For those of you with a memory like an elephant, congratulations, you may recall that we have delightfully attended the Mauldin Strategic Investor Conference (SIC) virtually during lockdown for the past two years. As a side note, a conference that we had never attended before due to the duration and the timing … very near tax time!
Good news, once again this year the conference was virtual and we are happy to attend.
While there were 40+ speakers, more to come on others, we found the following expert and presentation very interesting, if not somewhat controversial.
Barry Habib, Mortgage and Residential Housing Expert
You may recognize Barry as he is a regular speaker on many of the financial channels among other and was a presenter at this year’s SIC conference.
Cutting to the chase, Barry expects a recession later this year or early 2023 and as such expects mortgage rates in particular to drop precipitously from their current 5 1/2% rate along with all rates of other asset types.
These expectations, (forecasts), are certainly more economic and financial market related, as such we will make note as predictions and check back sometimes next year.
Now, to Barry’s wheelhouse, what we are all interested in, the expectation of housing appreciation or depreciation!
Understanding that Barry comes from a residential and mortgage background, so let’s be transparent that there may be some innate biases, but his expectations are for mid to low single-digit housing appreciation for this year 2022.
This flies in the face of many forecasters due to the aforementioned slow down or R- word recession and more importantly the heightened interest rates of Mortgages currently.
In Barry’s defense, lack of supply and his expectations of a sharp reversal in mortgage rates will lend itself to this continued growth.
Heck if housing prices hold their values we would consider Barry’s prediction a win.
There will certainly be pockets of strength and weakness across the country…
We will be watching as it’s very easy to monitor and will let you know!
Barry …thanks very much for a fantastic presentation and for the information duly noted…
Welcome to our Video and Audio Podcast Review of our Q3 2021 Newsletter. For those on the road or just unable to grab the time to read, our podcast type review gives you the behind the scenes insight to our thoughts, observations and deep views of the entire Newsletter.
Click the Download button below, for a direct link to an electronic version (an early peek-good ole fashion paper versions are on their way to you shortly) and here for our Newsletter page
BREAK IN – Below is a new format for our Newsletter, hoping this pulls through on your Cell Email!
In this Break In Moment Post, an executive of the company Fligence reached out with regards to our fun TSA Posts through the closure of the country.
Their neatly designed website can be a very handy item for determining your possible time needs and delays as well as neatly follow our country to reopening at full speed.
Capital Market Comments
Inflation or No Inflation
In doing writings, I try to approach each article with a clear mind and head, especially if the post is heavy ….
Many times I try to completely forget the article or post from maybe just a week before….
Good News…. the Month of May was a success in clearing my mind as I accidentally pounded everyone over the head with Inflation stuff…..
My apologies, but it coming at us from so many directions made it top of mind….
At the Berkshire Hathaway meeting post, starring Warren Buffett and Charlie Munger, Inflation was all the chatter and a huge concern for them.
Then Here in our Jolts – job opening Post we looked at how there are tons of jobs to be had –
Here in our Favorite Dallas Federal Reserve Chair post, Robert Kaplan – Sooner rather than later, worries inflation may be coming if we stay too low on interest rates…
Lastly in this verbal tug of war post between Jim Bianco and Lacy Hunt, they could not more disagree very emphatically.
With this post already set to go, I ran across this interesting chart late in the weekend and thought it worth adding- looks like others are interested in at least the Inflation answer: 2004 to current Google Trends Searches –
Blue = Inflation Searches
Red = Deflation
Yellow = Recession
Ok, back to our regularly schedule Post!
n spring of 2020 during the beginning of the countrywide lockdown‘s we had the opportunity to attend a conference that we had never chosen to do before due to logistics, cost, and length of the conference (7-10 days). John Mauldin SIC Strategic Investor Conference, after 18 years of consecutive conferences Mauldin shifted last year’s and this year’s conference to virtual and we were happy attendees.
The conference this year lasted a total of two weeks and had 45 speakers of which about 35 were Capital Market related with the other 10 being macro-economic or specific industry such as doctors.
Views: Number One From the Conference – Go Away FOMC – You Have Stayed Too Long
View number one and shared by every market related expert, the federal reserve is overstaying their welcome and should immediately stop asset purchases and begin talking about increasing rates. The main reason for these shared views are because asset levels have become inflated across almost all assets according to the experts and be continued purchases are no longer necessary given that capital markets are orderly.
Number Two – Inflation Is Coming – Via Jim Bianco
View number two shared by approximately 75% to 80% of the Capital Market Professionals were there will be some type of inflation. About half of the professionals felt like inflation would indeed be transition, which is what Jerome Powell (FOMC President) and the federal reserve are saying the other half felt like by the FED continuing to purchase assets a change from the long deflationary era of the last four decades to a longer-term inflationary era over the next several decades is ahead.
None of the pro inflation experts predicted runaway inflation that we had in the 70s but the most aggressive inflationary person that we heard was Jim Bianco of Bianco research. In one of many slides, Bianco pointed to the rise of the 10 Year Treasury, below and a belief it would continue to rise.
10 Year US Treasury Yield
Number Three – No Inflation, Back to Slow Grow – Via Lacy Hunt
View number three, shared by the remaining market experts emphatically, there will be no inflation and we will return to a slow growth environment similar to what we had coming out of the financial setback of 2007 -2009.
The most emphatic believer of this deflationary trend was Lacey Hunt who oddly enough shared the stage with the aforementioned Jim Bianco, and has been an expert in the capital markets for 40 years.
