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How long can the 'everything' bull market last? · The Financial Exchange Show

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Veterans Development Corporation. This is the Financial Exchange with Chuck
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Zada and Mike Armstrong.
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Speaker 2: Chuck, Mike and Tucker with you here as we kick
1:15
off a Thursday on the Financial Exchange, And we got
1:18
some economic data this morning. We got some additional earnings
1:22
late last night, and we got some further announcements from
1:26
China regarding the size and scope of their potential stimulus measures.
1:32
Speaker 3: And so unlike the first three days of this week
1:34
where it was.
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Speaker 2: Ho hum, little boring, not much to talk about, we
1:38
got a little bit of action here. Mike, where do
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you want to start today?
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Speaker 4: I guess let's kick things off with just markets again
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reaching all time highs, and news about the labor market
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remaining I don't know, uh, not that alarmingly concerning at
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the moment, as far as I can tell.
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Speaker 2: The S and P five hundred touching a new intra
2:02
day all time high above fifty seven fifty. So again
2:07
for all of those who saw the first four days
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of September and said, oh boy, here comes on all
2:14
the bad September. We're gonna have to sell all the stocks.
2:19
Fortunately that has not worked out well. With now a
2:23
little bit less than three trading days left in the month.
2:27
The S and P five hundred up more than three
2:29
percent thus far for the month of September. Yes, it
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still can you know, fall five percent in the last
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three days and end up negative for the month. But
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you know, the question that you do have to ask is, Okay,
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what is the catalyst for that? Because the only major
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data that is left on the board that I can
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see is PCE Price Index data that comes out tomorrow,
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and most of that you can back into based on
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the data that we got from the GDP and PCE
2:55
report today. So there's not really a huge surprise left
3:00
that would warrant, you know, a four or five percent
3:03
downward move in the next couple of days. So you
3:05
got to be, you know, saying, okay, is it's gonna
3:07
be something with geopolitics this and that. But again this
3:10
is why. Look when when whenever you see anything that
3:14
talks about average this or average that, remember almost never
3:19
do you actually end up experiencing the average. You end
3:22
up experiencing something different that feeds into that average. And
3:25
so just because people say, hey, September is a bad
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month for stocks, it doesn't mean that that is going
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to be the case. In this particular September, and this
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is something that I'm going to continue to return to
3:37
each and every day until September is exhausted.
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Speaker 4: Here, Mike, sounds good.
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Speaker 2: Do you want to talk a little bit about the
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Let's do some of the data that we had this morning,
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and then I think we can kind of dovetail into
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this piece from market Watch. So few different data points here.
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First one that we get every week weekly job was
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claims two hundred and eighteen thousand, below estimates of two
3:57
hundred and twenty five thousand, Also below the prior month
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of prior week of two hundred and twenty two thousand.
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Continuing claims moved up modestly from million, eight hundred and
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twenty one eight hundred and thirty four thousand. In both cases,
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neither of these numbers indicating any major shift that we
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are seeing in the labor market towards more people filing
4:19
for unemployment.
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Speaker 4: My general conclusion here put it in the sock drawer.
4:23
Nothing to see here.
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Speaker 3: When we look at the labor market.
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Speaker 2: It has been one of the areas that we focused
4:30
on and said, hey, there's there's some weakness here. To
4:32
this point, Mike, it seems to be manifesting more as Hey,
4:36
companies are hiring more slowly as opposed to firing more quickly.
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Speaker 4: Is that an accurate statement. Yeah, we're seeing nothing in
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the way of layoffs. Certainly, the job openings that we
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are seeing have been on a continuous decline, so the
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demand for new labor is certainly weakening. We had companies
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like Amazon either because they genuinely want people back in
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the office or because they want to find reasons to
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fire people, but in either case it's not really relevant,
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but focusing less on what their employees want and more
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on what the employer wants. And so all of this
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speaks to me as employers recognizing, hey, this might be
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a slightly weakening labor market, but we are not so
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concerned about the economy that we're ready to get rid
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of a large portion of our employees. We just don't
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need to replace the existing ones at such a quick pace.
