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We Made it Through the Eclipse!

Happy Market Update!

Well, the weather gods struck again. Jackson did not have football due to rain and wind. Well, there was 0 rain in my area, but man, those winds were gusting. And for 5 year olds, let’s be honest, how often are we really throwing the ball? Last Spring we dealt with a lot of rain that only seemed to come on Friday night into Saturday. Do you remember that it was fairly wet last year? I do because I have to pay for each season…so I’m doing the math on what each game, or lack thereof, costs me. I’m a math guy. What can I say?

 

Wanna know who is not a math guy? The Fed…and DC. And apparently the economists who forecast rates hikes/cuts. Time out. I know you are wondering why I just jumped right into this for the week. We’ve got a lot to talk about! Okay fine…back to Jackson.

 

This kid is starting to really love puzzles. And what makes a better substitution for football like a puzzle! Here’s the puzzle. See what I did there? It’s a football puzzle.





No, I did not get him this one. This is like 3000 pieces and he’s freaking out about 400 pieces of T-I-Double Ga–R. Hey, at least it wasn’t a puzzle of the universe. Can you imagine how many dark pieces that one would be? Yikes. But look, I’m trying to figure out how to stimulate his mind without Paw Patrol and iphone video games. So I’ve started to show him candlestick charts. What? He’s not your kid. He’s mine. Candlesticks are math…and we need people with more math skills…or they turn in to people like the Fed and DC! (Segway #2)

 

This morning we got some math…and oops! The Fed is still not in control as we have been predicting in this newsletter. CPI, your consumer price index, or inflation, has risen again. Remember what that target was? No? That’s okay…I do. 2%. January we were at 3.1%, in February, we were at 3.2%, and March…a whopping 3.5%! Here’s a simple math equation for you. Is that moving towards or away from 2%? Yeah, I agree. So why would they cut rates this year? I’ve been saying 0…and that’s after Powell said last week he expects cuts. Why? You didn’t finish your initial job yet, and it’s moving against you, Sir.





From our friend, @NOD comes the 'what has inflation been' chart. You can see 2024 at the bottom. Yes, it’s not 2022 with our 7s, 8s, and 9s. But we can all agree that the Fed didn’t finish their job. So dare I say we might see another rate HIKE? I’d say that probability is increasing each month. I’m guessing we won’t see the administration doing victory laps about this outcome like we saw them do on Friday with the jobs report. By the way, they only tell you what THEY want you to think…





But I won’t do that here! I will give you THEIR info THEY don’t want you to see. The next two charts are from the Fed. I did not make these up…I went right to the government site and pulled this info. First up? Usually Work Full Time employed. I did draw the arrow because I know someone of you, if you got this far, don’t like my charts. Oh come on! This stuff is gold. Anyway, DC can celebrate their fantastic job creation, but they are not full time jobs which have actually DECLINED for almost a year now. Re-elections don’t want you to know this. (P.S. they also count everyone going back to work from COVID as their job creation. LOL)






As promised, here is that 2nd chart. This time? Part Time work! It is at record levels…and shows no sign of moving down. You can see this started moving up in mid 2022. Stop for a second and go back up 2 charts. What was happening in mid 2022? 40 year highs in inflation. And while the rate of inflation may have decreased, it has not deflated. So we are still adding each month to those highs. And here is part of the reason for the part time jobs. The other? The above full time jobs lost…need to be replaced by what, two or maybe three part time jobs? And that is the victory lap from DC? They are a joke playing a game and we are pawns. That is it. You, me, our neighbors. We are all just pawns for DC and their insider trading and lies.





Okay, deep breath. Like I tell everyone, calm down. (No, it doesn’t go well, and I don’t like it either…but I’m too old to change now!) What good news do I have? Recession forecasts! Consensus is that the probability in the next 12 months is shrinking. So that’s good news…but is it right? Are consensuses usually correct? Are these the same people who had a consensus on rate cuts up to 6 times this year? How’s that working out? Or how about the consensus that inflation was transitory? How’s that working out?





Okay, so I’m pretty sure I took a good slide and made it bad. Sorry about that. The inflation thing just pisses me off, for lack of a better phrase. I will go to my grave believing that the Fed was really late to raise rates, and should have still risen rates rather than pause, and now we are living in the pain. This CPI number today was not good for your 401ks. I’m sorry. Send your angry emails to Jerome Powell and not your financial advisor.






10yr: You may want to look away if you were betting we would not go up. I know there are a lot of lines on here…just look at my red drawings. This chart is from the end of summer until now. We have clearly broken out this week above those two lines forming a triangle. So I expect for yields to rise now for a while. The questions is, will it head towards my question mark? Or retest the 5% from last October? If we are in this long term…and we head towards 5%, well, I might take a 4 month vacation. Maybe I should leave now. When is a good time to start a sabbatical?





MBS: Reminder down here means higher rates. We are clearly in a downtrend since the beginning of the year. But still way off from the lows of October (then the 10yr above peaked). But that is one BIG red candle today. Not good. And we are below all of those MA lines (the colored ones). Rates are heading up. That’s it. It’s going to be a long summer…and we are not even a month into spring. When is a good time to start a sabbatical?




It’s rough. Thanks for getting this far. Jamie Dimon, CEO of JP Morgan, thinks raters could get really ugly. I’m not a huge fan of this guy…but he’s probably not wrong. While people are still spending money, these rates move up. If you need to access more cash, say from your massive equity in the house, let me know. Home equity lines of credit are popular. Happy to help.

 

Finally, I’m happy to know that you made it through the Eclipse. Man, was that a close one! All of those state of emergencies. Get real. Our building went outside and it seemed like everyone got bored real fast. I was obviously reminding everyone that this was a state of emergency! Someone has to keep excitement going. But they all just looked at me like I was crazy. ME! Hey, I’m not a governor who clearly didn’t pay attention to science class like Indiana. I’m just picking on them…but they were only one of the “leaders” freaking out. Ugh. Mass panic is what everyone in leadership wants. And look…we made it. I bet that’s how the governor will run in his election. How the state was saved by leadership. That, my friends, is what the Feds want to do to. Stay strong. Believe YOUR eyes and not your ears. This will get ugly before it gets better. But I’m a fighter…and you are too!

 

What doesn’t kill you makes you stronger.

Tim

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