DawgTalkers.net Forums DawgTalk Palus Politicus The Economy Part 2

Facts don't matter. #feelingsoverfacts

And to me, your spoilers isn't even the biggest problem with the victory lap. Alas, most do struggle with math. Besides, it's hard to work the calculator with your fingers in your ears.

Then remove your fingers.

Good one!

You make it easy.

I know you are...

That's not nearly as good as "it's hard to work the calculator with your fingers in your ears."

You're regressing.

A shady financial tool from the housing-bubble era is making a comeback

America’s gummed-up housing market is a $45 trillion mess — a big old knot of economic forces smashing into a century’s worth of cultural conditioning about the value of homeownership.

There are some obvious, urgent needs: We need more housing, full stop. And that housing needs to be affordable. And we should probably stop letting Wall Street firms become landlords for the sole purpose of extracting capital from renters who could otherwise build equity.

Point is, policymakers aren’t running out of puzzles to solve when it comes to housing. Perhaps the last thing the market needs is another shady financial product that pushes low-income Americans into homes they can’t afford, under terms that could bankrupt them.

And yet, here we are. The zero-down mortgage is making a comeback, my colleague Matt Egan reports.

Two weeks ago, one of the nation’s largest mortgage lenders rolled out a “new” program (I put new in quotation marks because, well, we’ve seen this movie before) that allow first-time homebuyers to secure their purchase with no money down.

Zero down. Lots on the line

Let’s briefly get into how it works, and then we can talk about why it’s a huge red flag for anyone with passing understanding of the 2008 financial crisis.

So, you want to buy a home but you’re not sitting on enough savings for a downpayment. (Super common, totally fine, we’ve all been there.)

Under the deal being peddled by United Wholesale Mortgage, you can bypass that initial cash payment. (Sounds great, right? Read on.)

Instead, you borrow 3% of the home’s value (up to $15,000) as an interest-free loan, and pay for 97% of the home’s value with a standard mortgage.

(Interest-free! Where do I sign up?)

Here’s the catch: That $15,000 won’t accrue interest, but it will need to be paid back — in full, all at once — when you either sell the home, pay off the mortgage or refinance.

That will work out great, assuming nothing bad happens to you or the economy and the value of your home keeps going up. And honestly, when has the value of the housing market ever gone anywhere but up up up up?

Ohhhh right.

So let’s just highlight some of the ways this $15,000 sword of Damocles could wind up stabbing you in the back.

The housing market, as we all remember from “The Big Short,” does not always go up. And because you didn’t put money down, you’d be instantly underwater — owing more than the home is worth — if the market sours.

You don’t want to be underwater when tragedy strikes. Losing a job or falling into financial distress might prompt you to try to sell your house, which would put you on the hook to pay back the $15,000. But if the house isn’t worth what you owe, you’ll be in default. That scenario is “exactly what happened during the subprime crisis,” said Patricia McCoy, a professor at Boston College Law School. “It happened before and it could happen again.”

Even under the rosiest economic scenario, you still have to pony up $15,000 at some point. And as any homeowner can attest, your house is going to be a constant financial drain from the moment you’re handed the keys. You are going to have projects. Lots and lots of projects. And they won’t always be the fun DIY bathroom renos you see on TikTok. Most of them will be the “holy crap we have to replace the entire roof before the winter” kinda projects. That’s going to slow your cash accumulation significantly.

UWM is pushing back on all those concerns, noting that borrowers must still go through strict underwriting guidelines, and lending standards have gone up significantly since the financial crisis.

“People who make these claims are uneducated about the current state of the industry,” Alex Elezaj, UWM’s chief strategy officer, told CNN. “In today’s environment, UWM is responsible for underwriting the loan, which gives us confidence that these are high quality loans.”

And sure, we’re not exactly doling out NINJA loans — no income, no job or assets — anymore.

But if there’s a morsel of wisdom mortgage companies should have tattooed on their foreheads it’s that lower-income people with no savings are likely to suffer more in a bad economy.

“One of the lessons of the subprime crisis,” said Jonathan Adams, an assistant professor at Saint Joseph’s University, “was that you are not doing any favors to borrowers by making it too easy to borrow.”

Creative homebuying

The resurgence of the zero-down loan underscores how sticky the housing market of 2024 has become. With low inventory and mortgage rates around 7%, sellers are unmotivated to move, and buyers lack choice, forcing some to get creative.