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Speaker 2: Also, this morning we got the final update on second
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quarter GDP. They give an initial estimate, a second estimate,
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and then the final update, which also isn't final. They
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then will go back and revise it, you know, a
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year or two down the road and say, oh, here's
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what actually happened. But the final for you know, the
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actual reporting kind of in real time, and what we
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saw was that GDP for the second quarter after this
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additional update for you know, more data that's been collected
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now clocks at a flat three percent annualized growth rate, again,
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a significant improvement over the growth that we saw in
6:07
Q one and improvement over the initial estimates that we
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saw as well. And thus, again when you talk about
6:15
the idea of hey, recession being imminent, you have to
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take it in the context. You know, you kind of
6:20
have to put that in context and say, Okay, where's
6:22
it coming from? Because Q two GDP again.
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Speaker 3: Is it three? Is it two eight, is it two nine?
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Is it three to two? I don't I don't know.
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Speaker 2: It's it's in that ballpark of you know, high two s,
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low threes and GDP. Now, the Atlanta Feds now cast
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for where GDP is at this point in the quarter,
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given the inputs that have come in so far, is
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projecting growth at two point nine percent according to their
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last estimate from September eighteenth. They're going to do another
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update tomorrow after that PCE data comes in. And so
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you sit here and you say, look, if you have
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back to back quarters with GDP growth somewhere in the
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high twos. There isn't even really a meaningful down trend
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that you're seeing in terms of actual economic growth. And
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it's kind of hard to have a recession if you
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are not recessing.
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Speaker 4: Recessing, Yeah, okay, fair enough. Pending home sales, what.
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Speaker 3: Do you want to talk?
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Speaker 2: I mean, again, I don't really know that there's much
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that's notable on that front. They're just kind of stable. Yeah,
7:27
zero point six percent in August. Increase, but again from
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very low levels. I think continues to be the story
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on home sales. Yeah, mortgage rates continued down, but we
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didn't see a massive surge in activity. And again this
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is data from August. I think there is a potential
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compelling story on housing. We're seeing it in the refinance market,
7:49
which we'll get to. But does that lead to pending
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home sales? Frankly, it probably you. I probably wouldn't expect
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to see much of it in in September. Really, October
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is what I'm going to be looking at here is
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did the FED cutting rates shift thinking or get people
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excited about housing in a way that didn't exist back
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in August? And September is the question that I continue
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to have, and well, we'll not see that data until
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October November time frame. So overall, the economic data that
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we continue to get over the course of September, to
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me is, hey, it seems like there's some stability that's
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starting to show up in a number of different data sets.
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Two places that we haven't seen stability yet both labor
8:36
market indicators, but the job Openings report, the Jolts Report,
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which we're going to be getting next week, that's going
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to be out on Tuesday at ten am Eastern, That's
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when that comes out. And then aside from you know
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a little bit of a recovery in the you know,
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jobs numbers and unemployment rate for the August numbers, Hey,
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we get September jobs numbers coming out next front, and
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can we see some continued stability there after you know,
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potentially what might just be a one month blip that
9:06
looks like a rebound. So I think the thing that's
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tough for me to to sort through when we're looking
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at the data is, Hey, the labor market data that
9:16
we tend to rely on, those big monthly reports, there's
9:21
been some continued weakness and we need to see that,
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you know, kind of stemming the bleeding at some point,
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because otherwise, even though all these other places are improving,
9:29
it gets to a certain point in the labor market
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where it becomes hard to avoid a recession if job losses,
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you know, start to increase based on what we're seeing
9:37
in those reports. And that's still a possibility in the
9:40
next few months. But again, the data elsewhere has largely
9:45
you know, kind of started to show signs of bottoming
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or even improving over the last three to four.
