The Boss Has Spoken
Join me in our ‘Weekly Market Update’ to decipher what to expect in the coming weeks & months.
Happy Friday! Brian Manning here with the weekly update. Let’s get right to it.
Monday was a really volatile day in the markets. Not a lot going on there, because everything was hinged on what was going to happen with the election. We had some volatility there waiting. Tuesday, we all know was Election Day. I don’t know about you, regardless of your political side, I’m just happy that the election is over. I’m sick of hearing about it in the news. I know now the news will have something different to pick up on, but just to have election behind us is great, because the financial markets were not loving it leading into this week. Once the election was done and over with, all eyes turned to the Federal Reserve, which was on Thursday.
The Federal Reserve had a two-day meeting. It got pushed out a day later in the week because the election. They met on Wednesday and Thursday. On Thursday, Jerome Powell spoke. He’s the president of the Federal Reserve. What do I mean by the headline “The Boss Has Spoken”? Well to me, Jerome Powell is really our boss. When you’re looking at finances, real estate, Jerome Powell and the Federal Reserve control the most powerful thing in the world, which is the price of money, and specifically the price of the US dollar. Based on what’s happening in the market, Jerome Powell and the Federal Reserve truly control everything. Think about how many homes sold back in 2020/202. I know we were stuck at home with COVID, but the reason why so many homes sold was because rates were low, the cost of money, and the cost of borrowing was low.
Now you look at what happened in the market the last couple years. What happened was you had supply increase and a demand decrease. Why? Because rates are higher. Jerome Powell, who has control of the money, starts to decrease the cost of borrowing. That opens people up to borrow more money in the US economy and around the world. So, watching the Federal Reserve is really the boss for all of us in the room, because what the Federal Reserve does is impactful to all of us- whether you’re buying a home, you own a home, or you’re a realtor looking to sell homes to clients. If you’re a realtor, you should be paying very close attention to exactly what Jerome Powell does and what he’s saying.
On Thursday, the Federal Reserve cut interest rates by a quarter percent. That’s exactly what was expected, but it was great to hear the comments. It was the first time I felt like Jerome Powell was really dialed in with what he was saying and looking at the future going forward. He also cited the three and six month run rate, which is something we’ve looked at. Looking at the three and six month run rate of inflation looks good. The numbers are very positive there. It shows the inflation numbers will continue to move lower.
The Federal Reserve has two mandates. Number one is going to be employment in the United States. The second is going to be price stability. They want to see inflation that at that 2% range. So, we are seeing inflation move lower. The Federal Reserve acknowledged that. They also acknowledged, for the first time, the lagging rents. They really kind of went into that and talked about how the rents and shelters, which we’ve talked about, lagging in the readings, and how it’s catching up. So that’s going to continue to be positive news on the inflation front. They also acknowledged that we’re likely not going to see a move on inflation again until January. So, the January move on inflation will get reported in February, when we start looking at that, we’ll see a positive movement on inflation again.
We’re likely not going to see much movement on inflation in the months of November and December, October as well. The reason why is because we look at last year, October, November, December, the replacement numbers were low, but they did acknowledge this. This was really great to see that they’re forward looking and what’s going to happen. It felt like the true tone was that they still see future rate cuts in the cards, and they’re still really focused, and they really do understand right now that they have a restrictive monetary policy. It was good to hear all that. This really lines us up for lower rates in the future, and the Federal Reserve is finally feeling like they’re dialed in on what’s going on.
Don’t forget, we have fall Fiesta coming up. It’s our 10th annual Fall fiesta. I cannot believe it! Taking place next Thursday, November 14 at T/aco where we started Fall Fiesta 10 years ago. Pete Walters always been amazing to work with. We love Pete and we love T/aco. We’re super excited to go back there.
We only have 13 spots left because it’s a smaller space compared to where we were last couple years. So, if you want to attend, please make sure to RSVP. We’d love to have you there.
We’re raising money for Trees, Water & People. They’re a phenomenal nonprofit. We first met them on jam cruise about 13 years ago. They do really great things. They’ll be there to tell you about what they do and where your donations are going. It’s a minimum suggested donation of $20 per person since I’m paying for all you can eat, tacos, all you could drink, open bar. You don’t have to donate anything if you don’t want to, but we truly think that asking for $20 for a nonprofit is a fair suggestion. I don’t know where else you can go in Boulder right now and go out to all you could eat, all you could drink for $20 and if you want to donate more, please to 100% of what you donate, everything goes to trees, water, people, so we’d love to see you there. Hope you have a great day. If you have any questions you want to talk about what’s happening with the Federal Reserve, reach out to me anytime. Have a great day! I’ll talk with you soon.
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