A Mortgage Update

Interest rates have been rising. Does that make it more difficult to buy a home or easier? Hi, I'm Rob West.

The Federal Reserve's ongoing effort to curb inflation by raising interest rates is having a ripple effect throughout the economy, especially in the housing market. I'll talk about that with Dale Vermilion today, and then it's on to your calls at 800-525-7000. That's 800-525-7000. This is MoneyWise Live, biblical wisdom for your financial decisions. Well, Dale Vermilion is our guest today.

He's the author of The Mortgage Maze, the simple truth about financing your home, and he's always got his finger on the pulse of the mortgage and housing markets, which has been on the move as of late. Dale, welcome back. Rob, always good to be with you.

Thanks so much. Absolutely. Dale, interest rates rose quite a bit since the last time you've been on the program just a few months ago.

I'd love for you to begin by just sharing where things stand right now. Yeah. Well, as of September 8th, we hit a new high with interest rates on a 30-year fix at 5.89 and 15-year fix to 5.18. Now, that's over double what they were just a year ago this time, and we have literally seen in a matter of about seven months this year about a 300 basis point increase. So it's been a big jump. It's been a pretty volatile market, and the good news is I think we're going to start to see some stabilization in that in the near future.

Yeah, really interesting. I mean, hard to believe that rates are where they are today given, well, we were less than, as you said, they've climbed over 100% since the beginning of the year. And I just read today, Dale, that for a home purchase of $400,000, that puts the average mortgage payment up $700 more than it was when rates were back below three, and that's a meaningful amount for a family, isn't it?

It really is. I mean, that is a big impact to the average family, and therefore it's really important that as people view buying a home, they really do their budgets and really try to be as conservative as they possibly can. Yeah, no doubt about that. All right, I guess the next obvious question is where do you think rates are headed then over the balance of this year? You know, I've talked to a lot of other experts about this that do this every day like I do, and we all kind of have come to agreement. We really believe that rates are going to stabilize in the fourth quarter of this year. And the reason we believe that, even though the Fed is raising rates on their September 20th next opportunity, as you probably read, you know, when the Fed raises rates, that is not a direct correlation to mortgage rates. It does affect other interest rates on other loan products and obviously on savings and those kinds of things, but in the mortgage world, it's really based on a couple of factors. It's based on what the bond market's doing. It's based on inflation. When inflation goes down, typically rates go down, and it's also based on recession. And what we've seen over the last 50 years is that when we have recessions and when inflation drops, we see rates go down. So even though the Fed is going up, we anticipate rates to be somewhere in the, you know, five to six range maximum, hoping they'll get down by the end of the year to the high fours. All right. Yeah, I guess the challenge here we have, Dale, is we still have low inventory and with prices as sky high as they are, for somebody who's trying to enter the housing market, now with these higher interest rates, that's kind of hitting them from all sides, isn't it?

Well, it is. You know, the good news in today's market, which is kind of surprising, is that although rates are up significantly on the other side of that equation, we're just starting to see now a drop in listing prices that's somewhat considerable. In fact, as we've talked about, you know, we saw property values increase 25% from June of last year to June of this year, the highest single increase that we know of in history. But now, finally in July, Black Knight announced that they saw about a 1% drop in listing prices and they're thinking that we'll start to see sale prices go down, we'll start to see costs for housing be less. We're seeing less people in the market right now because a lot got up because of the rates, so there's less competition and properties are actually on the market a little bit longer than they used to be.

Yeah, perhaps a bit of a silver lining. We'll talk about the implications of that, whether you're on the buyer or the seller side of the equation. But as Dale said, prices considerably higher, perhaps cooling. I just saw today, on average, home prices now 43% higher than they were at the start of the pandemic, according to one study.

That is significant. I'll tell you, we will unpack all of this and talk about how this affects you as you seek a mortgage going out to purchase a home. All that plus your questions for Dale Vermillion. We've got some lines open for mortgage and housing related questions.

