Argentina’s Inflation – think inflation has gotten out of control in the US? Argentina has experienced double digit inflation for most of the previous 20 years. This year it is close to 140%. Argentinian banks enforce a $200 withdrawal limit. The next presidential election happens in nearly a week and one candidate, a trained economist, is hoping to solve the inflation problem by adopting the US dollar and relinquishing control of their currency and economic policy. Ecuador did this in the late ’90s during a deep recession with major inflation. It did help bring inflation and poverty levels down significantly.
Mortgage Rates increased slightly this week as the price of Mortgage Backed Securities pulled back from the previous week’s spectacular gains. Rates are up approximately 1/2% from this time last year.
Home Values increased 0.3% in September and are up 4.5% year over year. The month of September showed another all-time-high for home prices, marking the 5th consecutive month of record values. Core Logic forecast continued growth of 2.6% over the next 12 months.
Recession Indicators – the Sahm Rule Recession Indicator flashes when the 3-month moving average of the unemployment rate jumps 0.5% above the 3-month moving average low of the previous 12 months. In the previous 12 months, we have been at 3.5% unemployment. Currently we are at 3.83% and if we get another high unemployment reading in December, we will eclipse that 4% threshold. Since the 1960’s this indicator has a 100% correlation with economic recessions.
Mortgage Applications increased by 3% from the previous week but are still down 20% year over year. Refinances increased 2% down 7% year over year.