Look Who Has Two Degrees!

Happy Market Update! 

We are having a long week here at Bear Mortgage. There has been a ton of economic information to digest, while watching the stock and bond markets move in strange directions. One of my financial advisors, Eric Rosel, once told me that during the Financial Crisis, every day seemed like a year. That did not fall on deaf ears. Around here, we have a lot of days that seem like they are lasting a year. I’m guessing you’ve had days, weeks, and months like that in your careers or with family. It happens. But we must persist, don’t we? As the saying goes, “This too shall pass”. Slowly. I’d add slowly to the saying to help set further expectations. 

While we wait, being excruciatingly patient, let’s chat football. I know you were waiting for this anyway. Good news, my problem last week wasn't present this week. So, I did coach, along with the first coach at the first game. We played a doubleheader and we lost one game by a point in the last second…and we actually won the other one (Eric: I did verify it was not a tie. Woo-hoo!) Not to pat myself on the back, but the feedback was that it was more organized. The kids seemed to understand assignments (mainly because I picked them up and put them there I wanted them to be sometimes). But containment works! We had more plays to get to first down on both sides of the ball…better than one play and touchdown. That’s not fun. So even with the loss, I was happy. This proves I don’t get angry when we lose…if we play right. And yes, I am speaking to myself right now. Here is an actual clip of me on the sidelines from this past weekend:

But I am not immune to cuteness either…and this one cuteness probably cost us the game we lost. We have a team of 10, but only 6 showed up. Reminder, 3 of these kids turned 4 within the past 2 months…and the other 3 are 5 and 5.5. If you don’t know kids (and I didn’t for most of my life), this is a HUGE difference. The 4 year old's are space cadets. Focus is not their priority…and in football, that does not work. One of these non-focused kids in his first season of football was given the running back position. I will either run to the other side of the field so they run to me…or I stand behind them to tell them which way to run. It’s probably overwhelming that everyone is running at you. Anyway, this kid runs to the right slowly…and then out of nowhere, turns on the afterburners! But oh no! I could see the sidelines and I thought here comes 3rd down. But no! He turned up-field. I was…AMAZED. Here he is running the sidelines like a pro halfback! I mean, holy shit. Sorry, but that was my feeling. And he was pulling away from the defense AND the offense! (sidebar: yes, in this league your own team tries to pull your flag. It’s not my favorite part.) And I thought, we are going to score! And he ran…he ran…he sprinted right out of bounds and into his mother’s arms! Aaauuuggghhhhh. (Tim: it’s Mother’s Day tomorrow…be kind). Well, I laughed actually. Which is not what I might typically do in that situation (see above gif). But it was cute…everyone laughed and the mother felt loved. UNTIL…yes, I walked up. And asked her kindly to spend the rest of the season in the opposing teams end zone (with a smile on me…I’m not that mean. Sheesh.)

But times flies in those days…it’s not like the days being years. And it doesn’t stop there. Some of you who have been with me for years might remember that Jackson graduated from Pre-K…and then had to repeat it. No, not because he didn’t pass a test…he’s 5. His birthday is such that Kindergarten won’t start until this fall. So he went back. How many other people do you know who graduated twice form the same schooling?! I’m not going to lie…it’s a little ridiculous. But he will only get older and despise me, right? I think that’s how I remember the progression. Anyway, here he is contemplating the many career offers he will have after receiving 2 graduate degrees…from PreK.

And you know what? He’s going to need as many degrees as he can get to understand this market. (crushed that segway for sure) Let’s start with CPI…once again, this means inflation. All the way to the right is the most recent move. It was forecasted to rise 0.3%, month over month, and it “only” rose 0.3%, at expectations after the previous move of 0.4%. Woo-hoo! You might say. But it’s still going up. It tied the lowest levels of the year. And the stock markets exploded. By the way, CORE CPI removes food and energy prices because they “tend to be more volatile”. Uh, okay. Perfect place for a LOL. So if you feel prices are still going up with food…the government doesn’t care.

So let’s just take a second and chat about inflation and the Fed lowering rates. Because of this “better” number, economists are expecting 2 rate cuts this year. I’m sticking to my 0. Why? Because the people who actually vote on this, The Fed Presidents, are still saying there is no reason to lower them yet (in fact 2 of them said this just this morning). By the way, these are the same economists who told us in the late fall of 2023 we would have 6. How’s that working out? People hear what they want to hear. Don’t be one of those. Listen to what the Fed is saying. They are saying no, and until I hear them say otherwise, I will assume it’s no. I’m not saying they are right or wrong, but they are saying no. This chart shows a more than half prediction for the September meeting to cut rates. It was December but moved up. Okay. Let’s see how BBQ food and gas does this year! Oh wait, we don’t pay attention to that…unless you are at the store.

Meanwhile, retail sales continue to shrink. Which means we are finally starting to give up…maybe? That’s a big goose egg on the right. 0. Nada. Zilch. Forecast was higher…and our bond market liked this…finally. I think the bond market knows that things are slowing down.

More on retail…I stole this from our good friend NOD (find him on X @NOD088). This is a chart from @CharlieBilello showing that once you adjust retail sales for inflation…we are clearly negative. The average retail sales year over year is at 4.65%, but less than half of that once adjusted. And it’s currently negative. I think the red tells a much better story. So maybe we will get a rate cut this year…but naw. I don’t think so…still. And I will stand on this hill.

This next one is going to sound more political than I like to get on here (stop rolling your eyes…I TRY to keep it separate as much as I can). But sometimes I cannot deal with the lies told. Over the weekend, Biden claimed that inflation was at 9% when he came into office. That is just wrong. Clearly wrong…and people who don’t educate themselves may buy it. In fact, he is probably depending on that. But here is even CNN saying he was wrong.

But you know I always verify with a chart. Biden takes office in mid January of 2021. Here is the chart from the FED themselves for evidence. Use your eyes…not my writing or Biden’s words. Dude, just stop lying…do I need to mention “Corn Pop” or your uncle who was eaten by “cannibals”? Eye roll again here. 

One last complaint from me…this time about fees. The Wall Street Journal wrote an article about the gap between prices and what you actually pay. Have you had this issue too? I literally went to order food at lunch last week online (not DoorDash or Uber or whatever). There was a $15 convenience fee added. What convenience? Using your website? You didn’t see it unless you checked at the bottom before clicking pay now. What the actual…hell (you thought I would say something else, didn’t you? I thought it.) You know what everyone should have to do? Send a good faith estimate with all your fees itemized like we do in the mortgage world. Ha! That would make a lot of businesses squirm. Then start voting correctly. End of political rant.

10yr: We’ve had a few good days…maybe weeks. But he smacked my upward yellow trendline this morning, just like we did three times before. We really need to break this and move down to get any hope of interest rate relief.

MBS: Similar…after a couple of good weeks. But heavy resistance above near 101.08. Gotta get through that and head to the next levels. But we are above the multiple trendlines. I will take that. For now.

For those of you out there attending Graduation parties this May, have fun, drive safe, but remember your relative or friend didn’t graduate twice…like mine. Haha. But hey, look around…maybe you don’t have enough room in your home for that party. Remember, Bear Mortgage can help you with that. (shameless plug) And keep on being vigilant with your money and time. What’s the saying…it’s always darkest before dawn? If you are living any days right now that seem like years, you are not alone. You’ve got friends who will listen. And if you don’t, I will. Stay strong.

What doesn’t kill you only makes you stronger.

Tim