Today’s blog is a series of random observations.

    Rate Hit New Record High

    Mortgage rates hit a new 23-year record high today partially in response to initial jobless claims coming in lower than expected. Rates increased because investors know how much the Fed focuses on employment. But, I only wish the Fed would read my blogs about how unemployment only jumps after we are in a recession: Busting the Employment Myth.

    The Stimulus I Forgot: Credit Card Debt

    In my blog yesterday, Why I Was So Wrong About Rates, I pointed out numerous forms of government stimulus and liquidity injections that have been keeping the economy far stronger than expected. But, I forgot one of the biggest factors of all: credit card borrowing. Credit card borrowing was up $45 billion in Q2 alone, and that is another huge source of consumer spending. So, as long as consumers can double their credit card balances every month forever, we will definitely avoid a recession. 😊

    “The Economist Who’s Been Predicting a Recession for 18 Months Says “Litmus Test” Is Finally Here, Especially With Oil Headed Toward $100 a Barrel.”

    The above subheading is the title of this article from Fortune, and the economist they reference is David Rosenberg – someone who I cite often in my blog. He was one of the prominent economists who thought we’d be in a recession last year. But, he points out that stimulus, credit card borrowing, and lag effects delayed the recession (pretty much what I said in yesterday’s blog). He points out though that 70% of the U.S. economy is consumer spending, and that spending is now coming to a halt… unless consumers can use credit cards forever (see above).

    He further points out that he made similar predictions in 2007, when he almost got fired for doing so while also being inundated with hate mail. He says today is very similar to 2007 (another point I make often), when recency bias and listening to the Fed narrative overly influenced all too many analysts.

    Rates Can Move Irrespective Of Fed

    This is something else I remind readers often: Long-term rates can move up or down significantly, no matter what the Fed says or does. So, once again, a significant increase in jobless claims, a major stock market correction, an economic crisis overseas (in China for example), or a new war or an escalation of a current war can all move rates down.

    “California Home Insurers Plan Return To Fire Zones Under New Deal”

    The above subheading is the title of this LA Times article. I wrote this blog in July – CA Homeowners Insurance Debacle Explained – and explained how many major property insurers were leaving CA because regulators would not let them charge enough to make a profit (which ended up costing consumers even more). In any case, it looks like regulators relented somewhat and insurers are returning to the state, but insurance costs will be much higher.

    Dollar Just Keeps Rising!

    The above subheading is the title of this Barron’s article. TLDR: The dollar is surging in value, despite all of the collapse predictions. This is largely what I explained in this blog from April: The U.S. Dollar Is Going to Collapse (or not).

    I Was Too Dumb To Know 1995 Was Slow; Ignorance Was Bliss

    The real estate and mortgage markets have not been this slow since 1995 – a time when I had just entered the business. Interestingly, I was too naïve to know how slow it was overall, so I personally was very busy, as I never let the market conditions discourage me.

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