Last time was during the Financial Crisis. Now it’s happening in a kinder and gentler way, but there is no crisis.
The evidence thickens: In July, the median price of new single-family houses fell 4.5% from July 2018, to $312,800, and was down 3.1% from July 2017, according to the Commerce Department this morning.

These price changes do not include the incentives – the free upgrades of finishes, counter tops, and the like – that homebuilders dangle in front of potential buyers to make deals. With incentives, buyers get a little more for the same price. The price declines in the chart are on top of that.
The trend via the three-month moving average.
As you can see from the chart above, this data – produced jointly by the Census Bureau and the Department of Housing and Urban

Fifth deal croaked in August. Moody’s has a cow over Ancestry.com’s deal. Deals had to be sweetened to find buyers. Retail investors bail out.
Despite the Fed’s warnings over the years about leveraged loans – including in its Financial Stability Report and in the minutes of its July meeting – the leveraged loan market has only gotten bigger and riskier and has ballooned to $1.3 trillion globally by a narrow definition, or to $3.2 trillion by a broader definition. But first signs are appearing that it’s getting rougher.
Ancestry.com, a heavily indebted, junk rated DNA-tester – owned by private-equity firms Silver Lake Partners and Spectrum Partners and by Singapore’s sovereign wealth fund – was able to complete a $1.385 billion leveraged loan, according to “sources” cited today by

Fed Warns about “Elevated” Asset Prices and High Business Leverage.
My fancy-schmancy Fed Hawk-o-Meter, which analyzes the minutes of the Fed’s meetings for tell-tale signs of how the Fed sees the economy, jumped 5 points for the meeting on July 30-31, indicating that a further rate cut – even a cut of just a quarter percentage point – was not set in stone during the meeting:

The Fed Hawk-o-Meter counts how often “strong,” “strongly,” and “stronger” appear in the minutes to describe the current economy. The meeting minutes are one of the Fed’s communication channels to the markets to avoid surprises on meeting day. The Hawk-o-Meter attempts to show in a chart what the Fed wants to communicate to the markets.
The words “strong,” “strongly,” and “stronger” appeared 28 times in the

Now they’re clamoring for this NIRP absurdity in the US. How will this end?
This is the transcript from my podcast last Sunday, THE WOLF STREET REPORT:
Now there is talk everywhere that the United States too will descend into negative interest rates. And there are people on Wall Street and in the media that are hyping this absurd condition where government bonds and perhaps even corporate bonds, and eventually even junk bonds have negative yields. All of that NIRP absurdity is already the case in Europe and Japan.
There is now about $17 trillion – trillion with a T – in negative yielding debt in the world, government and corporate debt combined.
This started out as a short-term emergency experiment. And now this short-term emergency experiment has become the new normal. And now more

Vancouver sags. Calgary, Edmonton down from many years ago. Toronto rises but below 2017 peak. Montreal, Ottawa at new highs.
July is seasonally a strong month in the Canadian housing market, as tracked by the Teranet–National Bank National House Price Index. Over the past 21 years, the composite index for the metros has risen on average 1% from June to July due to seasonal pressures. This year it only rose 0.7%. On a seasonally adjusted basis, the composite index declined in July by 0.1%, after having declined 0.5% in June, and 0.4% in May – “pulled down by the three largest markets of Western Canada,” the report points out, particularly by Vancouver.
Vancouver:
Normally, July is red-hot for Vancouver house prices. In July 2017, for example, the Teranet–National Bank National House

The segments at the core of the Brick-and-Mortar Meltdown.
Ecommerce sales in the second quarter 2019 soared 13.3% from a year ago to a new record of $146 billion (seasonally adjusted), the Commerce Department reported today. In 2018, ecommerce sales reached $522 billion, according to revised data released today; at this rate of growth, ecommerce sales will get close to $600 billion this year. Ecommerce sales have doubled in five years.
Ecommerce includes sales by the online operations of brick-and-mortar retailers. Many brick-and-mortar retailers have built thriving online operations: Walmart, Home Depot, Best Buy, Macy’s, and Costco rank in the top 10 ecommerce retailers, according to eMarketer:
Amazon
eBay
Walmart
Apple
Home Depot
Best Buy
Macy’s
Qurate Retail Group (QVC, HSN,

Now they’re clamoring for the NIRP absurdity in the US. How will this end? (11 minutes)
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Nope, the Fed dumped. But there was huge demand elsewhere.
The US Gross National Debt has jumped by $363 billion in the two weeks since President Trump signed the law that suspended the debt ceiling. This surge pushed the total debt to $22.39 trillion. That’s up by $1.01 trillion from 12 months ago. And these are the good times. Watch this debt balloon during an economic downturn! Whoopee!  Note the technical term at the top right of the chart:

