Winning . . .

All today: 

Bill to fund DHS fails in the Senate

 

Judge blocks Pete Hegseth’s censure of Sen. Mark Kelly over troops video, for now

 

Fed chair drama: Tillis pours cold water on off-ramp for Powell criminal probe

 

Trump administration will end immigration enforcement surge in Minnesota: Homan

 

 

 

The bond market has voted Nay Nay on the Fed's interest rate cuts which started in September 2024, but I repeat myself

 Worries about softening employment have been entirely misplaced. Jobless claims have been FLAT for four consecutive years.

The Fed was wrong about jobs, just like it was wrong about inflation being transitory.

 

The New York Times on the global economy had me and then it lost me

Because it, like too many commentators, uses an obsolete dollar index in DXY, which measures dollar strength or weakness relative to just SIX currencies: EUR, JPY (!), GBP (!), CAD (!), SEK (!), CHF (!).

 

The Federal Reserve has developed broader indices weighted to the countries the U.S. trades with the most.

 

U.S. GDP is $31.1 trillion. 

EURO ZONE GDP: $16.5 trillion.

Japan: $4.3 trillion.

Great Britain: $3.6 trillion.

Canada: $2.3 trillion.

Sweden: $0.6 trillion.

Switzerland: $1 trillion.

Global GDP: $117 trillion.

 

 The Global Economy’s Warning Signals Are Broken

 

 ... It’s as if cars, instead of slowing down at a flashing yellow light as expected, started speeding up. ...

 

The traditional connection between the American economy’s performance and the value of the dollar has also been snapped. Uncertainty tends to increase the dollar’s value compared with other currencies as investors seek a safe haven in risky times. But the dollar has sunk to its lowest level in years. ...

 

Analysts backed down on their predictions that Mr. Trump’s tariff blitz last spring would cause higher prices ... 

 

Even by DXY standards, the dollar is not weak at 97, well within its long term average range between 95 and 105.

 

And The New York Times is ignoring that wholesale prices increased at a higher rate in 2025 than in either 2024 or 2023. 

 

Anyway, you know what happens when people ignore the flashing yellow:

 

Traffic fatalities surged during the COVID-19 pandemic. This research highlights the fact that disadvantaged communities bore the brunt of the increase and calls for holistic solutions to promote equitable access to safe transportation.

 

 

Gold and silver plunge after Trump picks more pragmatic Kevin Warsh to head the Fed over dove Kevin Hassett

 Gold and Silver tumble as Trump’s Fed Chair pick Warsh seen as preserving central bank independence

... Claudio Wewel, FX strategist at J. Safra Sarasin Sustainable Asset Management, told CNBC’s “Squawk Box Europe” on Friday that a “perfect storm” of geopolitical tensions had helped precious metals move higher this year, pointing to the U.S. capture of Venezuelan President Nicolas Maduro and Washington’s threats to use military force in Greenland and Iran.

More recently, he said, speculation over who would be nominated as the next Fed chair had been influencing metal markets.

“The market has clearly been pricing the risk of a much more dovish contender, that’s been largely helping the gold price along with other precious metal prices. Over the last 24 hours, the news flow has changed a little bit,” Wewel said, prior to Trump’s announcement. ...

Fed Chairman Jerome Powell says economic activity has been solid lol

 10-year Treasury yield rises after Fed keeps rates steady, notes ‘solid’ economy

... “Available indicators suggest that economic activity has been expanding at a solid pace. Job gains have remained low, and the unemployment rate has shown some signs of stabilization,” the post-meeting statement said. “Inflation remains somewhat elevated.” ... 

“I think, and many of my colleagues think, it’s hard to look at the incoming data and say the policy is significantly restrictive at this time,” Fed Chair Jerome Powell said in a press conference. ...

The economy should be three times the size it is, $90.4 trillion in GDP instead of $31.1 trillion.

 

 

Core pce inflation averaged 1.61% year over year under Trump 1.0, but through eleven months of 2025 it averages 2.79%, 73% higher

This higher inflation level, measured on a year over year basis, has persisted for 19-months from April 2024. We're just going sideways, not coming down. 

Next we'll hear from Trump that this is the new normal and that higher inflation is good akshully.

No, the Fed started cutting in September 2024 in error, obviously, and Trump wants the Fed to cut some more.