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Speaker 4: Weeks, so I may be jumpinging ahead a bit by
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way as we turn to next week, which, as Chuck mentioned,
9:57
we do get a number of new labor market reports,
10:00
and that seems to be what you and I are
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most concerned about if we're talking about a real risk
10:04
to the economy. On Tuesday, we will get the Job
10:08
Openings Report, so the Jolts report where you look at
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that ratio of unemployed to total jobs open. We'll also
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be getting ISM Manufacturing and construction spending. That morning. Wednesday,
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you'll get the ADP Employment Report. We'll get another week
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of jobless claims before ISM services and factory orders come out,
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and then the big you know, the big item of
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the week next week will be that Friday jobs report
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that comes out and among other things, gives us the
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trend line on unemployment rate. We saw a stabilizer for
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one month. When we look at the August data in unemployment.
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Will that continue or will we see it tick back up?
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That has that potential to shift this narrative once again?
10:56
Speaker 3: Was I speaking French?
10:58
Speaker 4: Yeah, yeah, I'm just repeating exactly what you said.
11:00
Speaker 3: I just wanted to make sure.
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Speaker 4: Okay, yeah, nice, say smart. Just take what somebody else said,
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repeat it in different words and yeah, we'll be done.
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Speaker 3: There works for me. I was just I was just
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trying to understand, just making sure. Let's take a quick
11:12
break here.
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Speaker 2: When we come back, let's talk about this piece from
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market Watch talking about whether or not we are in
11:19
in everything bull market.
11:21
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Speaker 4: We might be missing Chuck here, so I'll move along
12:29
here as we as we discuss. But there's a piece
12:34
today in market Watch talking about investors finally experiencing the
12:38
everything bull market, and what we are actually talking about
12:43
when we refer to an everything bull market is the
12:45
fact that we finally are experiencing a market where it's
12:48
not just one area or one sector leading things. And
12:53
for the first good chunk of this year, it was
12:56
just that you had Nvidia leading just about everything. You
13:00
had really semiconductors being at the center of everything. You
13:05
could argue as well that a few limited pharmaceutical companies
13:08
with their Wi goo V and other weight loss drugs
13:11
experiencing robust gains, But we talked about earlier in this year,
13:14
a large portion of companies experiencing nothing in terms of
13:17
real return. At this stage, you're seeing emerging markets do
13:22
exceedingly well, the rest of the world do exceedingly well,
13:25
and we seem to be shifting to this narrative of
13:28
just overall optimism about rates and lack of recession pretty globally.
13:34
Chuck and I wonder what's the potential risk to that,
13:39
and what's the potential trend that breaks that back. Well,
13:43
the risk is that this article is published three months
13:45
too late. Well, yeah, it's already over. It's already happened
13:50
like this.
13:50
Speaker 3: This is the thing.
13:51
Speaker 2: The time to say, hey, I think that we're going
13:54
to see this broadening out in the market was early July,
13:57
because since early July we've seen a broad out in
14:00
the market. Just as an example, the S and P
14:03
five hundred technology sector was up over twenty two percent
14:07
at that point in the year. By by July eighth,
14:11
As of right now, it's up seventeen percent, So it's
14:13
actually down five percent over the last you know, call
14:17
it two and a half months, almost three months now.
14:20
The S and P five hundred communications services sector was
14:23
up twenty point three three percent. Now it's up you know,
14:26
about twenty three and change, so again relatively flat over
14:30
that time. What has been going gangbusters over that time? Well,
14:34
utilities are up like eighteen percent, just as an example.
