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September 15, 2021 | What a Collapse of China’s Evergrande Would Mean

Property development has been a huge factor in China’s economic growth. It accounts for 28% of GDP. And much of it has been funded by debt, including dollar-debt, and much of it is now blowing up. Foreign investors piled into the property sector over the years, buying hundreds of billions of dollars in bonds, including […]

September 8, 2021 | New Vehicle Sales Plunged Further in August amid Inventory Shortages & Production Cuts: Chip Shortage Wreaks Havoc

It has been one heck of a year so far for automakers, with sales surging early in March and April to very high levels, only to get smacked down brutally by the inventory shortages that resulted from the semiconductor shortages that were triggered by the record mind-blowing spike in sales of durable goods more broadly […]

September 2, 2021 | The Monstrous Flow of Free Money and the Shortages

The shortages are not at Costco or Safeway, though they too might run out of a few weird items here and there. But other retailers are complaining about them, including apparel retailers and shoe retailers – yup, it took five weeks for my running shoes to arrive after I ordered them online, when normally I’d […]

August 24, 2021 | End of the Era of Voracious Corporate Appetite for Office Space

It has been nearly 18 months that many big-company offices became no-go places, and the temporary disruption that was supposed to last only a few months has been dragging on and on. The vaunted and repeatedly delayed “return to the office” – as flexible, partial, and “hybrid” as it was supposed to be – is […]

August 19, 2021 | The Extra $300/Week Unemployment Benefits Encouraged Many to Not Work: Details about the “Labor Shortage” Pile Up

In the 27 states that have ended the extra $300 a week in federal unemployment benefits, paid on top of the regular state unemployment insurance, people are returning to work at a much faster rate than in states where the extra $300 a week are still being paid: this was further confirmed today by the […]

August 13, 2021 | Driving in America Changed: Rural is Up, Urban Down, Mass Transit Out

Total miles driven by all types of passenger and commercial vehicles, including over-the-road trucks and local delivery vehicles, in June, on all roads and streets in the US rose to 282.5 billion miles, the highest since October 2019, and just a tad below June 2019, according to the Federal Highway Administration this week. In other […]

August 4, 2021 | Dollar’s Purchasing Power Gets Zapped. It’s Permanent

This stuff is now going on everywhere, all the time, at all levels. Polaris, the Minnesota-based manufacturer that makes the Indian Chief motorcycles, a variety of snowmobiles, off-road vehicles, and other vehicles, raised its prices in May in response to higher input costs, and now, a couple of months later, it is again contemplating price […]

July 27, 2021 | The Most Splendid Housing Bubbles in America: July Update, Holy Moly

House prices spiked 16.6% from a year ago, the biggest increase in the data going back to 1987, according to the National Case-Shiller Home Price Index today, which was for the three-month moving average of deals entered into public records in March, April, and May. But in some cities, the raging housing mania produced far […]

July 20, 2021 | The Most Splendid Housing Bubbles in Canada: Why the Bank of Canada is Cutting QE

At least the Bank of Canada is officially acknowledging the craziness of the Canadian housing market, which has been deemed to be the second biggest housing bubble in the world, behind New Zealand, whose central bank also officially acknowledged its housing bubble, and stopped QE cold turkey, unlike the Fed, which has refused to officially […]

July 5, 2021 | The Dollar’s Declining Status as Dominant “Global Reserve Currency” v. the Dollar’s Exchange Rate

Yes, the Fed is a drunken reckless money-printer, and the US government has been high for years on deficit spending, but other major central banks and governments do the same or worse. The long-term trends are clear, however. The global share of US-dollar-denominated exchange reserves ticked up to 59.5% in the first quarter of 2021, […]

June 29, 2021 | The Most Splendid Housing Bubbles in America: Holy Moly. June Update

House prices soared by 14.6% from a year ago, according to the National Case-Shiller Home Price Index, the biggest increase in the data going back to 1987. But it pales compared to the raging mania that has taken hold of individual metros. Today’s release, called “April,” is based on a three-month average of sales recorded […]

June 25, 2021 | Pay More, Get Less: Consumer Income & Spending Chewed Up by Red-Hot Inflation

You saw this coming after today’s release of the Personal Consumption Expenditure inflation index. “Core PCE” inflation, which excludes food and energy – the lowest lowball inflation index the US offers and which the Fed uses to track its inflation target – spiked by 6.4% annualized for the past three months. In May alone it […]

June 14, 2021 | Average Age of Cars & Trucks on the Road Jumps to Record: The Circular Problem for Automakers

The average age of all cars and light trucks on the road in 2021 in the US, regardless of how many times they have been traded, jumped by about two months from last year, to a record of 12.1 years, according to IHS Markit today. “Average age” means that a portion of the vehicles are […]

June 6, 2021 | Oh Lordy, Yellen Comes Out for Higher Interest Rates: “A Plus for Society’s Point of View and the Fed’s Point of View”

