Latest / Mastering Encompass® / Consumer Inflation Surprise - Market Update 3/18/24

Transcript

Consumer Inflation Surprise - Market Update 3/18/24 · Mastering Encompass®

• 0:29
  Hi everyone, Larry Bailey here, Awesome Technologies Inc. bringing you the newest newsletter.
• 0:36
  This one is dated March 18th, 2024. I'm recording this on the 19th because yesterday was a travel day.
• 0:43
  We're out here for the Ice Mortgage Technology Conference.
• 0:46
  We're in booth 520. If uh if you're not out here, I totally get it. But make sure that you do join over into the MortgageDot community, into the Ice Experience 24 space to catch all the updated information, to make sure that you're reviewing this, information as it's posted, and also to make sure that you participate in this week's wrap-up show.
• 1:09
  It's on March 21st. We're going to be live streaming it all day, so make sure that you join up and we're going to be talking about everything that's happened in the Ice Mortgage System.
• 1:17
  Technology Experience 2024 event happening this week.
• 1:21
  We're going to break down all the breakout sessions as well as uh insights information, things we heard, things we saw, uh things we didn't see.
• 1:28
  Sometimes that's important too. This information here for the weekly newsletters brought to you from MBS Highway. Uh, if you ever need anything with regards to market information, get over to mbshighway.com, get a subscription.
• 1:40
  Barry Habib and team have been rock solid for at least 20 years.
• 1:44
  Um, forever, like just forever, so great stuff. And also again, uh, thanks to awesome technology experts. I've been for always supporting this.
• 1:52
  And guys, do a workflow review.
• 1:54
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• 2:15
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• 2:20
  This one's uh going for the week, we're going to review the week of March 11th, 2024. And, and uh if you're watching this on Morgazot Community, on video grade, if you're listening us on podcast, get over to Morgazot Community.
• 2:33
  Check out the video replay. Uh and that way you can see.
• 2:37
  Everything that I'm sharing on screen because a lot of this comes across on screen better than it does just. You're hearing my voice.
• 2:44
  So, uh both consumer and wholesale inflation were hotter than expected last month plus retail sales in February rebounded from January sharp decline.
• 2:53
  But, not as much. As economists have forecasted.
• 2:55
  Here's the headlines. Uh there is upside surprise to consumer inflation.
• 3:00
  Check that out. Wholesale inflation comes in hot.
• 3:03
  Next story is February retail sales below estimates.
• 3:07
  And the last story is new s- seasonal adjustments impact jobless claims.
• 3:11
  So the upside uh this uh upside surprise to consumer inflation is the first story and this is brought to you from uh Bureau of Labor Statistics.
• 3:20
  And the latest consumer price index that's CPI showed that the inflation rose. 0.4% from January to February coming in right around forecasts.
• 3:30
  Of course, CPI which strips out volatile food and energy prices increased 0.4% while the annual reading fell from 3.9 to 3.8.
• 3:38
  Kind of been doing this dance up and down up and down up and down. Um but slowly going down. So, trend lines are always important. Um, both figures were slightly higher than estimates rising, shelter and energy costs for two key factors. That helped push inflation higher last month. Bottom line gang. Uh, inflation has fallen considerably. Remember in 2020, 2020. That headline reading was at 9.1% and light and rightfully so everybody's freaking out. Now that's down to 3.2%.
• 4:04
  The core reading and that was as high as 6.6 is now down to 3.8%. But the CPI was still hotter than expected for both January. Meaning inflationary pressures have been more persistent than the Fed would like. This is not on screen here but keep in mind that there's no, it's not like you flick a switch and boom things drop.
• 4:25
  There's this dance up and down and there's so many macroeconomic.
• 4:29
  Uh, influences here going on, things that are rising around the world, and we just have to wait and see what's going on here.
• 4:37
  I know everybody is really anxious to get rates lower, get inflation lower and this is why I'm the federal or reserve is doing its thing. And that leads us right into the next story here.
• 4:49
  So, next story is wholesale inflation comes in hot note.
• 4:52
  Again, wholesale is the producer price index, the PPI. And that measures inflation on the wholesale level.
• 4:59
  That rose .6% in thi- That would be where a doubling market estimates.
• 5:04
  And remember, at the wholesale level, think about this, if you go to like some wholesaler and you get like prices lower, and then you go to a retailer and get prices higher.
• 5:12
  Like that's normal, right? You understand that. Typically.
• 5:15
  And, but if the wholesale- See ya. Prices jump.
• 5:18
  You know it's gonna jump at the retail.
• 5:21
  Like retailers can only absorb so much. Umm and this is not gonna help them. So, the uh on an annual basis, the PPI rose from 1% to 1.6% well above the 1.1% that was 4%. Forecasted. The core PPI which strips out the volatile food and energy prices was still hotter than expected with a 0.3% rise.
• 5:41
  Year over year reading umm uhh uhh it remained at 2% just about forecast.
• 5:46
  Bottom line here gang is that the despite the dee .
• 5:49
  Umm upside surprise in the data. The wholesale inflation is still well below its 2022 peak. February is 1.6% year over year reading is a sharp drop from the 11.7% that was reached a few years ago.
• 6:01
  That's when everybody was like dude we're in some serious trouble.
• 6:04
  There go. There go. Remember that the Fed began erasing their Fed uh their Fed funds rate which is the overnight rate uh for barring for banks in March 2022. It was designed for all this stuff.
• 6:16
  So while the Fed is still expecting to start to start to cut the Fed funds rate later this year. Umm with these higher inflate, you know, higher than expected inflation readings. Mmm and it might push things back.