14:38
Uh so you've got you know, they've rallied in a
14:40
way that you haven't seen, you know otherwise, Financials up
14:43
about nine percent. Uh, you've got I'm just kind of
14:47
going through my big list here of what's you know,
14:50
kind of doing anything. Materials up nine percent. So the
14:53
stuff that no one really liked for the last couple
14:56
of years, it's already had this pretty nice rally over
15:00
the last few months. And so the question I think
15:04
that you have to be asking as an investor is, hey,
15:09
what what are the factors that are going to be
15:12
showing up in the economy and in markets over the
15:15
next you know, six twelve, however many months you're looking
15:18
at for you know, your particular trading horizon, and are
15:22
they going to be the same ones that we're showing
15:24
up for you know, the last twelve months, the last
15:26
twenty four But hey, this idea of hey this this
15:29
everything bull market you know could occur, Well, it's it's
15:33
it's been occurring. I think the real question is will
15:36
it continue? And that's going to depend on economic growth,
15:40
which is why we're now talking about that a lot
15:42
more than inflation.
15:44
Speaker 4: Yeah. The title of the article, which I didn't finish, was,
15:47
you know, investors are finally experiencing the everything bull market,
15:51
and it may last, this strategist says. And that's the
15:55
that's the piece that you should probably check at the
15:58
door and ask what evidence and so are they putting
16:00
out there to support that it may last? And do
16:03
I buy it? Because I again to your point, this
16:07
would have been a useful article for somebody to read
16:09
three to six months ago.
16:11
Speaker 2: And one of the items that's mentioned in here by
16:14
Paulson is, Look, it's only in the last few months
16:18
that the FED has become a potential tailwind for markets
16:22
instead of a headwind. Remember, for most of twenty twenty
16:25
two and twenty twenty three and the first part of
16:29
twenty twenty four, the FED was actively trying to slow
16:34
the economy actually it was not a case where the
16:37
FED was trying to provide any support or stimulus to it.
16:41
So the case that Paulson lays out here is, hey,
16:47
it's as simple as this, don't fight the FED. And
16:51
the answer on that is, well, yeah, most of the
16:53
time you don't want to. But we also have seen
16:56
instances where bed cutting cycles don't really stop the economy
17:01
or markets from the the eventual slide that they're they're
17:04
heading into. And at this point in the cycle it's unclear.
17:08
You could potentially be a huge winner if you say, yep,
17:13
I think that recession is going to be avoided. And
17:15
if that recession is avoided, okay, like you look great there.
17:19
Obviously the counter to that is if recession happens, you
17:22
look bad or you could you know, be a genius
17:24
if you say no, despite you know the recent strength,
17:26
recession is coming and it is time to fight the FED. Okay,
17:29
that that has some merit too if recession actually comes,
17:32
because recessions, you know, can be rather painful for economies
17:37
and markets. But at this point it's kind of a
17:40
toss up, and I think that some humility is required
17:44
in terms of, you know, determining where this thing goes
17:47
over the next three six nine months.
17:50
Speaker 4: In my opinion, yeah, right there with you. I mean,
17:53
none of this stuff that has happened over the last
17:55
couple of months contradicts the very hard data that we've
17:59
got and about the labor market, which you know, I
18:03
know markets have done quite well since early August, but
18:06
we had a some rule trigger, We had a pretty
18:09
reliable recession indicator that triggered about the economy, and nothing
18:12
that we've seen so far has firmly contradicted that it
18:16
has not gone on to support that same argument. You
18:19
haven't seen the data worsen from there, but you can't
18:22
look at it and say, oh, look, how vastly the
18:25
data about the labor market has improved since that really
18:29
kind of troubling report on the labor market.
18:31
Speaker 2: Yeah, And the big thing is, look, the labor market
18:35
has two factors that typically work against it. The first
18:38
is momentum and that it tends to keep moving in
18:41
the direction it's been moving in. So that's one thing
18:43
that you worry about. The other thing that you worry
18:45
about is what's called convexity, which is when you get
18:47
to a certain point where the unemployment rate is deteriorating,
18:52
it starts to accelerate upwards. It doesn't just move at
18:55
the same pace. It starts to move much more rapidly.
18:58
And typically that's after unemployment has risen, you know, anywhere
19:02
around one to one and a quarter percent from its low.
19:06
And we're approaching that point, you know, kind of as
19:09
we speak right now.
19:10
Speaker 3: So I think that overall.
