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Let's Talk "Bidenomics"

Updated: Aug 31, 2023

Happy Market Update!

I know it’s been a few weeks. But hey, you were probably traveling anyway, right? I hope everyone had a great 4th! If you are a newcomer to this mail, you should know I am rooted deeply in support of the USA! So thank you to all of our Vets and Patriots out there for your support! You’ve got mine.

I’ve been requested to give an update on Jackson. So that’s how we’ll begin. He’s doing great! Thanks for asking. On to politics. J/K.

He’s started on Summer football now…he is in swimming meets…and he’s even fending off live wild animals in Idaho! Don’t believe me? Like a good American in the 21st Century, rather than help, I recorded it!

And then there was the deadliest killer of all. Relationships. This almost made me intervene. But as they say, let her Mom worry. Right?

Man, that was close. But he got through it. What doesn’t kill us only makes us stronger, kiddo. I was lucky enough to see him, LIVE, get a 3rd stripe for his white belt in Jiu Jitsu. Jiu Jitsu is good for this kid. If I was anything like him, I understand the trouble I was always in as a kid. He means well. The kid has manners. I mean, a LOT of them. Respect is a requirement to live under my roof and the martial arts support that. Before you ask, he is not in Cobra Kai for Karate. I know we look like the bad guys in every 80s movie, but we really aren’t. Well, most of the time.

He’s getting smarter too, as you would hope for a kid turning 5 in October. But it’s deeper than you could know. Here he is discussing “Bidenomics” with me:

Yes, at the age of 4 even he has figured out it doesn’t compute. You can’t keep sending our tax money overseas, use our tax money to pay other people’s debt (especially since I paid mine), hide the fuel and food inflation, and think everything is going to be okay. Yes, it’s time to see what everyone is hiding from us to save us from the scariness of life…? I mean, we can’t help correct it if you lie to us. So I’m going to help. As was Jackson’s main concern, let’s start with the growing problem with businesses (don’t forget, these for profit organizations create or remove jobs):

This first one is a surge…no…the word lately is tsunami… a TSUNAMI of office space delinquencies. That looks a lot like 2009 in slope. If it’s not 90 degrees, it’s 87 or 88.

So that can directly impact values. I don’t think the above has priced in yet. Year over year, commercial value is down 11%. There is almost 1 Billion (that’s a B) of square foot office space open in the country. I saw that stat that read: “If all office spaces were stacked as a single office tower with 20,000 per floor, the building would be 48,000 floors. Can you imagine the elevator ride for that?

That’s not just it. Look at these manufacturing orders. Some people say, well we are just now dipping below the zero line. Do you not see that downward slope after the reopening of the country from Covid? I sure as hell do.

Fine, not impressed? How about this one. This chart reflects above or below 50. 50 is stable. Above 50 shows expansion of manufacturing in the country. Below 50 is contraction. I’m willing to bet that every time we are below 50 for a substantial time, we get a recession (again as I am sticking with my 2022 had 2 negative quarters of GDP…otherwise known, previously, as a recession).

But jobs must still be strong, Tim! Jobs, maybe. But statistics are made to help both sides. I’m hearing more and more of the “job growth” is 2nd and even 3rd jobs by the same people. I’ve started polling. Ask around. I think you will find out it’s way more than you think. And that’s scary. But anyway, check out the productivity by state just last year (and it’s getting worse). That’s a lot of negative in states with a lot of people. Yuck.

But we are still shopping! Well, I saw an article this morning that less toothpaste and toilet paper are being sold. Come on. Do you think in a recession you can just use the leaves off your tree? Stop that. Here are same store sales showing that we are not buying the same goods at the same stores. Why? Maybe because we overspent to keep our Tic Tok lifestyle going? There is always a coming to Jesus moment. He’s not returning yet…but shaking his head. Stop overspending. Those credit cards are maxed, aren’t they?

But Tim, my money is in Tech. Okay…okay you got me. Well take some profits! Oh you don’t want to pay taxes? Well cash is king. And I get it. I have paid my fair share of taxes already, and guys, I’m only halfway done. But check out this chart. It shows that the 10yr Treasury (we follow in our mortgage world) and Tech move together. So what’s going on the past quarter? AI has Tech moving. So either the 10yr yield needs to move higher (think higher interest rates – barf) or Tech needs to drop. And that’s those stocks you have. Which one gives? Either way, dig in.

10yr: We went over 4 in the past week. Today we are back below it…and if CPI and PPI come out low the next 2 days, stocks should rally and bond yields move back down, helping rates. I would be locking to protect but watching for any relief to come. We broke out of the downward trend (circle 1) and that led to us spiking back to the resistance line (circle 2) which held. Thank, God. So we hit 4.09 which is roughly the 2nd highest this year…and just stays below the 4.33 from last October. As of now, we are sitting at 3.97%. So the move back below 4…and close today below 4 should help.

MBS: Similar story. You can see the sideways action here (and above) over year to date 2023. But again, we are at the lowest levels which gave us some of the highest rates since the beginning of the “Great Recession”. This is a reason to lock for protection.

I know this is a lot. And if you made it here, you like me. You really like me. You should! I will continue to make sure you protect yourself. So save that money. Inflation will come down, but it may take longer…and it might not be a soft landing. Don’t listen to the talking heads on TV. They have an agenda. I ask nothing of you except to protect what is yours like the 4th of July taught us in 1776. If I lived near a harbor I would be dumping my tea. It’s not as good as the wine, you see. I’m going to end with a new weekly sign off, starting…

What doesn’t kill us, makes us stronger.

Tim Lindsey

President/Sr. Loan Officer

Bear Mortgage Inc.

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