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Friday Market Update for Week of June 11th 2021

Happy Friday, Brian Manning here with this wonderful spring weekly update. Let’s get right to it. Monday this week, pretty quiet newsday. Tuesday this week, we got some information from the NFIB, so 48% of small businesses right now have employment positions that they can’t fill, certainly the labor shortage is real, it’s being felt all around the country but 48%, that’s a pretty high number. 40% of businesses say that they now have to pay more for their labor costs and in return, they’re going to pass these increased cost down to consumers. So that’s just going to continue to put some additional pressure on inflation.

Thursday this week, we got CPI. You know, we’ve been talking about inflation and the consumer price index for quite a while and talking about the numbers that were replacing the year of 2020 with where we are in 2021 and here we go, exactly what we’ve been talking about. So inflation was the hottest number since 1992. The headline rate for inflation was up 5%, which is an extremely hot number, the core rate which strips out volatile items such as food and energy was up 3.8%. So, you know, normally this would have caused just turmoil in the bond markets because really, inflation is just the enemy of interest rates, usually you get a report like this, and then it just crushes interest rates and they go up but we had the Federal Reserve with their version right now of quantitative easing and even though they will not admit it, still on a monthly basis, they’re buying an enormous amount of US treasuries and mortgage-backed securities.

So they’re essentially putting into place what’s called yield curve control, meaning, we’re getting hot inflationary numbers, but mortgage rates and interest rates are really staying at really historic lows and it’s all because the Federal Reserve is very much buying a tremendous amount of mortgage-backed securities and US treasuries. There hasn’t been much talk about tapering, although in the markets, there’s a lot of talk about when is the Federal Reserve going to start tapering but the Federal Reserve itself hasn’t really made much in the form of announcements as far as tapering is concerned. But relatively soon, we have a two day upcoming meeting at Jackson Hole, Jackson Hole is really kind of a spot where a lot of announcements take place for the Federal Reserve. So all eyes are going to be on Jackson Hole. Let’s see what happens there. Because it’s crazy, you look at like used car sales. On a month over month basis used cars are up 7%. And on a year over year basis, they’re up 30%. I mean, used cars are normally a depreciating asset and right now, potentially you could trade in your car and make money which is just unbelievable.

Friday, today, we get some information from CoreLogic. So CoreLogic tells us that on homes that have mortgages across the nation, home appreciation is up 20%. That’s just a staggering number. And I wouldn’t say right now yet that there’s really a home affordability crisis, the challenge that we have is just limited inventory anywhere you go in the United States. Everybody that we talked to around the US are just seeing just extremely tight supply of inventory. So up 20% what do you do with your equity? Well, potentially someone that bought a house a year ago could refinance now and remove PMI.

We also do a lot of debt consolidation because there’s a tremendous amount of equity in homes as well. I’m around all weekend. If you have any questions let me know. If you want to get pre approved for a new mortgage, talk about refinancing, removing PMI, debt consolidation, etc. call me on my cell phone, text me. Happy Friday. Have a great day.

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