Increased Super Bowl Spending - 100M People are expected to watch the Super Bowl and the average fan is expected to spend $43 on food – up 23% from last year. Wages are now up more on a year over year basis than inflation and food prices have moderated. Wings prices have fallen for the second consecutive year, fresh wings down 5% and frozen down 11%. Shrimp prices have also declined, while guacamole and beer prices are flat. The price of brisket is up. Soda prices are up sharply since the beginning of the pandemic but much of that is due to aluminum prices so soda drinkers might consider 2 liters.
Mortgage Rates increased slightly this week as the price of Mortgaged Backed Securities continued a downward trend we have observed since mid-December. Rates are up about 0.75% from this time last year.
Contrarian Investing – Fannie Mae released their Home Purchase Sentiment Index and it showed consumer sentiment toward housing is at its highest in nearly 2 years. This number is high because 82% of customers feel good about their jobs, the economy, and inflation. While sentiment towards housing is strong, 83% of survey respondents believe it is a bad time to purchase and are waiting for rates to drop (a record number of folks think rates will drop). We know that if everyone is waiting for rates to drop, if they do a lot of folks (80%+) will get back into the marketplace causing bidding wars and an increase in demand and price. In this environment it may pay to be a contrarian investor.
Car Prices – the Manheim Index showed the price of used cars remained unchanged in January and are down 9.2% year over year. Part of the reason for the price declines over the last year are due to Fed rate hikes increasing the cost to finance.
Long Term Value – Since 1942, there has only been one ten-year period where purchasing a home turned out to be a bad investment.
Mortgage Applications - fell 1% last week and are down 19% year over year. Refinances increased 12% last week and are up 1% from last year.