The question, “Who the heck is buying all this debt” – because every dime has to be bought by some entity – is becoming increasingly nerve-wracking, particularly as the trade war with China puts the possibility out there that Chinese entities might dump their US Treasury securities, much like Russia has already done. But Russia was only a

For Trucking and Railroads, it’s Hangover Time.
Freight shipments within the US by all modes of transportation – truck, rail, air, and barge – fell 5.9% in July 2019, compared to July 2018, the eighth month in a row of year-over-year declines, according to the Cass Freight Index for Shipments, which tracks shipments of consumer and industrial goods but not of bulk commodities such as grains. This decline along with the 6.0% drop in May were the steepest year-over-year declines in freight shipments since the Financial Crisis:

In terms of shipment volume, the year 2018 was a historic outlier boom, far above all prior years. Now the Cass Freight Index has fallen back to the levels of the prior boom year, 2014, but remains higher than it had been in July 2015, 2016, and 2017.
In its

Navistar confirms next phase in Transportation Recession.
After orders by trucking companies for Class-8 trucks – the heavy trucks that haul trailers across the country – collapsed by 81% in July compared to July last year to the smallest number of orders since 2010, deepening a trend that has gotten worse all year, it would only be a matter of time before truck manufacturers announce production cuts and ultimately layoffs.
These heavy-truck makers – Peterbilt and Kenworth, divisions of Paccar; Navistar International; Freightliner and Western Star, divisions of Daimler; and Mack Trucks and Volvo Trucks, divisions of Volvo Group – have been eating through their historic backlog, accumulated during the record year of 2018, and they’re still delivering these trucks at near record pace,

House prices dropped again – and ironically the most in San Francisco and Silicon Valley.
In the San Francisco Bay Area overall, house prices dropped again in July compared to July last year. They dropped in eight of the nine counties on a year-over-year basis: Silicon Valley (Santa Clara and San Mateo), San Francisco, Marin, the Wine Country of Napa and Sonoma, and the East Bay (Alameda and Contra Costa). The only county where house prices ticked up year-over-year was in the least expensive county, Solano.
The drops pushed the median house price for the Bay area 3.1% below where it had been in July 2018, and 9.5% below the peak in May 2018, according to the final data by the California Association of Realtors (C.A.R.). The median price is now back where it had first been in June

All in next-gen corporate speak to give you the warm & fuzzies. Meanwhile, Uber hits new low, down 24% from IPO price. 
“The We Company,” as WeWork now calls itself, which is in the business of burning cash and selling “space-as-service,” has registered with the SEC to go public as soon as next month to get out through the IPO window while the getting is hopefully still good. And its S-1 filing, which became available today, depicts a company that takes corporate speak to a new level, has visions of $3 trillion in revenues, and, more realistically, has lost $4.3 billion over the past three-and-a-half years, including $904 million in the first half of 2019. But this chart doesn’t yet show the red-ink massacre to come in the second half:

The second half, if the IPO takes place, is

Cash-out refi hype is back full-blast. And for the first time since early 2006, people are doing it in large numbers.
This is the transcript from my podcast last Sunday, THE WOLF STREET REPORT:
For a moment this morning, I thought I was back in 2005 or early 2006, when I listened to a dazzling radio show, hyping cash-out refinancing of your mortgage.
The show was funded by a shadow-bank specializing in mortgage lending. They were promoting their efficient service, that didn’t involve the normal hoops to jump through, and it was a fantastic deal, to not only refinance your mortgage to capture the lower mortgage rates currently available – the lowest since November 2016 – but also to use the home as an ATM once again to cash out the equity that the home had accumulated, due to years

But these are the good times. Automakers are not amused.
The auto industry depends on subprime-rated customers that make up over 21% of total loan originations. Without these customers, the wheels would come off the industry. And tightening up lending standards to reduce risks would cause serious damage to the undercarriage. Subprime lending is very profitable – until the loans blow up – because interest rates can be high. But those subprime auto loans are blowing up at rates not seen since the worst days of the Financial Crisis – and these are the good times!
Serious auto-loan delinquencies – 90 days or more past due – in the second quarter, 2019, jumped 47 basis points year-over-year to 4.64% of all outstanding auto loans and leases, according to New York Fed data released today.

