$Nasdaq Composite Index (.IXIC.US)$ I want to put this out t...
$Nasdaq Composite Index (.IXIC.US)$ I want to put this out there under food for thought to put in the back of your mind.
everybody understands consumer spending has slowed you see it in in McDonald's in Chipotle in various retailers and some luxury items. the statistics are out there with consumer credit being the highest ever. we all know this...
but what will change the balance of this year into next year why will consumers accelerate their spending habits?
as interest rates are cut the first group that's going to have the largest increase in spending again our homeowners.
people that bought houses, this past year as rates fall they will be able to do a rate and term refinance on their properties so if they bought it 7 and 1/4 30 years and now they're able to refinance at 5 and 3/4 the end of this year beginning of next year that's an enormous savings on a $400,000 mortgage on a monthly basis.. you're talking about $3,700 a year ballpark which since people are creatures of habit they will spend again all that money goes right back into the economy buying goods and services.
the next group are those that have already owned houses for an extended period that have raked up credit card debt and they want to do what's called a Cash out refinance and they want to roll their credit card debt into their home to free up cash flow. this is where most banks in lending institutions make the bulk of their money it's highly profitable and you tend to get repeat business the cost customer acquisition is very low. so if you have two credit cards $10,000 on one $5,000 on another maybe you have a car loan that you financed on a purchase not a lease and you have a couple years left on it and you're paying $400 a month you take all of this debt you roll it into your mortgage you may have been paying $1, 500 a month on your credit card payments and your car loans.. when you refinance this into your house your principal balance goes up the rate that you're paying obviously is going to go down because interest rates are coming down.. and you're savings on a monthly basis is going to be around $1200 a month.
so we're talking millions and millions and millions of homeowners that do this that's hundreds of billions of dollars that are going to get pumped back into the economy because people are creatures of habit and they'll have this extra cash every month and it will be burning a hole in their pocket and they will spend again.
this is in my opinion what will be the next leg up in consumer spending this up and coming year. while you here consumers are tap now and spending is slowing this Cash out refinance and refinancing houses at a lower rate and term is going to pump billions and billions of dollars into the economy.
mark my words by June of next year you will not be hearing anybody on TV saying consumers are not spending..
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MonkeyGee : maybe by next year, you have the right person on the hill, and the gas price will be below $2.
Ginvest : My thoughts are “which stock would benefit from people spending?” Do you have opinion on it? Thx in advance
10baggerbamm OP Ginvest : all of your large box stores are going to benefit immensely so when rates come down people will move when they move they outfit their houses with new furniture they want to paint they want to do landscaping they buy their new lawn mowers they buy their appliances so your Lowe's your Home Depot do well it's a very transparent clear cut path who's going to benefit so what you would want to look at is which are going to get penalized the most the balance of this year and the companies that are rock solid that have just been penalized because the consumers are not spending enough it will reverse by next June and it takes about a 6-month window for rates to come down enough where you begin to get this constant refinancing taking place. and this will carry forward through the balance of next year and the year after that assuming and this is the biggest assuming .. Harris does not win because if she wins oil prices go up that's inflationary and I think the Federal reserve will end their rate cut and possibly have to raise rates to slow inflation down next year so that derails everything if Harris wins
10baggerbamm OP Ginvest : I would just tell you to stay tuned because really dependent upon who wins the election is going to determine which sectors next year are going to be the biggest winners and then from that you can break the sectors down into the best companies within those sectors. so as they use to say in the 1960s Batman.. stay tuned same bat Time same bat channel.
DipHunter : Bro your insight is great but it’s really hard to read…
10baggerbamm OP DipHunter : my old phone used to put periods and commas in.. the phone I have now which is probably a year old or so it doesn't do anything. if I say period it spells it just like that if I say comma it spells it out. I really need a phone that has inference so that it understands when I pause it's a period it's a comma when there's inflection in the way I speak it's an exclamation! sometimes I go back and I correct what I say and I realize all of the mistakes and there's many not just in the punctuation but also in the words than my phone puts in. I may say a certain word and because of how it thinks I have an accent it uses a different word and that completely screws up what I'm trying to say