19:13
Speaker 2: The picture for me is one that still warn't some concern,
19:16
but again we are seeing some green shoots here.
19:18
Speaker 3: There anything else you want to add, Mike.
19:20
Speaker 4: No, that's all I've got for this. Let's take a
19:22
quick break. When we come back, we're gonna have a
19:24
full market recap with Wall Street. That's up next on
19:26
the Financial Exchange.
19:41
Speaker 1: Like us on Facebook and follow us on Twitter at
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19:54
Watch a complete look at what's moving markets so far
19:57
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20:01
Speaker 5: Markets are in positive territory, led by a jump in
20:04
the tech sector driven by Micron strong earnings and revenue
20:08
outlook on robust AI demand. Right now, the Dow's up
20:12
by half a percent or two hundred and twelve points.
20:14
SMP five hundred also up by half a percent. Look
20:18
at that all three major averages are up by half
20:20
a percent here this morning. Nasdaq also up by ninety
20:23
three points, Russell two thousands up nearly one percent or
20:26
twenty points. Ten year treasureveeled is up by three bass
20:30
points at three point eight one percent, and crude oil
20:34
pulling back today, down nearly three percent, trading at sixty
20:37
seven dollars and seventy seven cents a barrel. Outside of
20:41
Micron's seventeen percent jump this morning, other chip makers, including Intel, Nvidia, AMD,
20:47
and ASML are also seeing gains in reaction to Micron's
20:51
upbeat outlook. Meanwhile, Southwest Airlines hiked its third quarter revenue
20:56
forecast this morning and also announced its board authorized two
20:59
and a half billion dollars in share buybacks. Southwest shares
21:03
are jumping by nine percent. Elsewhere, Pfizer down by about
21:07
two thirds of a percent after the pharmaceutical company said
21:09
it is voluntarily withdrawing its sickle cell treatment of oxy
21:14
brida I think from markets two years after acquiring its
21:18
developer in a five point four billion dollar deal. Meta
21:21
share is edging higher after the social Media and Tech
21:24
Giant unveiled a new entry level two hundred and ninety
21:27
nine dollars VR headset. The company also showcased Oriyan, a
21:31
prototype of fully augmented reality smart classes that won't be
21:35
sold to consumers. Carmacks beat fiscal second quarter sales forecasts
21:40
and increase its provision for loan losses. CarMax shares jumping
21:44
by six percent. Starbucks upgraded by Bernstein to outperform from
21:48
market perform, saying it was bullish on the new hire
21:51
of CEO Brian Nickel, that stock up by over two percent,
21:54
and Costco will report their quarterly result after the closing
21:59
bell on Tucker Silvan. That's Wall Street Watch.
22:02
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Probably don't have much better idea of who's going to
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to die sect them from a real what does it
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Speaker 3: Mike, how much do you know about computer memory chips?
24:20
Speaker 4: I know that they exist and I that's about as
24:25
far as I go.
24:26
Speaker 2: So, Micron Technology is one of the world's leading manufacturers
24:31
of computer memory chips, and they reported earnings, as Tucker
24:34
said after the bell yesterday, and big things that they guided.
24:39
Their revenue is going to be higher, their profits going
24:42
to be higher in upcoming quarters, and they are expecting
24:46
to be able to sell more of a certain type
24:49
of memory called high bandwidth memory that is used in
24:53
AI applications, and so that's generally viewed as something positive
24:58
for demand of you know, other AI chips from Video
25:01
and a m D at whoever else is selling them.
25:03
Speaker 3: And so it's kind of floating.
25:04
Speaker 2: The entire AI chip market today on the back of
25:07
that earnings release from Micron last night.
25:10
Speaker 4: So we stocks, as you mentioned, up a good sixteen
25:14
percent in early training. Here we'll see where it goes.
25:17
Micron one of you know when we talk about different
25:20
chip companies, you know, in Nvidia is a chip designer.