• 6:28
  We were thinking maybe July. And I know a couple weeks ago some were like, see I told you it was gonna be July. I don't know.
• 6:34
  I mean we'll have to wait and see what happens. Um.
• 6:36
  you The latest update in December showed that the Fed Board members projected a meeting of three great cuts for this year.
• 6:43
  We'll see if that happens. We'll see if this economic data really supports that opinion as time goes on.
• 6:48
  I mean it's already March 19th, for goodness sake. So this year is flying by.
• 6:54
  That gets us into our next story. February retail sales below estimates.
• 6:58
  So retail sales rose 0.6% from January to February.
• 7:02
  Though this modest rebound was well below estimates of the 0.8% gain they were expecting. Sales in January were also revised downward from the original.
• 7:10
  They reported 0.8% decline to a 1.1% decline when compared to December.
• 7:15
  Bottom line here is after strong holiday sales uh shopping season.
• 7:19
  Consumer spending is cooled in the first quarter. I know I'm spending cooled.
• 7:22
  I could see it in my credit card statements. So while the January's uh harsh weather. Certainly impacted sales at the start of the year.
• 7:28
  The growing use of credit cards uh and buying out pay later programs could also be contributing to slower spending as consumers pay back the holiday season and other debts. The federal will be closely be watching this um retail sales reports.
• 7:41
  as it indicates a strengthened economy and it might also impact their monetary policy decisions later on this year. Next story is new seasonal adjustments impact jobless claims. So there were 209,000 initial jobless claims filed in the latest week. make uh marking a decline of a thousand applications for new unemployment benefits from the previous week.
• 8:02
  Now continuing claims continue to rise and this rose by 17,000 with 1.811 million people, a lot of people still receiving benefits after filing their initial claim.
• 8:13
  Bottom line is And this story is that the latest continuing claims is much lower than the 1.9 million readings we've been seeing, but the decline is not due to improving conditions of hiring.
• 8:22
  In fact, the Bureau of Labor Statistics changed their seasonal adjustments, which has caused big revisions throughout the prior weeks reporting.
• 8:30
  We'll one. Yet, even with these adjustments, continuing claims are still trending higher compared to a year ago showing that it's becoming harder for some people to find new employment once they're let go.
• 8:39
  Um, on a related note, the largest small business optimism survey from the National Federation of Independent businesses, sure that small businesses are struggling on the labor front with plans to hire and plans to increase compensation, both hitting three-year lows.
• 8:54
  And at the larger level, at the mid, you know, mid and certainly large size, we're starting, I'm starting to see some uh Folks that are starting higher again and uh, we'll have to wait and see, you know, what happens.
• 9:07
  Family heck of the week, March Madness means munchies! This cord, this cord inside, uh caramel corn courtesy see a taste of how we'll be a slam dunk with family and friends my mouth is water. Like seriously, it's out of control. Pop 6 cords of popcorn, oh my gosh, 6 cords of popcorn and set those aside.
• 9:27
  Create your album at 250 degrees Fahrenheit and you're gonna grease two separate Thanks watching! 2, 13 by 9 inch baking fans.
• 9:36
  An allergic saucepan combined two cups of brown sugar, one cup of butter, cubed, one half cup corn syrup, and one teaspoon of salt, bringing all of that to a boil over medium heat. And boil it for five minutes during occasionally, don't scallop. All that, it's easy to burn that stuff, so make sure you do it gradually.
• 9:54
  Remove from heat and stir in three teaspoons of vanilla, one half teaspoon baking soda, and mix that well.
• 9:58
  You're gonna pour that sauce all over the popcorn and stir until well coated.
• 10:02
  And pop corn, uhm ehm ehm ehm add the popcorn to the prepared baking dishes and bake for 45 minutes, stirring it for 15 minutes.
• 10:10
  Cool that completely before serving, and then if you have any left to ever store them at an airtight container, so your popcorn doesn't get all umm stale.
• 10:19
  You wanna keep crisp. Here's what to look for this week, housing data we'll share. Start with builder confidence from March for the National Association of Home Builders on Monday, yesterday, and by the way yesterday's report you can see the market responded favorably to that. Where are we here?
• 10:38
  Tuesday brings news on February's housing starts and building permits while existing home sales data files Thursday. Actually, you know what? I'm recording this specific time so that the actually the Tuesday uh housing starts and building fronts are probably out and you can You can you can kind of see that uh this is doing you know this is doing good stuff so 10 basis points in the U.S.
• 11:01
  treasury fell 2 basis points. Still sucks that's over 4 but we'll see what happens here. The feds meeting the feds meetings begin.
• 11:09
  Tuesday with a monetary policy statement and press conference coming tomorrow Wednesday.
• 11:13
  Investors will closely be listening for news regarding timing of rate cuts later this year. Also note the latest job list claims and update on manufacturing for the Philadelphia region where we will be reported on Thursday.
• 11:24
  Thursday again. Thanks very much for always listening to these updates and reports.
• 11:28
  I will keep doing them provided you keep listening to them.
• 11:31
  So there you go. There's the cycle. Anything we can ever help you with any type of mortgage technology custom development, um, encompass plugins solutions for MeridianLink or Bite Pro.
• 11:42
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• 11:44
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• 11:50
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• 11:57
  Get it over to you. Thanks everybody. Have a great rest of your day.
• 11:59
  Take care. It's alright.