Inflation runs hot in housing, medical services, health insurance, other items that are not imported.
The consumer price inflation data released today by the Bureau of Labor Statistics, which corroborates prior inflation data, says that, yes, prices are rising, but they’re rising sharply in services that are not impacted by imports and tariffs, such as rents and other housing costs, healthcare, education, and other services, and also in restaurants (where customers pay mostly for labor and rent). But inflation in durable goods, such as electronics, cars, and the like – where the tariffs would show up – was very low.
Inflation as measure by the Consumer Price Index (CPI) rose 0.3% in July from June and 1.8% over the 12-month period. This was largely held down by a decline in energy

They had it coming.
The chase for yield in a central-bank manipulated low-interest-rate environment is very costly, as brain-dead buyers of Argentina’s dollar-denominated and euro-denominated bonds found out. These junk bonds were issued with great Wall-Street hype in 2016 and 2017, including inexplicably a 100-year bond, backed by a country that has defaulted on its foreign-currency bonds five times in my lifetime, and that defaults on its peso bonds on a daily basis via inflation running between 30% and 50% recently. “And yet, yield-desperate investors don’t seem to care,” I wrote in astonishment in 2017 when brain-dead investors bought that 100-year bond. So here we go again.
On Sunday, voters in Argentina expressed their frustration with market-oriented but ineffective reforms

Here we go again: Cash-out refi hype is back full-blast, and for the first time since early 2006, people are doing it in large numbers (11 minutes).
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Today’s scenario is very unlike the plunge during the Financial Crisis, which blew over in no time.
This is an edited transcript from my interview with “This Week in Money” by HoweStreet.com. You can listen to it here.
Semiconductor sales have plunged about 22% from the peak last October. That peak was the end of a long spike that started in 2017. When you look at the chart, you see the surge in semiconductor sales that lasted for a year and a half. And then it’s just a straight line down essentially, back to July 2017 levels. And semiconductor sales have been stuck at these levels now for five months. Compare that to the 39% plunge during the financial crisis.

During the financial crisis, semiconductor sales fell off a cliff within a few months, and then bounced off instantly.

Store liquidations in 2019 have blown past the full-year total of 2018.
The phenomenon of the Brick-and-Mortar Meltdown is proceeding with relentless momentum, trailing in its wake store closings, job losses, bankruptcies, and liquidations. Just this week:
A’Gaci, a young women’s fashion retailer based in Texas, filed for Chapter 11 bankruptcy protection on Thursday, for the second time, after having filed for the first time in January 2018. This time, it will liquidate. All its remaining 54 stores in seven states and Puerto Rico will be closed – the “bulk” of them by the end of this month. Bankrupt retailers are notoriously difficult to restructure and turn into success stories.
The company blamed the “challenging business environment,” particularly the “shift in consumer

And rideshare revenue is stagnating.
Uber’s losses have been legendary for years, ever since they were being leaked to the public while it was still a privately held company. But this takes the cake. Uber reported this evening that it had lost $5.24 billion in the quarter through June 30. The thing is, Uber reported revenues of only $3.2 billion. In other words, its net loss exceeded revenue by $2 billion. That takes some doing.
Its $5.24 billion loss came on top of its $878 million loss in the first quarter. Combined, during the first half of 2019, Uber lost $6.25 billion. Total revenue for the two quarters was $6.3 billion. The chart of Uber’s “Loss from operations” – which does not include interest expense ($368 million in the first half) and “other income (expense),” such as

Suddenly – I mean the signs had been everywhere for a long time and “suddenly” doesn’t really apply – the whole house of cards came tumbling down.
This is the transcript from my podcast last Sunday, THE WOLF STREET REPORT:
I just listened to a friend of mine, telling me how he now feels comfortable with his investing skills and his strategies after two years of studying the markets. He retired two years ago, and that’s when for the first time in his life he started paying attention to stocks and bonds. He has stocks and bonds, and he feels really good about his portfolio, he said. There are going to be minor sell-offs in the market, he said, but his portfolio was designed to ride this out without damage.
And he was talking about his future. Clearly, the future success of his

The bifurcation among consumers.
Consumer credit – auto loans, student loans, and revolving credit such as credit card balances and personal loans, but not housing-related debt such as mortgages and HELOCs – grew 5.4%, or by $208 billion, in the second quarter compared to a year ago, to a new record of $4.06 trillion (not seasonally adjusted), according to the Federal Reserve this afternoon.
This 5.4% year-over-year gain was the strongest such gain in two years. The quarterly gain from Q1 to Q2 of $60 billion was the strongest such gain since Q2 2016. In other words, American consumers are not slackers. They are doing their collective job, propping up the US economy, and by extension the global economy, with money they don’t have:

Every dime of that additional $60 billion that

12 countries with negative 10-year yields. A race to hell.
Every day brings new indications that the financial world is going from already nuts to even nuttier. According to Bloomberg, the total amount of bonds outstanding globally that are trading with a negative yield exceed for the first time $15 trillion. This includes government and corporate debt, and also some euro junk bonds that have joined the elite group (click to enlarge):

