236
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[00:00:06] Welcome back to the Whatchamore podcast. I'm your host Quinton Harris. You are [00:00:10] dialed into episode 236 here on Monday morning. So it is the kickoff of [00:00:15] March and it's kind of rounding out the first quarter and man, we are excited about this episode because I'm going to [00:00:20] talk to you about the PCE, the Fed's favorite form of inflation that came out Friday, the reading, what [00:00:25] that means.
[00:00:25] Scott Besant, his comments about the private sector. I think he's saying something [00:00:30] we've all been saying, but No one has come out and said it yet from a public figure standpoint [00:00:35] that and more in this episode of what you're one more All right. So [00:00:40] welcome back. So hey, it is monday. It is the kickoff of march.
[00:00:43] We're rounding out the first [00:00:45] quarter You know, I always like to reference that forecast that we put out there I thought that this would be the [00:00:50] turning point, you know, we have a fed meeting in a couple of weeks coming up. Um There's still some [00:00:55] content. They're not going to do anything, meaning they'll continue to pause.
[00:00:58] I'm not so sure of that I'm gonna pull up [00:01:00] the most recent cme group where does the whole fed watch and what's going on and [00:01:05] the the It's the odds of a great cut while small are continuing to increase. [00:01:10] Um, you know friday We've got the pce reading that came out which is the fed's favorite form of [00:01:15] inflation Obviously we get the overall year over year index and then we get the core reading as well [00:01:20] Why is this important?
[00:01:21] Because the Fed is continuing to say, Hey, listen, it's the labor market [00:01:25] over inflation. However, we do want to make sure that inflation stays at the 2 percent [00:01:30] target rate and that's our job to get it there. But they've made numerous commentaries now that it's not [00:01:35] requiring any type of rate hike to get it there.
[00:01:37] Um, they've also insinuated that, you know, [00:01:40] listen, we expect higher readings coming out of the month of January. So the reading we get in February is for [00:01:45] January, which is what we're talking about. Those are traditionally high anyways. They typically Uh, are hot [00:01:50] coming off, uh, the, the January reading nine out of 10 times over the last 10 years.
[00:01:53] So the most recent [00:01:55] reading we got came in as expected of the forecast at 0. 3. So we're replacing last year's [00:02:00] reading this time to get an overall 12 month average. And the, the reality is, is that, [00:02:05] um, it came in at rounds up cause it came in at 2. 285. So slightly lower than expected, but [00:02:10] they round up. So it's 0.
[00:02:10] 3. The markets are reacting favorably to this. I think that's, uh, [00:02:15] adding to our forecast as well. You go back to our forecast. One of the things we've talked about is the Federal [00:02:20] Reserve really doesn't have to do anything. Of course, we want them to lower the rates, but they don't [00:02:25] have to do anything for this rate to come down right now.
[00:02:28] There appears one of the major [00:02:30] points of this administration is To lower the 10 year yield. Matter [00:02:35] of fact, the, the, the, um, the U. S. Treasury Secretary Scott [00:02:40] Bestin has come out and said, that is, that is what we think is, is an issue that needs to be addressed. We don't need the [00:02:45] Federal Reserve to lower rates.
[00:02:46] If they do, and they feel compelled to do it, great. But we think that, uh, [00:02:50] the economy right now is being held back by the 10 year treasury. And so they have made, uh, [00:02:55] multiple attempts to get this down. And I think they're going to continue to do it through commentary only at this point. [00:03:00] Um, but that goes a long way in the market.
[00:03:02] And since our last episode, [00:03:05] we're continuing to see this rally, if you may, in the bond market that supports those, those [00:03:10] theories. And uh, it's been really good to see, and you know, I'm going to put this graph on our YouTube [00:03:15] channel at what's your one more that's with a number one at what's your one more.
[00:03:18] And if you're not subscribed to that, you [00:03:20] listen to our audio, go subscribe to that because there's some cool stuff our producer puts in there. That I think just really [00:03:25] takes these episodes to another level and, uh, and I really appreciate all the feedback you guys put in there and, uh, and [00:03:30] ask for more, you know, data sets that we put in there, but I'm going to drop this graph of this 10 year treasury in [00:03:35] there and look at the actual downward pressure that's been happening.
[00:03:39] Since really [00:03:40] dating back to right at Valentine's Day, like if we start February 14th, it has been a nice trajectory [00:03:45] down and we've seen a 40 point differential, 0. 4, 40 basis [00:03:50] point differential in the 10 year treasury. That's extremely important because what's happened is as [00:03:55] that comes down, so do mortgage interest rates.
