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December 6, 2018 | Fed’s QE Unwind Reaches $374 Billion

But how low might the Fed’s balance sheet go? The Federal Reserve shed $54 billion in assets over the five weekly balance sheet periods that encompass the calendar month of November. This reduced the assets on its balance sheet to $4,086 billion, the lowest since January 15, 2014, according to the Fed’s balance sheet for […]

November 29, 2018 | Treacherous Times for Bond Funds Ahead

Bond ETFs and open-end bond mutual funds sound conservative in marketing materials, but they pack special risks & surprises in a downturn that can entail a catastrophic loss for investors. Exchange-traded bond funds and bond mutual funds are big business. They’re a lot easier for retail investors to buy and sell than the actual bonds, particularly […]

November 23, 2018 | 438 Stocks on the NYSE Have Already Plunged 40%-94% from 52-Week Highs

Bloodletting beneath the surface. Big names too. Here they are. It’s barely a correction, technically speaking, with the S&P 500 down 9.9% from its all-time closing high, the Dow down 9.2%, the Nasdaq down 14%, and the Russell 2000 small-caps index down 15%. But beneath the surface, there has been some serious bloodletting for many […]

November 11, 2018 | Anatomy of the Housing Downturn in Vancouver, Canada

It’s not pretty. In 2018, “each month has brought weaker than normal sales, rising inventory, and continued downward pressure on prices” in Vancouver, British Columbia, writes Steve Saretsky, a Vancouver Realtor and publisher of real-estate blog, Vancity Condo Guide. The market faces another headwind: “With the Bank of Canada determined to reach a neutral rate […]

November 7, 2018 | The State of the American Debt Slaves, Q3 2018

Consumers are being lackadaisical again with their plastic. Consumer debt – or euphemistically, consumer “credit” – jumped 4.9% in the third quarter compared to the third quarter last year, or by $182 billion, to almost, but no cigar, $4 trillion, or more precisely $3.93 trillion (not seasonally adjusted), according to the Federal Reserve this afternoon. […]

October 30, 2018 | Declines Hit the Most Splendid Housing Bubbles in America

Seattle prices fall sharply. New York condo prices nearly flat for the year. First feeble declines in San Francisco, Dallas, Denver, etc. Something is afoot. On the surface, it still looks strong. Single-family house prices in the US rose 5.8% in August compared to a year ago (not seasonally-adjusted), according to the S&P CoreLogic Case-Shiller […]

October 24, 2018 | Sales of New Houses Plunge, Pile of Unsold Homes Highest since January 2009, Prices Drop from Year Ago

Hot air is hissing out of this market. Sales of new single-family houses in September plunged 18% from September a year ago, not-seasonally adjusted, to just 41,000 new single-family houses, according to estimates that the Census Bureau and the Department of Housing and Urban Development jointly reported this morning. In terms of the seasonally adjusted […]

October 18, 2018 | Implosion of Stock Market Double-Bubble in China Hits New Lows, Authorities Busy Elsewhere Keeping China Miracle from Unraveling

Bigger issues than propping up the stock market beckon. Today, the Shanghai Composite Index dropped another 2.9% to 2,486.42. In the bigger picture, that’s quite an accomplishment: Lowest since November 27, 2014, nearly four years ago Down 30% from its recent peak on January 24, 2018, (3,559.47) Down 52% from its last bubble peak on […]

October 10, 2018 | How Will 6% Mortgage Rates Deal with Housing Bubble 2?

What many in 2016 thought would never happen again is now reality. It finally happened – a line in the sand has been breached. The average interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) and a 20% down-payment did what people had thought in 2016 we’d never see again: It […]

October 3, 2018 | Powell Explains Just How Hawkish the Fed is Getting

“But we’re a long way from neutral at this point.” When asked how much he worried about another “financial crash,” Fed Chairman Jerome Powell told PBS News Hour that the “next set of problems” wouldn’t “look a lot like the last set of problems we had.” It would be “something else, a cyber-attack, some type […]

September 26, 2018 | What Will Surging Mortgage Rates Do to Housing Bubble 2?

5% is here, 6% beckons as the next target. The average interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) and a 20% down-payment jumped to 4.97% for the week ending September 21, the Mortgage Bankers Association (MBA) reported this morning. A week ago, it was still at 4.88%. This is […]

September 20, 2018 | HELOCs in the US & Canada: As “Scarred” Americans Learned Bitter Lesson, Canadians Went Nuts

Home-equity-loan balances in Canada per capita are now 3.3 times what they were in the US during HELOC peak before it all collapsed. Home Equity Lines of Credit – the infamous HELOCs Americans used as endless ATMs to draw equity out of their homes before home prices collapsed – played a role in the US […]

September 17, 2018 | Meanwhile in China, Implosion of Stock-Market Double-Bubble

Bubbles don’t end well for those who don’t get out in time. US tariffs and threats of more tariffs have not been particularly well received in China, which is already being rattled by corporate credit problems, quakes in the shadow banking system, a peculiar Enron-type phenomenon at provincial and municipal governments called “hidden debt,” and […]