800-525-7000. We'll be right back on MoneyWise Live. Delighted to have you with us today on MoneyWise Live. I'm Rob West, your host.

With me during this segment of the broadcast, Dale Vermillion. He's the author of Navigating the Mortgage Maze, the simple truth about financing your home. He's here today to weigh in on the recent rise in the mortgage market. The 30-year fixed mortgage, which is by far the most popular product today, accounting for more than 90% of mortgage applications, started the year right around 3%. It's now hovering at just above 6%.

An incredible and dramatic rise that has had a pretty huge impact. Dale, just before the break, you were talking about a slight dip in housing prices. What are the folks you talked to expecting for home prices moving forward?

Yeah, great question, Rob. So, you know, home prices and home values are always based on our lagging indicator to listing prices. And what we've seen in the last 60 days specifically is a pretty substantial drop in a lot of listing prices around the nation. Because frankly, they were going up so fast, you're pulling about the 43% increase since the pandemic is very true.

It was just getting out of control and buyers finally said, that's it, we're done. Well, because of that, now what we're seeing is a significant drop or it's turned finally for the first time in over 10 years from a seller's market to now it's a buyer's market. And we're anticipating that home values in 2024 and part of the fourth quarter of 2022 and then 2023 are going to be less than what they are right now. Now, it's not a national bubble like 2008.

It's more of a regionalized type of thing. But values will be going down nationwide, I believe, to some extent, even if they just stabilize in the really good markets. And we will see some drops in some of the other markets out there.

Yeah, no question about it. So Dale, if someone is out there looking to buy a home, there's not a reason necessarily to wait six months or a year because they think they're going to be able to buy it much lower. If anything, we're probably talking about a modest decline. So it's really about finding the right home that fits in your budget more so than trying to wait for some sort of significant drop, correct? Absolutely, because the other problem you've got, you mentioned a moment ago, is inventory. We've got a massive population of Gen Y and Gen Z that constitutes a lot of need for home ownership and not near the inventory to cover it right now. Therefore, you could wait and literally get in a position where there's just nothing really available in your marketplace. So I would say to somebody today asking, yep, today's probably a good time. There's less people in the market, there's more chances to get in a contract, the listing prices are down, you're in a better buying position, you can negotiate better, take all those advantages, work those to your benefit. And look, if you end up buying now and then a year from now rates drop 2%, which could very easily happen, you can refinance at that time and then maintain that home for the rest of your life.

Yeah, that's great advice. During these first few segments of the broadcast, before we turn our attention to anything financial, we're taking your calls and questions on mortgage or housing-related questions. Are you looking to buy or sell a home? Are you wondering about a mortgage? Maybe your home equity line of credit, which we discourage, but maybe you've got one of those and you've seen that interest rate rising. You're wondering what to do about it. All of those questions on the table in these first few segments for Dale Vermillion, our guest. We've got some lines open, 800-525-7000.

Give us a call. Dale, as we think about housing prices, when folks were going in to buy at the peak of this market, when rates were still low, inventories were low, we had these bidding wars going on. In many cases, they were waiving typical conditions on these offers, like appraisals and things like that. Has some of that gone away? Has that changed the buying process? It absolutely has.

I'm so glad you asked that question because one of the things I want the listeners to know is that, look, there are a couple of things that happened during that market that were very mainstream. One was waiver of the appraisal contingency. What that literally means is that you're saying that, look, if that property appraises for less than what you're buying it for, you're on the hook for the difference.

You have to pay cash for that difference or you lose your earnest money. That should never happen. Those kinds of waivers are not necessary in this marketplace today. Really never were, but you don't have to do that today. And don't do that today.

That's not a good stewardship of your money. Same thing is with inspections. You always want an inspection on a property.

I could tell you horror story upon horror story over my career of people who didn't get inspections and had serious issues. And it's also a great time for seller concessions. Those are back, too. So now, as a buyer, you can ask for seller concessions as part of your offer. That means the seller literally pays your closing costs and that will save you money. And also VA and FHA loans are back in play again. So if you're a veteran, you can probably get into a house now.

