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April 26, 2023

Consumer Credit Card Debt on the Rise: A Look at the Numbers and Potential Liquidity Issues | Money Moves

In this episode of Millionaire Mindcast, the dynamic duo is back. Matty A and Ryan Breedwell talk about the rise of Consumer Credit Card Debt and potential liquidity issues, as well as this past week's updates on world news, finance, and other market...

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In this episode of Millionaire Mindcast, the dynamic duo is back. Matty A and Ryan Breedwell talk about the rise of Consumer Credit Card Debt and potential liquidity issues, as well as this past week's updates on world news, finance, and other market updates. So tune in, and enjoy! 

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Matty A.: What's going on guys? Welcome into today's episode of Money Moves. As always, your host, Matt, a my co-host, Mr. Breed.

Ryan Breedwell: Cheerio. So

Matty A.: we're covering all things stocks, real estate, investing in personal finance to help you on your March 2 million and beyond. As always, if you are not subscribe to the podcast, be sure to hit that subscribe button. If you enjoy anything that we talk about, any value, any of these conversations, all we ask is that you take two minutes to leave a review on whatever podcasting platform you enjoy listening to this content on.

And of [00:01:00] course, don't forget to check out all the great stuff that we for you guys, spreadsheets, trackers, checklists, all kinds of amazing things that will ultimately. Put more tools on your financial tool belt, and of course, don't forget to take advantage of the free financial x-ray by Mr.

Breed well and his amazing team, which consists of

Ryan Breedwell: what Mr. Breed well. We will take a review of what you're currently doing with your assets. Main thing is we have a third party analyst go through and tell you what the fees are, what the performances look like, what the gaps are in the portfolio, any stock overlay that we have in funds.

We'll do a comparison of what you're currently doing, what I think might be a good idea most of the time. You've heard me say it here before, if I've been on here, it's just fees that people don't know that they're paying and layers and fees, and that normally takes away from the return. We're pretty good at identifying those and trying to fill those on with performance.

And most of the people that come through, we can quantify that there's a, [00:02:00] there's room for improvement and if they choose to do we can implement a plan to improve that. So it's just a free look under the hood and most of the people that ended up going through that ended up taking advantage of making those improvements so they.

Kind of take their investments and turn 'em into a financial plan.

Matty A.: And you guys can take advantage of that for free. All our million of mine cast listeners, Ryan and his team graciously do that for you guys. This is a comprehensive plan as well and extremely valuable. So feel free to text the word x-ray to 8 4 4 4 4 7 15 55 to take advantage of that.

All my credit investors that wanna get on my deals list looking for passive income investment opportunities, you can text the word deals. To 8 4 4 4 4 7 15 55 as well. That being said, Mr. Bradwell all the way across the pond. My brother is all the way down

Ryan Breedwell: here, baby in London Town right now. Where are you at?

I'm in London. Yeah, I'm I can actually say, cause I won't be here tomorrow, so now nobody can come and find me. I'll be at the, I'm [00:03:00] at the Rosewood London right now. I got a A nice sweet year and I wasn't, I didn't even know that's what I did when I got the room. So good on me for that. Super old building.

People are so nice. The cons, I will say the food is a little different than what I'm accustomed. You're not liking your mouse and bangas

Matty A.: on?

Ryan Breedwell: I'm not, I haven't found the Indian food I had.

Matty A.: Wow. I bet you they got some great Indian food out there.

Ryan Breedwell: It was incredible and it was like the, I wanna say it is the best Indian food I've ever had.

Butter. I just had butter chicken, so typical American dish. But it was amazing. It was super, super good. All the people in there were extremely nice and it's cheap. Went out to an Italian restaurant, got some homemade pasta, 10 pound, so $12 for a full, yeah, not a bad, not bad at all.

Takes about six hours to go. 15 miles in a cab. Takes about six minutes to go 15 miles in the tube. That's the trains. So I'm learning. Shout out. We got a listener out here, [00:04:00] Demetrius and Karen. So shout out to them. Hoping you two are doing well. They text me cuz I knew I was coming out here and they live in London.

Nice. So shout out to them. But yeah. Good. Good weather's actually pretty good too. It's like Seattle, so it rains a lot. But it's been 58, 62 cloudy. We had the bo, not Boston, the London Marathon. Is that what it's called? I think happened the other day, so there's runners everywhere. So it's been a cool time.