September 6, 2018 | The Fed’s QE Unwind Hits $250 Billion

Here’s my math when this “balance sheet normalization” will end. In August, the Federal Reserve was supposed to shed up to $24 billion in Treasury securities and up to $16 billion in Mortgage Backed Securities (MBS), for a total of $40 billion, according to its QE-unwind plan – or “balance sheet normalization.” The QE unwind, […]

August 27, 2018 | US Yield-Curve Looks Hell-Bent on Inverting, “Flattest” Since Aug 2007

How does it compare to German, Japanese, and Chinese yield curves? On Friday, the US Treasury 2-year yield rose to 2.63% and the 10-year yield remained at 2.82%. This squeezed the spread between them to just 19 basis points, the lowest since August 2007. This is a further step in the “flattening yield curve,” where […]

August 24, 2018 | My Inner Contrarian Wakes Up: Gold Short Positions Hit Record

Speculators in gold price futures are short 670 tonnes – the biggest bearish position in 25 years. First things first: I want to thank the many readers who have expressed their interest in an article about my views and theories on gold and silver. In fact, the response has been so strong that I decided […]

August 18, 2018 | Toxic Mix in Canada: Spiking Inflation, Variable-Rate Mortgages, and a Housing Bubble

What will the Bank of Canada do? The Bank of Canada has nudged up its target rate four times, starting July a year ago, from 0.5% to 1.5%. It last hiked on July 11. But now it is facing inflation that suddenly and unexpectedly jumped at twice the Bank of Canada’s current target rate. Canada’s […]

August 16, 2018 | “Asia Will Be the Next Source of Downside Systemic Risk for Financial Markets”

Emerging Markets turmoil: The price of cheap debt & misallocation of capital. “Excess liquidity usually leads to the misallocation of capital, masking any balance sheet constrains. As this tide of excess liquidity recedes, it reveals the misallocation of capital and the mispricing of risk,” Nedbank CIB strategists Neels Heyneke and Mehul Daya write in a […]

August 9, 2018 | What’s Going On in the Used Car & Truck Market?

As “affordability challenges” hit new vehicles, consumers switch to used, prices spike to record, inflation psychology sets in. For a brain-twisting phenomenon, amuse yourself for a moment with the Consumer Price Index for used cars and trucks. It shows that there has been 0% inflation since 1994 in used cars and trucks, despite actual prices […]

August 1, 2018 | Tesla Discloses Worst Quarterly Loss Ever, But Where Are the 17,000 Model 3 Cars it “Produced” But Didn’t “Deliver”?

SEC, are you checking into this? Tesla never ceases to astound with its hype and promises and with its results that are just mindboggling, including today when it reported its Q2 “earnings” – meaning a net loss of $718 million, its largest net loss ever in its loss-drenched history spanning over a decade. It was […]

July 27, 2018 | The Big Adjustments in “Real” GDP

A  $1-trillion job. What the Bureau of Economic Analysis released today as part of its GDP report was a huge pile of revisions and adjustments going back years. It included an adjustment to the tune of nearly $1 trillion in “real” GDP. And it lowered further its already low measure of inflation. Based on this […]

July 20, 2018 | Which Yield Curve “Inverts” First? US, Japan, Germany, or China?

How the “Yield Curves” Stack Up in central-bank manipulated bond markets. So we had a little bond-market upheaval this morning. After President Trump successfully manipulated bond yields down yesterday and today by griping about the Fed’s rate hikes, an inveterate Fed dove (who has also been griping about the Fed rate hikes) responded by brushing […]

July 12, 2018 | Stock Markets See the US Winning the Trade War, Defying Corporate Lobby & Media Propaganda

Moody’s chimes in.  The trade war talk has been going on since the presidential campaign but markets just brushed it off and rallied. In 2018, the trade war verbiage moved to the foreground. But until June 14, the administration vacillated between thinking about tariffs and putting the trade war “on hold,” depending on who was […]

July 5, 2018 | As the Yield Curve Flattens, Threatens to Invert, the Fed Discards it as Recession Indicator

This Fed is getting seriously hawkish: It revealed that instead of thinking about backing off rate hikes, it’s replacing the yield curve. In the minutes of the FOMC meeting on June 12 and 13, released this afternoon, there was a doozie, obscured somewhat by the dynamics of the rate hike plus the indication that there […]

June 30, 2018 | Update on the Rental Bubbles & Crashes in US Cities

Rents in Southern California go nuts. Bay Area & Seattle “mixed.” Chicago & Honolulu in free-fall. New York City sharply lower. Washington DC loses grip. But rents soar 10-15% in many markets. Median asking rent for one-bedroom apartments across the US rose 4% in June compared to a year ago, to $1,209. And for a […]

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