[00:03:56] And if you're in the mortgage side of things, you've seen that since that time. [00:04:00] Matter of fact, in the last week, you've seen a pretty good drop off in the pricing, not necessarily the rate. But the pricing [00:04:05] side of things, which have made some rates that were maybe, you know, accompanied by a discount point now [00:04:10] accompanied by no discount points, which means you're able to offer lower rates with that same discount point.
[00:04:14] I [00:04:15] think that's very consumer advantageous and it's continuing to open up the affordability side [00:04:20] of things on the market. The other thing I thought that was interesting is we've got some commentary, two different commentaries [00:04:25] this week that I kind of want to talk about one. I'm briefly going to talk about because I'm going to bring an expert on the [00:04:30] show next week.
[00:04:31] We're going to sit down, uh, with a former government official to kind [00:04:35] of talk a little bit about this, but we've got our own governor here in our backyard. Talk about, talk about coming [00:04:40] out and opening up affordability and creating more opportunities for Floridians. Governor [00:04:45] DeSantis has recently proposed the notion to eliminate property taxes for all.
[00:04:49] [00:04:50] Now, I think there's a lot of, well, if you do that, where does the government spending come from [00:04:55] and how do we balance a budget with that? And that's why I'm bringing in an expert on the show because off, [00:05:00] you know, offline, I've talked to him briefly about his thoughts on this. I was blown away by his response, um, [00:05:05] because it's not what I thought.
[00:05:06] And I think it's going to be really cool for you guys to hear this, but what a genius [00:05:10] idea if they're able to eliminate property taxes, talk about opening it up affordability. [00:05:15] Maybe we can tackle the insurance problem here in Florida as well. And then all of a sudden. We create an [00:05:20] enormous amount of affordability for homeowners and potential homeowners.
[00:05:23] I think it's a wonderful idea and it [00:05:25] continues to show out of the box thinking that we just haven't seen before in any type of government, [00:05:30] really sector. And uh, I think that that's really, really important. Going back to Scott [00:05:35] Besant though, this is important because as the US Secretary of Treasury, he opened up and said [00:05:40] something that I thought was really interesting and it was this.
[00:05:43] It was that if you take a [00:05:45] look at the U. S. economy, I'm quoting, this is his first in February, you know, February 25th was [00:05:50] his first address to the public in this position. He said, the U. S. economy, I'm reading the [00:05:55] line here, is more fragile under the surface than the economic metrics suggest. [00:06:00] That's important because I think if you've been listening to the show for some time, we've talked [00:06:05] about, there's a lot of metrics that have come out that kind of given these false narratives that, hey, we're [00:06:10] in a strong economy, things are good.
[00:06:11] Uh, we're thriving. GDP is up. Job growth is steady. [00:06:15] I've been kind of warning and leaning towards the side that those numbers are not adding [00:06:20] up. There's constant revisions, uh, to the labor force. There's [00:06:25] constant, uh, corrections to the economic data that's coming in 60 days after it's already come in. [00:06:30] It's a lot of it that rebukes this idea of a strong economy and quite frankly, I [00:06:35] mean, look around.
[00:06:36] Look around to where you are. I think you can see weakening signs of people [00:06:40] struggling And I don't think that this economy is as strong as we were led to once [00:06:45] believe and you know I think that's going to add to the federal reserve making these cuts that i'm [00:06:50] continuing to forecast at four not two There will be four cuts maybe even six on this year that are coming [00:06:55] going back to my forecast.
[00:06:56] I said the peak Of the opportunity as a home buyer [00:07:00] will be in the late q2 early q3 sector of this year Because I think that's when we're going [00:07:05] to see the the lowest of the rates this year In that range that we suggested somewhere between [00:07:10] 5 and 7 and a quarter You'll be on the lower end of that range, but I understand that.
[00:07:14] Um, [00:07:15] I understand that What scott best is saying here because i'm pulling up his commentary I thought this was really [00:07:20] important and I definitely want to go. He said the private sector has been in a recession and [00:07:25] I I tend to agree that there are sectors that are, that are in a rolling recession, but for him to [00:07:30] come out and address this, I think it was kind of one of those wake ups to the market that was like, wait a minute, [00:07:35] like, hey, that's, that's, that's kind of not what we've been told.
[00:07:37] It's not what we've been seeing on the news, you know, that's a [00:07:40] lot different. And I think that this is the sign of, um, the government [00:07:45] coming out and kind of spilling the beans, if you may. And I think that that's going to bleed right over to the Federal Reserve. And I think you're [00:07:50] going to see some favorable market conditions that we're just now hitting the momentum.
[00:07:54] And we [00:07:55] suggested in that forecast in March would be the run up. And here we are. We're not even at March yet. We're already [00:08:00] seeing it started mid February. This could propel us into a very nice home buying season here in the [00:08:05] spring. And if you're a home buyer, you know, something that I think you really have to consider right now, I'm [00:08:10] going to talk to home buyers specifically on this commentary.
