I'm Ready... Are You?

Happy Market Update

You probably didn’t know this, but I have no idea what music today sounds like. Now many of you are thinking, sure you do. It’s played everywhere you go. Well the joke is on YOU. I don’t go anywhere! I go outside (headphones and iPhone playing XM radio and whatever decade I want). I go to work (truck - XM radio and whatever decade I want). I am at work (Sonos - XM radio and whatever decade I want). I go to the mall (once, maybe twice a year) and since my head is arguing with myself as to why I am in the mall, I have no idea what the music is…or if it’s even on. This causes a problem for me. It’s not that I have the fear of missing out. From what I can tell, I’m not missing anything. The problem is that I wake up at 2am in the middle of the night singing very old tunes to myself in my head. Perhaps I really am a head case.  

No way. I’m as crazy as a fox. (This is for my team who argues with me that this is not a phrase…and they are wrong. But then they say I’m old…and I still lose.) Anyway, back to what you really want to know about: Jackson. Well, games cancelled again. And this Saturday isn’t looking good either. So I’m expecting a triple header soon. But he did get a competitive opportunity in the past week. In fact, he got a few. But the big one? Running laps! At school there was a fund raiser for something…I don’t really pay attention. Anyway, after each lap completed, the kids would receive a wristband. Well, not to be outdone…for a fundraiser and wristbands, Jackson decided to sprint as fast as he could. 31 laps. I think most kids were under 25 laps. I’m not saying he is the fastest person alive, but Usain only ran 30 laps that day. While I am laughing at this, my brain is wondering if I had to donate for every lap. 

Back to songs because I cannot think of a better segway today, here is some more of the Same Old Song and Dance. Fed “higher for longer” from Apollo. I thought this was pretty interesting. We are above the average length of time between the last hike and the first cut…which is 8, going back to the late 60s. We are currently at 10 with a Fed meeting next week (ending at noon Mountain Time on Wednesday the 1st). I cannot quote everyone, but I’m pretty sure everyone thinks this is a hold steady meeting. I am in that camp as I continue to see signs of no reason to cut…and maybe a reason to hike again. But hey, if they hiked again, that would restart this bar chart! (Not funny, but made me smile.)

What’s not funny form that chart is that 69-70 was a recession. After 97-98 we got the dotcom bubble, and of course, the Great Recession of 08 came after 06-07. I’m not saying there’s a recession coming. (And yes, I know how to make memes…uh oh!)

While I’m at it…NOT predicting a recession…have a look at this chart shared by @WallStreetSilv on X. For reference, the 511 to the left is us now. We have been inverted in our yield spread (we’ve talked about this in the past) for 511 days…and this is a few days old. As he puts it, “we’ve only seen this 3 times in history: 2008, 1929, 1974.” 08 we spoke about above already. 73-75 was a recession. And If you don’t know what happened in 1929, go back to school. Or let me know, and I will go get my teaching certificate and educate people about things that are important. Anyway, I’m trying to stress everyone out here. I’m just saying be cautious. I’ve been saying it for years, I know. But the Fed has taken this long to let us know they are still not in control of inflation…so blame them.

Like I’ve been saying, inflation is not done or under control. Again, from Apollo, this shows that by the end of the year, 3 of 4 traded CPIs are well above 2% by the end of the year. And all of them are above 2%, albeit one is almost there. So why would we cut rates this year?

In case you needed more fun news about taxes, Biden, on Friday, said he would let the 2017 tax cuts expire. As @SullyCNBC stated on X: “This would be a 2% tax increase on all income levels across the board.” As if we needed another place pulling money out of our pockets. Here is an excerpt of his speech. This is not a political stance. My goal is to make sure you know where your money goes…since we don’t count energy and food in our inflation calculations as a country (fraud!). It’s a big deal because he has been quoted as saying he would seek to keep some of the cuts (search it on the internet…most from last year). I guess that’s off the table now.

Let’s take a break from this crap, shall we? Let’s look at a recent article from The WSJ. Just read this headline and look at their drawing. For the love of God. No. No. No. No. No. 

I’m not okay with this at all. I won’t be doing it. Period. You men should not be doing it either. 

10yr: This does not look good. We are getting some consolidation on the right side…possibly for a move higher. We’ve held here since last week, but any bad inflation number from PCE this Friday, and we are in trouble. For reference, our highest levels in 40 years were last October near 5% (my “H”). Higher for longer is legit.

MBS: Reminder down means higher rates. Lows from last October on the left. My half circle is a charting tool that would suggest we continue to move lower…which, like above, means we are seeing signs for higher rates. 

In our industry, we are already seeing rates moving up and housing slowing. Monthly reports show existing home sales dropping. It’s because we cannot afford for everything to be expensive. I feel like I’m crazy. Am I the only one thinking we should save money? I’m not saying don’t go on vacation…wait, yes I am. But seriously, prices won’t come down. It’s like taxes. Once DC, your state, your county, your municipal raises them…you think they are permanently coming down? Not a chance in hell (one of my favorite sayings). And these prices won’t either. If we get any move against us in jobs…look out below. It’s going to get ugly, fast. Markets have appeared to be rolling over the past few weeks. How long does that last? I don’t know. Maybe it’s over…maybe it’s strong in summer because it’s an election year. Or maybe we are about to get the snot kicked out of us. I’m ready…are you?

What doesn’t kill us, makes us stronger.

Tim