Mortgage Rates Explode… Housing Affordability Threshold?

FED Loses $500 billion in Q1

Netflix down 70% from peak, Amazon 30% down

Japanese Yen loses 80% relative to gold in 22 years

The McAlvany Weekly Commentary

with David McAlvany and Kevin Orrick

Mortgage Rates Explode… Housing Affordability Threshold?

April 3, 2022

“The speed and ferocity of reducing a mammoth size presence in the fixed income markets that is shrinking the balance sheet, that’s what they probably tinker with. While the Fed need not worry for its own solvency, you and I have to. Others have to worry about their solvency. We get marked to market every day, and we lack the flexibility to print ad infinitum. They’ve got that going for them too. We plebes operate with a different set of rules. And so, with rising rates and the “stagging flation,” I think these are things that we have to pay attention to.” — David McAlvany

Kevin: Welcome to the McAlvany weekly commentary. I’m Kevin Orrick, along with David McAlvany. 

A lot of our stories Dave, come from your travels. I love sitting— We were sitting at Ken & Sue’s restaurant last night, again. For the first time in two years, we actually got to be live with each other instead of doing the FaceTime, because they opened up for us on Monday nights. And we looked back and we said, “Gosh, we’ve done this for over a decade.” Sat, had a Talisker, just talked about life, our family, the markets, the things we’re going to talk about. It was so nice to do that. And also talk about, again, your travels.

David: Well pretty busy between the Energy Conference in Florida to meeting with a group of guys, business leaders from around the country for a couple of days of fly fishing in Montana.

Kevin: I got the pictures. I got the pictures. Well, I’ll tell you what, I’m glad though. I’m glad that the accident that you guys were caught in, one, didn’t turn out to be fatal. It certainly could have been. It sounds like it was a terrible accident between a little RAV4 and a semi truck. And you said that the semi truck looked like it was worse for the wear.

David: Exactly. Coming back from Montana, we went straight to Santa Fe, New Mexico, and on our return trip, we were stuck in traffic and sat there for three hours. And a RAV4 and a semi, you’d think, this is not going to be a good story. No fatalities, but a big mess in a pinched canyon.

Kevin: But you adapted quickly.

David: I looked at Mary Catherine. I was like, “We could be here forever. Why don’t I go for a run?” So I ran up the road. I ran past the mess, they let me go by. And I was like, “You pick me up. If traffic breaks free, you can pick me up. I’m going to keep on running.” Kind of a Forrest Gump moment.

Kevin: Yeah. Yeah. Just, keep running. You said that your wife also brought a book to read a little of, and she ended up reading the whole book while you waited.

David: Oh yeah. Oh yeah.

Kevin: Okay. So as we look at this, I think about your travels, Dave, because you have a tendency— That’s just part of the resiliency that your family tries to build in. You wrote the book on legacy. You could also add resiliency to that. And that is, take the situation, make the most of it. 

I think about Christopher Blattman last week. You met him on one of your trips. Literally it wasn’t one of those things where you had figured out, “Oh, I want to talk to somebody about why we go to war.” I think you met him and his wife in a hot tub. You came back and you said, “I have a guest for the Commentary.” And it really, it turned out to be a very timely, a providential type of interview. I really enjoyed it.

David: Yeah. Well he said it was probably the most interesting conversation he’s ever had in a hot tub. Well, I thought, it just pays to be engaged and ask questions,