Meanwhile Jeff Cox for CNBC is just phoning in the story: 

Fed’s main gauge shows inflation at 2.8% in November, edging further away from target

... The personal savings rate rose in November to 3.5%, down 0.2 percentage point from the prior month. ...

How does the personal saving rate rise when it's down 0.2, Jeff? 

Yes, the personal saving rate fell from 3.7% the prior month to 3.5% in November.

People are paying for higher prices at the expense of saving. 

 

Trump attack on Powell causes Senate Republicans Tillis and Murkowski to threaten to block his future nominees to the Fed

Good. 

Powell investigation: Drumbeat of Republican opposition grows on Capitol Hill

Former Fed Chairs finally stand up for Powell in public

 Greenspan, Bernanke, and Yellen say Trump using ‘prosecutorial attacks’ to undermine Fed

... “The reported criminal inquiry into Federal Reserve Chair Jay Powell is an unprecedented attempt to use prosecutorial attacks to undermine that independence,” a statement backed by more than a dozen signatories said.

“This is how monetary policy is made in emerging markets with weak institutions, with highly negative consequences for inflation and the functioning of their economies more broadly,” it continued. “It has no place in the United States whose greatest strength is the rule of law, which is at the foundation of our economic success.” ... 

“The Federal Reserve’s independence and the public’s perception of that independence are critical for economic performance, including achieving the goals Congress has set for the Federal Reserve of stable prices, maximum employment, and moderate long-term interest rates,” the statement said. ...

Mad King Ludwig's disgusting vendetta against Jerome Powell escalates into DOJ criminal probe of Fed Chair's oversight of building renovations

 What this really is is Mad King Ludwig's builder's envy. He thinks he should be in charge of the literal remaking of every Washington edifice, just as he thinks he should be in charge of everything else, including interest rates.

Powell's term expires on May 15, but the lunatic we put in charge of the country just can't let Powell fade away without picking this disgusting fight over nothing.

The Department of Justice should be ashamed of itself, but like most MAGAts, it is incapable of shame. 

Watch here. 

 

 

Trump's mortgage bond proposal imitates his own "stupid" Jerome Powell on the financing side to reduce interest rates, which is what helped make homes 50% more unaffordable in the first place

 

The perfect storm of government MBS purchases and sub-3% mortgages through ZIRP in 2021 combined to rocket housing values by 50%.

Housing reached record low affordability a year later, falling to 17.22%.

Yeah, let's do more of that.

Back in the 1990s, before Bill Clinton and the Uniparty got a hold of it and turned it into a commodity, housing was stable and affordable as median income bought 25% of a home. 

Trump hasn't gotta clue what to do.

 

 Mortgage rates drop to lowest level in nearly 3 years as Trump orders buying of $200 billion in mortgage bonds

... In the first two months of the Covid pandemic, as markets reeled, the Federal Reserve purchased $580 billion in agency MBS. It then continued buying more throughout the year. From March 2020 through June 2021, the Federal Reserve increased its agency MBS holdings from $1.4 trillion to $2.3 trillion, according to the Dallas Fed.

The Federal Reserve also lowered its own lending rate to zero. The combination brought the average rate on the 30-year fixed mortgage to record lows, hitting just 2.75% at the start of 2021, according to Mortgage News Daily. ...

... But Zelman also points out that in the broader home market it’s not just the mortgage rate, but overall affordability that is keeping buyers sidelined. Consumers are stretched, and home prices are close to 50% higher than they were pre-pandemic, ironically because of those record-low mortgage rates brought on by MBS purchases. ...

 

 

Long yields have defied Fed interest rate cuts since September 2024, signaling persistent higher inflation

 

The unemployment rate at 4.6% in November 2025 can't be right

 The unemployment rate at 4.6% in November 2025 can't be right with Initial Claims for Unemployment so low, averaging 223k.

The January to September averages were 4.2% unemployment with 222k initial claims.

Compare:

2024: 4.0% at 221k

2023: 3.6% at 221k

2022: 3.6% at 215k

2019: 3.7% at 217k

2018: 3.9% at 220k.

Household Survey response rates, from which we get the unemployment rate, have plunged since the pandemic, from above 80% before COVID to below 70% now.

As a consequence 2025 and 2024 look suspiciously higher than they probably are when compared with prior years. 

Initial claims for unemployment is more certain as a measurement because the data is aggregated from state unemployment agencies which pay actual people who make actual claims, not people who answer (or don't answer) a poll.

