Powell’s Starry Night: Navigating the Economic Constellations at Jackson Hole


Stargazing might seem like an odd hobby for Jerome Powell and the Fed, but with their recent comments, they seem to be doing just that – looking for celestial guidance in an overcast financial sky. Today, we delve deep into Powell’s much-anticipated speech at Jackson Hole and what this means for the economic cosmos.

The Powell Constellation: Mixed Messages in the Sky

Powell painted a picture of uncertainty in a tense address with the markets hanging on every word. His metaphor, that “we are navigating by the stars under cloudy skies,” while poetic, doesn’t exactly radiate confidence. However, amidst the poetic ambiguity, the market’s reaction has been relatively subdued, suggesting that worse was expected.

Labor’s Luminary: Earnings Amid Dimming Hours

Powell’s focus on labor conditions was evident. Despite reduced working hours, many are still raking in considerable incomes. This unexpected influx of disposable income has caught the Fed’s attention. As they say, when one star dims, another shines brighter. 

Housing Horizon: Prices Rise as Volumes Wane

Shifting his gaze towards the housing sector, Powell acknowledged a revival in housing prices, though volume remains stagnant. Supporting this notion, CoreLogic’s June report highlighted a 3.3% YoY rent increase, albeit this marked a slight decrease from the previous month.

While Powell’s celestial navigation might have left some of us a bit lost in space, the message is clear: uncertainty looms, and the financial universe is in a delicate balance. The big picture for next week promises an astronomical amount of data – from housing statistics to the pivotal BLS jobs report. With such celestial events on the horizon, we advise holding steady and awaiting clearer skies.

Why did the economist bring a ladder to class? To reach the high demand!

Stay tuned for more updates, and, as always, we’re here to help make sense of the financial galaxies above. Until next time, clear skies and happy investing!

Sky’s the Limit: Soaring Home Prices Meet New Heights Amid High-Interest Rates

Sky Scrappers

We shift our gaze from the stock market and land squarely on real estate. The housing market is determined to rewrite the rules of gravity as prices continue to soar, even in the face of high-interest rates. Buckle up; we’re going on a real estate rollercoaster ride!

Home Prices: Breaking Records Like A Pro Athlete

Previously, a sharp increase in mortgage interest rates was enough to apply the brakes on the housing market. But that’s no longer the case. Now, the housing market is like a tech stock—zooming upwards and laughing in the face of traditional economic principles. With prices setting new records and rising faster than San Francisco sourdough, buyers have acclimatized to the once daunting high-interest rates.

The Unpredictable Market: Boom Towns to Ghost Towns

Remember the pandemic boom towns? Cities that saw an influx of remote workers looking for new homes? Well, those cities are now witnessing a weakening in their housing markets. However, they are slowly regaining momentum like a wounded superhero in a blockbuster movie. Notably, San Jose, San Francisco, Los Angeles, and Seattle experienced price growth in May.

Low Supply: A Classic Game of Hard to Get

The one constant in the world of real estate? It’s always about location, location, location… and supply! New listings are down by about 25% from a year ago. Why, you ask? Homeowners who have managed to nab sub-4% mortgage rates are holding onto their homes like they’re golden tickets, wary of paying higher interest rates on their next abode.

As we’ve learned today, the housing market is like a game of chess—it’s all about strategy and anticipating your opponent’s moves. With prices hitting new highs and homeowners unwilling to let go of their properties, navigating this market might seem more challenging than finding an affordable avocado toast in California.

Unmasking the Naysayers: The Resilient Real Estate Market Amid Rising Home Prices

Home Prices

It’s another exciting morning in the world of real estate finance. While the pessimists forecast doom and gloom, the facts tell a different story. Strap in for our daily rundown of the latest developments in the mortgage-backed securities, inflation, and real estate sectors, served with a sprinkling of humor and a pinch of finance wisdom. Spoiler alert: It’s not the crash landing many have been predicting. 

Record High Home Prices: Cause for Celebration or Consternation?

Many market watchers have been expecting a tumble in home values. They might need to wait a little longer. Black Knight and the Federal Housing Finance Agency (FHFA) reports show home values have hit an all-time high. A modest increase of 0.7% in May sets a pace of roughly 10.3% for 2023. So, who’s popping the champagne?

Media vs. Reality: The Misconception About Home Prices

It’s fascinating to observe the media’s reaction. Record-breaking stock market values are met with jubilation, but the celebration somehow stalls when it comes to the housing market. The problem lies in a misunderstanding of median home prices vs appreciation. Home prices can indeed rise while the median price can decline, owing to the mix of homes sold.

Steady Home Price Appreciation, An Unfolding Narrative

The optimism doesn’t stop with Black Knight’s report. CoreLogic, for May, reported a rise in home values by almost 1%, hinting towards a similar trend. When looking at the five leading appreciation reports since January, the data points towards a similar narrative: an upward trend in home prices.

In this roller coaster ride of home price speculation, one thing stands out: real estate proves extraordinarily resilient, and any talk of a crash is, so far, mere conjecture. We always say, “In real estate, we trust!” So, pop the champagne, and let’s toast to the continued strength of our housing market.

Don’t forget to stay tuned for tomorrow’s edition, when we’ll dive into the latest inflation reports. Will they support a possible rally? We’ll have to wait and see. Until then, keep floating and enjoying the ride.