One way for motivated buyers to hunt for a lower mortgage rate is buy someone else’s. “Assumable” mortgages are loans that allow a homebuyer to take over a seller’s existing loan — its (ideally) lower interest rate, my colleague Samantha Delouya reports.

The way it works: A buyer pays out in cash the amount that the seller has in equity, while taking on the remaining mortgage balance.

It’s not a perfect solution for everyone, of course — that equity could be a hefty amount that the buyer may not have on hand, and only about a quarter of all mortgages is the US are assumable. But it beats waiting on the magic combination of macroeconomic forces to finally bring rates on new mortgages down.

It worked for Ellen Harper, a software analyst in her mid-50s, who closed on a Fairburn, Georgia, home in April, when the average 30-year rate was just over 7%. Harper’s rate? 2.49%. That’s saving her thousands of dollars in monthly payments, Samantha writes.

“I just decided I wanted to see how low I could pay on the interest rate,” Harper says. “I went into it looking for the best deal I could get, and I think I did pretty good.”

https://www.cnn.com/2024/06/03/business/zero-down-mortgage-nightcap/index.html

And when the bottom drops out people will blame it all on whoever is sitting in the Oval Office at the time.

Zero down loans eventually need to be paid off. They are loaning the home buyer the down payment. Unless of course it’s a VA.

So in essence they are loaning the buyer the enire amount and the buyers down payment never comes out of his own pocket. What they're doing is setting it up where a new home buyer, who lacked the ability to even save enough a down payment, is getting a loan for the entire purchase price. Entire cost of the home. This is the same thing that led to the housing market crash in 2008. Because the zero down loans were not being paid back.

Inflation is still increasing every. single. month.

Yeah, but it's not increasing as bad as before so these dolts claim that as a victory. Like if you have an STD that won't go away but the blisters are getting smaller... and then decide that calls for a couple hookers and an eight-ball to celebrate.

Don't you judge my Wednesday night activities!

Am I misinterpreting the data? I thought inflation has gone down. I think there is some normal amount of inflation always to be expected unless we're in a recession. Like I mentioned before, with consumer demand dropping and costs still increasing, it speaks to gouging. It looks like some retailers (Target, Walmart, etc.) are finally starting to minimally decrease prices in line with the revision in spending, but I really don't know what the solution is to drop inflation. Keep increasing interest rates? That can increase the hard landing prospects as well, so I'm not sure where the balance is.

Btw, I'm not trying to make this a right vs left thing. I'm really targeting the issue itself.

What’s an eight-ball?

You're making far too much sense for them to comprehend and the only one of them not coming from a partisan angle.

https://www.linkedin.com/news/story/doubts-cast-on-us-payrolls-data-6794234/

Doubts cast on US payrolls data
Share
By Cate Chapman, Editor at LinkedIn News
Updated 3 hours ago


U.S. job growth may have been overestimated last year, new data show, suggesting a less robust labor market. The monthly average of new nonfarm payrolls appears to have been closer to 190,000, down from the 250,000 earlier reported, according to the Quarterly Census of Employment and Wages. The data, used by the Bureau of Labor Statistics to update its records, could mean interest rates are too high, according to Bloomberg. The Federal Reserve, in an attempt to lower labor costs and slow inflation, has held its key rate at a 23-year high since last July.

New jobless claims rose by 8,000 last week to a four-week high of 229,000, and layoffs slowed in May.
The Labor Department is expected to report 185,000 new payrolls in May on Friday, according to a Bloomberg survey of economists.

Dow Jones Today: Nasdaq, S&P Hit Records After CPI, Ahead of Fed Outlook

U.S. stocks soared Wednesday, with the Nasdaq and S&P 500 hitting record highs, after a softer-than-forecast CPI inflation report boosted investor hopes of an interest rate cut this year.

The Nasdaq Composite rose 1.7% and the S&P 500 1.1%, while the Dow Jones Industrial Average gained 0.3%.

The Consumer Price Index (CPI) inflation report for May showed inflation cooling more than expected, with headline inflation rising 3.3%, versus expectations of a 3.4% gain. Core inflation, which excludes volatile food and energy prices, rose 3.4%, versus expectations of 3.5%. The softer-than-forecast print could figure into Fed officials' quarterly economic projections, which will be published this afternoon alongside the central bank's rate decision.

