Some good news for asset owners?

Is this as good as it gets for consumers?

Are longer-dated USTs indicating a top in inflationary expectations? Perhaps the consumer will eventually stop spending like a drunken sailor.

10- and 30-year UST yields (candles) and the Dow Jones Commodity Index (line); I had predicted a short-term reversal in most markets, but the only ones moving this way so far are the UST and bond markets. A test of the 200-day (1.23%) sma looks more likely soon.

Complacency rules; As predicted, the small speculator is once again getting spanked here as UST yields fall and bond prices rise

Tomorrow’s Fed’s meeting minutes, due out 2 p.m, could help solidify this trend. The central bank’s May meeting minutes provided an early signal of what appeared to be change in its approach to inflation, and market inflation expectations have been declining ever since. Maybe there will be light at the end of the tunnel as the plebes cool their spending plans over the next several months. Stay tuned.

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15 thoughts on “Some good news for asset owners?

  1. Chris, can I ask for some advice. We are moving to Chicago (unfortunately). My husband wants to be closer to his work, and he is still an unsaved sheeple. I cannot get him to agree with anything.

    What I am looking at is 1,500+ square feet, 2+ bedrooms (in case my parents need me, they are getting old), 2+ bathrooms. The lowest price is about $1,700 and there are only a few to rent at that price. They aren’t even ideal because he works in the rich area and we can’t afford that (like 3k+). Of course I am avoiding the ghettos.

    My husband makes 80k a year and I don’t work because of the Lyme disease and vaccine. What do you think we could even afford since I know you rent property?

    Should I wait a few months or are we going to be stuck at this price or higher?

    I appreciate your blog because you are an awake Christian, but I suck at the economy stuff compared to you and most of your audience. 

Thank you so much in advance for all you do!

    1. When I look at an applicant I use the 30% rule. Thus, 30% of 80k would be 24,000. Thus, your rent would be capped at 2,000/mo. Some apartment property managers go up to 40% with great credit, because they are effective at collecting.

      So. 1,500 to 1,800 is fine, unless you have children and other big obligations. Don’t do ghetto, you will hate life.

      Rent of 1,800 is 27% of gross. That’s okay. Below the 28% of the most stringent applications.

      Do not wait to try to get a cheaper rent. You would be speculating and gambling. Concern yourself with your lifestyle. If your parents move in that would be crowded and would mean 4 adults. Perhaps rent something smaller and if they do move in get something larger. If they have retirement like SS that could go to the monthly rent. But applying with four adults could be a deal breaker on applications. Take a chance and have them move in later, but you would really need to notify the manager. With parents, the square footage should be 1,100 sq feet, maybe larger.

      All my condos are 2 bed, 2 bath. That is the easiest to rent with low turnover.

      1. Thank you Chris. My husband wants to buy what do you think of that?

        My parents have retirement, social security and all. They are healthy-ish and working. I just worry about them. We have no kids and just a cat and dog. So it would only be my husband and me unless there was an emergency with my parents. My mom has had cancer twice in the past, but hopefully everything goes well in their future.

        This stresses me out! Thanks again.

        1. Given the possibilities of having parents move in, etc, I would look to buy something.

          Just try to get a good deal! We still need to plan as if things will still move forward. If you are stuck in Chicago, make the best of it.

          Condos include monthly common charges, so if total mortgage and common charge was 30% of monthly gross, and common charges were 400/mo, your PITI should not be more than 1,600.

  2. Zerohedge is out pumping a housing crash again.

    This anti-Western propagandist outfit has been at it since 2009, calling one housing bubble after another. Imagine if you listened.

    Real estate in the United States is still very inexpensive when compared to every other country in the world. Sure, it has had a huge run-up over the past year and a half, but perhaps there’s something else at play instead of mortgage affordability by the average unwashed plebe. Perhaps there are large institutions buying up everything that they can get their hands on. Perhaps there’s something different this time. Perhaps Zero Hedge is getting it wrong or is intentionally leading it’s reader down the chute to perpetual poverty.

    The United States is the only nation with a housing price-to-income multiple below five, so I am betting that the average dumbass consumer will get this wrong and will be chasing this Market all the way to the top. By definition, that’s how it always works.

    We still have some way to go as the average person still is under leveraged in this moment of the cycle. Once again, a real estate economics novice of Wolf Street is calling the top of the real estate market. But the same slob has has been calling the top all decade. And Zero Hedge is excited to place his so-called research on their propaganda website to demoralize the West.

    All I know is that my rent roll continues to rise and that my cap rates have actually been steady to slightly lower over the past year or so.

    These Cassandras like it both ways. They talk about house price bubbles yet in the next article they will talk about rent inflation. They like it both ways so, they can get lots of clicks and donations.

    Believe me on this one, the institutions who are desperate for yield, are gobbling up all of this housing surplus as it is probably about 150 basis points higher than comparable commercial real estate, and they don’t have to worry about vacancies.

    1. Here in Fairfax County, I see all of the immigrants and illegal aliens coming in and they’re okay with overcrowding in their rental houses. I see numerous cars parked out in front, and there are often five to seven adults living in the same house. There is no supply available and the people are desperate. This will never end. Overcrowding is becoming a huge issue, and it is almost like Soylent Green already. The large REIT-owned apartment complexes have regular inspections to determine if there is overcrowding in any of their units. It’s become a huge problem that will only get worse. This, of course will continue to drive up rents.

  3. Let me get this straight. The European Central Bank intends on employing quantitative easing and low interest rates to goose inflation above 2%. The problem is that Q E and low interest rates are causing low inflation in the first place. Via QE, massive amounts of debt get placed on to the collective balance sheet, which continues to provide for a deflationary force, and over the long run, interest rates and prices continue to fade.

    I figured out a long time ago that the central banks and the authorities in the central banks are not stupid. They know what they are doing and their goal is to consolidate the global wealth for their owners. All the while, we are told to look at them and laugh at their ostensible stupidity. This allows them to continue doing it right under our noses.

  4. All I read these articles about the great mystery of the falling 10-year treasury bond yield. It’s kind of simple here. Fed is still buying ample issuances every month, the world is sinking in a sea of deflationary red ink, and as long as all of this debt remains in force and serviced, the monetary system and economy will eventually revert to the old-school of quantitative easing. After all the distortions are wrumg out of the system from this front-loaded stimulus, the world will continue to sink in a sea of everlasting red ink. This red ink will cause interest rates to continue on their long-term downward spiral, and the plebes will continue to suffer an ever more terrible fate as the asset owners continue to enrich themselves.

    Same old same old, no surprises.

    I find all of these so-called struggles for social and racial Justice quite amusing. The sorry-ass plebes may eventually get some of their goals, but as they do, the country and the world will eventually fall apart according to the Book of Revelation. These dummies are so preoccupied with meaningless things, while their real rights were all stripped away. They all want the kingdom but I never hear them mention the name Jesus.

    1. Well now I see the answer to part of my question. I do not want to buy but we could. The last thing I want is to be more tied and stuck in Chicago.

      1. Oh. Just saw this post. You can always sell. If your husband plans on staying in Chicago more than a couple years, buying is what i would do. I don’t know your age, but I could never go back to renting again. I am too old for that.😫

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