Highest inflation report in the last three years. Bad news for those of us hoping for rate cuts. Further bad news is that the markets have already baked in a September rate cut. Markets are retreating this morning.
The Fed is going to have a real dilemma in their September meeting. Cut rates and risk the return of sticky inflation OR leave rates alone while job creation flops and a recession looms. Oh boy.
The higher rates of the last three years have crushed my mortgage origination business but on the flip side higher rates have boosted my real estate portfolio returns. When rates are low I originate and sell my loans for cash, when rates jump I originate and portfolio the loans. The portfolio is running at 18% + cash on cash returns at the moment. But the risk of holding a portfolio during an economic downturn is a position I would rather not find myself in. I will take higher inflation and the surge in cash rather than a job loss recession.
Whatcha gonna do Jerome?
Why are you always trying to impress us with how wealthy you are?