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Jun 15, 2023 - 12:07:47 PDT
The housing affordability crisis has priced middle-income buyers from a majority of homes on the market. Buyers earning up to $75,000 could only afford 23% of properties listed for sale in the US. Affordability has been crimped by low inventory and mortgage rates at multi-decade highs.
A Top Russian Banker Says the Dollar’s Dominance Is Ending — But China’s Yuan Is Gaining ProminenceJun 15, 2023 - 09:01:59 PDT
Kostin's assessment of the dollar's clout and the yuan's rise came amid an intense debate over de-dollarization that has raged on for the past year.
A ratings cut could shake confidence in the world’s premier debt market, send tremors through stocks and accelerate the tightening of credit conditions. The debt ceiling fight is over, but the battle that pushed the U.S. to the brink of default could still result in a credit downgrade that would inject new uncertainty into a fragile economy.
Despite the high-stakes debt ceiling negotiations, U.S. debt relative to GDP is projected to keep growing over the next decade. What factors account for this projection and why does it matter?
Asian Central Banks To Adopt Iran's SWIFT Alternative As De-Dollarization AcceleratesJun 15, 2023 - 08:28:13 PDT
In the latest shot fired in the growing rebellion against US dollar dominance, the nine-nation Asian Clearing Union (ACU) has agreed to use Iran's financial messaging system as an alternative to the dollar-denominated SWIFT system that has long served as the globe's financial nervous system.
No one argues that policymakers should not think about future generations. But, rather than focusing narrowly on financial debt, we should consider what kind of world we are bequeathing to our descendants, and what current policies and fiscal commitments will better serve their interests.
In an essay published shortly before he left his role as World Bank president, David Malpass warned that “[e]xcessive government debt raises doubts about whether the private economy can produce enough output and profit to carry the burden….” He wrote, “Government debt levels, both current and projected, are an order of magnitude larger than in previous crises, undercutting growth.”
Inflation is increasing prices and a fall in the purchasing value of money. Banks and governments make inflation sound complicated as it serves their interest. It’s a hidden tax.
House conservatives on Wednesday proposed raising the US retirement age to collect Social Security, handing Democrats damaging political ammunition ahead of the 2024 election.
Jun 15, 2023 - 07:50:23 PDT
61% of Bloomberg terminal respondents (including me, by the way) see Fed hikes leading to recession. Bond traders are stepping up wagers that the Federal Reserve will steer the US economy into a recession.
Jun 15, 2023 - 07:47:46 PDT
On the positive side, retail sales surprised to the upside which would ordinarily trigger more rate hikes from The Fed. +0,3% MoM in May versus -0.2% MoM expected.
“I see a trend here, and I don’t think the Fed’s going to be raising interest rates again,” said the DoubleLine co-founder, who argues that recent labor data suggests the economy wasn’t as strong as many believe.
Doubleline’s Gundlach Warns Stocks Are ‘Exhibiting Signs of a Mania': MWJun 15, 2023 - 06:21:05 PDT
“If there’s a massive default problem, stocks are going down more than 50%, because they are junior in the capital structure,” he said, arguing that with “storm clouds” gathering over the economy, Fed Chair Powell shouldn’t hike rates beyond the current 5%-5.25% range.
After the prior week's surprise surge in initial jobless claims (to the highest since Oct 2021), last week was expected to see a modest slowdown from 261k to 245k. However, things remain troublesome with 262k Americans filing for unemployment benefits for the first time last week (the same as an upwardly revised 262k the week before)...
Retail Sales Unexpectedly Surge In May Led By Autos and Building MaterialsJun 15, 2023 - 06:16:58 PDT
While consensus expectations for retail sales data this morning were expected to contract (headline) or grow very modestly (core); BofA's seemingly omnipotent analysts warned that numbers could be considerably hotter than expected - perhaps due to the recent near-record surge in credit card debt...
"Time will tell if future Fed officials are as resistant to political pressures as its current leadership, succumb to seemingly ever-resurgent MMT influences, or exercise great responsibility in maintaining a sound monetary policy." ~ David Gillette and Lauren Frazier
Jun 15, 2023 - 06:00:22 PDT
In the run-up to this week’s meeting, faultlines had emerged between officials over how much more pain to inflict on borrowers. Those advocating for a more cautious approach cited the possibility that the cumulative effect of the Fed’s tightening had yet to show up. That could result in unnecessary pain for an economy that, on the face of it, still seems to be remarkably resilient.
As with anger, guilt may be too strong a word. But Powell over time became more open in acknowledging that the Fed had gotten its inflation forecast wrong and more blunt in saying damage to the job market might be necessary. On Aug. 26, 2022, again speaking at the Jackson Hole conference: "While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses. These are the unfortunate costs of reducing inflation."
Rising global rate expectations are likely to be disappointed as slowing inflation significantly tightens real rates through the rest of the year, allowing central banks to deliver fewer hikes than priced.
Jun 15, 2023 - 05:54:25 PDT
As the Federal Reserve signals it will likely tighten the money supply further, corporate treasurers are scrambling to cope with the impact of more than a year of central bank rate hikes, taking steps like cutting costs and paying down debt.