25:23
Micron is from what I understand, one of the few
25:27
US manufacturers of these types of chips that actually that
25:31
actually exists here, and once again just another company that
25:35
is proving that if you can kind of do it right,
25:38
there is a way to make a whole boatload of
25:40
money on semiconductor and chip manufacturing and really running once
25:46
again in the face of Intel's continued performance, which I
25:50
know we've been talking at length about, but it's tough
25:53
to talk about the chip market these days without talking
25:55
about the just tremendous disappointment and lack of innovation coming
25:59
from Intel over the last several years. Who's stock today
26:03
is moving up a little bit, but for the year
26:06
is still down over fifty percent at this point.
26:09
Speaker 2: The big thing with Micron and with memory chip makers
26:12
in general is it is a hugely cyclical industry. Like
26:17
if you pull up the long term chart of Micron
26:20
and look at it dating back again, this is not
26:22
a new company. They've been around since the nineteen eighties.
26:24
I think they actually might have started in like the
26:26
late seventies but only went public in the mid eighties.
26:29
But you can actually very clearly see all of these
26:32
different capec cycles that computer makers go through because RAM
26:38
is just a hugely cyclical business in what is already
26:43
you know, kind of a cyclical industry to begin with.
26:45
Speaker 3: So the problem that you have on this it still doesn't.
26:49
Speaker 2: Answer the question in my opinion, of hey, is this
26:52
a long term spending trend that is going to continue
26:55
for you know, the next several years, or are we
27:00
starting to see signs that you know, you're getting close to,
27:05
you know, a peaking in terms of that capex and
27:09
maybe there's not too much further to go there. And
27:13
just as an example, again, I'm not saying that this
27:15
is or that this this isn't.
27:18
Speaker 3: But when you look at.
27:19
Speaker 2: It and you say, okay, where is the sequential revenue
27:23
growth going to, you know, go on a quarterly basis.
27:27
We've talked about how in Nvidia, as an example, is
27:30
is slowing down their quarterly growth.
27:34
Speaker 4: They're slowing down their quarterly growth rate, and in spite
27:38
of that, the stock you know, continues to trade at
27:41
levels that assumes that it will continue to compound very
27:45
very high, arguably triple digit growth. And the question remains,
27:51
can that continue or will the you know, most recent
27:54
questions that have been asked about the semiconductor space, specifically
27:59
related to AI, Hey Microsoft, you're investing all this money,
28:02
When will you start turning a profit? Facebook? Google, Apple?
28:05
The same questions. Will that cause them to slow down
28:08
the purchases of these high end chips or will this
28:12
cycle continue based on Yeah, these companies reporting really strong
28:17
sales and revenue from from these new investments that they
28:21
are making. And quite honestly, that's the multi trillion dollar
28:25
question occurring in the semiconductor market across the board. Let's
28:29
take a quick break. When we come back. Peace in
28:32
the Wall Street Journal today, Harris Putting government intervention at
28:35
the heart of her economic policy. We'll be discussing that
28:38
and what it might mean for economic policy should there
28:42
be a Harris presidency. That's next on the Financial Exchange.
28:46
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29:42
Speaker 2: Mike, I want to talk a little bit about the
29:44
housing market. How does that sound for you?
29:47
Speaker 4: Sure sounds like a plan.
29:49
Speaker 2: There's a piece in CNBC and it's titled It's not
29:52
a great fall housing market but this is as good
29:55
as it gets. That's according to an economist that they interview,
30:00
and the big thing that we're seeing in this I
30:03
pulled some other data from Michael McDonough from Bloomberg. Right now,
30:08
if you wanted to buy a five hundred thousand dollars house,
30:12
which is slightly above median home price in the country,
30:15
I think it's about ten percent above. But this is
30:18
just again what he did is ash at his analysis,
30:22
the monthly mortgage payment on that is about twenty four
30:26
hundred dollars.
30:28
Speaker 3: If you went back to the.