I'm off to Paris after this. Nice. Then Bordeaux and then Amsterdam.

Matty A.: Beautiful. We are getting finally some nice weather out here and Cali was out poolside with the girls this weekend watching my Sacramento Kings lose to the Warriors the last two games. So the series is evened up there, so hoping that they bring it home and it's gonna be a grind out, but it's fun watching some playoff basketball and.

Speaking of sports as a fellow girl dad, a big win for women's sports. The house has voted in favor of protecting women's sports and preventing biological

Ryan Breedwell: men. [00:05:00] No, Democrats voted for it against, and

Matty A.: unfortunately that is crazy to think that not one. One. Democrat voted to protect women's sports, which is wildlife.

Ryan Breedwell: If you're a woman and you're a Democrat, that would be a head scratcher for me.

Matty A.: The win is the win though. Yes, and I'm I'm stoked to see that we got a great show for you guys today though, in terms of big reports coming out this week and some big earnings coming out this week. We had some,

Ryan Breedwell: Ernie, I can't say what this is, but we had some earnings from some, a beverage maker at pre-market today on Tuesday, and that was very good there.

The Coca-Cola reported great earnings. No, no shock there. I needed to see what their e p s was. Cause again, I'm eight hours ahead and it's hard to look back, but they reported before the bell. I think their stock is up about half a percent right now. Strong dividend payer. There are billions and billions of cans of Coca-Cola are sold and opened and consumed [00:06:00] every week.

That's crazy to think. So just keep, that's a bellwether of the Dow and a long-term holding of our even, I disagreed with him last week. Our friend Warren Buffet. He's held Coca-Cola back since they were a couple dollars a share, even a couple pennies a share and has held it through, and that's one of his long-term holdings.

I'm, we also have that in our dividend as a dividend play for some of our clients. And I love the stock. What does that tell me? I would put soda as a category of a consumer defensive. It's a, it's something that somebody can, it's a sweet treat that somebody can have for a very low cost. So that's something that's really insulated, has wide moat coverage across the board.

So that's not. Not something I'm super surprised of to see Coca-Cola. We have other companies that are reporting and I think the weird thing is right now there was a survey taken for the [00:07:00] large asset manager, so asset managers with over 500 million in assets under management, and they did a barometer of three months ago.

And the forward looking three months and where these asset managers are thinking of putting the monies. And three months ago they were long emerging market stocks, long Chinese stocks, long the US dollar, I would call that a bearish or defensive setup set up now, and this one. Was very surprising to me.

Those same fund managers are now saying they're long, big tech. I wanna put an asterisk there. Big tech names, long US equities, short. Chinese equities underweight US dollar. Underweight emerging markets and developed emer developed international markets. So almost a complete 180. And it's [00:08:00] weird because tech stocks are starting to become somewhat more of a value play versus the hyper-growth.

Speculative stuff that they had been because technology is becoming more and more a part of our daily lives. Here I am with my computer right here, that is something that should be taken into consideration because that tells you what those funds and what those managers who have.

Big swaths of money and decision making power to deploy. That's where they're considering deploying their decisions. And so what's going to begin to happen is you're gonna see a shift or a rotation out of the safer and value focused assets that we've been going into these past, I wanna say 14 to 16 months, because balance sheets have been in focus due to inflation being so high and so sticky.

Depending on who you ask, but we'll call that the truth for now, and people are starting to give an indication that's probably not going to be the case for the long term. [00:09:00] Now there's lots of pundits out, including headline news that are now calling for a recession again. The same people that were calling for a recession 12 months ago and 14 months ago, and 16 months ago and then set a recession never happened.

So take that at face value. And I think the reason why, and I was talking to Matt about this before, is just there's so much conflicting data. I don't think anybody wants to put a foot down on either side of the line and be wrong. And that's one of the advantages of listening to us is. It's okay to be wrong and something we like to educate our listeners on is failing and fail forward.

It's okay to be wrong as long as you understand when you're wrong, you learn from it and use it as a stepping stone to move forward. I do think they're going to raise rates. I do not think they're going to pause on this next meeting. I think after this next meeting though, they are going to pause and I do think there's probably two to three and I said three originally, and I'm sticking to that, but.