Yeah. One of the biggest challenges when you're selling a home and then turning around and buying, especially if you're using the proceeds from the sale to make the purchase, is this idea that you would have a contingency on the sale of your home going through in order to have to close or perform on the purchase. Those were frowned upon because buyers, frankly, didn't have to accept that term. They could take somebody who was a cash buyer. Is that in play now?

That is in play now. And look, I would never recommend to anybody to ever buy a home if it's your primary residence and you're buying another primary residence to risk, especially in this marketplace where things are now volatile with values. You don't want to be caught in the middle where all of a sudden you might sell or buy the home that you're going to buy and now you can't sell because the market shifted on you and you're stuck with your property. So now you can go back to a more traditional or you can have a buyer contingency that says, look, I'm not buying until I sell my home. They're accepting those again because, again, it's a buyer's market, not a seller's market.

So those are back in play once again, which is good. All right. Very good. In just a moment, we'll begin taking your calls and questions for Dale Vermilion on mortgage and housing related questions specifically until the bottom of the hour. Eight hundred, five, two, five, seven thousand is the number to call. Dale, what do folks need to know who are going in to make a purchase specifically with regard to having that mortgage ready to go? Well, number one, do your homework.

The scriptures and Proverbs tells us that when you are in a house, you want to use good wisdom. You want to make sure that you are getting comparable offers. So a couple of things you want to do is be sure you do your budget first and foremost.

That's absolutely critical. Do your homework on lenders. Always talk to multiple lenders and make sure that you are prepared for your application with your income documentation, all of your assets, all of your bank statements, because what you want to actually get is a pre-approved application because you will be in a stronger position as a buyer with that. What that tells the realtors and the seller is that you've actually been approved for your loan.

You're not contingent on anything. They've verified all of your information. So do all of that and make sure you talk to at least three to four different lenders to get some different quotes so you're sure you got the best deal and the best price overall. So pre-approval, not pre-qualification.

And the main difference, again, between the two, Dale? Pre-qualification traditionally is where the lender will say you're qualified up to this amount based on us verifying your income and your assets and all of that. So it's a very soft offer where a pre-approval, they actually will look at your income. They will verify it. They'll do all your ratios. They'll make sure you actually qualify. They'll pull your credit. And they'll even pre-approve that for you. So now when the realtor gets it, they're very confident you're going to close.

Yeah, great advice. All right, we're going to take a quick break when we come back. We've got some great questions lined up here. We have room for a few more. If you've got a mortgage or housing-related question, until the bottom of the hour, Dale Vermilion with us to tackle those questions for you today, whether that's securing financing, buying or selling a home, we'd love to hear from you today.

Again, 800-525-7000. Much more to come just around the corner with Dale Vermilion as we talk about navigating these challenging times in the housing market and especially in the mortgage market, giving the considerable rise we've seen as of late. We'll be right back on MoneyWise Live.

Stick around. Great to have you with us today on MoneyWise Live. Joining us today, Dale Vermilion, author of Navigating the Mortgage Maze, The Simple Truth About Financing Your Home. He runs Mortgage Champions where they've trained tens of thousands of mortgage professionals over the years and we always enjoy our time with Dale. Dale has been updating us on the mortgage market, what's happening with rates, also the housing market as we've seen a slight dip in housing prices on the heels of a massive uptick since the start of the pandemic. Let's head to the phones. Evanston, Illinois, WMBI. Colleen, thanks for your call.

Go right ahead. Yes, I'm 70 years old and I don't have the resources to pay off my mortgage. I recently found out about the Senior Citizens Tax Deferral Program. It works kind of like a mini reverse mortgage where basically you can not pay your property taxes every year and then when you die or sell the unit, your debt gets just subtracted from the equity. And I've never heard that before and just wanted to throw it out there and see what you guys thought about it.

Yeah, it's interesting. It essentially provides tax relief for qualified senior citizens. So as you said, you're deferring up to $5,000 of your property tax. A lien is placed on the property.

