Financial summary of last week and full year 2021

 Source:

http://creditbubblebulletin.blogspot.com/2022/01/weekly-commentary-2021-in-review.html

Credit Bubble Bulletin
Saturday, January 1, 2022
2021 Year in Review
by Doug Noland

My edited easy to read version follows
Ye Editor

"Covid ran wild.
Monetary inflation ran wild.
Inflation ran wild.
Speculation and asset inflation
ran really wild. ...
Bucking the trend, confidence in
Washington policymaking
ran into a wall.

Federal Reserve Credit
expanded $1.391 TN
over the past year, or 19%,
to a record $8.742 TN.
'Federal Reserve Assets
have now inflated 10-fold
since the mortgage finance
Bubble collapse.

M2 “money” supply
two-year growth of 40.6%

The fiscal 2021 federal deficit
reached $2.77 TN, with a historic
$5.90 TN two-year shortfall
(28% of GDP).

70 new record highs in the S&P500.
Meme stock mayhem.
The SPAC craze.
A record IPO boom.

Cryptocurrencies running wild.
-- After beginning the year at about $28,000,
Bitcoin traded to almost $65,000 in April,
sank back below $30,000 in July,
before posting an all-time high
on November 10th at $68,992.
Bitcoin ended 2021 just below $47,000
– gaining 60% for the year.
Ethereum surged more than 400%.

The S&P CoreLogic Case-Shiller
U.S. National Home Price Index
 jumped 19.1% y-o-y
 (as of October data),
the strongest rise since 1988
The hottest markets were
Phoenix (up 32.3%),
Tampa (28.1%) and
Miami (25.7%)”

The Bloomberg Commodities Index jumped 27.1%

For the Week ending December 31, 2021:

S&P500 increased 0.9% (26.9% price gain in 2021)

Dow Industrials gained 1.1% (up 18.7%)

Utilities surged 2.7% (up 14.6%)

Banks added 0.7% (up 35.0%)

Transports advanced 1.8% (up 31.8%)

S&P 400 Midcaps jumped 1.7% (up 23.2%)

Small cap Russell 2000 added 0.2% (up 13.7%)

Nasdaq100 was little changed (up 26.6%)

Semiconductors increased 0.4% (up 41.2%)

Biotechs fell 2.3% (down 3.8%).

With gold bullion gaining $12,
the HUI gold stock index rose 2.0% (down 13.6%).

U.K.'s FTSE added 0.2% (up 14.3% in 2021).

Japan's Nikkei little changed (up 4.9% in 2021)

France's CAC40 gained 0.9% (up 28.9%)

German DAX increased 0.8% (up 15.8%).

Spain's IBEX 35 jumped 1.8% (up 7.9%).

Italy's FTSE MIB rose 1.2% (up 23.0%)

Brazil's Bovespa index unchanged (down 11.9%)

Mexico's Bolsa increased 0.8% (up 20.9%).

South Korea's Kospi fell 1.2% (up 3.6%).

India's Sensex jumped 2.0% (up 22.0%).

China's Shanghai increased 0.6% (up 4.8%).

Turkey's Istanbul National 100 fell 1.8% (up 25.8%).

Russia's MICEX rallied 2.3% (up 15.1%)

US  BONDS  &  MORTGAGES:
Three-month Treasury bill rates
ended the year at 0.03%.

Two-year government yields
rose four bps to 0.73% (up 61bps in 2021).

Five-year T-note yields
added two bps to 1.26% (up 90bps).

Ten-year Treasury yields
increased two bps to 1.51% (up 60bps).

Long bond yields
were unchanged at 1.90% (up 26bps).

Benchmark Fannie Mae MBS yields
slipped two bps to 2.07% (up 73bps).

Freddie Mac 30-year fixed mortgage rates
rose six bps to 3.11% (up 44bps y-o-y).

Fifteen-year rates
increased three bps to 2.33% (up 16bps).

Five-year hybrid ARM rates
gained four bps to 2.41% (down 30bps).

Jumbo mortgage 30-year fixed rates
up five bps to 3.23% (up 33bps).

COMMODITIES:

The Bloomberg Commodities Index added 0.3%
   (up 27.1% in 2021).

Spot Gold gained 0.7% to $1,829 (down 3.7%).

Silver rose 1.3% to $23.31 (down 11.7%).

WTI crude oil rose $1.42 to $75.21 (up 55%).

Gasoline added 1.0% (up 58%)

Natural Gas jumped 2.8% (up 47%).

Copper increased 1.6% (up 27%).

Wheat dropped 5.4% (up 20%)

Corn fell 2.1% (up 23%).

Bitcoin sank $4,690, or 9.2%,
this week to $46,370 (up 60%).

Coronavirus Watch:
December 29 – Reuters:
“Global COVID-19 infections hit a record high over the past seven-day period…, as the Omicron variant raced out of control and governments wrestled with how to contain its spread without paralysing fragile economies."

December 30 – New York Times:
“With a caseload nearly twice that of the worst single days of last winter, the United States shattered its record for new daily coronavirus cases ... As a second year of living with the pandemic was drawing to a close, the new daily case total topped 488,000 on Wednesday… Wednesday’s seven-day average of new daily cases, 301,000, was also a record, compared with 267,000 the day before"

December 29 – Bloomberg:
“The Cleveland Clinic… is down 2,700 staff—roughly 10% of its medical caregiving workforce—due to quarantines… And the remaining staff must take care of more patients than ever. The Cleveland Clinic is running roughly 2,000 tests daily ... The positivity rate for the state overall neared 25% Wednesday…”

Covid Economy Disruption Watch:

December 29 – New York Times:

“One New York City subway line was suspended on Wednesday and five others were running with delays because so many workers were out sick. Twenty CityMD locations, where thousands of New Yorkers go to get tested for the coronavirus, were closed because of staffing shortages caused by the virus. The Police Department has canceled days off for any officer healthy enough to work. Nearly one in three paramedics are out sick, and the Fire Department begged New Yorkers not to call 911 unless they were truly experiencing an emergency ... "

Market Mania Watch
December 28 – Wall Street Journal:
"Traditional initial public offerings raised more money than ever before in 2021 ... In the first eight months of the year, IPO shares rose. In November, 2021’s class of IPOs were trading up 12% on average… By late December, they traded 9% below their IPO prices.”