[00:08:12] There's a lot of you out there right now. [00:08:15] Not all of you are actively searching for the home at this moment. You have it on [00:08:20] your horizon over the next 90 days, maybe over the next 6 months. [00:08:25] However, if you get it on your horizon now, to plan for the next 30 to 60 [00:08:30] days, you may beat all of the competition to the market.
[00:08:33] That competition is going to come to the [00:08:35] market, may enter the market at lower rates than we've seen over the last 18 months, which is [00:08:40] going to cause a flurry of homebuyers, and that is potentially going to [00:08:45] increase home prices higher than anticipated. For example, if you're a [00:08:50] seller, something to think about.
[00:08:51] Now might be your time to list the property. You have less [00:08:55] competition. Now there are less homes on the market right now, historically speaking, [00:09:00] then there will be in May or June. So you should be able to [00:09:05] list your home. Now, if you're on the fence and you're like, well, I think we're going to list maybe the next 69 days.
[00:09:09] It [00:09:10] might not be a bad idea to do it now, because you're going to get probably exactly what you're [00:09:15] off, what you want for the home, maybe even a little bit more in a multiple offer situation. You know, I um, [00:09:20] I have a, a friend that recently, you know, wasn't a, he, he wasn't prepared to sell his home, [00:09:25] but he said, you know what, my wife and I were going to sell our home, uh, mother in law passed away, they were [00:09:30] handling her affairs, and they were like, you know what, we're going to go move into her home, we'll list our home, [00:09:35] we'll figure things out.
[00:09:36] That thing sold in 48 hours with multiple offers [00:09:40] and they, they were floored. It went that quickly to the point they, they didn't have enough time to move everything out. [00:09:45] My point is, is, is that there is an appetite in this market for homes [00:09:50] that buyers are willing to take on right now. And if you're a seller, this is your time [00:09:55] to do it in the form of getting out there and getting ahead of the competition because less homes that are [00:10:00] listed, you know, the more opportunity that your home is desired by the buyers that are out there wanting [00:10:05] to buy.
[00:10:05] And I think this is a trend that's naturally like I'm not setting the world on fire with this theory. [00:10:10] It's starting to become more robust now than ever before, especially with the amount of [00:10:15] limited listings that we've had over the course of the last really 30, 60 days. And you know, as I [00:10:20] continue to talk, you're starting to see more downward trajectory on this 10 year treasury, which is great [00:10:25] news.
[00:10:25] And you know, there's a theology, man, if this thing gets below. Yeah, it's at 423 right now. [00:10:30] If it gets below four, I mean, that's not going to happen today, but if it gets below four, that's a [00:10:35] really big threshold that we're going to break that I think imposes, uh, a [00:10:40] lot of opportunity in the market that wasn't there six months ago.
[00:10:43] It's something I'm very excited [00:10:45] about. You can probably hear it and how I'm talking about it, but, uh, I think that is something that, um, that I, I [00:10:50] think it's, it's, it, it's a really good sign again, going back to the federal reserve. They can still hit pause again. It doesn't [00:10:55] matter if that 10 year keeps coming down that plus if you recall, we did the whole how to make a mortgage [00:11:00] podcast, that plus the spread, which also is continuing to come down is how you make your mortgage interest [00:11:05] rate.
[00:11:05] There's a very good chance we're in the low to mid sixes. By mid [00:11:10] March. There's a very good chance that happens. And if you were thinking that, you know, Three [00:11:15] months ago, you'd be like, There's no way we're gonna be there by March. It absolutely looks like that's the way we're heading right now. And it's very exciting [00:11:20] times and a great opportunity.
[00:11:21] And if you couple that with the traditional discount point that you're seeing on a [00:11:25] loan right now, You're in the low sixes, maybe even upper fives, depending on how you structure that, [00:11:30] uh, great opportunity out there. And it's something that, uh, I'm very excited about as we kind of head into a year. And I think we're [00:11:35] all deserving of that, man.
[00:11:35] We've been on the line, we've been waiting since late 22, really for some sort of [00:11:40] rally to come back as some sort of opportunity and just stability in the market. And it looks like it's presenting [00:11:45] itself right now. And that's something that I think is, uh, highly anticipated and very welcomed in this [00:11:50] market there.
[00:11:50] So guys, if you like what you're hearing, please share this podcast. If you would share a friend, fan, a member, some like [00:11:55] your song. Two that's looking to be a homeowner, maybe on the fence, maybe not. We'd love to hear your comments and your feedback on our YouTube [00:12:00] channel at What's Your One More. And until the next episode, we'll see you guys at What's Your One More.