30:29
Speaker 2: Peak and mortgage rates about call it, you know, a
30:33
year ago, it was all a little bit over twenty
30:36
nine hundred dollars, So it's you've seen about a fifteen
30:39
to sixteen percent.
30:40
Speaker 3: Improvement in purchasing power.
30:44
Speaker 2: It still, however, is much higher than we were seeing
30:47
in basically any period from twenty sixteen through twenty twenty
30:51
one where that was hovering. You know, between call it
30:55
sixteen hundred dollars and twenty one hundred dollars to buy
30:58
that home on a monthly basis, And quite honestly, I
31:02
think the point this piece is getting at is, Look,
31:04
mortgage rates aren't going back to that level given the
31:07
overall level of economic growth right now and what the
31:10
FED is projecting interest rates to be.
31:13
Speaker 4: Yeah, it's tough to envision that. I mean, look, even
31:16
in the event of a let's call it a you know,
31:20
a not extremely severe recession, let's call it a mild
31:23
recession that we end up getting with more job loss.
31:26
Even in those scenarios, I don't know. Do you see
31:29
mortgage rates thirty years getting down to five and a
31:32
quarter percent over the next nine months. I have a
31:34
tough time getting there. And so, yeah, as good as
31:40
it gets is probably the right description here. And unfortunately
31:44
that still means, you know, thousands of hopeful home buyers
31:50
probably priced out of the market. But that is kind
31:53
of the state of things here until we give time
31:55
for more home building. And again, even with lower rates,
32:00
I have a tough time seeing prices coming down much
32:04
at all next year. I mean, it would be shocking
32:07
to me if you ended next year with prices down
32:09
more than five percent.
32:11
Speaker 3: Yeah.
32:12
Speaker 2: I mean, look, if we're talking on a national level,
32:14
it's it gets challenging to predict, you know, any kind
32:17
of meaningful price decline. Yea, we are seeing evidence locally.
32:22
If you look at different parts of the country prices
32:25
are declining. You take a look at what's going on
32:27
in Florida and Texas, and you've got some markets in
32:32
those areas that are seeing meaningful price declines. But that's
32:36
because inventory levels are now back above twenty nineteen.
32:40
Speaker 3: If you're talking about.
32:41
Speaker 2: You know, the northeast New England, even down through New
32:43
York and Pennsylvania, inventory levels are still like twenty to
32:47
sixty percent of what they are what they were in
32:50
twenty nineteen twenty eighteen. You're not getting that kind of
32:54
movement in price if you still have inventory that low.
32:57
And so the question becomes what releases enough inventory? And
33:01
the only thing I can come up with, Mike, is
33:03
time if rates are still where they are today.
33:05
Speaker 4: Yeah, I do wonder, you know, Chuck, I think we
33:08
saw what a twenty percent surge in refinance applications recently.
33:13
I'm wondering when the next real data points we will
33:16
get That would indicate just how much interest the Fed's
33:22
rate cut has sparked. It's really tough to know what
33:25
that's going to look like. And you know, obviously, if
33:29
you have an existing mortgage and it's now you can
33:31
refinance for one percent less, then there's a pretty strong
33:35
incentive to do that, and do that quickly if you
33:38
are a home buyer. I guess we'll see mortgage apps
33:42
pretty quickly. We won't see closings for a number of
33:45
months obviously, But I'm wondering how we gauge whether or
33:48
not this, this spark of a FED cut was enough
33:53
to inform buyers and get them back into the buying
33:56
buying mode right now.
33:58
Speaker 2: Yeah, I mean, I think honestly it's going to be
34:01
the spring buying season because twofold first, like you're heading
34:06
into just what is an absolutely dead.
34:09
Speaker 3: Period for home buying.
34:10
Speaker 4: Yeah, once you get past Thanksgiving, there's just nothing happening.
34:15
Speaker 2: The volumes that you see in December are like thirty
34:18
to forty percent of what you see in June and July.
34:21
So it's it's just very very quiet at that point.