December 30 – Financial Times:
“Global mergers and acquisitions for 2021 have soared to their highest levels since records began more than four decades ago"

December 30 – Financial Times:
“At the beginning of 2021, only a niche group of crypto enthusiasts knew what non-fungible tokens (NFT) were. But by the end of the year nearly $41bn had been spent on NFTs, according to the latest data, making the market for digital artwork and collectibles almost as valuable as the global art market."

Market Instability Watch:

December 28 – Financial Times:

“Traders are buying put option contracts in ever greater numbers, hoping the derivatives will provide a hedge if stocks fall from record territory. The rising use of put contracts, including by the swell of new retail day traders who entered markets this year, has accompanied a surge of volatility in the $53tn US equity market."

December 24 – Financial Times:
“Global bond markets are on course for their worst year since 1999 -- The Barclays global aggregate bond index… has delivered a negative return of 4.8% so far in 2021.”

U.S. Bubble Watch:
December 29 – Bloomberg:
“The U.S. merchandise-trade deficit widened to a record in November as imports surged to an all-time high. The gap increased to $97.8 billion last month from a revised $83.2 billion in October"

December 30 – CNBC:
“Initial filings for unemployment insurance dipped last week and remained close to their lowest level in more than 50 years, the Labor Department reported… Jobless claims for the week ended Dec. 25 totaled 198,000, less than the 205,000 Dow Jones forecast and a dip of 8,000 from the previous period.”

December 29 – CNBC:
“California’s largest businesses will be required to pay workers a minimum of $15 an hour in January. It’s a milestone fast-food workers have been trying to achieve since 2012. Next year, 26 U.S. states and Washington will raise their minimum wages, but only California and parts of New York will mandate hourly pay of at least $15, according to a report from payroll experts at Wolters Kluwer Legal & Regulatory U.S.”

December 26 – Wall Street Journal:
"U.S. professionals toward the end of this year saw their compensation jump at the fastest rate in nearly 20 years... Hanging over bigger paychecks is the specter of inflation running near an annual rate of 7%, the highest in 39 years… Wages for all private-sector workers grew 4.6% year over year in the third quarter.' 

Fixed-Income Bubble Watch:

December 29 – Wall Street Journal: 

“Investors have poured more money into municipal bond funds so far this year than they have in decades ... state and local governments issued $301.9 billion of debt for new projects as of Dec. 21, the most in at least a decade.”

China Watch:
December 29 – Reuters:
“A lockdown of 13 million people in the Chinese city of Xian entered its seventh day on Wednesday, with many unable to leave their residential compounds and relying on deliveries of necessities as new COVID-19 infections persisted. Xian reported 151 domestically transmitted infections with confirmed symptoms for Tuesday, or nearly all of the 152 cases nationwide, bringing the total number of local Xian cases to nearly 1,000 during the Dec. 9-28 period. No cases of the Omicron variant have been announced in the city so far.”

Global Bubble Watch:

December 30 – CNBC:

“Heading into 2022, the 10 wealthiest individuals in the world are all worth more than $100 billion, according to the Bloomberg Billionaires Index… Combined, the 10 richest billionaires added $402.17 billion to their net worths in 2021. They were led by Tesla CEO Elon Musk, who this year became the world’s richest man and briefly saw his net worth top $300 billion. He added $121 billion to his net worth in 2021 — just shy of the $140 billion he added in 2020.”

December 29 – Bloomberg:
"China’s 10 richest tech tycoons lost $80 billion in combined net worth in 2021, according to the Bloomberg Billionaires Index, amid widescale crackdowns by Chinese regulators. The drop represents almost a quarter of their total wealth and is the largest one-year decline since 2012, when the index started tracking the world’s richest people.”

Emerging Markets Watch:

December 30 – Bloomberg:

“The cost of borrowing money in Turkey is surging -- the yield on 10-year government bonds has climbed more than 7 percentage points, touching an all-time high of 24.9% on Wednesday. It stands at more than 10 percentage points above the bank’s benchmark repo, the biggest premium on record.”

Europe Watch:
December 30 – Bloomberg:
“Europe has never paid so much for electricity as in 2021. The average cost of power for delivery in the short-term soared to record levels this year, rising over 200% in Germany, France, Spain and the U.K. In the Nordic region -- where vast supplies of hydro power tend to cap prices -- costs surged 470% from a year earlier. The crunch is leaving consumers and heavy industrial users with rising bills heading into 2022. Metals smelters from France to Spain have already been forced to curb output, while some fertilizer producers were forced to halt output altogether.”

Japan Watch:
December 27 – Bloomberg:
“Japan’s industrial production jumped by a record in November, adding to evidence that a manufacturing recovery from supply chain snags was solidly underway before the omicron variant started to spread around the globe. A bounce back in the auto industry helped production climb 7.2% from October’s level, the biggest gain in data going back to 1978… Analysts had expected a 4.8% increase.”

Geopolitical Watch:

December 30 – Financial Times:

“The US and its allies are prepared to respond ‘decisively’ should Russia invade Ukraine, President Joe Biden told his Russian counterpart Vladimir Putin on Thursday amid mounting tensions at the border."