Maybe two could, it could be bumped down to two [00:10:00] rate cuts by the end of the year. And something that I keep trying to remind people is, what if I told you that every other time that they cut interest rates, it's because they saw a breaking or brokenness in the economy. And this time they're gonna be cutting interest rates because they're seeing hope or light at the end of the tunnel.

And this being inflation. That's the difference in narrative here, and that's why I don't think there's going to be a recession, and I do think we're gonna end somewhere around the 4,400 zone on the s and p 500 at the end of the year. Right now

Matty A.: we're seeing somewhat of a lack in confidence. F it seems like from a lot of people with that conflicting data of it somewhat being.

A sentiment that has a lot of people, like you said, scratching their head and almost pausing. Only 24% of investors believe now is a good time to invest in stocks, which was noted as the lowest reading in 17 years. Are you attributing that [00:11:00] to a lot of these polarizing. Narratives that are really on different ends of the spectrum and it being something that just feels very volatile still and uncertain for a lot of people.

Therefore they're just sitting on the sidelines and or not being as aggressive in what positions they're taking.

Ryan Breedwell: Yeah, I think that I think that the louder something is, especially in the mainstream media, The more in that, the more that you should understand that's probably not the truth.

Because if that was the case if it was so easy and well known that there was going to be a recession, the moves in the market that are happening just wouldn't. Be happening. My name was clear as day in 2007 to 2008 that there was a recession. The market started to tip off and kept going down and kept going down and kept going down, and then it eventually hit an edge where it went really down really fast.

We're doing the opposite again. The market's up almost double digits year to date. So all those [00:12:00] people that said that, if you would've listened to them since January 1st, you probably wouldn't have made any money. And most of my clients and almost all of my clients have made money this year because we have equity exposure.

Safe equity. I should be careful saying safe equity cuz equities, all investments have risk, but higher quality equity investments. We do have tech exposure and I, my main holding am my in large cap growth stock basket is going to be either Microsoft or. IQ v a holdings or a S M L, and before buying any of those stocks, you should definitely talk to your financial professional or investment advisor before doing that.

But it's a good, those are good areas to have exposure because they've been beaten up so much, but they're almost so integrated into what we do in our day-to-day lives. We can't get away from them. It's almost saying it's almost like shorting oxygen. Yeah. You can pause in between breath, but you always have to go back to it.

And so there's, that's what, that's where [00:13:00] we're looking when we're buying these companies, we're looking for companies that they may be down, but they just can't be out. There's no getting rid of Walmart, there's no getting rid of Microsoft. There's no getting rid of I B M. There's no getting rid of Oracle.

Those types of names are going to go down when the market goes down. But those just, that just presents opportunities for smart investors who are long because yes, in the short term they're long, but what have they done over the past five years? What if we back up five years ago and people that bought them five years ago and all the money, if they've made, what if they've been holding cash to buy more of that?

Just, it's starting to come to the point where there's a lot less. Narrative that people haven't heard and they're starting to get a little tired of hearing the same thing. Oh, okay, now our recession again. What happened to the last time this said there was a recession? Okay, what happened?

I thought inflation was gonna be under control once we got, into the year. What about 2024? What about 2025? Things like that have to [00:14:00] be serious conversations when you talk about investing. Cuz if you're investing for T today and you're gonna check it tomorrow, You are not in the right stand of mind to be investing in real estate.

You're not in the right stand of mind to be investing in the stock market or really anything. You're stuck in the casino and you're gonna keep jamming your money into stuff trying to get rich quick and it's never gonna happen.

Matty A.: Yeah, and I think, with a lot of, some of the data that's coming out right now, people are somewhat, like you said, getting.

Somewhat sucked into this short term fear-mongering mentality, and they're losing sight of the bigger picture. You've got Walt Disney this week beginning a second wave of layoffs, as it works towards eliminating another 7,000 jobs to help save five and a half billion in costs. There've been looks like a

Ryan Breedwell: little over a hundred, which is gonna be normal when they have a CEO switch up.

Bob Iger back. And he's in charge. And Bob Iger is not fuck around. He is there to make money and he's [00:15:00] always made money when he is been

Matty A.: ceo. I personally love Bob Iger.

