Home Fed Pauses, 10-Year Breaks Out, & The Vax Damage Trade

Fed Pauses, 10-Year Breaks Out, & The Vax Damage Trade

As the “markets guy”, my job is to ask: “So what’s the trade?” Consider banks.  Given how shaky the banks are right now given the 500 bp move in yields that has caused all those “unrealized losses,” then add to that these banks most likely force-vaxxed their employees.  How do we think that might play out? But this won’t just hit the banks.   It will hit a wide range of corporates and ultimately confidence in government.

user profile picture davefairtex Sep 24, 2023
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The reports this week were a bit real-estate heavy:

  • Housing Starts (HOUST): -164k (-12.78%) m/m, a 3-year low.
  • Existing Home Sales (EXHOSLUSM495S): -30k (-0.74%) m/m, nearing a 3-year low.
  • Fed Balance Sheet (WALCL): -74B (-0.93%) w/w, a 2-year low.
  • Bank Credit (TOTBKCR): +14B (+0.10%) w/w, mostly moving sideways.
  • Strategic Petroleum Reserve (WCSSTUS1): +600 (+0.17%) w/w.

Real Estate had a bad month.  Housing starts fell overall, but under the covers, there was a much larger drop (-36%) in 5+ unit housing starts.  I guess people aren’t building apartment buildings so much anymore.  Is that caused by mortgage rates @ 7.19%?  That said, we are not at 2008-levels just yet in any of the indicators.

There was a Fed meeting this week; they paused, as expected.  But the market was not pleased when Powell said that rates were going “higher for longer”.  Reading between the lines, it looks to me like we might have another rate increase next meeting.  The market doesn’t agree: CME Fedwatch Tool only gives a 26% chance of a November 1 rate increase.  I didn’t listen to this press conference – Wolf Richter did, and has more details here (source – wolfstreet).  One of Powell’s statements from Wolf’s post stood out:

“I feel like what we have right now is what’s still a very strong labor market, and there are many candidate explanations….”

Pick me!  Pick me!  I have a candidate explanation!  I hypothesize that the Biden-Handlers killed and disabled a sizeable chunk of the workforce through forced injection of a bioweapon-vax, and then they got everyone to pretend like nothing happened.  How would that manifest?  A surprising, and “very strong labor market.”  And the life insurance payouts and the disability payouts would temporarily increase little-people cash on hand – they might spend like drunken sailors – long term awful, but the families of the insured/murdered workers would get a “windfall” of sorts.   Maybe there have been half a million of them?  So a wealth transfer from insurance companies to dead worker families, and a “very strong labor market” because of the sharp increase in disability in the workforce.  And, of course, inflation.

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