US Home Prices Rose For 4th Straight Month In June, Case-Shiller Data Shows
After seeing their biggest rise in more than a year in May, home prices in America’s 20 largest cities rose once again in June, up 0.92% MoM (the latest Case-Shiller data released today). That is the 4th straight monthly increase in prices, but they remain down just over 1% YoY…
Source: Bloomberg
The Nation Home Price Index rose 0.65% MoM, but also remains down YoY (barely at -0.02%).
Chicago, Cleveland, and New York again led the way reporting the highest year-over-year gains among the 20 cities in June. On the other side of the scale, we note that Tampa just rolled negative and Miami is about to turn red YoY...
And judging by the resumption of the rise of mortgage rates since the Case-Shiller data was created, we would expect prices to also resume their decline…
Source: Bloomberg
But, when selling volumes and inventory are so low, anything can happen. Certainly not the tamping-down of home unaffordability that The Fed would have been hoping for.
The Western World Is About To Deliver Some Very Bad News To Its Young Adults
By Benjamin Picton, Senior Macro Strategist at Rabobank
Here Be Dragons
I’ve been away on holiday for the last two weeks trying my best to pay more attention to my children than I do to the markets. Mission accomplished for the most part, but it has been hard to look away while momentous shifts seem to be occurring all around us. Indeed, at the Jackson Hole symposium over the weekend, ECB President Lagarde re-upped her comments from April by suggesting that “there are plausible scenarios where we could see a fundamental change in the nature of economic interactions”, “past regularities may no longer be a good guide for how the economy works” and “there is no pre-existing playbook for the situation we are facing.” Translation: “we really don’t know if rates are high enough or not, and that isn’t really the point anyway.”
So, according the second most senior central banker in the world we’re in uncharted waters, and as anyone who has ever taken an interest in the Age of Discovery will know, once you reach the edge of the known world, here be dragons.
The most obvious dragon is of course China, and its surrogates, which are making new attempts at formalizing challenger status to the G7 via the BRICS bloc. Michael Every notes:
The BRICS just expanded to allow in Argentina, Ethiopia, Egypt, Saudi Arabia, the UAE, and Iran, so with much hullabaloo we can colour in more countries, GDPs and commodities (like oil) as ‘anti-dollar’. However, Argentina is a serial defaulter with a plummeting currency, and may dollarize soon; Ethiopia is one of the world’s poorest countries, and recently brushed with civil war; Egypt has a wilting currency; Saudi Arabia and the UAE have their currencies pegged to the US dollar, and the former is haggling over a US defence deal and nuclear tech; and Iran is heavily sanctioned, again with a collapsing currency, and could be daggers drawn again with Saudi at any time. In short, the world is changing, but as the FT has pointed out, the BRICS+ (a name created by Goldman Sachs) don’t even have an official website. Meanwhile, it was the Euro, not the dollar, that saw its share of SWIFT transactions collapse to a record low in the latest data. You want to look at potential early victims of any global tectonic shifts? Look there.
This reads as a very ragtag group, with “relationships” built mainly around a common outsider status and no small dose of opportunism in seizing a perceived first-mover advantage in undermining dollar hegemony. We remain sceptical. As we’ve covered in this publication many times, the idea of commodity standard like some kind of petro-Yuan is laden with problems.
The auspices aren’t great for the new alternative multilateralism. The putative centre of the BRICS+ bloc, China, is struggling to revive its flagging growth engine while economic remedies that are taken as orthodox in the West are shunned for their perceived incompatibility with Xi Xinping thought. Markets have been waiting for months for signs of big-bang stimulus from the CCP or the PBOC, but as the WSJ reports, maybe it just ain’t coming. Chinese perceptions that Western consumerism is flabby, decadent and morally obtuse stands at odds with the need for China to fulfil the role of deficit-runner in order to get enough Yuan into the hands of the periphery. How can Argentina, Brazil, Iran and Egypt buy virtuous Chinese manufactures if they don’t have any Yuan? The answer here is that trade will continue to be conducted in dollars, one way or another.
