WARNING: The Market HATES Good News Right Now

0:00College football is back. So, Hilton called to me the superstition concierge to make your fan rituals a reality. Need a room to match your lucky number? We got you. Want to make sure our team doesn't wash your lucky jersey? Oho, that smells lucky. Hilton's unmatched hospitality can keep up with any superstition. Even a marching bandwink up call it 555 and 55 seconds. Hit it! When you need a team that will do whatever it takes on game day, it matters where you stay. Hilton, for this day. Alrighty folks, we got some bad news to talk about, some unfortunate news. And that is the fact that it appears. Good economic news is bad news for the stock market. And really bad news for the bond market. I don't know if you guys saw what happened in the 10 year treasury market yesterday, but it was nothing short of a disaster. The 10 year note that usually moves 2 to 3 basis points, actually moved 15.

1:07That is akin to the NASDAQ falling 3% in a single day, just to give you some context. Now, what do I mean by good news is bad news? Well, let's look at the economic news that sparked this collapse in a bond prices and rise in yields. Yesterday, we got two PMI numbers, one for manufacturing and one for services. Both exceeded expectations. Manufacturing came in at 57, services came in at 58.7, both significantly above expectations. In fact, these numbers were noteworthy for how strong they were. The strongest growth in more than five years supported by robust hiring and robust demand.

2:09Input costs, note input cost, input cost, aka inflation. If you're not paying attention to the nuance of words, input cost jumped to the highest level since 2022. Driven by higher energy and transportation costs. Folks, we have been talking about diesel for quite a while on this channel. It is now sitting at a record high and it is one of those things that is in everything. And it will ripple through the economy like a cancer. I don't know how to kind of display it, but it is in the transportation of everything. Food, clothing, electronics, everything. And we will be feeling that for months to come. So normally speaking, a growing manufacturing base and a growing services base, growing demand, robust demand. That would be a good thing, right?

3:10I mean, you want your economy to be growing. You want strong hiring. However, we are sitting here in an environment where the Fed is telling us quite clearly that inflation is a problem. So we get these reports yesterday morning and the 10 year treasury rips higher in rate. Not only that, but the five year note, the five year note is now over 5%. The five year note hasn't been over 5% since 2004 by my recollection. So again, very, very interesting. Mortgage rates hit 7.26, seemingly marching ever higher to my 7.5. Weekly mortgage demand as expected is down 1.5% third negative week in the row. Although we just got new home sales that just came out at 7 a.m. right when this started.

4:12US new home sales units in a shocking move, shocking number, actually up more than forecast up to 600, 600, and, well, that'd be 0.684 million. So there'd be 684,000 forecast was only for 610. So a significant beat and much higher than the previous month at just 607. So again, new homes are up, but what does that mean? Well, it means that new homes are giving away credits buying down rates. I don't think that story has changed. They are eating margin to move product. It makes quite frankly perfect sense. Existing home sales are going to suck. They are going to be weak. Why? Because most homeowners don't have a mortgage company. They can't buy down rates. They can't eat margin on one product and buy, you know, a, you know, buy down to 4.99 or 399 or even saw somewhere in Texas 3.49.

5:12Wow, you got to be moving. You got to be very desperate to move inventory if you're buying everybody down to 3.49. But again, new home sales up more than expected. Again, the economy appears strong. Why does this matter? Well, the odds of a fed rate increase changed drastically. And I am talking about an October rate increase. This is something I called for just about a week ago. And basically, this is all this data, robust demand, robust hiring, input cost jumped. All of these are code words for we are going to get another dose. Remember, Kevin Warch said this is a dose of a restriction. We are going to get another dose in October. And right now, folks, we just got to be honest with each other. A dose in December is not out of the question. So again, buckle up buttercup. It is going to get interesting.

6:13Sorry, I'm trying to fight off a sneeze. I do want to thank you. We have seen a dramatic jump in the viewership for the daily financial news. Ever since we uploaded them as original videos at 8 a.m. The YouTube algorithm is sending us a bunch of love. We're now getting 10,000 views of the daily financial news. So to all the new viewers out there, thank you for being here. Like, subscribe. Be a part of the one rental at a time family. You get the daily financial news five days a week. You get it Sunday through Thursday. I do take Friday and Saturday off. But you get it five days a week. If you just want bullet point understanding of what's happening in the economy with a real estate slant for sure. Give us a follow. Check us out. Let us know what you think. Ask questions. We have a bunch of really good people here. And I think you'll enjoy the one rental at a time family. Next up, we got some fed speech fed talk fed Michael bar.

7:14Pay attention guys. They're telling us a rate increases coming. My base case is again, Michael bar. My base case further policy adjustments, aka dose. Likely to be needed to ensure inflation comes down to target in a timely fashion. Yeah, it's coming. Uh, Mohammed, Ellarian somebody I respect love to interview someday kind of maybe even on a bucket list love to interview him once. Rates are being pulled higher. Why? Well, the US economy is accelerating. And we have ever higher energy costs. Again, folks, when you look out at the data that the Fed is looking at jobs economy and inflation. Two of them appear to be pretty strong. And one of them's a problem. So they are going to turn their attention to inflation at an increasing way. You want to know how drastic the change in sentiment was yesterday.