There is a simple interest calculation and I believe 6% a year and the property taxes don't become due until after death as the real estate is sold. You've got to be 65 or older. You have to have household income of at least $55,000. You have to have equity in the property. No unpaid property taxes prior to this program. And it's got to be only for your primary residence. But obviously that's a steep interest rate that I'd love to see you not have to add to your estate's obligations at death. But certainly it's a way to help somebody who's on a limited income adjust to and accommodate for the costs in that season of life if the income is not there because the property taxes can be pretty steep. Is this something Colleen you're participating in?

I'm thinking about it for next year. Mainly just trying to figure out ways to reduce my budget because my resources are fairly limited. Yeah. So this would be one way as opposed to a full reverse mortgage where you're actually tapping into the home equity to create an income stream or pull out a lump sum. So certainly something to take advantage of.

It was created for the purpose you're describing for folks who are just a little tight, kind of living paycheck to paycheck or income to income. And this could take some pressure off that budget. So I appreciate you referencing that today, Colleen. Thanks for your call.

To Florida, Sam, you're next on the program. Go ahead. Yes, thanks for taking the call. I just got a quick question. My fiance and myself is closing on a property next couple of weeks.

What do I need to know when we're filing taxes next year since we will be filing separate tax returns? Yeah. Are you talking about specifically related to mortgage interest deduction or something else? Yeah. Yes. Okay. And you do plan to file separately? Is that right? Yeah, because we're not married as yet. I see.

Yeah. So you would have the standard deduction for a single person of $12,950 and whoever is responsible for that mortgage is going to get the benefit of the mortgage interest. That plus any other deductions like charitable contributions. 80% of folks, Sam, don't get above the standard deduction and therefore they don't really have any opportunity to claim those because they're not itemizing. So I don't think there's really anything specific you need to know there other than just to see whether or not your deductions get above the standard deduction threshold. And if not, there really aren't any tax implications specifically.

I would encourage you to make sure you file a homestead exemption if you don't already have that. But I think that's about it. There's not a whole lot to it. We appreciate your call. Indianapolis, Sandy, go right ahead. Good afternoon.

Thank you again so much for taking my call also. Hopefully, simply question, looking at also 72 years old, been in an existing home for over 40 years, probably could net selling it at approximately $250,000. Looking at going into kind of what they call the pre-bill.

I mean, I don't have to put it together. It's kind of built at probably $435,000. Thinking I would need then to take a mortgage of either probably right around $200,000. I do have the equity that I could take it from investments and possibly just pay cash.

Which way should I go if it's even fiscally reasonable at this point in time? Yeah. What type of investment accounts do you have? Are these retirement accounts or what I would call taxable accounts?

Yeah, I have both. And yes, they would be from my retirement accounts. I have both the taxable and the tax.

Well, I'm not sure if it's a tax-free. I bet I don't understand all that. Okay. Yeah.

But they are both retirement accounts. Yes, sir. Okay. And I suspect they're down quite a bit with the market? Yes, sir.

That's another reason that I'm really questioning taking a move at this point. It's a want. It's not a need. Sure.

Yeah. I mean, I'd be hesitant. Would you be able to be looked at what that $200,000 mortgage would cost you?

And how does that fit into your budget with your current income sources? It would be a little tight. And that's why, again, I think it's kind of a silly move to make at the moment. So I'm trying to tell myself to wait on the Lord and be patient. Yeah. And if you agree with that, then that would be just one of the things I've been asking the Lord to give me clear direction.

Yeah. I mean, I think I would, especially given what Dale was saying about housing prices beginning perhaps to dip slightly. You know, this is probably not the ideal time, especially in light of what's going on with your investments, to lock in those unrealized losses, make them realized. I'd rather let those come back over the next year or so and maybe sit tight with this property that you've got now, not get overly stretched in your budget, and maybe look to do this a year from now when maybe mortgage rates have dipped back down, housing prices slightly lower, and the market has recovered. Obviously, none of us know the future, but just based on what we know today, I think that's the direction I would head, Sandy.