34:25
And yeah, you've seen a little bit of a bump
34:28
off off the lows as far as mortgage purchase activity.
34:32
Speaker 3: But I think part of it is.
34:36
Speaker 2: I think part of it is that, Hey, what sparks
34:39
interest is hearing things like, oh, the FED cut rates,
34:42
Because quite honestly, I think a lot of people think
34:44
that that means that, oh, mortgage rates are going to
34:46
be lower now, whereas they've been coming down all year.
34:49
Speaker 3: Right.
34:49
Speaker 4: But you might not have looked right like, unless you've
34:51
got an agent breathing down your necks at a mortgage
34:54
broker breathing down your neck. The FED cutting rates, while
34:57
it actually did nothing for you, may have been the
35:00
trigger that got you to.
35:01
Speaker 3: Look yeah, exactly.
35:04
Speaker 2: But I also think that a lot of people just say, well,
35:07
I'm not looking heading into the holidays because I'm too busy.
35:09
You know, I've got eighteen people coming over for Thanksgiving,
35:13
I got you know, we're traveling for Christmas.
35:16
Speaker 3: And New Years.
35:17
Speaker 2: Like, people just don't want to be buying homes in
35:21
the middle of all that, right, And so I think
35:23
it very much is something where hey, if you get
35:26
a couple more rate cuts and maybe then another one
35:29
at either the January or the March meeting, Hey, now
35:32
you've got something that starts to sperse some activity, and
35:35
if mortgage rates are still in the low sixes or
35:37
even down to the high fives by then, depending on
35:40
the state of the economy, Yeah, you've got people who
35:42
might be interested again because the last time they looked
35:45
might have been spring of twenty three and the thirty
35:48
year fixed rate they were offered with seven and a
35:50
quarter and now it's six and eighth.
35:51
Speaker 4: I get why this matters for people looking to either
35:57
sell or purchase a home sometime this year or next.
36:00
That's obvious. If you're in the market by home, this
36:03
information is compelling and interesting. Why do I care if
36:07
I'm not. If I'm in my home like I am,
36:10
I've got my mortgage locked at a thirty year at
36:12
an incredible rate. If anything, I'm just looking to make
36:16
improvements to my home over the next few years. Why
36:18
do I The average, probably majority of people care that
36:24
it may be indicating a stronger home selling season this spring.
36:29
If you're not going to be tapping that equity for projects,
36:33
like if you're not taking out a home equity loan
36:35
to do X, Y or Z, there's no direct reason
36:39
for you, But it's much more of the indirect one,
36:41
which is Hey, a strong housing market in the US
36:44
typically means a strong economy that can avoid recession, and
36:48
recessions suck, so you'd like to avoid one, I think,
36:53
is that kind of where you were going. That's where
36:54
I was going. All else equal a robust housing market
36:58
with a lot of transactions. I won't say, regardless of
37:02
where that price lands, but to some extent, you know,
37:05
the price point on the transactions makes it a lot
37:09
less important than the volume of those transactions. If you
37:12
are looking for a rebound in economic activity, there's been
37:16
a number of things that have pointed towards a slow down.
37:19
Consumers kind of getting strapped. And if you start releasing
37:24
all the equity that is built up in those homes,
37:27
and then also you know the cost all the workers
37:31
that go into moving, repairing, redesigning homes, you can quickly
37:36
envision how that, you know, doesn't get distributed equally across
37:41
the economy. But there are big beneficiaries of housing activity,
37:44
like we're describing.
37:46
Speaker 2: So that's where we stand on housing right now. There
37:49
are signs that maybe we're starting to find a bottom
37:52
as far as activity, but lower rates haven't really translated
37:55
into a whole lot more in the way of purchases yet,
37:58
and we still have tories continuing to build. We're gonna
38:02
take a quick break here. We still got hour two
38:05
coming up, a lot more to get to on a
38:07
busy day on the Financial Exchange. We'll get to everything
38:11
that we have planned in our second hour