Ryan Breedwell: I like him too. He's not soft, badass CEOs man. Yep. Yeah he's getting the company back on the direction that they need to be.

Same with what Bud Lights Anheuser Busch InBev, leave of absence to their head of marketing. That was the way that they're supposed to do. You have to, when things get derailed and start going in an area that starts costing the company money, you have to make hard decisions sometimes.

And 100% the fact there were, the fact that Disney, for their example was hiring so much post pandemic way, overhired. Way overhired, they were running the parks prior to the pandemic at that, at those staff levels, they don't need triple the staff to do the same thing. We see that with Twitter. Why is Twitter now planning to be profitable for the first time?

Almost in their history, they cut the fat. Anybody, all my friends. In Texas, what happens when you don't trim the Bris Brisket correctly, either dries up or you don't cook, [00:16:00] so you gotta, you have to trim the fat properly. And we've been seeing a lot of companies way hyper-focused on the liberal woke agenda.

Too obsessed with that kind of stuff. Trying to trying to pander to people who don't even spend money on their products. And not focusing on the black and white day-to-day business metrics. That's why Bob Iger is good for Disney. He does not care about talking to your child about what's acceptable for a two father adult household, that's not their business to do.

Their job is to have you get in their theme parks, spend money, and when you spend money them to have high margins on those. On the money that you're spending so they can retain that and do it over and over and over again and give you a good experience while you're doing it. That's the job of all companies.

So Bob Iger, being back at the helm of Disney is great.

Matty A.: Wanna get your take on consumer credit card debt growing and ultimately how we're seeing some potential liquidity issues or not [00:17:00] for certain individuals. So I'm gonna share a little bit of data with you on that. And ultimately, this narrative continuing around banking and what that has potentially played a role in gold bean bought up.

So we'll talk a little bit about that. To circle back on the consumer credit card debt issues that have expanded recently. A recent go banking rate survey found that 30% of Americans have between 1,005 thousand in credit card debt. 15% have 5,000 or more. 6,000 have 10 thou, or 6% have 10,000 or more.

And although 6% may seem like a small amount, that means that based on the survey results, 14 million Americans have over $10,000 and credit card debt, and over 39% of Americans believe. That they will be able to pay their credit card debt off within the next two [00:18:00] years. Another study came out. Nearly half of Americans need credit cards to cover essential living expenses.

49% of Americans depend on credit cards to cover those living expenses with Gen Zers making up 61% of that data set. You got 53% of millennials using credit cards for living expenses, and 26% of boomers using credit card expenses with 53% of Americans saying they don't have an emergency savings per C M B C.

If something were to go wrong, Could that be a domino, this consumer credit bubble? Could that, if that pops, could that be something that creates a much larger ripple effect in the stock market, in the real estate market? Is there a concern there, or is this data misleading?

Ryan Breedwell: I think it's, I think it's a little bit of both.

I think it is a little misleading on some fronts. One [00:19:00] of them being people that have credit card debt. I think anybody that has a credit card has debt on it because that day that their credit card gets checked, it's probably not at zero. Okay. So let's go ahead and get it in front of that. If you go look at my credit card right now, I probably got 20 or $30,000 between all three of them.

I'm not holding that debt. The majority of it's on my business card and I pay that debt off. But if they were to survey me right now, it would say that I have $30,000 in credit card debt, which would be in, in an accurate statement in the moment, and an inaccurate statement long term. So I think a better idea is for who?

How long are people holding debt for? Over 90 days. So 90 days out. How much credit card debt is on average on, in revolving around it's probably gonna be a lot smaller number. Second cost of goods and services go up. So credit card debt is going to go up forever over time because people will have to spend more money to get the same thing.

So make sure we all wrap our brain around that. And second, debt is not a bad thing when it is serviced. [00:20:00] So that's another thing. You have to, I'm not Robert Kiyosaki. I'm not saying go into debt because debt is how you make money. That's also not. True. Again, actually that's one of those things that is true cuz yeah you're going into debt for the money, but that doesn't mean you made money.

But anyway you just need to make sure that you're servicing the debt properly. And so for people like me, if I run up 30, 40, $50,000 a month and I pay it off at the end of every month, did I have debt for 30 days? Yes, I did, but I also was holding my money in my bank account. My bank now pays me. Wow.