Mr. Hunt‘s main beliefs on why deflation will continue are the debt occurring by the afore mentioned FED asset purchase and ageing demographics.
So what are we do with all of this information and where does that leave us?
With such dissenting opinions it’s clear that someone will be wrong and things never work out exactly like people think, so some may be correct in a portion of their view an incorrect and another.
If Bianco is correct and inflation occurs and remains this would lead to substantial pressure on long duration assets such as the value of real estate, low earning but fast growing equities, long bonds such as the 30 year treasury and higher borrowing costs across the board. This would be a dramatic change from the last four decades and more rhyming of the late 70’s, but again not to the extreme.
If Hunt is correct, this will be a continuation of what we have seen over the prior four decades. Lower long term rates, lower borrowing costs, continued slower economic growth, lower expected earnings and continued upward pressure(tailwind) on the above mentioned longer duration assets.
The good news in monitoring each of the various forecasts we have easy to read and follow economic numbers such as the CPI and the level of interest rates, as well as federal reserve speakers talk in public venues.
In closing all of professionals believe most asset prices were elevated. High asset prices are not a direct reason for them to come down, and elevated asset prices can be grown into, like the 13-year-old growing quickly into the 15-year-old clothes. But high asset prices demand discipline and care as increased volatility is likely.
Have a Great “Inflation Deflation Tug Of War” Day!
As noted with our excited post last week, we are once again in the throws of the John Mauldin SIC – Strategic Investment Conference.
So far this years most ear catching moment has nothing to do with finance but comes from two Doctors who are repeat speakers from last year to give the group a Covid related update.
Their predictions last year (think at a time where a lot of uncertainty abounded) were spot on and almost unbelievable accuracy. So accurate they hardly needed to update their presentation.
Knowing we teased you with the headline, stay with us please … and take a quick moment to review these two Doctors backgrounds/Credibility! – Pretty Awesome stuff!
These guys are not show boaters!
So maybe not Dr. Culver’s best look … think super smart professor we have all had in our life!
Make it to 2030 and You will Likely Live Over Age 100
My mouth almost dropped when I heard these two stately Doctors utter the words above.
There is a super cool chart that the Doctors had in their slide deck, and of course it is the ONLY slide that had “Not for Reproduction” …. so in honoring their request … here is a recreated slide from their predictions.
Since 1850 average mortality has increase 2.5 years every ten years.
From 2020 to 2030 the Doctors believe we will see an increase age expectancy of 30 years, yep THIRTY!
That is the huge jump in the chart on the very far right upper expected mortality age 112 !
Much of this is due to the expected pull forward of knowledge earned from Covid and the various Vaccines.
The Doctors repeatedly mentioned that they expect a youthful elder years as well, not just extended longevity!
Recommended Life Style and Personal Health Monitoring
Here is a quick Legend for the abbreviations:
Blood Pressure
Body Mass Index
Fasting Blood Sugar
Cholesterol
No Tobacco
Stress Management – VERY INTERESTING! Newly added by the Doctors
For the record, those are not low hurdles using my own situation as an example!
Look for a more detailed review of this in the coming Newsletter!
Have a Great “Make it to 2030, live to over 100” Day!
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments may be appropriate for you, please consult your financial advisor prior to investing!
Background
The is the vocal portion of J.K. Financial, Inc. a Dallas Texas Based Fee Only Total Wealth Financial Planning Firm. Founded by John Kvale, a Dallas Texas Fee only Financial Planner and Total Wealth Manager.
Thoughts from Barry Habib, Housing and Mortgage expert, from this year‘s 2022 Mauldin SIC Investor Conference…
For those of you with a memory like an elephant, congratulations, you may recall that we have delightfully attended the Mauldin Strategic Investor Conference (SIC) virtually during lockdown for the past two years. As a side note, a conference that we had never attended before due to the duration and the timing … very near tax time!
Good news, once again this year the conference was virtual and we are happy to attend.
While there were 40+ speakers, more to come on others, we found the following expert and presentation very interesting, if not somewhat controversial.
Barry Habib, Mortgage and Residential Housing Expert
You may recognize Barry as he is a regular speaker on many of the financial channels among other and was a presenter at this year’s SIC conference.
Cutting to the chase, Barry expects a recession later this year or early 2023 and as such expects mortgage rates in particular to drop precipitously from their current 5 1/2% rate along with all rates of other asset types.
These expectations, (forecasts), are certainly more economic and financial market related, as such we will make note as predictions and check back sometimes next year.
Now, to Barry’s wheelhouse, what we are all interested in, the expectation of housing appreciation or depreciation!
Understanding that Barry comes from a residential and mortgage background, so let’s be transparent that there may be some innate biases, but his expectations are for mid to low single-digit housing appreciation for this year 2022.
This flies in the face of many forecasters due to the aforementioned slow down or R- word recession and more importantly the heightened interest rates of Mortgages currently.
In Barry’s defense, lack of supply and his expectations of a sharp reversal in mortgage rates will lend itself to this continued growth.
Heck if housing prices hold their values we would consider Barry’s prediction a win.
There will certainly be pockets of strength and weakness across the country…
We will be watching as it’s very easy to monitor and will let you know!
Barry …thanks very much for a fantastic presentation and for the information duly noted…
Have a Great “Housing Analysis and Forecast” Day!
John A. Kvale CFA, CFP
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Posted in Debt - Debt Management, Economy, Forecast, Interest Rates, Investing/Financial Planning, Market Comments
Tagged Barry Habib, Interest Rates, Mauldin, Mortgage Rates, Residential Housing, SIC Conference