Happy Tuesday! Brian Manning here with the weekly update. I know I missed last week. I know I'm a week off. I know it's Tuesday and it's completely out of place. Very sorry about that. Last week on Thursday, we had our Fall Fiesta. I just want to say thank you very much for everybody that came out. Such an incredible event. We raised a lot of money for Conscious Alliance. And I just want to say thank you very much for everyone that contributed in making that event an incredible success.

And I just wanted to get this update out there because there actually was a very important impactful stuff that happened between last week and today! So, I just wanted to jump in and do an update earlier than I would.

So, last week on Thursday, we got the October inflationary reading and we've been waiting for this. If you've watched any of these updates over the last several months, we've been talking about what inflation is doing and with inflation going up, inflation is absolutely the enemy of interest rates and it's just the arch enemy of bond markets in general. We've been looking at this, we've been talking about... the readings that we're going to get and what's going to happen starting in November going forward due to the high inflationary numbers that we're replacing. And we knew that we were going to have a rough spot this year in the spring and summer months, which we just came out of.

So, sure enough, we got an inflationary reading for the CPI last week on Thursday, that's Consumer Price Index and the core rate for CPI was only up 3/10th of a percent. And that's a really important number because I'll show you in a minute, it was replacing a number that was up 6/10th of a percent. So, the CPI number dropped, it went from 6.6% down to 6.3%. And that's really important because as we see inflation start to come down, that's going to be a benefit for us and it's going to have mortgage rates come down as well. So, certainly if you get mortgage rates from last Thursday to today, there's definitely been a nice decline in mortgage rates.

The crazy thing is that this number probably could have declined more, but one of the factors in the CPI is what's called lodging away from a home. And this looks at hotel costs around the country. And lodging away from home was up 4.9%. So, looking at those numbers, it was pretty insane to see lodging away from home costs up so high. If you looked at it on a chart, those numbers go up and down continuously. It's kind of a crazy number to even factor into inflation, but it does. And that definitely kept the number from improving more than it could have.

The other item that was taken into account was shelter. Shelter was up around 8% and then rent as well were up around 6%. So, we think we're going to start to see a little bit of easing of those numbers moving into January and that's going to have a yet farther positive impact on inflation.

And we're going to look at some charts here in just a minute. And the other item you want to look at was just employment. So, talking about a recession and potentially moving into recession. You know, recessions do not start when employment is at its lowest level possible, where unemployment is as low as level possible. You start to see a recession kick off when the employment market moves and then you start to see the unemployment numbers rise.

So, right now... an interesting number for us to look at what's called continuing claims. So, continuing claims are people that are on unemployment and they continue to file for unemployment benefits. And in the last month, the continuing claims were up by 129,000 people, which is a lot. So, I'm curious to see... we're starting to see this tipping point right now in the US Economy with employment and we'll look at another slide there as well. So, let me just pull something up real quick. Bear with me for one second while I do a screen share here. I just want to look at some items here for inflation and... employment numbers.

So, this is a chart of CPI. If you watch any of my updates in the past, we've been talking about this for months. We've actually been looking at this exact chart for last month. So, here we are right now. This is the month of October. This is the reading that we got on November 10th and this shows that inflation was up 3/10th of a percent. So, it's down. And what we've been talking about in the past is that the number that it replaced was this October number from last year.

So, last year in October, inflation was up 6/10th of a percent. So, when you replace an up 6/10th number with a positive 3/10th number, that means inflation is going to be down by 3/10th of a percent. We look at the prior month, we've talked about this in the past, July, August, September, were all really low inflationary numbers.

That's why we've seen mortgage rates just continue to rise so much is because the inflationary numbers that we've been getting here are really high. But now you look at this going forward, right? November, December, January, February, these are all elevated inflation numbers that we're going to replace. March is a low one, you keep going forward. April, May, June. So, lightly, now, you're starting to see the effects and the impact of the Federal Reserve hiking rates. You're starting to see some costs come down and then we're starting to replace these higher inflationary numbers. I will not be surprised if we see rates moving into the fives in the beginning of the year as far as mortgages are concerned because of the inflationary numbers that were replacing here.

The other item I wanted to look at, and we spoke about it briefly, was just employment. You know, okay, so we have 129,000 people on continuous claims over the last month, which is an elevated number. But now, you start to look at the tech industry as you start to look at the job cuts that are taken out, right? Twitter cutting by 50%, Facebook dropping their staff, Spotify, Netflix. I mean, it goes on and on and on and on. Then you go down to the bottom and you start to look at the hiring freezes as well. So, if you're looking at the overall strength of the economy, you're looking at the job market, certainly, we're starting to see some impact there on the tech side. I'm curious to see if that's going to have a lasting effect as well and start to really push into more inflationary pressure.

I just wanted a quick update for you because I was super excited to see the CPI numbers come back more favorable than we expected. I was super excited to see this prediction that we've been talking about for months and really come into play. Last thing I want to say is just a big thank you to Barry Habib of the MBS Highway. That's where you get a tremendous amount of information. I just want to give a shout-out to them for everything they do. Hope you have a great day.

-Brian

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