Shocking. They're starting to pay me yield on my cash, so I'm earning some sort of yield on that. Is it less than inflation? Sure. So on my negative on my purchasing power. Sure. But that money is for demand Now reasons? I don't think it's that big of a deal. Now flipping it on it's head, if there's a crack in that, is that gonna be a problem for the economy?

Oh yeah. In the short term, that's gonna scare some people. It's gonna cause some fear selling. But then when people pull back the curtain and [00:21:00] realize who it's affecting and they realize it's Gen Z who are already getting their parents' money, I really don't think that's gonna scare too many people.

I don't see a very, right now for the trajectory of Gen Z, I don't see a super bright. Future. The, some of the best futures that Gen Zers are gonna have is inheriting money. That's honestly true. True. That's honest. Cuz they're really not doing much as far as an equity position. Most debt lowest I believe working percentage.

So the, so Gen Zers, if you put the working age Gen Zers to working age millennials. Yes. Are we deeper into our cycle? Yeah. But we were also getting jobs at an earlier age, holding jobs for a longer tenure and not job hopping. Yeah, gen's ears literally will have a job for four months and jump to another job because they didn't make enough friends.

It's just, yeah.

Matty A.: To add data to that. The sheriff people under 35 who reported being engaged and [00:22:00] enjoying their work and jobs have dropped from 37% to 33, which is the lowest level since 2011. 11. And there's something called the misery index. And the misery index is at a value of 8.5 and I'll save the time for giving context and relativity to what that scale is, but this is down from 9.6 in February, but.

It's well below the median of 9.6 over the last 50 years, but still the highest in a 12 month timeframe. So it's interesting to see how some of these younger generations are not as engaged, not as inclined to work, are very interested in many different things that are somewhat outside of the scope of how our infrastructure as a, an economy in a world is somewhat set up.

And obviously they could be pioneering and creating, the argument for, a new world. But that being said[00:23:00] there are some issues right, that we're seeing in the short term, start to, to boil up a little bit when it comes to how they're engaging with the existing economy and way

Ryan Breedwell: of the world.

Yeah. The generation of shortsightedness and emotional decisions, that's what that is. They are, talk about the biggest crybaby, whiny. Gen Z. They're, I'm walking in front of London Parliament today and they're just, there's a bunch of protestors out there. It's all super young kids signing petitions.

What is the one they have, burn shell? We don't need stop oil production tomorrow. It's not possible. It's not possible. It's just it's rooted

Matty A.: in complete of really understanding the reality of the world. That being said, you've got, still some narrative around there potentially being this stress and volatility on the banking and financial.

Institutions Credit Suis saw 68 [00:24:00] billion in first quarter outflows. As it crumbled. Bank reserves could potentially fall between 900 billion to two and a half trillion by years. In this was a note by Fitch ratings. You hear America's banks are missing hundreds of billions of dollars per the Economist.

And over the past year in commercial banks those in commercial banks have sunk in by half a trillion dollars a drop nearly. 3%, which makes the financial system a little bit more fragile since banks, must shrink a little bit to repay some of their deposits, and now we're starting to see an all-time high of gold and being bought up.

Is that because people are that concerned about our financial institutions or is there potentially another. Catalyst for gold bean bought up or is it a mixture of both? What

Ryan Breedwell: are your thoughts? I think it's a mixture of both. I think people are going to the old atta [00:25:00] of gold being a a hedge or a good place to go, a safe haven asset class.

And it's a boom bust commodity class, meaning it's good to, to swing trade it. I also think that with the advent of space travel and technology moving forward, and the fact that we're going T SM is trying to build a factory in the United States, and Intel is trying to build a FA chip factory in the United States and Nvidia, an A M D and A S M L.

These are companies that need. Large amounts of that material and by holding onto portions of that material, because it does have a finite amount, we don't just make gold out of thin air. We'll eventually probably mine it from space. But that's the, right now what we got on Earth is what we got on Earth.

It's, there's a finite amount of it. So if they can hold onto that and it, its demand continues to go up, there's a potential for that being beneficial for the banks. The other thing is it's an asset class that [00:26:00] does not have a maturity date. So they're getting less exposure on their balance sheets to fixed income assets and they're that, that need to be held to maturity that has h t m on there, versus holding gold and seeing if they can play with that for a little bit.