China clearly has little appetite for further credit expansion either. The CCP has made several attempts over the years to rein-in debt levels, all of which have ultimately been abandoned in the face of a stalling economy. For the time being, Xi Xinping is resisting large-scale easing of credit conditions, urging “patience” while the economy passes through what policy-makers hope is a temporary soft patch, rather than the start of a Japan-style stagnation brought on by decades of malinvestment and speculative pump-priming of real estate assets.
The real question now is how strong the CCP and the PBOCs resolve to address burgeoning debt-levels will be in the face of economic slowdown. For an authoritarian regime whose legitimacy is built on the delivery of rapidly rising living standards, slow growth poses a potentially existential risk. The obvious retort here is that authoritarian states have no need to court popular opinion, but the speed at which the Covid-Zero policy was ultimately abandoned in the face of civil discontent should serve as an indication that the CCP is ultimately still sensitive to what the population thinks.
Looking back to Jackson Hole it’s fair to say that debt and popular discontent aren’t a uniquely Chinese problem. During the meeting of rich men north of Richmond (Jackson Hole is north of Richmond, I checked) a paper presented by Barry Eichengreen and Serkan Arslanap broke the bad news that “public debts will not decline significantly for the foreseeable future”, “primary surpluses of… 3 to 5 percent of GDP are very much exceptions to the rule” and that “inflation is not a sustainable route to reducing high public debts.” That all makes for sobering reading for already beleaguered millennials and Gen Z’s, who will be the can carriers for Eichengreen and Arslanap’s prognosis that “given ageing populations, governments will have to find additional finance for healthcare and pensions”.
What seems to be missing here is a dose of Huw Pill cod liver oil, whereby the West confronts the idea that we’re not as rich as we used to be, and that deteriorating demographics and higher spends on national security might necessitate a lowering of ambitions around what is possible in welfare economics. There are signs that the message is starting to get through. BOJ Governor Ueda nodded to the plight of the West when he suggested that the relocation of supply chains will result in lower productivity in the future, which ultimately means lower real incomes. Meanwhile, former French Ambassador to the United States Gerard Araud, echoes Michael Every’s assessment of Europe’s diminishing importance by writing in the UK Telegraph that “deluded Europe can’t see that it is finished.”
Nobody likes bad news, but telling young people that they need to pay a higher proportion of their stagnant incomes to fund the pensions of people who are wealthier than they are ever likely to be is sure to go down like a lead balloon, especially when pop culture is already communicating the sense that a Dollar doesn’t buy what it used to, and is taxed to the hilt.
So, the plates are shifting and policy makers in the West seem to be either totally unsure of the answers, or proffering answers that are anathema to the social fabric. We’re in uncharted territory and here be dragons.
Tucker Carlson Apologizes To Hungary On Behalf Of America, Slams ‘Disgusting’ US Ambassador Over Lack Of Diplomacy
Tucker Carlson flew to Hungary last week where he gave two powerful speeches – apologizing for the United States’ lack of diplomacy and its “cultural imperialism.”
Carlson started by apologizing on behalf of the United States after US Ambassador David Pressman, a gay activist, lectured the Hungarian government over LGBTQ rights.
“The point of diplomacy is not to hector other nations for its own sake,” said Carlson. “To show up in someone else’s country and scream at them because they’re different from you.”
“I’m not in the habit of apologizing for the United States. In fact, I don’t think I ever have, but the behavior of the American ambassador to Hungary makes me want to apologize,” said Carlson. “It’s disgusting and inexcusable. It’s also so far from the norms of diplomacy in my country that it’s hard for me to believe that David Pressman is actually doing what he’s doing.
“And so for a creep like David Pressman, who is not a diplomat – who’s a political activist and Biden donor – to show up in your country and lecture you about your culture, and threaten you because you do things differently from the way they do things where he lives… hurts the United States and is a grave embarrassment to me as an American, and an outrage to me as someone who pays his salary. It’s disgusting.“
Hungary under Orbán has been tightening laws targeting LGBT propaganda. Currently same-sex couples in Hungary aren’t allowed to adopt children, and changing genders is also illegal. Pressman, meanwhile is a gay human rights lawyer and California-born former aide to former US Secretary of State Madeline Albright. Earlier this year, Hungarian Foreign Minister Peter Szijjarto slammed Pressman, saying he was way out of line.
