Market Update- Rates, CPI and PPI inflation, retail sales, jobless claims, and LO production

Good morning and happy Friday. Jordan Keck here, your lender buddy, with your weekly market update. Hope you have a great St. Patrick's Day weekend here coming up. So, and then hopefully had a good Pi Day yesterday, 3.14, March 14th. Kicking off this week, unfortunately, the benefit we saw last week on interest rates has been undone. We got a couple of hot inflation report numbers this week. And that has pushed us back as far as interest rates. Last week, we were at 6.85. Now we're up to 7.02. Today stabilizing a little bit, but unfortunately not able to continue that downward trend we were starting with the reports from last week. For me, mortgage tip this week talking about cosigners. And this is something that we all typically know is available there. But being able to continually remember if somebody's not qualifying, or I had a situation the other day with a client who has a job putting in tons and tons of overtime, so they're making great income, but because they don't have a history of that overtime, we have to only be able to use the base rate, 40 hours a week multiplied by their base rate. They're actually making more than double that amount with their overtime. So we know they can afford the payment, but we can't count it on paper to qualify. Situations like this are great to be able to look at a cosigner where we know that again, they can take care of the payment, but have somebody else on the loan to help them qualify for that amount. Another situation are going to be times where somebody is self-employed, or if you've got, you know, I have several times where people would be coming out of college, looking to get a job offer, but don't necessarily have one yet. And so having grandparents or having their parents cosign, using their income to qualify, but then having the kid on the loan. So it's an owner-occupied loan. So a lot of versatility in how you can be able to use cosigners. So great question when you're talking with clients that may not qualify is, hey, do you have somebody who may be able to cosign for you? And interesting requirement, most of the time when you're giving a gift, they're required to be a family member or a very close personal friend. There's no relationship qualification with a cosigner. So if you just have a friend, somebody else, maybe want to go in and share some of the equity as an investment, essentially you can do that with a cosigner. Next up here, talking about the inflation report, the February CPI, the Consumer Price Index, came in, we're shorting up about 0.4% up for the month, 0.44%, which was in line with expectations. Year over year increased from 3.1% to 3.2%, which was above expectations of an unchanged level, and then the core rate rose 0.36%, which was slightly above estimates of 0.3%, and decreased year over year from 3.9% to 3.8%. So still moving year over year in the right direction, but the markets did expect 3.7%, so overall came in a little hotter than expected. But the big one that ended up moving markets was the PPI, the wholesale inflation number, the producer price index. For February, this rose 0.6%, which was double the estimates of 0.3%, which is a huge beat. And even though wholesale inflation historically hasn't been looked at a whole lot, in lately, the last couple of years when inflation's been the focus, this has taken a lot more weight because usually whatever happens on the wholesale side gets transferred over to the consumer side. Year over year, PPI rose from 1% to 1.6%, which is again way above the 1.1% year-over-year number that was expected. Still a very, very low overall, but the concern is if we do continue to see higher numbers like this, especially going into summer, that the year-over-year will start moving up very quickly. The biggest change was a 4.4% jump in energy prices month over month, and of course we've been seeing this at the pump anytime you're getting gas largely due to the OPEC production cuts, which have been hurting the amount of supply even though demand is strong. So of course that's pushing prices higher. There was also a 1% jump in food prices for the month. So those two really leading the way in this higher than expected number. The core rate, which strips out food and energy, rose 0.3% and year over year remained at 2.0%, so unchanged. Retail sales numbers for February rose 0.6%, which actually helped us a little bit. It kind of tampered some of the market's reactions because this is below expectations of an increase of 0.8. January's number, which was already low at a -0.8%, was also revised even lower to a -1.1% reading on the month. So you not only have February's coming in lower than expected, but January's being revised lower. So again, this helped to, to tamper some of the strength that we saw in those inflation numbers. And then core rate for February was flat— excuse me, was flat for February after coming in at -0.3 for January. So again, very, very low numbers on the core and the headline. Next up, the initial jobless claims fell 1,209, and then continuing claims rose 17,000 to 1.811 million. Now, the BLS did revise last week's report down 112,000 for continuing claims, which is why we see this closer to 1.8 million versus the 1.9 or so we've been seeing, which is a huge revision. And as you've been watching all of my updates, you know that whenever we get the BLS jobs reports, they've been making some very, very large revisions to their numbers coming out in decent portion because they've changed the way they calculate their seasonal adjustments. And are having to make some very large revisions as a result. So because of this, a lot of people are starting to take those reports with a very large grain of salt, knowing that they might come out with a number that looks very strong, but then revise it the next week, next month, or even 2 months later. Very, very large revisions. And lastly here, interesting stats for loan officers in 2023. We've seen a lot of data out there, but one data provider really made an investment to try and get the most accurate data. Because if you're working at a bank, you don't necessarily need a license to originate loans. And so if you're just looking at how many loan officers are licensed, you might not be having the full picture. So interestingly, in 2023, there was a total of 234,000 loan officers, which is a huge decrease from the nearly 600,000 to 700,000 we saw a few years ago. But if you look at who's active, who's actually doing loans, who's done at least one loan closed the last 90 days, you've got only 134,000 loan officers. That means we lost about 100,000 loan officers over the last year who are now, even if they're technically licensed, have not originated a loan. So huge decrease from what we've seen. And as far as the numbers go, the median point, about half of those loan officers who actually did a loan in the last 90 days in 2023 or the last 12 months, If they did 18 loans or more, they're in the top half. 18 loans or less, we're in the bottom half. So that's kind of the medium point. For loan officers to be in the top 25%, they had to do $12 million of production or 38 loans. To be in the top 10%, they'd have to do 70 loans or $22 million or more. Top 5% was 100 loans or $32 million in transactions. And then the top 1% were 180 transactions or $64 million in volume. So interesting out there as you're looking and working with loan officers, you're feeling a lot of people who are getting really desperate for business. And, you know, I had several people earlier this week talking to me about a loan officer who is calling real estate agents and basically saying, hey, I saw that you did a deal with someone else. Are we still working together? Or just trying to make them feel guilty for for sending clients who weren't able to be pre-approved right away. It breaks my heart on that because as a loan officer, I view our job as being able to help clients go from where they are to where to— well, where they want to go. There's nobody better suited to that than us as loan officers because we know where they need to go and what their financial situation is. So I'd say if that's the way that you have been treated by loan officers, I am so sorry. I never want you to feel pressure. I never want you to feel like you're responsible to do the work of somebody else. So full permission, whether we've worked together or not, um, I appreciate you, what you do. It is tough out there and getting clients in the door, you don't know if they're qualified or not. So my promise to you is always one of, I will never expect anything from you. Anytime we do get a chance to work together, I view that as a privilege and a trust that I continually earn every single time. And if you have a client, I don't care if they want to buy in 2 years, if they're not qualified right now. If there's somebody who wants to have a conversation, wants to get help, I'm happy to chat with them. We've built an incredible system and a great team here where we've got the capacity to do that. You know, if you're looking at those numbers, I'm in the top 5%, pretty near the top 1% there. So again, we've got capacity, we have time to be able to do that. So never feel like you're wasting my time. I want you to be well served because you are on the front lines in a really difficult market. A lot of people haven't gotten to this point, you have. So I want to support you in every single way that I can. So thank you for what you do. I appreciate you. I hope you have a fantastic weekend. If you need anything, I will be available. I'll talk to you next time. Take care.