Maybe they're going to collateralize against their gold deposits. Who knows? But I do think it's a little bit of both. Do I think that people should rush in and buy gold? Not really, because gold is an asset that does not pay a yield. And so you really have to buy it at a low and ride it up and sell it at a good time and wait till it goes right down.

Buy it again, ride it up, sell it again. It's not normally something that you hold for a super long period of time. And I say that with a grain of salt because we do have a one to 2% position in some of our portfolios of gold, but the idea is to dollar cost average that position and then go heavy into it out of our bond positions.

When the economy does stuff like this, which we have. So it's not something that I would say, Hey, you need 30 or 40 or [00:27:00] 50% of your money in gold. Keep putting your money there. It's prudent to have a small portion potentially in gold or physical gold at your home. But not necessarily the, Hey, I need it in my portfolio because the world's gonna come to an end and because I have gold in my portfolio, I'm safe.

What if the world comes to an end? Do you think gold on a piece of paper is going to save you? It's just also make sure you run that through the washer a couple times and understand what comes out in the end. That's still just on a piece of paper. It's just one of those, a lot of people that


Matty A.: into gold are ultimately some, I don't wanna say somewhat of doomsdayers right?

But they're taking a lot of,

Ryan Breedwell: a lot of people, a lot of people that do it think they're doing something that they're not. Yeah, they think they actually are gonna hold, oh yeah, I'm buying gold. You are buying deposit tree shares that show you have ownership in the gold that our company owns, and you're gonna pay us a percentage to have ownership interest in that gold.

But no, you don't [00:28:00] physically own the gold at your house. And then you flipped out on said, what if you do physically own the gold? What are you gonna do with it? Where? Where are you gonna turn your gold into currency? Are you gonna chip off a piece of gold and go. Buy some beans from the guy down the street in the middle of the apocalypse.

Again, if you just unpack it a little bit more, you sound a little crazy when you buy lots of gold, because what are you gonna do with it?

Matty A.: Most of the people I know that do have pretty heavy positions in gold have zero intention of it, generating them a return, and it's more so as a store of value in utilities, insurance, or

Ryan Breedwell: a workforce.

Worst case scenario, insurance is way better. There's absolutely zero risk you can leverage against it, earn interest on it while you leverage against it, and historically has a higher average rate of return. So yeah, again, Nothing wrong with gold. Gold is beautiful and shiny has intrinsic value. I don't know how I'm not super gungho on it.

I'm an [00:29:00] equities focused investor, and then real estate, that's what I like. And real estate has been on a tear this year.

Matty A.: Yeah, and we'll get to that here in, in a second. We've got some very interesting new policy coming out from the Biden administration, which has got a lot of people scratching their heads.

We'll talk about that. And of course, some market updates before we do, speaking of gold and being a store of value for worst case scenario, doomsday you've obviously got. Very similar narratives and similarities to crypto ftx has recovered 7.8 billion in assets and is considering relaunching in 2023.

How is that even possible and how does this impact the crypto world?

Ryan Breedwell: I, to me, the way that I would view it is I don't think people are gonna seriously consider FTX anymore, especially when you have, I don't know how it could after. Yeah. You have regulated banks that are going, through issues.

We have SVB Signature [00:30:00] Bank and those are. Banks that were just over leverage, and if you think that they're gonna have more leverage to deploy than FTX would, you are absolutely nuts. I'm of the opinion that's not going to be something that's going to be long in the tooth. I don't think that FTX is gonna be around as a serious player, could totally be wrong, but I would just, I don't know.

You have things like Solana that already have a ton of VC money put into them. So I don't know why people would pivot back over to a failed project. There's probably gonna be people pushing it because the price is, down so far off, its all time on. I think last time I saw it, it was trading like a dollar and some change.

Almost $2 maybe. But it's just not something that people that are in the crypto community, I think would take seriously. I really think that FTX thing pissed off that community and I don't think that they would support or get behind it again. Yeah. Yep. I agree. But let's just do crazy things all the time.


Matty A.: they, I think they [00:31:00] definitely lost all the, credibility behind the brand, so they're definitely gonna have to, in my opinion, relaunch something new to, to build up that trust. But who knows, I've, we've seen crazier things than crypto. We have home buyers with good credit scores will soon be facing higher mortgage fees as the Biden administration

Ryan Breedwell: got, I got some clarification on this.

