3/21/24 marked the 625th consecutive day of the inversion of the 2-10 yield curve. This means the yield on the 2-year Treasury has consistently exceeded the yield on the 10-year Treasury since early July 2022, breaking the record of 624 days in 1978. Yield curve inversions occur when the Fed battles inflation, and are closely followed since, dating back to 1970, every inversion has preceded a recession.

The Friday File: Between 2000-2023, the average number of UFO sightings per 100,000 persons in the US was 34.3. Lincoln County, NV, where fabled Area 51 is located, is tops at 820.9. Next is Arthur County, NE at 618.6, then Alpine County, CA at 594.1. Sightings are noticeably elevated in the 13 western states and the three northern New England states. The truth, as they say, is out there.

While retailers closed 5,000 net stores in 2019, 6,000 net stores during pandemic-plagued 2020, and several hundred in 2021, since then the improvement has been amazing. In 2022, 1,500 net stores opened, in 2023 almost 500 opened, and YTD, 750 have opened. Combine that with almost no new retail construction allowing oversupply to dissipate, and booming suburban demand and the vacancy rate is below 4.8%, a record low.

Despite many households locking in low mortgage rates, household interest expenses are skyrocketing. In 00Q4, the peak of the dotcom boom, interest expenses/GDP hit an all-time high of 2.2%. In 07Q2, shortly before the onset of the Housing Bust, interest expenses/GDP cyclically peaked at 2.04%. As recently as 22Q1 they were 1.1%, their lowest since 59Q4. However, in 23Q4, interest expenses/GDP were a shocking 2.02% and rising rapidly! Deeply concerning.

The cost to a mortgage lender to complete a residential loan in 23Q4 was $12,485, the second highest level in the history of the series, and up from $11,441 in 23Q3. Unfortunately, revenue per loan barely rose. As a result, each mortgage resulted in a loss of 73bps, up from 34bps in 23Q3. This large loss/loan suggests that despite layoffs and cuts, more cost cutting is ahead.

While the long-term impact of NAR’s agreement to end litigation brought on behalf of sellers, related to broker commissions, may take a while to become apparent, the immediate results were clear. On Friday, the day the agreement was announced, the stock price for RE/MAX declined 3.1%, for Redfin 4.9%, for Zillow 13%, for Compass 14.3%, and for Douglas Elliman 16.2%, suggesting that overall commissions and brokerage profits will be lessened.

The Friday File: A study of 584,734 dogs has found small, long-nosed, female dogs have the longest average lifespan at 13.3 years. The median canine lifespan is 12.5 years. Dogs with flat faces live an average of 11.2 years. Interestingly, they also find purebreds live 12.7 years while crossbreeds live 12. The longest-lived, the Lancashire heeler at 15.4 years, the shortest life expectancy, the Caucasian shepherd which averages 5.4.

As of 3/1/24, the IRS issued 36.2 million refunds versus 42 million refunds Y-o-Y. However, tax filing season began on 1/23/23 compared to 1/29/24. That said, so far, the IRS has processed 53.2 million returns vs. 54.3 million last year. The IRS has issued 36.2 million refunds vs. 42 million Y-o-Y with the average refund worth $3,128 vs. $3,028 Y-o-Y. All in all, no meaningful differences versus 2023.

The new White House pilot program designed to save homeowners money by waiving the requirement for title insurance on some refinancings by some lenders is, while well intended, ill advised. It’s because at the margin this increases housing demand, which will further raise prices, which are already high as we are short millions of units. Instead, boost the supply side by promoting more residential construction.

Since 1945, when equities retreat 5%-9.9%, on average it takes 1.5 months for markets to recover and recoup all losses. When markets experience a correction, a decline of 10%-19.9%, it takes on average 4 months to recover, and when they experience a bear market, a decline of 20%-40%, it takes about 13 months to recover. However, when markets fall more than 40% it takes a whopping 58 months to recover.