BONDS HIT DANGER ZONE

Added: 2026-05-21

[00:00:00]seeing this if the sound quality is okay and uh we will get started with the daily financial news. The first thing to highlight is I think the bond vigilantes are setting up to test Kevin. Again, this should be not this should not be news to this channel. We have learned that 10 of the last 11 Fed chairs were tested and um this is setting up to be Kevin's test. I believe uh the 30-year Treasury yesterday hit 5.19.

[00:00:32]Uh the 10-year went over uh 4.6 and even the Japanese bond is setting records uh hitting 2.81, highest in 30 years. So the bond market is clearly setting up for something. Is the bond market setting up uh because inflation is coming? Are we set up to have a Fed that will actually hike rates? Excuse me.

[00:00:58]Wow, it's really cold here. It's really cold. Can you guys see that? That there's a big mountain behind that. Uh, and you can't see it. So, uh, anyways, here we go. So, again, uh, we really do need to watch the bond vigilantes, watch the 10-year note, watch the 30, also watch the Japanese market. Why the Japanese market? Well, they're selling US treasuries. I think last month they sold 81 billion. Uh it seems like they are you know trying to protect their currency. So again this is setting up to be something big and obviously that impacts the real estate market. The real estate market uh has seen interest rates yesterday at 6.75.

[00:01:39]Uh we should all hug a mortgage spread.

[00:01:42]I don't know if you guys have done the math. I have. And mortgage rates would be almost 8% today.

[00:01:49]they would be eight almost 8% if we had the worst of the uh housing uh or worst of the mortgage spreads. Lots of you are asking where we are. We're actually in B. Uh we took a flight to Calgary, jumped on a bus and we are sitting uh in B. It is a beautiful, beautiful area and uh I highly recommend travel folks if you can uh get out, enjoy this amazing world. See people, see different places.

[00:02:18]Uh, it's a lot of fun. Just just did Australia for three weeks. Now we're in Canada. We have some more travel in the next month or so. So, get out if you can. Uh, let's talk about what's going on in home sales. Pending home sales were up 1.4% month on month. Uh, that's the third month in a row. Yes, I know the housing bears and the crash sisters are talking about crash. They're wrong.

[00:02:42]They're wrong again. Uh, they don't know what they're doing. They have PTSD.

[00:02:46]They're paying their rent by producing fear. I think they're evil. Uh but it is what it is. If you look at where housing is picking up, the Northeast leads the race at 6.6%, Midwest 3, West only4, and the South is negative uh.6.

[00:03:05]So again, very very interesting. Uh yes, we did see Lake Louise yesterday, I think. Yes, we did see that. Uh very very nice. also saw the massive hotel there uh which was you know uh very interesting to see. Uh Red Fin says that 35% of home sellers cut their price in April. That's actually down uh it was as high as 38%. Uh buyers are coming out uh but are cautious according to Lawrence June chief chief economist uh optimism uh despite economic uncertainty. So again, we are seeing uh I think we are seeing the start of a late spring selling season. We've talked about that for a while. Uh I think that is what's going on. It looks like swaps in the market are thinking the Fed will have an 80% 80% chance of raising rates by the end of 2026. Uh so again, that is something you and I have been talking about for 45 days. And once again, we were early. We were the first to talk about the Fed raising rates. I will talk I will take our victory lap because again it's fun to be early and it's fun to be right.

[00:04:15]Uh there was a Fed poll of 101 economists and no they did not ask me but 48 of the 100 think that the uh Fed will cut Wows. That can't be right. I have to check my notes. It actually says 48 of 101 think they will cut rates in 26. I'm not. If that's true, that survey had to go out before the Iran were because nobody's I can't believe 48 economists would think they're going to cut rates in 26. But hey, it is what it is.

[00:04:47]Again, mortgage rates at six and three/4ers. Will we see 7%.

[00:04:52]Will we see 7% mortgage rates?

[00:04:57]It's possible. In fact, I would argue it's really likely. How would we do that? Well, one way is if the Bon vigilantes step on the gas and really test Worsh. How would they do that?

[00:05:09]Well, they would take the long end higher. They would take the 10-year to like, wow, four and three/4ers, 4.8, maybe take the 30-year to five and a half, five, five and three/4ers. That would do it. Second, if we have any kind of escalation, meaningful e es escalation with Iran, uh that could be, you know, dropping bombs, it could be involving other countries, this Iran thing could still spiral out of control and take us much, much higher. And also, we have to watch CPI.