Treasury yields fell after the release of the May inflation numbers. The 10-year yield was down 13 basis points.

Oracle (ORCL) shares jumped to a record high after its large artificial intelligence (AI) deals with Microsoft (MSFT), OpenAI, and Alphabet's (GOOGL) Google Cloud offset the cloud-software provider’s quarterly earnings miss.

Apple (AAPL) reclaimed its title as the world's most valuable company from Microsoft (MSFT) on Wednesday as its shares continued to rise after closing at a record high yesterday following its unveiling of “Apple Intelligence," its AI strategy.

U.S. stocks largely gained yesterday with the S&P 500 and Nasdaq Composite both shrugging off early losses to close at records thanks largely to Apple’s AI-fueled surge. The Dow ended yesterday slightly lower.

https://www.investopedia.com/dow-jones-today-06122024-8662030

Chicken little will be back soon to scream another downfall that doesn’t exist. Lol

https://www.cnn.com/2024/06/12/economy/consumer-price-index-inflation-may/index.html

Inflation slowed in May, hinting at welcome relief for consumers

CNN
—
Inflation cooled more than expected in May, new data showed Wednesday, delivering a welcome piece of news just hours before the Federal Reserve is set to make its latest announcement on interest rates.

Consumer prices rose 3.3% from a year earlier, slowing from April’s 3.4% rate, according to the Bureau of Labor Statistics’ latest Consumer Price Index report released Wednesday.

On a monthly basis, prices held flat for the first time since July 2022. Falling gas prices kept inflation in check following a 0.3% gain in April.
“This is the best news we could’ve gotten this morning,” Philip T. Powell, executive director of the Indiana Business Research Center and clinical associate professor at the Indiana University Kelley School of Business, told CNN. “The Federal Reserve has been watching to make sure this [monthly] number came in below 0.2%.”

“If it did, that means inflation is going to come down, which means [the Fed] could lower interest rates,” he added.

Economists were expecting a 0.1% monthly increase and an annual gain of 3.4%, according to FactSet consensus estimates.

Helping to slow inflation in May were falling gas prices, which dropped 3.6% from April. They’re still up 2.2% for the year. Grocery prices were flat and overall food prices went up by 0.1%, lifted by a slight acceleration in inflation at the restaurant level.

Car insurance and transportation prices fall, but housing inflation is stuck running high
Excluding gas and food, categories that tend to be volatile, the closely watched “core” measure rose just 0.2% for the month (its slowest pace since October of last year), and its annual rate dropped to 3.4%, setting a fresh three-year low.

“Adding to the good inflation news, core services inflation (excludes energy services) printed its mildest monthly increase since September 2021,” Kathy Bostjancic, Nationwide’s chief economist, wrote in a note issued Wednesday. “This is significant since core services inflation has been very sticky and the key reason overall inflation has not cooled more quickly.”

However, shelter inflation more than offset the decline in gasoline, rising 0.4% for the fourth month in a row, underscoring the pressure Americans are feeling from housing-related expenses. On an annual basis, shelter inflation slowed a tenth of a percentage point to 5.4%, which is its lowest rate since April 2022. However, in addition to outpacing overall inflation, the cost of shelter is running above its pre-pandemic average and the 3.3% rate in February 2020.

The shelter index, an abstruse measurement of housing costs, has been the thorn in the side of the Fed’s desire to see overall inflation return to target. (That target, by the way, is based on a separate inflation gauge, the Personal Consumption Expenditures price index, which stayed pat at 2.7% in April.)

Shelter’s heavily weighted in the CPI, and while it doesn’t fully reflect some of the slowdown seen in market-rate rents, its persistently high readings certainly do speak to the pain Americans are feeling in their biggest monthly expense.

“The one thing that sticks out in these numbers is the continued struggle with housing affordability,” Indiana University’s Powell said. “There is so much pent-up demand out there for housing, it’s not going to go away.”

Transportation services prices fell for the first time since the fall of 2021, dropping 0.5% for the month. And motor vehicle insurance prices ticked down by 0.1%, a sharp contrast from the spikes seen during the past two months.

Still, those costs continue to run hot for consumers, with transportation services prices up 10.5% from a year ago and car insurance up 20.3%.

“The big and important things that households spend their money on — food, transportation and shelter — there’s not been a lot of relief there,” Sean Snaith, University of Central Florida economist, told CNN.