With claims still historically low, the Fed is making a big mistake in reducing interest rates because it thinks employment is softening based on the Household Survey.

They risk reigniting inflation. 

 

 

 

This was a plausible excuse for the latest Fed rate cut

 But what it really does is get the meddlesome Trump off their backs, whether jobs are flagging or not. Jobless claims have averaged a very, very low sub-227k in 2025.

The case for more Fed rate cuts could rest on a ‘systematic overcount’ of jobs numbers

 

Meanwhile Powell & Co. did an end-run around Trump by confirming all the regional bank presidents two months early, before Trump could meddle with that, too, which was a fear.

 

Which is very amusing. 

 

Fed votes to reappoint all of its regional bank presidents 

 

Long term yields have not believed in the rate cuts.

 

They have risen, risen indeed!, since the Fed started cutting in the face of persistent inflation in September 2024, and remain higher today.

 

You can run, but you can't hide from the Hound of Heaven. 

 

 

  

Owner-occupied housing is in short supply, in part because of pandemic-related panic-buying by 5.4 million in 2020, not because of a post-pandemic illegal alien surge under Joe Biden

 ... we flooded the country with 30 million illegal immigrants who were taking houses that ought by right go to American citizens ... Under the Biden administration, the price of a new home literally doubled in four years. ...

-- The ever-ridiculous J. D. Vance, here

Hysteria is everywhere on this issue.

Owner-occupied housing is hardly higher today than it was at the 2020 peak. 

Buyers became hysterical in 2020, seeking isolation. Vance is hysterical in 2025, playing immigration politics. The Fed went hysterical in 2008 slashing interest rates, and it took fourteen years and pandemic-related inflation just to get them to snap out of it.

The Fed's ZIRP after the Great Recession drove down mortgage interest rates to sub-five percent, averaging less than three by 2021.

As everyone knows, when you lower the long term price of a mortgage, you can "buy more house".

That's the major culprit driving prices higher, making housing more expensive, that and the 2-year rule. It took more than a decade of zero interest rate policy to bring us to this pass. It has not been and will not be remedied overnight, especially by its new cheerleaders in the Trump administration.

Cutting interest rates will only make housing more expensive. 

New housing is indeed soaring, but people need to get a grip. The median sales price of all housing in the United States is up 30% since 2020, not 50% like it was in the five or six years right after 2008.

A better government tax policy on housing is called for. The biggest problem is that the mere 2-year owner-occupancy requirement for capital gains tax exclusion has turned housing into a commodity since 1997. It was a big mistake to make housing so fungible. The answer lies in applying the brakes to that, so that the emphasis is on housing as a home as opposed to as a speculative investment driving prices for all types of homes irrationally higher.

The old policy allowed the exclusion only once in a lifetime. You sold your house when you retired and enjoyed life living off the proceeds mostly tax-free, usually in a down-sized arrangement or as a renter. Otherwise during your working life, when you had to sell to move, you had to purchase at least sideways, or up in price so that your gains went into the new place, not into your pocket. That's how housing became such a tempting source of pent-up capital in the first place. There was an incentive to maintain a ladder of housing values upon which people could move more freely, mostly up but also down.

We need to go back to some form of that arrangement.

But our leaders seem to have no imagination for it. They can't see that what we did in 1997 was a revolution. A bad revolution.

Sad! 

 

Oh, ah, well . . .

 

Supreme Court lets Fed Governor Lisa Cook keep job pending oral argument in January

FOMC lowers the Funds Rate 0.25 to 4.25 on a vote of 11-1

Trump's new cry baby appointee Stephen Miran voted against it because he wanted a cut of 0.5 instead lol.

Only "one official did not want any cuts, including Wednesday’s."

Story here. 

Treasury Secretary Scott Bessent once agreed to call two different houses his “principal residence” at the same time just like Lisa Cook ROFLMAO

 

Bessent made mortgage claims similar to ones Trump cited to try to fire Fed’s Cook: Report

There wasn't a spike in jobless claims last week after all: it was due to attempted claims in Texas which were fraudulent

I hope the Fed got the memo.

 

What he said

 

Now that we know Fed governor Lisa Cook bought her second home in Atlanta as a vacation home, Trump's Bill Pulte, who falsely accused her of mortgage fraud, has to go