But you pray about it, see where the Lord leads. Thanks for your call today. Dale, always great to have you stop by, my friend. We appreciate you weighing in on the mortgage and housing markets. Thank you, Rob. God bless you. Always good to be with you.

All right. Dale Vermillion, our good friend and mentor in this area of houses and mortgages. Hey, we'll be back with your questions just around the corner.

Stick around. Thanks for joining us today on MoneyWiseLive, biblical wisdom for your financial decisions. Coming up in the final segment of the broadcast today, we'll be joined by our friend Jerry Boyer, resident economist, president of Boyer Research. Jerry will weigh in here at the tail end of the week on the markets and the economy. We had a great day in the stock market today. Jerry will tell us why, and we'll see you next time. What he's been watching as we evaluate this ever-changing stock market and economy here in the U.S. and abroad.

Obviously, the Federal Reserve having a big impact on the markets this week with comments out from Federal Reserve Chairman Powell. Jerry will fill us in on the details. All right, back to the phones.

800-525-7000 is the number to call. To Illinois we go. John, you're next on the program. Go ahead, sir. Thank you for taking my call. This is a hypothetical.

Only one thing has happened. A borrower pays a portion of a debt he owes to a loan company, and the loan company sends a 1099-C form to the IRS. Later, the loan company accepts the balance of the debt due from the borrower. At this point, does the lender send a corrected 1099-C stating the debt is zero with a note stating it's been paid in full, please disregard previous 1099-C, or is there another form or way to withdraw that first 1099-C?

Yeah. Well, because the lender is the one that issues the 1099, which that's normal, whether it's forgiven or canceled, often unpaid debt would be seen as income, and that's where the 1099-C is issued. But in this case, if it was issued and then the debt was either paid in full or settled in full and the lender or creditor considers having received full remuneration for the debt, then that 1099-C can be reissued with a corrected amount or reissued at zero. So I would have this individual ask the lender for an amended 1099. Failing that, you could submit an explanation to the IRS, but I'd rather have the documentation from the lender. All right. And with respect to documentation, what do you mean? The amended 1099 showing that there is no income there. Oh, yes. And you said failing that. You said an explanation.

What do you always come to? Well, if there was ever a question from the IRS or an audit or some other means, oftentimes they would contact you and say, listen, you owe us an additional X dollars based on the income that you didn't report. And at that point, you'd have to just provide an explanation to the IRS as to why, with documentation showing that the debt was paid in full, that you don't owe it. But rather than going through all that, it would be better to get the amended 1099 directly from the lender. I see. And with the corrected 1099-C, it would be sufficient just to put in there zero as far as debt.

There's not a separate form. That's right. Correct.

Because there just is an amendment to a previously issued 1099 zeroing that out because there was no amount forgiven or unpaid. Okay. Thank you very much. All right, John. Thanks for your call today. To Flat Rock, Alabama. Debbie, thank you for calling. Go right ahead.

Yes. Hi, I'm a senior and I'm 70 years old and I have an investment in the market and the market. I've been losing the money on that investment for several months, maybe all year. And my investment representative says, keep the money in the market.

It'll come back sometime. But my husband keeps telling me to take all my money out of the stock market. And he also suggested I take all of it, but part of my money. And I was trying to decide what to do. It's really frustrating.

Oh, I can understand, Debbie. It's a challenging market. I mean, it's somewhat of a yo-yo. We're up. Dow Jones is up three hundred seventy seven points today and on the heels of a pretty three week Fed induced slide and stocks.

And it can leave folks living off of their income in this season of life really frustrated, to say the least. Can you give me just some rough estimates? What was the value of the portfolio prior to the beginning of this year?

What is it today? It was about one hundred and eighty thousand. And now it's like one hundred and thirty thousand or something like that. I think I lost about a thousand at least. OK. All right. Yeah. So so you had one hundred and eighty thousand, you said, and it's about one hundred and thirty thousand.