Soft CPI boosts chances for Fed cuts
The CPI, which tracks average change in prices for a basket of goods and services common to consumers, is the most widely cited inflation metric.

But on Wednesday, it was merely the opening act.

The report landed just hours before the Fed was scheduled to wrap up its policymaking meeting, deliver its latest economic projections, and announce the next steps for interest rates.

Federal Reserve officials' meeting kicks off on Tuesday. They're widely expected to keep interest rates at current levels as inflation continues to rage on.

Although the softer CPI likely will be welcomed by central bankers, economists say it won’t be enough to move the needle on interest rates, which are overwhelmingly expected to hold steady Wednesday (markets are seeing a mere 0.1% probability of a June cut).

“Logically, then, today’s news would seem to open the door to a July rate cut, although we still think that’s very unlikely given hawkish rhetoric from the Fed recently,” Preston Caldwell, chief US economist at Morningstar, wrote Wednesday. “But rate cuts starting by September should now be cemented as overwhelmingly likely.”

Traders seem to agree: The latest projections from the CME FedWatch Tool had the likelihood of a September rate cut at nearly 63% on Wednesday morning, jumping from 46.8% Tuesday.

The Fed on Wednesday is expected to tip its hand some with the release of the latest Summary of Economic Projections (SEP). The quarterly publication includes the central bankers’ forecasts for key economic indicators such as inflation, GDP growth and unemployment as well as the “dot plot,” a chart of their expectations for interest rates.

When the Fed released its prior SEP back in March, it showed the possibility of three cuts penciled in for the remainder of the year.

Economists expect that number to drop, given that there are fewer months left on that runway and still fairly strong economic data touching down (be it the hotter-than-expected inflation reports to start the year or the stronger-than-expected job gains).

“The CPI report for May came in a bit better than we dared hope for given the string of disappointing readings to start the year,” Scott Anderson, chief US economist for BMO Bank, wrote in a note Wednesday. “If sustained, it will keep Fed rate-cut expectations that we have penciled in for September and December alive and well. Restrictive monetary policy has more work to do, and the Fed will remain patient and watchful.”

https://www.linkedin.com/news/story/retail-sales-flash-warning-sign-6016601/

Retail sales flash warning sign
Share
By Cate Chapman, Editor at LinkedIn News
Updated 2 hours ago


In a sign of consumer stress, retail sales edged up just 0.1% in May after revised data showed they fell 0.2% in April. Meanwhile, spending advanced 2.3% on an annual basis last month, the Commerce Department announced Tuesday. The depressed activity suggests that high interest rates and inflation have begun to inhibit consumer spending, which accounts for 70% of gross domestic product. After the report, fed funds futures traders raised bets that the central bank will reduce rates twice this year — with almost a quarter of them predicting three cuts.

The Federal Reserve kept rates on hold last week, while lowering the number of projected cuts this year to just one.
Tuesday's report also showed declining purchases in five out of 13 categories, as lower gasoline prices and Memorial Day sales supported sales in most.

So sales are increasing in 8 of 13 categories. Isn't that good news?

“depressed activity.” ? Mmmm sounds like a buzz word for “here comes the long awaited depression we’ve been hoping for to make Biden look bad.

He must have missed the news that the markets set now all time records on Monday.

We don’t need a “long awaited recession” to make Biden “look bad”. He has done that all on his own.

I think people are focused more on the fact that since Biden took office gas prices are up 50%, groceries are up 35%, overall energy prices are up over 50%. In fact most of Americans living expenses are up dramatically under Biden. They see that at the Main Street level and know it to be true. They have had a 2-3% cut in real wages under Biden. They know they are worse off now than they were in pre Covid trump administration.

Fake news. Smh. I find it amazing how dystopian and detached from reality the GOPer mind has become on their steady diet of nonsensical propaganda. It’s like watching frogs slow boil while refusing to jump out of the pot…

Fixed it.

Two frogs croaking at each other from opposite sides of the same pot. Smh.

We have one of two choices. Which one would you prefer of the two? You have openly admitted trump is the worse of the two and then rail against others who are pointing out that very same thing. Quite odd.

Hop out of the pot.

Just because you're down inside the pot and can't see out as you boil, doesn't make which side you sit on the only two options.