You did. Okay. Let me get you, yeah, it's actually not a 1% fee, so

Matty A.: let's l let me share a little bit more so people can understand the context of what we're talking about here. Biden administration seeks to close the racial home ownership gap and get more first time and low income buyers through the door.

A new federal. Rule could raise the monthly mortgage payments of buyers with good credit scores by over $60 a month. So again, we're not talking insane amounts, but that being said, it will essentially give more favorable terms to risky borrowers because their fees will be reduced [00:32:00] and

Ryan Breedwell: both of them are a fee reduction.

Okay? Just lower credit gets a higher fee reduction,

Matty A.: which doesn't make, so both are getting it.

Ryan Breedwell: Yes, I actually talked to our real estate person and they clarified that for me, that if you actually, headline news is gonna be a little hard to find that, but if you actually look at the bill language, it's a 1% reduction in fee for higher credit and a 1.75, which still doesn't make any sense. This doesn't make it any better. It's just a clarification on what is being said. Cuz I was one of the people that thought that, that, cuz that's what the headline news is saying. And again, this is why it's good to make sure you peel into stuff.

Cuz I definitely did. Cause I'm like thinking, I'm like how is that even going to get past? Nobody would pass. Yeah. It makes no

Matty A.: sense how you reward bad behavior and you're still rewarding behavior. [00:33:00] Yeah.

Ryan Breedwell: You're still rewarding. You still are rewarding it. Exactly. Almost to the tune of it's 175% more of a fee reduction if you have lower credit.

I completely understand the idea behind it. Hey, let's get people that have less of an opportunity a break. But if you're going to do that, you should then say, and the people that are doing a good job, let's not just give them the smaller, let's give them an even bigger deduction because now they're, cuz they're doing their part.

Let's pull the risk down to the lower end and not pool the risk to the higher end risk. Pooling insurance companies love it. But you're not supposed to pull your risk in riskier areas and then say you're reducing risk. You're supposed to pull your risk. If you have an unhealthy person, you put them in a risk pool with a lot of healthy people because then it negates the [00:34:00] risk.

I don't really understand the idea of, let's take people that have low, that have higher risk of defaulting. That's what their credit score indicates, and let's give them a bigger discount and let's put them all together. Yeah, that doesn't make any

Matty A.: sense. The effort to get more low income Americans and Americans of color into home ownership is, essentially with this program being subsidized by borrowers who have better credit scores and can contribute more to their down payment

Ryan Breedwell: and does, they could afford to give the larger buyers a 75 basis point discount if they can afford to give the people that aren't.

They're just not. So and so that is technically a, in a very roundabout way, there is a higher fee, but they're doing it by implementing a lower discount. Yeah,

Matty A.: I think it will potentially increase home ownership among the targeted group, but I think it could also, if you really extrapolate it out, [00:35:00] decrease home ownership among the middle class and other individuals that are doing all the right things.

Ryan Breedwell: Also going to muddy mortgage backed security paper to lower grades from investment grade to high yield. You Very true. You can't shine shit. And when you put in high, this is the whole issue that happened in 2008. It was T tranching of these mortgage backed securities and then coding them and AAA rated and AA and a rated paper.

And then below it was a bunch of B and C and non-rated crap. And then they were like we'll wrap it with a synthetic cdo. So this one's linked to this one. And so as long as this one doesn't fail, this one's gonna be okay. That's not how it works. Yeah. And we know that.

Matty A.: Yeah. We know that, how that, that turned out.

And I just think the way to expand access to housing is not to reward bad behavior. It's not to reward bad credit, it's it's getting other key. Pieces of the

Ryan Breedwell: puzzle. How about with people about real estate and credit cards and [00:36:00] stop teaching people about supply side economics in high school and let's that would Yeah, I think it's huge,

Matty A.: huge thing.

Yeah. If you wanna talk macro, it's bringing down inflation. It's, expanding affordability. It's reducing property taxes and leaving more money in people's pockets. It's cutting energy costs, right? It's investing, getting rid

Ryan Breedwell: of income tax, which is. Absolutely supposed but that be around after the,

Matty A.: it's just another, in my opinion, perfect example of what the Biden administration has become very well known for, which is just pandering.

