Recession, Rate Updates, and the Data
The Recession Movie Opening Date is Being Pushed Back
The long-awaited premiere of Mission Impossible: A Soft Landing has yet to advertise a release date, although many critics are now anticipating 2024.
This is certainly a pushback from the Q3 and Q4 expected earlier this year.
In seriousness, the thought of a recession keeps getting pushed back, and some folks think that a soft landing is becoming more possible. I guess Ethan Hunt is in charge of the Fed now.
A soft landing is where the Fed slows down inflation without messing up the economy. In other words, there is no recession.
I’ll tell you this time next year if that worked out.
Why the change of tune? Overall inflation dropped to 3% year over year, with core inflation dropping to 4.8%.
That made Wall Street happy and is good Good News!
Maybe there is only one more interest rate hike. We’ll find out on July 26 when the Fed tells us what they are thinking.
Consumer sentiment also rose. Things are looking up as inflation continues to trend down.
Time for a Rate Update Courtesy of Bankrate.com
Money market rates for Personal Accts: 5.17% - CFG Community Bank
12-month CD accounts: 5.48% - First Internet Bank of Indiana
Now keep in mind, as long as you keep the balance under $250,000, you are insured by the FDIC. I know nothing about CFG in Maryland or FIB in Indiana.
Bauer Bank Ratings gives them both 4 stars.
But how about the national banks?
Bank of America – 0.03% - Maybe that’s a typo on Bankrate.com, but it’s not a typo here.
Chase – 0.01% - ‘nuff said. If these are wrong, someone needs to call bankrate.com.
Wells Fargo – 1.5%. Better, but…
Why are they so low? Because the perception is that you can put more – or less - than $250,000 in their bank and you’ll never have to worry about it. You are sacrificing your yield for safety.
30-year mortgages
Purchase: 7.18% fixed for 30 years
Refinance: 7.33% fixed for 30 years
The 5-year fixed-rate (variable thereafter) is about 6.22% but has a bunch of fees attached to it. But the lower rate could get you into a home.
And folks, this is why the housing market is still tight: no one is moving and leaving their 3% fixed rate mortgage behind.
When you sell your home that has a 3.25% rate on it and move to a new one and double your rate, that’s going to impact your payment if you qualify at all.
One of the consequences of historically low rates. It’ll work itself out, but it will take a year or two, maybe longer.
It’s All About the Data
Rick White spoke to our Thursday group this week.
He provided a list of 15 items that he does to help companies keep accurate track of their financials.
The keyword is accurate.
He went on to discuss how QuickBooks has made data entry very easy for business owners but doesn’t tell you what categories to put them in.
Garbage in, garbage out.
Many bookkeepers today really don’t know bookkeeping; they know QuickBooks entries, and that’s NOT the same thing.
I mention this because the owner of a family entertainment venue in Yucaipa uses data – attendance, advance ticket sales, onsite ticket sales, food sales etc. – to spot trends.
Very successfully, I might add.
Good information in, good information out.
After 35 years in banking, I can tell you that just because you have a CPA do your taxes, it doesn’t mean you have good financial statements. Your tax returns are NOT your financial statements.
A good CFO advisor like Rick or a CPA that puts together your financials can point out things that need attention and can help you with your cash flow.
It will also make you look good to your bank.
That gives me an idea for next week’s letter.
Get your summer vacation going because it will be over before you know it.