Carlson also criticized America’s ‘cultural imperialism,’ insisting that larger countries have a responsibility not to force their ideologies or lifestyles onto smaller ones, and that this behavior undermines the notion of self-determination.
“That is not the basis of a successful Empire,” he said.
“Everybody wants Freedom everyone understands the concept of self-determination,” said Carlson, adding “Hungary isn’t hassling anybody else; Hungarians have views, your government has views.”
Tucker Carlson went off in Budapest:
“The ruling party is the childless, the unmarried, working for low wages for large corporations and living in tiny apartments in overcrowded cities rife with crime, having food delivered by immigrants, and spending time glued to a screen.” pic.twitter.com/Im62rNPShO
Carlson then warned: “It’s the ones who tell you the 180 degree opposite of the truth who you need to be careful of and they’re the ones who will enslave you.”
He also warned NATO… “The world is reseting completely. The post-war order is collapsing. NATO is going to collapse. NATO cannot stand long term.”
Tucker in Hungary: “The world is reseting completely. The post-war order is collapsing. NATO is going to collapse. NATO cannot stand long term.” pic.twitter.com/QzEla49erc
“The most important thing I ever did other than get married was read books not tweets, not electronic but paper books in traditional form and read them every day,” said Carlson, pondering whether the decline in reading is responsible for the clouding of the world’s collective wisdom.
He then conveyed a message to the West…
“What Hungary is saying to the West is we want to be part of the West… maybe don’t push your garbage on us so aggressively,” he said – in essence, that Hungary doesn’t want to be an island, it wants to participate in Western civilization but without the oppressive force of cultural changes that don’t align with its values.
Watch the entire speech below:
Carlson’s speech echoes some of what he told a crowd in Esztergom, Hungary two years ago, when he told the crowd that the US media landscape lacks objectivity, and discussed the importance of respecting culture, history, and beauty in society. Carlson views these elements as essential for human happiness and effective governance, something he thinks Hungary has managed better than the U.S.
“If you disobey the political orders from the ruling party they’ll shut you down,” Carlson said (prior to being shut down).
Carlson was particularly struck by Hungary’s stance on migration. “Hungary stood alone essentially in saying you know no thanks, and that struck me as a totally legitimate thing to do,” he said, referring to the Orban’s decision to block migrants from entering the country.
This 25 minute video with Matthew Piepenburg and myself is probably one of the most important discussions that we have had.
For years we have both warned investors about the consequences of a system based on unlimited money printing, debt creation and money debasement.
The world economy and the financial system is now on the cusp of a precipice.
No one can forecast when the coming violent turn will come.
It can take years or it can happen tomorrow.
Future historians will tell us when it happened.
In the meantime investors have one duty to themselves and their dependents which is to protect their wealth from total destruction.
Money printing and debt creation have taken markets to dizzy and unsustainable levels.
Since Nixon closed the gold window in 1971, both global and US debt is up over 80X!
And asset markets have been inflated by this fake money with the Nasdaq up 120X and the S&P up 44X since 1971.
But the bubbles are not just in stocks but also in bonds, property, art, other collectibles etc, etc.
In our view, the time to pay the Piper is here and now. The consequences will be costly, even very costly for the investors who ignore this major risk.
Just as bubble assets can go up exponentially they can implode even faster.
RISK OF MARKETS FALLING 50-90%
Sustained corrections of 50% to 90% in stocks and bonds are very possible and when the bubble bursts it will go so fast that there won’t be time to get out or to buy insurance.
Whether the Everything Bubble turns to the Everything Collapse today or tomorrow, the time to protect your assets is before it happens which means NOW.
Forecasting the gold price is a Mug’s game . But understanding the significance of gold for protecting against unprecedented risk is not. We had the Ides of March in mid March this year when 4 US banks, led by Silicon Valley Bank and Credit Suisse, Switzerland’s second biggest bank all went under in a matter of days.
That was a rehearsal. Bad debts and rising interest rates are a timebomb for the banking system. So is the $2-3 quadrillion derivatives risk. This gargantuan risks are before us now and could materialise at any time starting this autumn.
Erdogan Announces Russia Trip Where He’ll Seek To Restore Grain Deal With Putin
The head of the country which comprises NATO’s second largest military is planning a trip to Russia to meet with President Vladimir Putin.
