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Sometimes Winners Loose

Happy Market Update! 

 

It’s been a busy week around here. I mean busy like it hasn’t been in mortgages in a long time. This is great, but also means we get behind in a few things. But that wouldn’t be the newsletter! I obviously waited until now to write this because today (Friday) is job’s Friday! I can hear your excitement already. I’m short on time, but here is my update for Jackson…

 

We played in the Spring Championship for football Saturday morning before sprinting (in a truck) to his first REAL swim meet. Yes, this is starting to sound like my Saturdays are filled up for the next decade and beyond. Well, we lost the Championship. And that’s okay. Our kids played the best they could against a better team. It was our rubber match for the season. Kudos to that team for a great season. But we held our own in the 2nd half. 1st half was rough.



But my largest takeaway was watching Jackson learn to deal with defeat. It was not pretty. The other defense was ready for him this time. And he struggled to get in the end zone. At one point he came around a corner and their fastest was on him and pulled the flag before the end zone. He cried. And yes, I went straight up to him…told him it was a great run and attempt. And then I told him to stop crying or he was getting benched. Now before you start sending me hate mail, I was very nice about it. I did it gently. I asked him why he was crying and long story short, he was frustrated with himself for not scoring a touchdown. It’s a proud moment to know that he felt he could do better…and the next possession, he did…he scored.

 

While it was trying for Jackson to learn that you cannot always score when you get the ball, it’s a better lesson for all of us adults. You are not always going to win. And that’s okay. It’s God’s plan. But we cannot give up. We cannot go to the sidelines and cry. That does no good. We need to dig deep and decide what we can control and what we can change. And then do it. That’s what Jackson did…with some really good coaching, if I say so myself. 



“Hey, don’t run towards that kid. If he is on your right, run left.” Etc. But losing is important. Without it, you cannot understand and appreciate winning. This is your lesson for the day and weekend. Be someone’s coach who needs it or seek out one if you need it. I’m no psychiatrist, but I did take a few classes in college. Call me. I’ll listen.

 

Speaking of listening, I’m listening to my charts tell me that things continue to move towards the slowdown and the Fed needs to lower rates. But we are not there yet. Since it is 6:39am MT as I write this, jobs have been out for 9 mins.

 

Jobs for May: All the way to the right, this shows that jobs came in higher than forecasted. That will not be good for interest rates or the prospects of the Fed lowering their Fed Funds Rate. Higher for longer. I have not had any time to dig into the report yet, but I suspect that we are going to see more of those part time jobs versus full time. So more of the same…and it makes things look better than they are, in my opinion. And I think that's because of the 2nd chart…



Unemployment moved up to 4%. So we created jobs, the participation rate actually dropped, and somehow the unemployment rate moved up. If we created jobs, and more people came back to participate in the job search, I would expect this rate to go up. But jobs go up and less people participating does not make sense to me here. 



This tells me something strange is going on…



Continuing with jobs, earlier this week we received job openings. That continues its down trend…so something the Fed wants to see…they won’t like the jobs today.



How are we feeling economically? Look at this and you tell me. Not…too…good.



I found this chart from Game of Trades interesting. I like when we see important things moving together…and then not. They wind up meeting again. And with today’s unemployment number moving up to 4%, this is headed towards the existing homes sales. Or maybe existing home sales is moving towards it? Either way…we don’t see the great recession on the right. Yet.




Meanwhile, banks are still seeking money from the Fed to stay afloat. This chart is called the Reverse Repo. This is money needed for banks to stay liquid in order to pass strength tests. It costs the bank money to borrow it to show it on their balance sheets. This chart, from our good friend NOD, shows we are close to running out of money to give the banks. What happens when they cannot borrow…and they don’t have the money to pass the tests? More bank problems? I think yes. Yikes.







10yr: Well, we were doing so good. The past week has helped with interest rates moving down. This morning, the furthest candlestick to the right is ugly. As of yesterday, we had broke my 4.354% line and were already 3 days below that up trendline. But look to the left. That first circled area is another “oops” along our trendline. Sometimes this happens. Right now, our uptrend is still intact. Bummer. But as traders dig through the report…and we wait for CPI (inflation) next week, we will see if we stay in the trend or officially touch it and move back down.



MBS: while we have a large candlestick to the right (today), I circled the “shadow”. That part looks very different from the 10yr chart. So maybe the 10yr will start moving back down and leave us a shadow at the top of that candle? What does all this mean? It means that MBSs are not moving as badly as yields. So we will see if MBS helps rates and yields back off their highs…or if the yields will pull MBS back down. Never a dull moment around here.



This week’s reminder: losing is important. Now, don’t mention that to me. I don’t like losing. I’m not interested in learning lessons…but I am also almost 50 years old. Jackson is still a new dog who can learn tricks. But man, I love the determination. And yes, we had a nice embrace on the field at the end when I told him he was awesome. He tried his best and that is the lesson. Sometimes we try our best and lose. But we have another opportunity someday to try again and win. Learn your lesson like Jackson will learn this one. How do I know? Because I am going to make him do wind sprints for 25 yards back and forth, and push sleds 10 yards with 45 weights stacked up until he gets back on the scoring train! I kid. I kid. I’m not that mean. Well, maybe I am.

 

What does not kill you makes you stronger.

Tim


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