So, yeah, you're down about 30 percent, which is a little more than the market. Do you have somebody overseeing this money, managing it, or was it just kind of in some investments, kind of on autopilot, so to speak? Yes, I have a person who manages this and I usually call her about every other week and check on it. She just keeps saying, leave it in, leave it in. It will come back. But but I don't know when that. And I hope it comes back before I pass away.

No, I understand. How much are you all pulling out of this account every month? A thousand dollars. OK, so you're pulling twelve thousand a year.

So on one hundred and eighty thousand, which is what before what it was before the decline. You know, I would typically want to see a withdrawal rate of about four percent, which is only which is seventy two hundred a year, you know, or about six hundred a month. So you're pulling a good bit more than that.

The challenge is, you know, that's going to eat into the principle. It also sounds like that this portfolio is perhaps positioned a little more aggressively than I would have recommended for somebody in your situation at seventy one years old. You know, living off of this money and pulling at a withdrawal rate that's really unsustainable, even at one hundred and eighty thousand. You know, you all are looking at about seven percent that you're pulling out a year. And, you know, that's that's more than I would be wanting to pull out in this season of life for this to last for the rest of your life.

So I think you've got a couple of things going on here. One is to determine what is the right investment mix for you all in this season of life. Number two is to see if there's any way to reduce the amount that you're pulling out of this. You know, because as I said, I think, you know, your withdrawal rates a little aggressive for the size of this portfolio even before the decline certainly is now. So I think your best option, you know, would be number one, to talk about the longer term with your adviser. What is the right mix of stocks and bonds for you all?

I mean, I would typically have said no more than 40 percent in stocks for you at 71 with an income portfolio, 60 percent in fixed income type investments, which would have allowed you to be down not quite so much and then ride it out. The question now is, do we stay the course with your current investments and wait for it to come back? Which I think it will. You know, this could last another year or so.

But here's the thing. Even if the you know, we slip into a full blown recession, the market will recover ahead of the U.S. economy. And although we have longer term, some real headwinds, you know, I don't think we have any real major problems coming in this year in the U.S., you know, in the immediate near term. So I think the market will recover like it always does.

At that point, we certainly want you all to get more conservative. But if you're just way too aggressive right now and I won't know that unless somebody can look at the portfolio, then we may even want to make some modifications now, even before it comes back. So I might get a second opinion. You could find a certified kingdom adviser on our website at MoneyWise.org.

At the very least, I'd go visit with your adviser and have her explain how you're currently invested, the asset allocation and why it's appropriate for you at 71, pulling 7 percent a year from your portfolio. And then let's see if we can make a decision from there. Stay on the line. We'll talk a little bit more off the air.

We'll be right back. Thanks for tuning into Money Wise Live, where we apply God's wisdom to your financial decisions and choices. You know, we started out today by talking about buying and selling homes in the mortgage market.

Well, for today's home buyer or seller, for that matter, it really does take careful consideration and planning to prepare for what is the largest financial transaction that many of us will ever make, buying or selling a home. Most of us need tools to help us stay disciplined with a home plan that fits into our needs and wants. And I would encourage you to check out the Money Wise app for that purpose. It's the best tool that I know of to stay on track with your money management plan. In fact, we just recently launched a new goals feature that will help you set a goal, for instance, for your down payment and then reach it over time. So head to MoneyWise.org.

Click the app tab to get more details. Again, MoneyWise.org. We've got some phone lines open today. The number to call, 800-525-7000. Let's head to Spokane, Washington. Janice, you're next on the program.

Hi. What do you think of including a down payment in the mortgage amount? I'm a big fan of that. Yeah, I would recommend 20% down, Janice, whenever you're buying a home. What that's going to do is a couple of things. Number one is it's going to ensure that you don't have private mortgage insurance, which is an additional cost, usually about 1% of the value of the mortgage each year, which doesn't benefit you. It's entirely for the lender, so it's just a completely unnecessary cost. Number two, in a situation like this where home values are slightly declining given the massive run-up that we've had, it's going to ensure that you always stay with positive equity.