Turkey’s President Recep Tayyip Erdogan made the announcement Monday, and teased potential progress for reestablishing the critical Black Sea grain deal, despite ongoing international tensions over Russia bombing Ukraine ports, which has been strongly condemned by the West.
“President Erdoğan has so far led an intense diplomacy in order to help prevent a global food crisis,” ruling Justice and Development Party (AK Party) spokesman Ömer Çelik said in announcing the upcoming trip,
The meeting will be held as soon as next week, with Bloomberg reporting a date of Sept.8 – prior to Erdogan going on to India for the G20. The Turks as well as Russian media confirmed it will be hosted in Sochi. But it could happen early next week, with TASS mentioning September 4 as a possible date, citing diplomatic sources.
“Turkish news reports said Erdogan planned to bring up the issue of renewing the grain deal during the potential talks with his Russian counterpart,” TASS wrote. “Kremlin Spokesman Dmitry Peskov previously said that the meeting between the two leaders would take place shortly, but he did not name any specific dates.”
Since the Black Sea Grain Deal Initiative expired on July 17, and as Moscow pulled out (by not renewing it), global food prices have risen. Meanwhile Ukraine has with Western backing sought to establish an alternate export route by using the maritime territory of Romania and Bulgaria.
Within NATO, Erdogan has not been as vociferous in condemning the Russian invasion of Ukraine compared to other leaders, instead playing more of an intermediary role, keeping diplomacy open. Prior to its collapse, Turkey touted the grain deal as its greatest achievement toward peace and dialogue related to the Ukraine war.
▪️Erdogan could possibly go to Russia on Sept. 8, before traveling to India to attend the Group of 20 Summit in New Delhi, officials said. pic.twitter.com/ASgvefFol1
The West will be watching Erdogan’s actions closely, and likely some officials will condemn the Turkish leader’s trip to Russia outright, after China’s Xi was recently another major leader to visit Russia during the war.
Rents are rising at a record pace in Germany. Politicians turn to a price control gambit guaranteed to fail…
Germany’s ruling party, the Social Democratic Party (SPD), is preparing to propose a three-year rent freeze nationwide to help tenants cope with rising housing costs. “We need to create a space where we can breathe – we need a rent freeze for the next three years,” says senior…
Using a 1994 law change, we exploit quasi-experimental variation in the assignment of rent control in San Francisco to study its impacts on tenants and landlords. Leveraging new data tracking individuals’ migration, we find rent control limits renters’ mobility by 20 percent and lowers displacement from San Francisco. Landlords treated by rent control reduce rental housing supplies by 15 percent by selling to owner-occupants and redeveloping buildings. Thus, while rent control prevents displacement of incumbent renters in the short run, the lost rental housing supply likely drove up market rents in the long run, ultimately undermining the goals of the law.
A Brookings Study says “Rent control appears to help affordability in the short run for current tenants, but in the long-run decreases affordability, fuels gentrification, and creates negative externalities on the surrounding neighborhood. These results highlight that forcing landlords to provide insurance to tenants against rent increases can ultimately be counterproductive. If society desires to provide social insurance against rent increases, it may be less distortionary to offer this subsidy in the form of a government subsidy or tax credit. This would remove landlords’ incentives to decrease the housing supply and could provide households with the insurance they desire.”
Common Sense
Common sense suggests the same thing.
Landlords of rent control units have no incentive to make improvements, and developers do not want to add units in rent control areas.
The common remedy to the latter point is to offer developers incentives. Developer incentives further distorts the markets.
Rent Control Doesn’t Work, But It’s Still a Good Idea
The Problem Isn’t a Housing Shortage, It’s the Concentration of Ownership by the Wealthy, this bubble is fundamentally an artifact of central bank and government policies that enrich the already-rich, who were incentivized to outbid each other with low-cost credit to snap up “investment properties” with their “surplus capital” that generate more income and capital gains that cash, which until recently was “trash” due to near-zero savings yields.
Bingo.
Rent controls cannot possibly address that fundamental problem.
The Fed Commits to a 2 Percent Inflation Target, Carefully
Here is the key thing Powell said today: “As is often the case, we are navigating by the stars under cloudy skies.”
