Crypto Exchange Collapses and Midterm Effect – crypto exchange platform FTX went from advertising at the Superbowl and a $32B valuation to freezing user withdrawals and filing for bankruptcy this week. It got into trouble when CEO Sam Bankman-Fried used $10B in funds to support his other crypto trading company that was making big gambles (apparently this is legal). Since 1950 the stock market has increased after every mid-term election. Mid-term elections typically generate gridlock. Generally speaking the market likes gridlock in congress because it indicates that bills won’t get passed and there will be less inflationary spending and more reliability with laws/tax laws.
Mortgage Rates improved nicely on Friday as the price of Mortgage Backed Securities (MBS) shot up with the Consumer Price Index (CPI) news that showed inflation was slowing down. Rates are up approximately 3.25% from this time last year.
Inflation – the CPI index increased by 0.4% last month, but the year over year reading decreased from 8.2% to 7.7%. The Core Rate (which strips out food and energy) declined from 6.6% to 6.3% which caused MBS to respond very favorably as investors focus on core inflation.
Jobs – The number of people filing for unemployment for the first time increased by 7,000 to 225,000 this week. While overall a very low number, both continuing and initial jobless claims are on the rise.
Cars – the Manheim Used Vehicle Value Index fell 2.2% in October and prices are down now 10.6% year over year. This is the lowest number since August 2021. Auto loan delinquencies 60+ are up to 1.5% which is the highest reading in over a decade.
Mortgage Applications to purchase homes increased by 1% last week and are down 41% year over year. Refinances declined 4% and are down 87% year over year.