Pandering without real merit behind what they're doing. And ultimately it, not, ultimately it not serving and accomplishing the task of what it is, quote unquote, designed to

Ryan Breedwell: do.

Matty A.: Yeah. Percent. But it's a headline. We're checking boxes, therefore look at us. And as you said, when you really dig in, peel back the layers to what's going on.

When you really get to the bottom of a lot of the policy here, it's [00:37:00] bad policy. It is That is something that will be interesting cuz that is supposed to be going into effect on May 1st. Has that been voted on or is that for sure going into effect? I didn't see

Ryan Breedwell: I have thought, from what I understand, that goes into effect on May 1st.

May 1st, so that'll


Matty A.: interesting to see how that all plays out. Existing US home sales fell 2.4% last month from February to a seasonally adjusted rate of 4.4 million. The National Association realtor said Thursday, sales slumped 22% compared to. March of last year and this last week we just saw, according to Altos reports, that active single family inventory was up 2.1% week over week, which is the highest jump we've seen all year.

Maybe inventory has finally bottomed out seasonally. That will be something that we're definitely gonna be paying attention to. Cause that's the biggest jump that we've seen. So is it anything that's alarming? No. Delta Terra's [00:38:00] Capital Dave Burt came out this week on C n BBC saying we're gonna see a 2008 style correction as 20% of the market is mispriced.

And then you got Reuters and, many other big, organization saying the US housing market isn't gonna see anything close to 2008 size crash. I am definitely in that camp when we're playing simple supply and demand economics. I just don't see how that is possible unless there's some type of black swan event and some systemic risk baked into that, which we are not aware of at this stage of the game, which at least right now we don't see any of that.

Are you seeing any of that on the, Kind of financial side and bonds in, in your world?

Ryan Breedwell: No. None. No. Really what we're seeing is just a lot of, there's a lot of volatility still in the market, but it's hard to say that too because we also have, the VX is just trading at really low levels.

VX is at 19 and a half as I'm talking right now, and I, that's very low. The [00:39:00] volatility index for where it should be. If we do have the amount of volatility that we have. So I just think people don't know where to put their money right now. And then that Yeah. I think the e the ever ending charge where to Yeah.

Where to put your money. So it's perfect. Is also a fool's errand. You just need to buy Yeah. Quality and consistently buy quality.

Matty A.: We got some reports coming out this week. Kay Schiller is coming out tomorrow, and that is projected to be flat. What do we Yeah we're projecting to see that there

Ryan Breedwell: zero, 0%.

It was up two and a half percent, I think last month. So this will be the first j s Schiller that is flat and that is good for the rate. Pause, soft landing, no landing narrative. The one that I am, the camp that I'm currently in, it's not necessarily great for your side of the street for real estate data, but it also isn't terrible.

It's almost the same as, hey, inventory's up 2.1% and [00:40:00] we all know inventory will eventually get back to where it's supposed to be. It's just going to happen. It's just gonna happen in pieces.

Matty A.: Any other key reports coming out this week that we're paying attention to?

Ryan Breedwell: Consumer confidence on Friday the Michigan final for April.

That's probably the one I'm most concerned about and are concerned, interested in. Expected to be flat. We have consumer confidence as a general report tomorrow, expected to be slightly negative, but essentially flat between friends. If we get a beat on that, plus a really good earnings week we could see a nice movement in the s and p for the end of the week and have a good trading week.

Again, week over week is not something that we track, but just to give you guys an idea of where my head's at for what we're gonna see in the short term. If we get A and we get B, we should have a good C. Yep.

Matty A.: We will keep you guys updated on the data. We will be covering all of those reports, news and updates in next week's episode.

So be sure to subscribe. If you enjoy the show, leave us a review. Don't forget to take advantage of your free [00:41:00] financial x-ray by. Texting the word x-ray to 8 4 4 4 4 7 15 55. If you wanna get on my accredited investor list, text the word deals to that same phone number and be sure to head over to millionaire mind for all the links, resources, and available products that we got available for all of our Millionaire Mind Cast family.

With that being said, we appreciate you guys tuning in today. Until next episode, keep investing in yourself and your wealth on your March two a million mbm.

Ryan Breedwell: Cheers. Cheers.

All right.