It Could Be A Lot Worse

Well, I am officially back from Juarez, Mexico where a Men’s Group from my church helped build families 3 houses in 2 days in mid-90 degree weather. Yeah, it’s a dry heat…I get it. But come on. Regardless, I know most of you are shocked that I know anything about a hammer…or drywall screws, but I do! Like most of us, I’ve had some previous lives before this career. And yes…at first, I was like…okay…men are watching to see if you can perform. Can you? First swing always misses the nail, right? The second one hit hard…and I got better as the framing continued. It took us about 45 mins to get the 4 walls up for this house. Now keep in mind, we are in Juarez…not Cherry Hills (for those of you outside the Denver area…this is the area Peyton Manning lives in). But a 432 square foot mansion (trust me…these are mansions where I was last week) is nothing to complain about for these people. They are grateful, which is refreshing. 



Here is the neighborhood:

Street View:

And the final look from the outside:

In the end, it was very fulfilling. It felt good to give my time to help others. We can look at my industry for this…as we are trying to help people with homeownership, which I think is the best way to any wealth in this country, but there are a lot of hands in the cookie jar…including mine. So that’s not really the same thing, is it?

Speaking of hands in the cookie jar, Jackson has been stellar at defense this year. We ended the season 3-2 with a 2 win streak, heading into the playoffs. In the last game, Jackson had another interception. In fact, the whole team was coming together on defense. They understand containment better than some NFL teams I’ve watched recently (you know who you are).

The below picture is how he looks after 2 INT’s and one ball batted down as a free safety this 5 game season. I refuse to tell him that’s better than some NFL teams. I mean, just look at him. Oy vey. Now before you Denver peeps get all worked up, he is not a SF fan…we are the 49ers this season. Calm down. (Go Steelers!) I’m not going to take credit for his interceptions…..bbbutttt…this proves he listens (to what he likes to listen to). 

Meanwhile, back at the ranch, we are working with the last days before the Presidential election. Yippy. I’m sick of seeing all these damn commercials. Who hasn’t figured out who they are voting for by now? Well the word on the street is that we will get inflation and more debt problems regardless of who gets elected. And how do I know that’s true already? The bond market. I think this market knows what’s coming before we do. The below chart is going to stress some of you out. But I am going to give my best explanation of what you are looking at from technical analysis. You can thank me later when you start recognizing these patterns. For now, grab a beer (or wine – you know who you are), and sit in for this explanation. Stick with me…it will be worth it.

This is the 10yr yield daily chart. Each of the candlesticks (the red and green vertical rectangles) represents one trading day. You can see that the overall trend from near the beginning of this chart was downward. And then more recently, it spikes up. I’ve drawn a few items on here that I want to explain. You can see my half circle followed to the right by a much smaller half circle. This is referred to as a cup and handle. You can see it if you think about holding the cup at the handle with your right hand. The horizontal line drawn is the brim of the cup. That’s important to gather the “D” of depth of the cup. The depth of the cup is from the brim to the base of the cup. We take that distance and then add that to the brim of the cup going up…and that gives us a target destination. Why? This is how technical analysis of a cup and handle works. I’ve been telling people that I expect rates to continue moving up, and this is exactly why I agree with the inflation narrative. I added in the sad face because this means interest rates are going up and are still on their way. Interestingly, this up move would push it near the highs back earlier on the chart. That could be referred to as double top which would then be bearish (lower interest rates ahead). Everyone stick w me on this? It’s complicated, but a good way of seeking out the future rates through a “crystal ball”. Sorry folks…I don’t think lower rates are coming before the end of the year (and probably further). 

What would higher rates do? Well, keep this chart in line. This is the number of existing homes sold monthly. You can see we are near lows not last seen since Covid and the Great Financial Crisis. But we are not in a recession? How much longer with that narrative? Higher rates will move this number lower. Last month was reported at 3.84m (does not include new homes = builders). I expect this to move lower each month this year and into Jan/Feb (based on closing dates). 

Apollo likes to send out information that contradicts other information it sends out, sometimes…in my opinion. But it is all fascinating. This speaks for itself, but the long term growth outlook for “The West” is low, relative to the beginning of the millennium for the EU and 2008 in the USA. Housing slowing won’t help this.  

The IRS moved your goalposts for taxes by the 2.8% inflation adjustment! Sweet…even though inflation has been higher. But okay…from The Wall Street Journal: https://www.wsj.com/personal-finance/taxes/tax-brackets-2025-c47c9c66?st=8pDDvv&reflink=article_email_share

Here they are…

10yr: Here is a more detailed view of the cup and handle. Based on today’s candlestick, I would suggest there is a good chance we move further up this week. At least up to test the 4.5% before retracing down a bit. But ugh…

MBS: Showing signs of a continued move down, pushing down from that 200 day moving average (purple). There are three targets in price to the left I have outlined. So we are locking our loans as they come in.

I’m grateful for all of you (earlier than the Thanksgiving gratefulness I know). It was a good reminder to see where I was in Mexico. I know we go to Mexico and travel…but a lot of times we stay behind walls and drink our money’s worth, right? I did stay behind walls at night (no choice in the matter), but during the day we ventured out and helped people who don’t know that they are supposed to take a flushing toilet for granted. You do. I do. And when it doesn’t flush right? What an inconvenience. Damn be the plumbing, god, right? Maybe step back over the next few weeks, look around and be reminded that shit could be a whole lot worse. We are lucky to have been born in the greatest country that ever existed, even with it’s problems. At least you have a fridge, dishwasher, probably enough cars (or more) for each adult, more than 432 square feet for 9 people, a heater, an air conditioner…you get it. I will thank my Lord that he let me have this life. And I will plan to use it more to help those who were not as blessed as all of us.

What doesn’t kill you makes you stronger.

Tim