Just because your brain thinks in binary doesn't mean everything actually works that way. Sometimes I wonder if that binary approach is actually the result of an on-off switch that's stuck on off.

Politicians are happy for you to think that way. It keeps things from ever changing and/or really challenging their accumulated/"stolen" power.

I made it quite obvious to you as to the time constraints left for making the ballot in 36 states. That's not a binary approach or way. That's the reality. I understand that's not an approach you embrace.

There are more than two choices. Just not more than two choices that have any chance of getting elected. With less than two months to meet the requirements to get on the ballot in 36 states I'm not ready to join you on Fantasy Island.

Fantasy Island sounds like a good time. Too bad it's a figment of your otherwise lacking imagination.

Enjoy your stovetop.

So give a plausible scenario how this person in your brain can make enough state ballots in less than two months to win the presidency? Then of course there is the issue of raising enough money to get their name out there and compete with the two major parties? This should be interesting. Don't worry I'll wait.

Biden could have a stroke. Trump could be in prison. Do either of those sound especially implausible?

I'm sure they'd find replacements.

Actually a more realistic scenario would be that trump could end up in prison and if you look at the shape trump is in both he or Biden are at the very least equal at the risk of having a stroke.

But that has nothing to do with you claiming there is someone out there other than the leader of these two parties that stands a chance of becoming president. And please don't pretend that hasn't been your claim all along. At least be honest about it this time.

So you agree that both are plausible? With another plausibility to boot?

My claim has been the same the whole time. Your interpretation of it has been bad. Your expression of certainty/"reality" has been flawed.

No, actually you have stated time and time again that both the republicans and democrats want to convince us that only a nominee from one of their parties can be elected president. Now you wish to make a feeble attempt to twist that into something completely different.

The economy, well darn.

First off, let’s bring back the gold standard. My grandpappy, Old Rusty Ralph, always said, "Gold never loses its shine!" And he’s right. Imagine if every dollar was backed by actual gold bars stashed away in a Fort Knox-style vault. We’d have a solid, shiny foundation for our economy. No more printin' money like it’s Monopoly cash – every dollar would be worth its weight in gold. It’s time to turn that paper money into somethin' that glitters!

Next up, let’s abolish the Federal Reserve. Who needs those fellas, anyway? Let’s go back to the days when local banks issued their own currency. Each town could have its own unique banknotes – collect ‘em all! It’d be like Pokémon but with money. And if you don’t trust banks, well, let’s bring back buryin' gold in the backyard. It’s the ultimate DIY savings plan!

Now, here’s a gem of an idea: let’s make taxes optional. That’s right, you pay taxes if you feel like it. Think about how motivated folks would be to contribute if it was all voluntary! We’d see bake sales, car washes, and lemonade stands on every corner, all raisin' money for public projects. Plus, who doesn’t love a good bake sale?

Let’s talk energy independence. It’s time to harness the power of the free market and privatize the sun. Yep, you heard me right – sell solar panel rights to the highest bidder. Want some sunshine? Better buy your solar credits from SunCorp! And while we’re at it, let’s privatize the moon too. Moon minin' could be the next big industry, and we could sell lunar land plots like hotcakes. Just imagine the commercials: “Own a piece of the moon today!”

And let’s not forget about agriculture. We need to turn every backyard into a mini-farm. Homegrown veggies and livestock are the way to go. Imagine city folks raisin' chickens on their balconies and goats in their garages. It’d be a return to our agrarian roots, with everyone producin' their own food. Plus, nothin' tastes better than homegrown tomatoes, am I right?

Let’s turn highways into toll roads – all of ‘em. But here’s the twist: let people pay in barter. You want to drive on I-90? Pay your toll with a bushel of apples or a homemade pie. It’s the ultimate barter economy, and it’ll keep our roads maintained with the added bonus of delicious toll payments.

And finally, let’s incentivize hard work with a national prize lottery. Instead of taxes, every paycheck gets a tiny deduction that goes into a huge lottery pool. Every month, a few lucky folks win big prizes – cash, cars, even a free house! It’ll keep people excited about workin' and dreamin' big, and it’s way more fun than regular ol' taxes.

That's a separate claim. One which you keep inadvertently adding support to.

Edit: what they want and what is possible are two different things.

I'm sorry to insist on being obtuse.

For someone apologizing for it you certainly seem to insist on continuing to be obtuse.