7% MORTGAGE RATES!!! What Happens NEXT???

0:007% mortgage rates are back. Yes, folks, today it is very likely we are going to post 7% mortgage rates by mortgage business daily, by end of day. What the heck is going on? Well, frankly, all the things that we've been discussing the last six weeks or so have been driving rates slower and activity lower. As I thankfully warned you, the last six months of 2026, we're going to be ugly, going to be disastrous for the transaction business and we are in it right now. So lots going on, lots of reasons to drive. Mortgage rates over 7% today. We will start with oil. Oil this morning, I haven't checked in the last half hour or so. Brent was 105 and WTI or West Texas was just over $100.

1:01And seemingly screaming higher. There is now talk behind the shadows that this never ending war with Iran could and may very likely continue throughout the rest of President Trump's second term, meaning another two plus years. This is what I have feared from the beginning and should this continue and just continue to drag on, oil is going to be going higher as well. We've already drained our strategic petroleum reserves to the very bottom. Again, we don't have that to fall back on so it is getting ugly out there in the energy complex. Next up, we got our first inflation reading of the month. We got PPI. Excuse me. PPI headline came in at 5.4%. Prior month, 4.8.

2:05That is going the wrong direction. Okay, what about core? Tell me about core because you know, headlines got energy and oil and gas and diesel. Don't tell me about headline, tell me about core. Well, core came in at 4.6. Now it too was up from the prior reading of only 4.2. So again, at least according to PPI inflation is accelerating, not decelerating. And PPI is often a leading indicator for CPI. So again, if you look at the leading indicators for CPI, you do have ISM services, which is about six months ahead of time. Right, there's some cost of goods inside ISM surveys. Then you have PPI and then of course CPI. CPI is the big number of the week. It has the potential to frankly guarantee a rate hike next week if it comes in hot. So we will be paying attention tomorrow for sure.

3:06Jobless claims came in on the screws at 206. Again, nothing to see there. And the 10 year note, if you haven't checked this morning, 4.9. 4.9, too, I think. So again, we had seen it in a trading range where 4.8 was the high watermark. Scott Vessent came out what two days ago and said, hey, bond vigilantes, I am the house. Bet against me if you want. And guess what, they did. And the bond vigilantes are winning. It turns out that the whisper number for the bond buyback was not five billion, it was 10 billion. So as soon as he came out with that measly 6 billion, the bond market laughed, laughed in rates shot higher. Now over 4.9 and seemingly screaming to 5%. Yeah, 5% is certainly possible. It's frankly possible this week, probably more likely next week.

4:08But again, we shall see. Let's talk about that AI doom that we heard about yesterday. Again, somebody had an enthroppa who turns out to work there for six weeks quit and wrote this nasty thing that's been amplified by other AI doomers. Apparently people are starting to get wise to the sia. Apparently it has been identified that Jacob Coxon is nothing but a shill for some negative AI firms. Basically, he came out and said, don't underestimate the power of the technology, yada yada yada. And again, he is part of some cohort of doomers. And this is nothing more than a sia. So what I hope happens is I hope some journalists out there investigates Jacob in all of his cronies and they follow the money. If they are being paid by a foreign adversary like China, for example, and you can prove without a shadow

5:10they are just preaching the sia from China, send them to jail. Send them to jail, right? This is national security stuff or, I don't know, whatever you want to call it, send them to jail. You got to make an example of these people. And if you can prove and by court of law that they are guilty of espionage or whatever it is, send them to jail and guess what? These foreign based sia would stop overnight. If you don't penalize these people, they're just gonna keep doing it. And then you're gonna regulate AI to nothing. And quote unquote, China is gonna win and yada yada yada. So I don't know, hopefully somebody takes it amongst themselves, goes investigates this guy, holds his feet to the fire, threatens jail time, get, start having him name names of who paid him. And we can put this episode behind us. Because again, a 10% chance that all of us die in the next 10 years, that's not a message we want out there.