[00:05:44]Uh CPI is on a trajectory to 5%. I think all three of those things could take mortgage rates to 7%. Uh I do want to uh highlight what that means. We were just at 599 uh seemingly 8 n 10 weeks ago. Uh we talked about it on this channel. We went and did a cash out refi at 599.

[00:06:04]Actually several of them. Hopefully you did as well. Today uh at 6 and 3/4 that means a pay payment on a 420k house is an extra $167.

[00:06:18]Uh which is interesting. Uh Brad Lee uh put out a post the other day I thought was interesting I wanted to share with you. He says happiness is a choice.

[00:06:28]Happiness is a choice. And the key is avoiding negative people increases happiness by 100%.

[00:06:39]This is a big deal to me. Obviously we work here on the YouTube world and trying to help motivate you to think what's possible. If you are still watching doomers, you're missing the boat. They Doomers are keeping you poor. Doomers are stealing your energy. They're stealing hope. Doomers are evil. Please block evil. We did get some earnings that I thought were interesting. Let's start with Toll Brothers. Uh we actually saw a Toll Brothers community when we were in Orange County and wow, some people got crazy money dropping 7 million bucks on a brand new home. But woo, that's a lot of money. Anyways, Toll Brothers beat topline, beat bottom line, highlights that luxury demand remains resilient. In fact, Toll Brothers raised guidance. Uh their gross margin did take a little hit down to 26.2% down 1.3. However, signed contracts and again shout out the folks at Toll Brothers grew 8%.

[00:07:37]8% 2.81 billion. The top end of the K is printing money. and Toll Brothers earnings showed. How about Lowe's, right? Home Depot yesterday, Lowe's today beat topline beat bottom line saw strength in appliances, home services, and pro sales. Revenue was up 10%. I do have a question. Didn't we just hear from Whirlpool that that appliances are at um record or recession lows? How can Lowe's say that appliances are a key?

[00:08:14]Maybe Whirlpool has an execution problem? I'm just saying. I don't know.

[00:08:19]How about Target? Target B topline, bottom line, same store sales were up 5.6%.

[00:08:24]Uh that's the first time in five quarters uh Target uh has same store sales uh rise.

[00:08:31]Mark Cuban, excuse me, Mark Cuman says there will be two types of companies in three or in two, you know, three years. Two types of companies in three years. Read your notes, Zuber. Uh, companies that are good at AI will be number one and number two, out of business. Yes, according to Mark Cuman, you are either going to be using AI or out of business in as little as three years.

[00:09:00]Tom Lee actually gave a talk about the University of Michigan consumer sentiment. Um Josh, thank you very much, buddy. I appreciate that. It's very nice of you. Uh Tom Lee talked about the University of Michigan consumer sentiment survey. This is something you and I have talked about a lot the last 90 days because again, we are at record lows. again, we are lower than 911, lower than GFC, lower than um, you know, the pandemic, which is crazy to me.

[00:09:29]Well, it turns out the survey sucks.

[00:09:34]The survey sucks. According to Tom Lee, the Michigan Consumer sentiment survey is biased towards Democrats.

[00:09:42]66% of the survey respondents are Democrats.

[00:09:48]33% are Republican. Why is this important?

[00:09:53]Well, the Democrats are saying again in this survey that inflation is 100%.

[00:10:00]Republicans are saying inflation is 1%.

[00:10:03]Again, this is total nonsense. Both of those are completely political hacks.

[00:10:10]But the fact is one of them has two/3s and one is a third. So again, at this point, as I said before, I think the Michigan Consumer sentiment survey needs to be thrown away. It is complete garbage and provides no information at all. Uh lastly, uh I will go back to where we started. The US uh treasuries have entered the danger zone. Sticky inflation, hawkish Fed. This could spill over to equities and broader risk assets. Wow. a $20 super chat. I don't think I've ever got one of those before.

[00:10:46]Thank you very much. Uh if I knew your name, I would say it, but I did not see one. I'm sorry about that. So, a couple of you have asked. We are in B. Give you a view. It's about I don't know 40 degrees. I think there's a big mountain.

[00:11:01]We are just surrounded by low clouds today.

[00:11:05]So, hopefully you enjoy that. H have fun. Again, thank you for the super chats. It's very kind of you. And uh I'm going to go work out. So have fun. Take care of yourself. Bye.