Inflation Came In Cool – Exactly As Barry Habib And Jeff Snider Predicted!
In 2021, I told a group of mortgage bankers at a lunch how and why rates were going to shoot past 7% in 2022 – and NONE of them believed me.
Despite their pushback, I remained very confident in my position because I was following a bunch of macro guys who had been dead on correct with their predictions over the previous few years.
And, ironically, I have been getting the same pushback in recent months when I have been telling people that rates were going to fall this year and next.
But, I was again just repeating what I have been learning from these same macro guys.
And Sure Enough – Rates Plummeted Today (I Will Explain Why This Is So “Huge” At The End Of The Blog)
In October, I wrote this blog about a very hot/high September inflation report (that pushed rates up sharply). I explained though how rates would come down on November 10th (today) when the October inflation report was released. I was just repeating Barry Habib of MBS Highway fame once again, as Barry has been explaining to the world over and over and over how and why inflation would come down TODAY.
It is because the inflation reports are year-over-year readings – where they compare the latest month of this year (2022) to the same month last year (2021). So, when we compared 2022 months to 2021 months with low inflation readings, the 2022 inflation reports were always going to be “high.” BUT – per Barry, the October of 2021 report was the first report we saw in 2021 with relatively high numbers, so the October of 2022 report (released today) came in lower – exactly as Barry predicted. (Please see the blog I link to above if you’d like more info or to see a chart that makes this explanation clearer).
The other reason inflation came in lower is because prices are actually falling in the face of decreased demand, inventory buildups, and supply chains untangling – exactly as both Barry Habib and Jeff Snider, of Eurodollar University fame, predicted.
Additional encouraging news from an inflation and interest rate perspective is that the inflation numbers were still pushed artificially higher by lodging numbers that lag the market and are over-influenced by “temporary lodging away from home” figures. So, Barry expects inflation to fall much further once these numbers shake out in a few months. And finally, unemployment is steadily growing too, relieving wage pressures and sending strong recession signals.
So Why Is This So Huge?????
This is so huge because Jeff Snider and Barry Habib have been proven dead on correct once again – and these are the same guys who are predicting much lower rates by March as a recession sets in.
More on that in Monday’s blog, as JVM will be closed tomorrow in observance of Veterans Day.
It’s Still The Inventory…
Barry Habib made one final quick point in his morning update video today, and that is that inventory is and will remain extremely tight for the reasons I explained in this blog: It’s The Inventory, Stupid (I am calling the housing doom and gloomers “stupid,” not my blog readers 😊). In any case, Barry reminded us that it is tight inventory (along with declining rates) that will keep the market from crashing.
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