You never find yourself upside down because you've got built-in equity right from the start. And then thirdly, I think it demonstrates a financial health that you've been able to save in addition to an emergency fund and maybe your giving and your retirement savings that you've been able to save for that home purchase, which tells me you have some financial readiness to make that major purchase and transaction. So you're able to go in with that amount down, and it's just going to get you on your way to making some real progress toward ultimately paying that house off. So I think it's critical, especially now with rates at 6% or more for a 30-year mortgage, that's going to allow the average family to keep that mortgage payment reasonable so it actually fits into the budget. Right now, the average family is spending about 35% on their mortgage payment. I'd like for that to be 25% as a rule of thumb, just so you have money to do everything else and have some margin left over.

So bottom line, Janice, I'm a big fan of going in with a 20% down payment. Okay. Thank you.

All right. I appreciate your call today. Hey, before we head back to additional phone calls today, it's Friday. In our final segment of the broadcast, we're joined by our good friend Jerry Boyer. Jerry joins us to reflect on the market and the economy for the week. Jerry is president of Boyer Research.

He is a frequent contributor on this program, and his podcast is called Meeting of Minds with Jerry Boyer. Jerry, good afternoon, sir. Good afternoon, Rob. How are you, my friend? I'm doing great.

It's great to hear your voice. Hey, what are you thinking about this week? As you see, here we are on a Friday.

We have all green across the board. The Fed's been weighing on the markets this week. We snapped, I guess, a three-week slide in the markets.

What's that coming as a result of? Yeah, I think what it's coming as a result of is the international picture. And there's a tendency to ignore the international picture and just think of the U.S. markets as the markets and the U.S. economy as the economy. But the U.S. economy is a fourth of the economy. Three-fourths isn't here, right?

And we're not the majority of the markets either. And so there's always a tendency to look. I remember I asked Robert Mundell, father of the euro Nobel Prize winner, what's the one thing that we all get wrong? You know, you've been doing this for a half a century. You won a Nobel Prize. You invented the euro.

What do you have to tell people over and over again? And he said that the United States is not a closed system, that there's a global system and it's all interconnected with one another. Which means that this week, all other things being equal, good economic news, the ISM report, which is a survey of purchasing managers, was optimistic. New unemployment claims was down.

That was down. So fewer people applying for unemployment, all good economic news. Typically, good economic news has been bad news for the markets because it means, oh, the Fed feels like the economy is strong enough that they can keep giving it the chemo of fighting inflation with interest rate hikes.

But this week, it didn't happen that way. This week, there's good economic news and the Fed even came forward and said, we're going to keep doing it. We're going to keep, we're going to fight inflation.

And yet the markets went up. And I would suggest it's because the world is in big trouble. And so global investors are saying, look, I've got a problem with a lot of what's going on in America policy-wise and the Fed's still tightening and that might be bad.

But if there's a recession in the U.S., it's not going to be as bad as the serious recession in the euro or in the United Kingdom or the long-term slowdown in China. So money is coming here. Even though we've got problems, money is coming here because our problems seem to be less than the world's problems.

Interesting. And obviously, as a result of all of that, Jerry, the U.S. dollar has been surging. What are the implications of that? Basically, it's the story told through the currency markets that we're seeing through the commodity markets.

It's really one story just showing up in lots of data points. And that is that the world is saying, you know, the dollar is still a haven. We have enough, look, we've wandered in many ways, but there's enough Christian heritage, enough spiritual and cultural and financial capital in this country that despite all of our problems, we're still a haven. And so when things get dicey around the world, what happens is the dollar gets stronger and it's very strong now against the euro, against the yen, against the yuan, all the currencies that were supposedly going to replace us, they're very weak against us. Gold drops because that's a hedge against currency problems and stock markets go up and stock and bond markets went up, but stock markets went up more.

And the kinds of stocks that are growth sensitive, you know, like growth stocks, for example, tech stocks, they went up even more. So basically the picture here is the U.S. economy is better than we thought it was going to be. And the U.S. economy is better than the rest of the world.

