Tag Archive for: recession

Inflation Comes In Hot! Rates Shoot Up; BUT – Will It Last? Maybe Not

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Today’s Consumer Price Index (CPI) inflation report came in hotter than expected, and the markets went into panic mode. Rates shot way up, as rate cuts by the Fed seem less and less likely. (Rates are 3/8% higher than where they were a few weeks ago, but still over 1/2% LOWER than where they were in October).Read More

Fed Promises 3 Rate Cuts This Year – But WHY? (Very Confusing Message)

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The Fed held the Fed Funds Rate steady this month – which was no surprise. The big surprise was that it announced that we’d see 3 rate cuts this year […]Read More

Why Fed Chair Powell Is TERRIFIED of Arthur Burns! (Why Powell Will Not Cut Rates Now; Why He Will Cut in June)

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Jerome Powell is terrified of having an Arthur Burns legacy. So, he’d much rather push the U.S. into a severe recession than risk cutting too soon – and re-igniting inflation. Yes, recessions and all the job losses and suffering are bad, but as Mr. Volcker’s legacy has shown us – Americans forgive Fed Chairs who cause horrible recessions, but we don’t forgive Fed Chairs who ignite inflation.Read More

Everyone You Know Is Rich & That’s Why You’re Confused

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To be in the top 10% of the wealthiest Americans, you only need a net worth of $854,00, per Yahoo Finance (this is pretty much everyone who owns a home in CA). The top 5% have net worths of $1 million and the top 2% have net worths of $2.5 million. To be part of the famous and “evil” “top 1%,” you only need a net worth of $5.8 million. Read More

GDP Way Up – Don’t Get Fooled Again

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GDP or Gross National Product was up an astonishing 3.3% for Q4 – and the “soft landing” (no recession) crowd is doing victory laps. This is extremely good news, as nothing reflects the health of an economy overall more than GDP growth – as that is the true indication of the total wealth to be spread amongst us all.Read More

Interest Rates Up Again; Trends Vs. Blips; How Worried Should We Be?

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The “average interest rate” peaked at just over 8% in October. Interest rates then slid downward 1.5% over the next few months before heading back north over the last few weeks. While they remain 1% lower than where they were in October, the slide upward over the last few weeks has left many people in the real estate and mortgage world all too worried. Read More

10 Reasons For Enormous Optimism In 2024!

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2023 was probably the worst year in history for the mortgage industry – and we’re all happy to see it go, as the total losses were well into the billions. It was worse than 1981 even (when the Fed Funds Rate hit 20%) because of all the over-capacity (and excess competition) left over from the COVID boom.Read More

Fed Ready To Cut; Rates Fall & Stocks Shoot Higher; BUT – Why Is This NOT 2007? “This Time’s Different…”

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Fed Chair Powell informed the world yesterday that the Fed is ready to “pivot” even before a core inflation reading (PCE) hits their desired 2%. And, this was after a lower-than-expected inflation report (Producer Price Index) was released. As a result, both stocks and bonds performed well, reminding us again that SOMEBODY WILL PROBABLY BE VERY WRONG. Stocks go up on the prospect of a strong economy and higher profits. Bond prices, however, go up on the prospect of lower inflation and a weaker economy. Is it possible that this time is different and that rates will fall and the economy will surge as a result? Not likely.Read More

BOTH Stocks and Bonds Soar In November; Confusion or Goldilocks Economy?

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We saw something very unusual in November: both stocks and bonds had record months! This Reuters article – Average 60/40 portfolio has best month in November since 1991 – BofA […]Read More

Why Do We HATE Each Other So Much? And Why Does It Matter For Housing?

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America has not been this contentious or polarized since the Civil War – as most readers know. Many people blame social media for this polarization. The ability to post online without being face-to-face and the ability to post anonymously – seems to foster much more contentious and polarizing discourse.Read More

Inflation Eases/Rates Up – WHY? Delayed Closings; “Walls-In” Insurance for Condos; ADUs NOT Part of Square Footage

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A key inflation report, Personal Consumption Expenditures (the Fed’s “favorite”) was released today, and it showed that inflation continues to cool. But, despite that, rates went up. This surprised many casual market observers because cool inflation reports normally send rates sharply down, given that bond investors focus so heavily on inflation.Read More

Rates Fell 3/4% Since Mid-October – Defying Predictions Of “Rate-Ageddon”

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Mortgage rates fell almost 3/4% since mid-October – while the 10 Year Treasury yield fell about 6/10%. We’ve seen rates fall before, so who cares? Read More

Why The Fed Must and Will Lower Rates!

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I frequently remind readers that a recession is likely and that the Fed will lower the Fed Funds rate when the recession hits. The Fed will do this to revive lending, to make borrowing costs cheaper, and to stimulate the economy overall. The risk of doing so will be more inflation, but the Fed will likely have no choice if it wants to keep the economy from completely collapsing.Read More

Why I Was So WRONG About Rates; Why It Matters So Much

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If you google “wrongness,” you’ll see a picture of me screaming “Rates will fall by March of ’23!” I am wrong a lot actually and am not afraid to admit it because it makes for great learning and blog fodder. For example, I was wrong about when rates will fall, and I was wrong when I said that the Fed would not raise rates again after its June pause.Read More