8:16Heading into the PMI reports the odds of a September no October rate increase. We're 55%. Yesterday they got as high as 77%. Yeah, I would say a October rate increase is coming. Something very interesting. Taylor from life goal investments are Wall Street veteran of a decade. He works only with the 1% of the 1%. He comes on the channel once a week. And on Monday, he said, if rates blow out the 5%. We are going to be in trouble. And yesterday he texted me. And he actually created an Instagram reel highlighting that discussion. And again, he said a 15 basis point move in the 10 year is like a 3% move in the Nasdaq. It was wild. Higher rates are going to mean that people stay put longer.

9:17Gas prices are going to mean people travel less and they are going to have drastic changes. They're going to be chicken versus meat or beef and things of that nature switching costs McDonald's McDonald's CEO throwing economy McDonald's CEO expects high inflation and flat, flat traffic is not going away from restaurants. Interesting. Have you guys heard of something called the ski trend? This is something that the baby boomers are apparently are celebrating. Again, ski being S K I all capital letters. So not ski like down a mountain or cross country ski or water ski. Skie stands for. Yeah, you're not going to like this. I certainly certainly didn't like this. It stands for spend kids inheritance ski. Yes, apparently more baby boomers are using their new found wealth in their house.

10:22They paid 20 grand for and their stocks to spend their kids inheritance. Don't know if you saw oracle tank this morning apparently they've issued a forced measure basically notifying the developer of a data center. I think in New Mexico that if it's not ready by 2028, they aren't paying. Yes, the data center is running into local opposition and not making much progress. So oracles like we're not paying. It's not functional by 2028. We are not paying. We got a couple more things for the daily financial news, but before we get there, let's congratulate another or at family member for writing a book. This time the lovely couple David and Morgan who oh, by the way are coming to Vegas. They will be speaking at our Vegas event in January. They just wrote this amazing book. Building options. How ordinary people build extraordinary freedom through real estate.

11:22If you don't know Morgan and David, you really need to check them out. Morgan to stay at home mom. David is a. I'm how I want to say this. He's he works for the police. Let's say that. And again, it's it's how how they built financial freedom. They call it building options. I call it one rental at a time. It is an amazing story. I was so impressed by it. I actually wrote the forward for their book. So check it out building options. Congratulations David and Morgan. It's a it's a great job writing a book. So nice, nice work. So a couple more things. We got weekly jobless claims once again, once again below 200,000 again the job market is not in trouble. 197,000 last week, 196 open AI open AI just needs to be sued and put out to pasture open AI software product is now hacking governments open AI confirm this morning that they hacked the Australian government.

12:29Folks, if you release a shitty software product, you need to be sued. I am obviously not a fan of open AI. I think that's been pretty clear over the last couple of months. But yes, if you're a product. Yeah, if you release a bad product, you should get sued. So hopefully they get sued to oblivion and never IPO. And then lastly, I read this very, very interesting research report about past investment trends. Again, I've said for a while that I think AI investments are going to go the way of fiber and the internet and railroad and highways. But some of you don't know what that means. So let's take a look. In the 1900s, there was mass investments in railroads. In fact, the investment was so large, it was 2.24% of America's GDP. So significant investments. And if you guys don't know what happened after almost all railroads went bankrupt. Yep, it happened.

13:33Highways in the 1950s were such a large investment. It made up 1.13% of the GDP. How about the internet, telecom, fiber, all of that, the stuff that I lived up close and personal. It was 1.1% of GDP. AI is forecast by 2030 to be 3.63% of GDP. 3.63%. Bigger than all of the previous ones by at least 50% and bigger than the last two by 300%. Again, I think this goes the same way. AI is amazing. AI will be around forever. AI is a tool. I will stress tool. I think it will go down as a utility. It'll go down like a Google search where it's free. It's just in everything. But that just means these LLMs and all of these premium products go to zero or at least a few of them go to zero.

14:37All right, folks, that is the daily financial news for Thursday. Again, thank you for being here. Thank you for all the new people like subscribe comment. Help this thing go even further. Don't forget that steadily is landlord insurance. If you are buying or thinking about buying rental property, it is your job to get multiple quotes. Might as well give them a shot. They saved us on 60. Yes, 60% of our portfolio, which is awesome. And of course, if you want to come to our biggest event in January, there's a link below school or at all that good stuff. Hope you enjoy the daily financial news. We will be back Sunday morning. Take care. Later. Push your limits, train with precision. See the results at equinox. That type performance living, iconic spaces that inspire personal training backed by real data unlimited group fitness classes from yoga. And pilates to strength and conditioning elevate your post performance ritual with saunas, steam rooms, cold plunges and more.

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