of Canada Front-Runs the Fed, Hikes Interest Rates, Citing Hot Inflation & Even More Inflationary Pressures

The Bank of Canada today hiked its overnight rate and its deposit rate each by 25 basis points, to 0.50%. It cited 5.1% CPI inflation that it expects to rise further and faces one of the worst housing bubbles anywhere – both of them fueled in part by two years of interest rate repression and […]

February 21, 2022 | The Most Splendid Housing Bubbles in Canada as Bank of Canada Begins QT, Yields Spike

Canada’s housing bubble had been waning before the pandemic, particularly in Vancouver, but then came the crazy monetary policies of the pandemic, the tsunami of global free money, including from the Bank of Canada, and BOOM goes the housing bubble in Vancouver and some other markets – but not in all markets. A year ago, […]

February 18, 2022 | Margin Debt Plunged as Stocks Tumbled and High-Fliers Got Crushed. But Leverage Still Gigantic, Long Way to Go

The only measure of stock market leverage that is reported monthly is margin debt at brokers, via FINRA. Much of the stock market leverage isn’t reported, such as Securities Based Lending, and even banks and brokers that fund this leverage don’t know the leverage in the overall market, or even the leverage of their client […]

February 8, 2022 | Used Vehicle Prices Finally Hit Resistance, at Ridiculous Levels

Used car and truck wholesale prices that had gone berserk last year were essentially flat in January, the first hesitation since August, at ridiculously high levels, as pricing resistance in face of this craziness is finally setting in. Two months ago, I noted the first signs of softening of some of the beneath-the-surface pricing-dynamics. And […]

January 19, 2022 | Most Splendid Housing Bubbles in Canada: Mad Scramble to Lock in Rising Mortgage Rates as Bank of Canada Is Set to Tighten

Potential homebuyers and speculators in Canada are now looking at rising interest rates coming their way, which is a dreadful sight with house prices at these ridiculous levels in the big markets. As is typically the case early in rate-hike cycles, there is now a mad scramble underway to buy a house now, no matter […]

January 12, 2022 | Purchasing Power of the Dollar Goes WHOOSH!

The broadest Consumer Price Index (CPI-U) jumped by 0.5% in December from November, and by 7.04% from a year ago, the highest since June 1982, according to data released by the Bureau of Labor Statistics today. But there’s a big difference between now and 1982. Now, the inflation index is spiking, and has been getting […]

January 4, 2022 | What I See for 2022: Interest Rates, Mortgage Rates, Real Estate, Stocks & Other Assets as Central Banks Face Raging Inflation

Super-inflated asset prices such as housing, stocks, and bonds; massive inflation; and central banks that have started to react. Many central banks have started pushing up interest rates; others have ended asset purchases. And Quantitative Tightening (QT) – central banks shedding assets – is on the table. Rising interest rates in the US won’t catch […]

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