The Slow-Moving Reality of the Housing Cycle and Inflation Concerns With Bob Elliott

Episode #310 | May 15, 2023

Episode #310 | May 15, 2023

The Slow-Moving Reality of the Housing Cycle and Inflation Concerns With Bob Elliott

In This Episode

In the latest episode of Stansberry Investor Hour, Dan and Corey welcome Bob Elliott to the show. Bob is the co-founder, CEO, and chief information officer of Unlimited, a firm that uses machine learning to create products that replicate index returns. Bob drops in to share his valuable perspective on inflation intricacies and supply-chain issues.

But first, Dan and Corey address the unique challenges the housing market is facing right now... particularly how homeowners are holding on to their properties due to historically low mortgage rates. While advantageous for homeowners, this trend has reduced housing supply and subsequently driven prices upward.

Then, they turn their attention to central banks and discuss how effective these institutions are. Both Dan and Corey voice doubts about the ability of central banks to steer the economy in the right direction amid these challenging conditions. They also express skepticism about central banks' ability to achieve their target inflation rate of 2%.

Bob Elliott then joins the conversation to provide his insights on the current state of the Consumer Price Index. He highlights the underlying inflation in the economy, which is closely tied to wages and service prices, resulting in a stable inflation rate of 5%. He explains...

Once we started to get a flattening out of oil prices... and used auto prices... those going from falling to flat has a positive pressure on inflation.

Bob also delves into the gradual nature of housing cycles and the dynamics of the housing market throughout and following the pandemic.

That's the nature of these cycles... They don't progress rapidly. They aren't the kind of force that will drastically alter the Federal Reserve's outlook within the next three months.

Lastly, Bob highlights that the previous housing cycle in the U.S. lasted for seven years, spanning from the summer of 2005 to 2012. He explains that numerous structural and tactical factors influence these cycles. However, as input costs decrease, construction activity is expected to increase, which will eventually stimulate economic growth.