6:11We don't want killer robots in Terminator 2 or whatever it is. This is not good. We did get some earnings. Chewy, again, pet lovers out there, beat top line bottom line, raised guidance, although free cash flow did miss expectations. Signet, again, Julie store, matched on revenue but beat on earnings and raised guidance. Again, the consumer must be strong if you all are buying jewelry. Well-front, beat on revenue, missed on earnings, although did hit a hundred billion platform milestone. And then finally, American Eagle, beat top line bottom line, same store sales, up 6%. I don't know that I've ever been inside an American Eagle, but hey, apparently some consumers have money left over. Although results or earnings were boosted by 161 million tariff refund. It's interesting to read how people are handling the tariff refunds. Some of them slap them on earnings to make gross margin look better.

7:12Some of them take them as a special charge. It's interesting to see how these folks identify the tariff refund. Auto delinquencies hit a record high. Again, I guess $1,000 auto loans is not a good idea. A lot of people took that during the pandemic and now they're like, hey, that's pretty stupid. So the 60 day delinquencies are a record high. Rick Santali. Santali, Santali, retiring from CNBC. He's been on there 25 years, shout out, Rick. But he did an episode yesterday or the day before. I saw it yesterday, so it might have happened the day before. Where he said the 10 year note, which at the time was below 48, he said if it closes below 48, no big deal. We're gonna go back to 4.2 to 4.5. But if we broke and closed above 48, which we did yesterday, and likely we'll do today, he said 13%. 13% is not out of the question. Now again, that frankly should scare you

8:13because a 13% 10 year means what, 15.5, 16% mortgage rates. That means real estate gets really slow. If we go, if we go to double digit mortgage rates, it's gonna get interesting. Now again, I don't see that coming. But Rick Santali's been doing this a long time, so I thought I would share that with you. Don't know, wow, excuse me. Don't know if you saw this yesterday, but apparently President Trump is promising $5,000 dividends if the Republicans win the House and the Senate. That is to every adult. So by a quick Google search, there are 245 million adults in the US. If you gave all of them 5K, that's 1.2 trillion in stimulus. Also throw it on the debt. We immediately jumped to 42 trillion or whatever it is.

9:14I have lots of things to say about this. First and foremost, didn't we make fun of President Biden for trying to buy votes? I tried to remember what he did, but I don't remember. And now we have President Trump trying to buy votes. What are we doing? Why don't you just run on good policy? Just beat the other guy in the town square. Why do we got to promise money to people to buy votes? How can this be legal? I mean, seriously, what is going on? Again, I got a lot, so oil over 100, Brent 105, 7% mortgage rates. Oh, the ECB. ECB is the first of the major countries or areas to raise mortgage rates, or not mortgage rates, sorry, the funds rate, they raised a quarter point to two and a half. It is also expected that the Bank of England and the Bank of Japan will be raising in the next two weeks. The odds of the US raising are currently sending, I believe, at 61%. That will definitely change tomorrow based on CPI.

10:17Again, folks, I guess a little bit more about PPI. Where was inflation? Well, right where you would expect it. Energy of 4.2% diesel, 24.1% and gasoline 4.2. The interesting thing about diesel is it ripples through into services. Again, there are plenty of services that are impacted by this as well. All right, folks, that's what I got for your daily financial news. Remember, we are running a special by September 15th. So five more days. If you buy a ticket to our Vegas event, you will be intern in a raffle to get an hour of time from one of the four millionaires, Dion, Matt, Cody, or myself. As a thank you, I'm trying to encourage more of you to buy your tickets early. It's just helpful on my end. So hopefully you can get your tickets. Don't forget to get your teenagers. There's now 14 tickets left for teenagers. We're down to 14. So again, that will undoubtedly sell out shortly. And don't forget that steadily is the sponsor of the daily financial news. If you are a landlord, it is your job.

11:18Yes, your job to get a quote see if they can help you. Maybe they can. Maybe they can't. But it's your job to give them a shot. And of course, I hope to see you guys inside school. Take care. Have a great time. We'll talk to you Sunday morning at 7.30 a.m. Pacific. Later.