A chart like this, of markets and central banks chasing each other further and further into the negative-yield absurdity, is crying out loudly: “Somebody has got to put a stop to this race to hell.”
The Fed was dabbling in trying to stop this race that is now leading ever deeper into negative-yield absurdity, and had even tried to reverse it, and got

The deepest plunge since the Financial Crisis, but more persistent.
Global chip sales plunged 16.8% in June from June last year, to $32.7 billion, on a three-month moving average basis, and are down 22% from the peak in October 2018, according to the World Semiconductor Trade Statistics today. As deepest and most relentless plunge in semiconductor sales since the Financial Crisis continues, any hopes for a V-shaped recovery, such as during the Financial Crisis, have been shelved:

This was the fifth month in a row that the three-month moving average has been in the range of $32 billion to $33 billion, down about $10 billion from the peak in October last year, the steepest dollar-drop ever. During the Financial Crisis, sales plunged and then bounced back instantly, for a perfect

Second oil bust in five years – or phase 2 of the same oil bust – exacts its pound of flesh.
Shale-oil driller Halcon Resources today announced in a filing with the SEC that it would file for pre-packaged Chapter 11 bankruptcy in Houston on or before August 7, after about 67.3% of the holders of its unsecured notes agreed to take a haircut of $750 million. This was Halcon’s second bankruptcy filing in three years.
The original shareholders got wiped out ahead and during the first bankruptcy filing in 2016, felled by negative cash flows, high debts, and the oil bust. In the process, $1.8 billion of Halcon’s debt was eliminated. In return, these stiffed debt holders were given 96% of the newly restructured company’s shares. Now, in the second bankruptcy, those new shareholders will

Suddenly – I mean the signs had been everywhere for a long time and “suddenly” doesn’t really apply – the whole house of cards came tumbling down.
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Order backlog still feeds truck makers, but they don’t disclose for how long.
Orders for Class 8 trucks – the iconic trucks that haul part of the economy’s goods across the country – collapsed by 81% in July compared to July last year, to 9,800 units, the lowest since 2010, according to FTR Transportation Intelligence on Friday. It was the ninth month in a row of year-over-year declines. But “declines” is not the right word. This year so far, these year-over-year “declines” ranged from -52% to -81%, which makes for a stunning collapse of the historic boom last year:

“Fleets continue to take a wait and see approach to 2020 equipment,” FTR chief intelligence officer Jonathan Starks said in a statement Friday afternoon. “Potentially higher equipment costs, uncertain demand, and enough

But apartment rents in 10 other cities surge 10% to 15%.
In the most expensive US markets, apartment rents hit a ceiling some time ago, in some cases four years ago, and have dropped from those highs, as tenants have reached their limit. That this wasn’t a brief fluke, after which rents would surge again in those markets, is becoming increasingly apparent. At the same time, sharp rent increases have moved down to less expensive markets.
In Seattle, the median asking rent for one-bedroom apartments in July fell 3.1% from a year ago to $1,900 and is down 4.5% from the peak in May 2018. The median asking rent for two-bedroom apartments fell 4.1% from a year ago to $2,350, and is down 11.3% from the peak in April 2016.
Clearly, after years of surging rents in Seattle, a ceiling has been

Only feeble signs of manufacturing returning to the US (you’ve got to build the plants first).
Construction spending, an important part of the US economy, has essentially gone nowhere over the past 18 months – the longest period of drought since the great recession. Total construction spending – residential and nonresidential, private and public – in June fell 2.1% from June last year to a seasonally adjusted annual rate of $1.29 trillion, according to the Commerce Department today.
Construction spending has now fallen on a year-over-year basis in four of the last five months, and is back where it had first been in January 2018:

All figures are quoted as “annual rate.” Annual rate means that at the June pace, construction spending for the whole year would total $1.29 trillion.

Chicago struggles, Dallas-Fort Worth, Atlanta, Minneapolis, Charlotte reach new highs. Drum-roll for Detroit and Cleveland!
This is the other side: Not every metro in the US has experienced the kind of blistering housing bubbles occurring in Miami or the San Francisco Bay Area, as illustrated in The Most Splendid Housing Bubbles in America: Year-Over-Year Declines Spread to Seattle. This is about the others among the 20 metros in the  CoreLogic Case-Shiller Home Price Index, the metros that range from crushed markets — that are trying to dig themselves out — to blooming bubbles that haven’t quite yet qualified for the list of the Most Splendid ones.
Dallas-Fort Worth House Prices:
To the aggravation of homeowners and speculators at the time, the Dallas-Fort Worth metro skipped