The Silent Killer?

No, not that silent killer. This is not about your health, and the silent killer of heart disease. This is about rising interest rates and why they will continue to rise, all the while threatening the entire economic system. (For those who are not prepared)

History teaches us that monetary depreciation, price increases, and a decline in corporate activity are all related. Even if a slowdown in economic activity is all but guaranteed, interest rates will keep rising as a result of the falling purchasing power of fiat currencies. The monetary authorities have little control over it, thus a cyclical banking crisis, involving both central and commercial banking institutions this time, is inevitable.

As long as the tightly controlled consumer price inflation statistic increased at a pace of about 2% annually, central banks were willing to keep interest rates low, even to negative levels. However, the increase of credit during the covid epidemic changed that, and prices then shot above the 2% objective. Beginning in the middle of 2020, both producer and consumer pricing movements began to show the new price trend. However, prices skyrocketed and interest rate control strategies failed when NATO opted to exclude this important source of commodities and energy from the world market in response to Russia's invasion of Ukraine a year ago.

Hope that the inflation dragon is nothing more than a mystical figment of the imagination is the only thing preventing a fresh market disaster. At first, it was said that inflation is temporary. After then, it was promised to return to the 2% target, but it would take a bit longer, and it still is.

The basic presumption is that the purchasing power of the currency is constant and that all price movements result from the supply and demand for goods. Nevertheless, given the irrationalities of human judgment and the huge expansion of a fiat currency's number and related credit, this is untrue. - LewRockwell

Meanwhile, This From Breitbart Economics Editor John Carney

“The Federal Reserve’s decision to scale back rate hikes at their last two meetings will be “looked at as an historic mistake because that refueled inflation”.

“I think that a lot of people thought that inflation was going away,” Carney said. “All the information we’ve had about January, and now also February, says inflation is back. The Fed stepped down in December and then stepped down again in the January-February meeting. And that is going to be looked at as an historic mistake because that refueled inflation, and we’re coming right back up again.”

This resurgence, Carney noted, “follows the Federal Reserve’s decision to step down the pace of rate hikes—a policy choice that increasingly looks like it was a mistake.” - Breitbart

A Sign of ourTimes

According to The Washington Post, Amazon has paused work on its HQ2, which was supposed to be built near Arlington, Virginia. Three office buildings with a total height of 22 stories were intended for the project.

The move is the most recent illustration of Amazon's conservative growth strategy following a decade of explosive expansion. The corporation was compelled to reduce recruiting and growth at its warehouses after overexpansion led to a drop in business. It has also fired 18,000 corporate employees in recent months. The company has also stopped expanding its logistics network after acknowledging that, in an effort to meet the pandemic's bullish growth expectations, it added too many warehouses and hired too many staff.

The development stop is only a hint that Amazon is "adapting to current market conditions," according to Terry Clower, director of the Center for Regional Studies at George Mason University. The labor market in the construction industry is still tight, and some supply chains are still constricted, which puts pressure on major building projects. He asserted that Amazon is holding off on making any decisions until it knows what the "new normal" in business demand entails. - Breitbart

Housing 101, in 2023

Mortgage applications to buy a home have dropped to a new 28-year low, signaling that recent housing hype and hoopla has already fizzled.

Since late January, mortgage applications for home purchases have been falling every week, and they have now reached a fresh 28-year low. A leading indication of the volume of home sales is the number of mortgage applications. According to information released by the Mortgage Bankers Association today, they fell by 44% year over year and by 48% compared to two years ago, reaching their lowest level since 1995.

A significant portion of the January hype and hoopla came from homebuilders. Due to the 40% to 60% decline in their sales orders in Q4 they are currently surviving off of their backlogs. If those sales orders are not canceled, they represent potential future earnings. The majority of the builders' Q4 revenues and profits came from finishing homes and closing sales on earlier sales orders that were in their backlog. They were willing to ignore the decline in Q4 sales orders, which are an indicator of future revenues. They concentrated on the increase in sales orders from the fallen levels in Q4 to the January level. The goal was achieved when analysts went for it and homebuilder stock prices increased.

Also, the spring selling season is already over. All of this anticipation rested on a two- to three-week period in January when activity jumped from its low point late last year. Mortgage applications were down 32% from a year ago and 38% from two years ago, even at the high near the end of January. - Wolf Street

This Too Shall Pass

The secret of success is to be ready when your opportunity comes. Benjamin Disraeli