Posted on 04/23/2022 6:49:53 AM PDT by Browns Ultra Fan
Its Saturday and I am dreading markets opening on Monday. But here is where we sit today.
The 30-year mortgage rate has soared to 5.29%, the highest level since 2009 at the beginning of Obama’s Presidency. Since 2009, we have seen the purchasing power of the US Dollar decline further (orange line) while inflation (blue line) has soared. M1 (yellow) and M2 (green) has been growing since the financial crisis, but really took-off with the Covid outbreak in 2020 and The Fed’s massive overreaction coupled with Federal government stimulus.
Since the creation of The Federal Reserve System under President Woodrow Wilson, the purchasing power of the US Dollar has collapsed so much that $10 in 1913 in worth 34.8 cents today. But notice that since 1949, the CPI YoY has rarely been negative meaning that prices are pretty much only going up.
Instead of April showers bring May flowers, it is April expected Fed rate hikes (now 10.408 rate hikes by February 2023) bringing declining assets prices. In April so far, the S&P 500 index is DOWN 7%, the 10-year Treasury Note price is DOWN 5%, Bitcoin is DOWN 11%, the 3.5 coupon agency MBS price is down 3.2%.
We are seeing increased volatility in both the equity and bond markets.
Well, Powell and The Fed are hurling fireballs at mortgage rates and asset prices in April.
(Excerpt) Read more at confoundedinterest.net ...
Indeed, every day I see our retirement funds go down 5- 8000 dollars a day.. like it’s Covid all over again.it’s very diversified too. They have us checkmated every where.
My very meager 401K was cashed out 4 weeks ago. I guess I feel better about the penalty.
Took half my pension and bought a house, if all goes to pot at least I have a place to live with a garden, only losing half as much in the market now.
Recession next.
There are people in DC that deserve a good, old-fashion Texas rope dance...Big Time. Legalized thievery is what it is.
Many on Wall street agree and may last a long time a lot of democrat damage to clean up.
Its not like any of this is a surprise.
If anyone had been paying attention this is lining up just as it was expected. The rates are going up. Inflation is going up. Housing prices will soon turn. The markets have a couple of bad quarters ahead.
If the EU changes their Russia gas and oil policy as spring arrives...that will have a huge impact on prices.
The supply chain is going to go bad once again, until China opens up from their lock downs.
If you are still thinking the stock market is going to turn around and be brilliant in the second half of the year, one might want to reconsider their positions.
How long cn Americans take this Government Abuse? How many need to die before people realize—things MUST CHANGE!
Highest mortgage rates since the halcyon days of Obama and highest inflation since the Jimmah Cahtah.
Thank you Joe. Now FOAD.
Take the “soaring” mortgage rates posted in this article, for example. There was a time when homeowners would have refinanced their existing mortgages to get DOWN to the 5.29% rate cited here.
Agree!
Inflation is going up.
IMHO, Inflation is out of control. The Fed response is too little, too late. The economy is headed for recession. The only questions are: "How Deep?" and "How Long?"
The markets have a couple of bad quarters ahead.
IMHO, it will take more than a couple of quarters to recover. The worst place to be is "Bonds".
My current investment strategy is 60% stocks (mostly dividend funds) and 40% cash. The 40% cash will cover 5 years of RMDs.
If the EU changes their Russia gas and oil policy as spring arrives...that will have a huge impact on prices.
Here, I disagree. Russian oil and gas are being sold (at a discount) on the international market, primarily to China and India. The only way oil prices will come down is if Biden's policies are reversed or OPEC+ ramps up production.
The supply chain is going to go bad once again, until China opens up from their lock downs.
The supply chain mess worries me a lot. I hope you are correct and that China ends their lock downs, soonest.
Regards
My first mortgage was 12%. My current is 2.875%
You are right, perspective is important.
I think there are concerns that mortgage rates are rising, and fears that they will go a lot higher. If they level off in the 5 to 6 percent range, we would all be happy.
The combination of higher rates, plus a housing market in which prices are the highest in history, makes for a tough situation for today’s home buyers.
The key metric would be compare the average monthly home payment on newly purchased homes (new or existing) to the median monthly income.
That is probably the worst it has been since at least the Carter years.....
Sometimes, it seems that whining about “doom and gloom” is just an excuse for doing nothing.
When my wife and I bought a development house in 1975, we had to finance it with a 30-year mortgage at 13.5%. That was the “market rate”.
At first, we “stretched” to make all our mortgage payments on time. I took a week-end job. We had no vacations, no restaurant meals and no major purchases for two years.
Instead, during that time, we created “sweat” equity. My wife and I repainted our entire house, inside and out. We rebuilt our tumbled-down seawall and we reinvigorated our garden.
As interest rates went down, the value of our house jumped. The value of our EQUITY increased so much that when we sold that house, we had enough equity to allow us to buy TWO houses: a big “Beaver Cleaver” colonial and a ski-house in Vermont. We have bought and improved many houses since then, each time at a profit.
Our children have also profited from creating their own “sweat equity” as they moved from their small “starter homes” to bigger and better “family homes”. Their progress proves to me that it can still be done.
So, my advice to the doubters is: collect your tools and just DO IT!
When I bought my house in 82 the mortgage rate was 12 percent. Years later I learned that some bankers liked to buy houses when the rate was high and few people qualified. They knew the rate would go down as mine certainly did. It went to 4.8 and now it is 3.25.
I meant if the EU shuts down their imports. Russia will be swimming in oil, but the west will pay more.
I think you read my original comment in the opposite way.
Natural gas and oil are not coming down anytime soon.
I am about 80% cash or CE these days. My expenses are modest, and I’ve hedged the heat and gas, so that’s covered for at least a year or so.
Us, too. What a sh!tty time to retire. GD government royally effs up everything it touches.
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