That was the that was the one big story that drove things this week. And Jerry, given the challenges you just described for the rest of the world, China and Europe and others, can we overcome that? I mean, obviously there's a ripple effect back to the U.S. when they have major problems.

Yeah. So we're interconnected, but we're also in competition with one another. So if the world has a recession, we're hurt by that. But if the world has a recession, markets are still helped because markets have to decide between real world alternatives. If there's a global recession, reasonably likely, you still have to invest in something. So even if the whole world, including the U.S., is in trouble, then investors have to make the decision, OK, who's in less trouble?

So what that means is we can have another recession because I think we had one first half of this year. But the world can still put its money here because we still might be more trustworthy. Despite all of our problems, we still might be more trustworthy than the rest of the world and a safer place. And I would say that's largely because of our biblical heritage.

I love it, Jerry. Last question. Do you think the base case is that we avoid a recession then here moving forward? Well, I think we had one for six months of the year, according to the dictionary definition, but I don't think we're in one now. I think the third quarter will be positive and the fourth quarter will probably be positive. We might have another light recession. I think the world is in more trouble than we are. And I think market volatility is stronger than the actual economic outlook because, as I said, we've got a double-minded Fed. Which mandate are we going to follow this week, right?

And so the market volatility makes things more frightening than they actually really are in and of themselves. Yeah, very good. All right. Last thought. You mentioned your interview with the Nobel Prize winner.

If you would win a Nobel Prize, Jerry, then I could say when I was talking to my friend Jerry Boyer, Nobel Prize winner, it would be helpful. So I'm just putting that out there. All right. I'll work on it.

I'll try to get one. I was going to ignore it. It wasn't all that important to me. But now, if it matters to you, if it matters to my friend Rob, I'm going to go out there and try to get one. OK, great.

That would keep me posted on that. Hey, Jerry, God bless you, my friend. Thanks for stopping by. God bless you. Bye. All right. Bye bye. Let's see. Well, let's head back to the phones. We're real short on time.

Quickly to Arlington Heights, Illinois. Bonnie, you go right ahead. Hello. How are you, Rob? I'm well, thank you. I understand you're Bonnie, but even more than that, you're Courtney's mom. Is that what I understand? This is true. I love that.

Courtney's one of my favorite people. All right, go right ahead. I have heard and I don't know if you have any information on after you've moved from your home in Illinois and, you know, the next buyer, you have to pay your tax in the rear and you pay it. I heard that you can't get they can come back and text you again in Illinois. Do you know anything about that?

Yeah. So, well, if you mean you can sell the home, you know, if you sell the home in Illinois, if there's a property tax lien on it, the answer is yes, it's a it's a complicated process. But if you mean that you're taxed in Illinois after you sell your home, that could also be true. In that case, it's a sales tax and there's several different layers to it. You know that there's a state tax and then there's a county sales tax and then there's a municipality sales tax as well.

So it does get a bit complicated. But in either case, yes, it would not be a federal tax, but it could be local. OK, well, it was just a little disturbing to me if you've already paid all your taxes. I don't have any tax liens, but I just wanted to.

Yeah. So what I would probably do, Bonnie, is check with the CPA. I mean, I'm not a CPA and I'm not in Illinois, so that's kind of a two strikes against me. But I think, you know, getting some counsel on this, if you had a transaction or you're planning on one, just to make sure you understand exactly what liability you will have, because the last thing you want is for that to sneak up as a surprise on you. I appreciate your call.

I'm sorry I don't have more definitive information, but that's likely what you're referring to is the state and county and municipality sales tax that could be going on there. Hey, God bless you. Thanks for calling the program today. We appreciate it, folks. That's going to do it for us.

Money Wise Live is a partnership between Moody Radio and Money Wise Media. Thank you to Dan Anderson and Amy Rios and Jim Henry and our call screener today. We couldn't do it without them. Hope you'll come back and join us on Monday. I'll look for you then. God bless you. Bye bye.