Starting in 2018, President Trump harangued and hammered Fed Chair Jerome Powell to end Quantitative Tightening and to cut interest rates, and Powell buckled and did his infamous “180.” And now suddenly – unless this gets walked backed again tomorrow – we’ve got the opposite. Treasury Secretary Janet Yellen said in an interview with Bloomberg […]

May 28, 2021 | Fed’s Favorite Lowball Inflation Gauge is Red-Hot, Not Seen in Decades, Even Without the “Base Effect”

The Fed’s favorite inflation measure, generally the lowest inflation measure the US government provides — tracking a lot lower than even the Consumer Price Index which already understates actual inflation — and therefore our lowest lowball inflation measure, and therefore the Fed’s favorite inflation measure, was released this morning, and it was a doozie, despite […]

May 20, 2021 | The Most Splendid Housing Bubbles in Canada: Even the Bank of Canada Gets Nervous and Tapers

The first thing to know about the housing bubble in Canada is what the Bank of Canada has been doing, after its furious bout of QE: In October last year, it tapered purchases of Government of Canada bonds by one notch and also ended buying mortgage-backed securities. In March, it started unwinding its liquidity facilities, […]

May 16, 2021 | The Credit Card Hustle by the Banks & the Fed Hits Rough Spot

There has been a lot of commotion in banking and at the Fed about Americans having the temerity to pay down their credit cards – practically an abuse of stimulus, so to speak. In the five quarters since Q4 2019, Americans have paid down their credit card balances by $157 billion. “One of the most […]

May 6, 2021 | Bank of England Now 2nd Central Bank to Taper, After Canada, but Denies Tapering is “Tapering,” also Following Canada

The Bank of England’s Monetary Policy Committee (MPC) today announced that it voted unanimously to maintain its policy rate at 0.1%. But in terms of its asset purchases, it took the trail the Bank of Canada blazed last November and then widened in April: tapering. The BoE announced that the blistering pace of its asset […]

April 26, 2021 | Forget 2% Inflation. With Margins Forcefully Squeezed, Big Companies Raise Prices, Point at Massive Inflation Overshoot

Big companies, such as Procter & Gamble, have used their earnings calls to prepare investors, customers, and consumers for what is coming: Surging input costs are creating hefty margin pressures, and companies are confident they can regain their margins by passing on those surging costs by implementing large price increases. Smaller companies face the same […]

April 23, 2021 | Cut Prices and They Will Come? New House Sales Jump After Massive Drop in Prices

The median price of new single-family houses sold in March fell by 4.4% from February, to $330,800, after having already dropped by 4.5% in February from January, and by 0.8% in January from December, for a combined three-month drop of 9.4%, the biggest three-month drop since 2009, which brought these house prices right back into […]

April 14, 2021 | More Signs of Cooling Demand: Mortgage Applications to Purchase a Home Drop Below 2019 for First Time in Pandemic Housing Craziness amid Higher Interest Rates

he index for mortgage applications to purchase a home in the week ended April 9 fell by 3.7% for the week, and by 20% from peak-frenzy in January this year, and thereby edged below the same week in April 2019 for the first time since this Pandemic housing boom started, according to the Mortgage Bankers […]

April 6, 2021 | Bank of Canada Now Owns 40% of Government of Canada Bonds. Fed a Saint in Comparison. Taper on the Table

The Economics and Strategy shop at the National Bank of Canada, the country’s sixth largest bank, sent a missive to clients today that would be hilarious if it weren’t pointing at such a serious and massive issue: It celebrated “40,” referencing a 40th birthday, but instead of a birthday, it referred to the Bank of […]

April 1, 2021 | The Explosive Surge of Mortgages for “Second Homes”: Housing Bubble Math

That the housing market has gone nuts is now in the news on a daily basis with click-bait reports of silly bidding wars with ludicrous amounts paid over already high asking prices, powered by the new pandemic of FOMO – the fear of missing out. Bad deals are made in good times, as bankers say, […]

March 23, 2021 | Bank of Canada Announces Balance Sheet Reduction, Suddenly Worried about “Moral Hazard”

The Bank of Canada will unwind its crisis liquidity facilities, will further reduce its purchases of Government of Canada bonds, which it already started tapering in October, will let short-term assets “roll off” the balance sheet when they mature, and will as a result reduce its total assets from C$575 billion now to $C475 billion […]

March 16, 2021 | Can Retail Sales Only Grow if Americans Get Permanent Stimulus Payments in this Era of Free Money? That’s the Question Now

ere is the thing: Retail sales in February dropped 3.0% from January to $562 billion, seasonally adjusted, according to the Census Bureau this morning, much lower than “expected.” What gets blamed for the discrepancy? The weather, which in February was nasty in much of the country. But if these economists had looked at anything at […]

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