And to that I would add, using tools like inflation expectations proven to be totally worthless.
The Fed creates bubbles because it is has no idea what inflation is. Hell bent on raising routine consumer inflation, the Fed ignored massive bubbles in housing.
The Housing Bubble Is Expanding Again
Case Shiller National and 10-City home prices indexes plus OER, CPI, and Rent indexes from the BLS.
After a two-month decline in most markets, prices are again on the rise.
Checking In On NATO-Liberated Libya: Foreign Minister Fired For Meeting With Israel
Libyan Foreign Minister Najla al-Mangoush met with her Israeli counterpart FM Eli Cohen last week in Rome.
Upon reports of the “controversial” meeting, mass protests have erupted across the country, which since Muammar Gaddafi’s overthrow at the hands of NATO-backed rebels has been in a state of internecine conflict and chaos.
FM Mangoush represents Libya’s Government of National Unity (GNU) in Tripoli, which is the United Nations and US-backed authority in Libya, following years in-fighting among rival Libyan factions ruling western, eastern, and southern parts of the country.
The North African country has never recognized nor had diplomatic relations with Israel. Any dealings with Israeli are punishable by imprisonment, according to the Libyan penal code.
Al Jazeera is reporting Monday that Foreign Minister Mangoush has been fired, which is a deeply ironic situation given the Tripoli government was literally installed after the US-NATO military intervention in 2011.
In wake of the controversy, both governments are now trying to downplay the Rome meeting as more of a chance encounter, but regional sources have pointed out the following:
Reporting from West Jerusalem, Al Jazeera’s Harry Fawcett said: “[An Israeli] foreign ministry spokesman said that it was a coordinated meeting, it was not something accidental bumping into, it was a deliberate, direct session of talks with Italian foreign minister in attendance.”
Over a decade after Obama pledged to bring “democracy” to Gaddafi’s Libya, by bombing it in support of NATO-armed rebels, the new government dismisses ministers for merely meeting with close US-ally Israel.
The Associated Press has revealed that no less than CIA Director William Burns was earlier this year dispatched by the White House to urge Tripoli to enter diplomatic relations with the Jewish state:
A Libyan government official said normalization of relations between the countries was first discussed in a meeting between the Tripoli-based prime minister, Abdul Hamid Dbeibah, and CIA Director William Burns, who visited the Libyan capital in January.
According to the official, Burns proposed that Dbeibah’s government, which is recognized as Libya’s internationally backed government, join the group of four Arab countries that normalized relations with Israel under the U.S.-brokered Abraham Accords in 2020. The Libyan premier gave an initial approval, but he was concerned about public backlash in a country known for its past support for the Palestinian cause, the official said.
Hard to imagine a better illustration of how the Israel obsession warps U.S. Middle East policy than sending the CIA director to pressure one of Libya’s two rival governments to normalize ties. Does it even fit on a Top 20 list of U.S. interests in Libya? https://t.co/k9WRqwX57H
Back in 2011, then Secretary of State Hillary Clinton was considered the “architect” of the war, which many pundits have also called “Obama’s Iraq”. Like with US policy in Syria, it resulted in arming and empowering jihadists and other fanatical Islamists.
Rather than stemming the expansion of terrorism in the Mideast/North Africa (MENA) region, Washington’s “Arab Spring” era interventions served to exacerbate and spread terrorism in the region.
France Ready To Support Military Action In Niger, Won’t Pull Ambassador: Macron
France is defying the orders of Niger’s junta leaders, who have ordered France’s ambassador to immediately leave the country.
On Friday, French Ambassador Sylvain Itte was issued a letter telling him to exit the country within 48 hours, but Paris has said it will not recognize the “the putschists” but instead supports “a president who has not resigned,”according to fresh statements of French President Emmanuel Macron.
“Our policy is the right one. It depends on the courage of President Mohamed Bazoum, the commitment of our diplomats, of our ambassador on the ground who is remaining despite pressure,” Macron affirmed in a speech to a gathering of French ambassadors in Paris on Monday.
He also dismissed assertions that there’s reason to be afraid of Niger’s military rulers, given Amb. Itte could face arrest or even violence, also after earlier this summer the French embassy was attacked and set on fire by pro-coup demonstrators.
“One shouldn’t give in to the narrative used by the coup leaders that consists of saying France has become our enemy,” Macron said in the speech.
He also blamed Niger’s military coup leaders for country’s current economic woes and political instability. “The problem of Nigeriens today is the coup leaders who put them in danger because they are abandoning the fight against terrorism, because they are abandoning a policy that was economically good for (the population) and they are in the process of losing international funding that was helping them emerge from poverty,” he said.
But importantly, Russian media has picked up on an important part of speech where Macron said he’s willing to support military intervention if it is decided by a regional bloc of African states:
France is set to support any efforts, including military intervention, made by the Economic Community of West African States (ECOWAS) to restore constitutional order in Niger, French President Emmanuel Macron said on Monday.
“We support the diplomatic and, if it is decided, the military activity of ECOWAS,” he said, adding that Paris will not drop its support for legitimately elected President Mohamed Bazoum.
UPDATE – French President Macron regarding Niger:
“Our policy is simple: we do not recognize the putschists, we support a president who has not resigned”.
“We support the diplomatic action, and when it decides, the military [decision] of ECOWAS”.
ECOWAS has made the threat several times, but has lately waffled in the face of Niger’s warning that it is ready to fight if invaded.
Niger also has a couple of regional supporters in the countries of Mali and Burkina Faso, both also run by juntas. These two outside powers would like jump by Niger’s side against the ECOWAS coalition.
A company backed by the Soros Economic Development Fund has taken control of two major Polish newspapers, raising concerns over far-left media bias due to the billionaire oligarch’s progressive politics.
The Polish owner of the daily Rzeczpospolita and the financial daily Parkiet, Grzegorz Hajdarowicz, has sold a large proportion of his shares in Gremi Media, which owns the two papers, to the Dutch company Pluralis. This completes a deal struck in 2021 that saw Pluralis buy a minority stake with the option to buy extra shares later.
As a result, Hajdarowicz has ceased to be the majority shareholder in Gremi Media, with the Dutch company Pluralis now owning 57 percent of the shares, which has allowed it to take control of the company, according to Business Insider.
One of the shareholders in Pluralis is the “Soros Economic Development Fund.”
The fact that billionaire George Soros, along with his surrogates, has become indirectly involved in the deal runs counter to his recent announcement that he is pulling out of being active within the European Union.
Soros has been highly active in former communist countries.
He is hostile to Poland’s ruling conservative Law and Justice (PiS) party and the idea that it could win power for a third term in the parliamentary elections in October.
Soros supports liberal migration policies and deeper integration within the European Union.
Poland’s state-backed oil and gas giant, Orlen, which has purchased a large number of regional papers, was in 2021 reported to be interested in purchasing the company then fully owned by Hajdarowicz.
However, Hajdarowicz preferred to sell the shares of Gremi Media to a foreign investor.
A study published in 2022 in the British medical journal, The BMJ, found processed and ultra-processed meats, such as ham, bacon, salami, hotdogs, beef jerky, and corned beef, can significantly increase men’s risk of colorectal cancer and other diseases and even increase early death in both men and women.
“We found that men in the highest quintile of ultra-processed food consumption, compared to those in the lowest quintile, had a 29% higher risk of developing colorectal cancer,” stated co-senior author Fang Fang Zhang, a leading cancer epidemiologist and the head of the nutrition epidemiology and data science division at Tufts University’s Friedman School of Nutrition Science and Policy in Boston.
The effects of ultra-processed foods are pretty obvious — look at the American people — morbidly obese and full of health problems. Knowing the health ramifications of the chemicals mega corporations put in the food should be a national priority — but it’s not.
While we don’t want to spoil dinner, the latest viral video of pink slime was posted on TikTok. It shows what appears to be a ham operation.
Over 20,000 users weighed in on the video, with the vast majority expressing concern about the country’s food supply and speculating on how the chemicals in processed foods might be harming them.
It may be time for some folks to realize their health problems are partly due to diet. Break the food matrix, find a local farm, and source food locally — or better, grow your own food. Isn’t it time to know what’s exactly in your food?
But don’t worry. Big corporations will solve the fat crisis with the newly created miracle fat drug.
Why aren’t ESG-ers going after companies producing processed and other junk foods?
