Good morning. Well … it appears the government shutdown … the longest in history is about to end … and what, in my view, was accomplished? A lot of worry and suffering for so many Americans. Different polling sites has Congressional approval in the high teens … quite a disappointing result … and those who thought it couldn’t be any worse will probably have to do a reassessment. It is possible the next result will be lower still. Meanwhile, investors are liking (so far) the news out of Washington which drove stocks up this morning in a sort of “relief rally” … with the relief being a very temporary pause to the bickering in DC. There was also talk (initiated by the President) of giving most Americans $2,000 each as a “tariff-dividend” … but the thought that people would actually receive checks was diminished when Treasury Secretary Bessent said yesterday that it could come via “tax cuts.” … but let’s face it … not only is the math questioned right now on the actual amount coming in from tariffed foreign governments … but we have a bit of national debt to consider … and just doing quick math giving $2,000 to 200 million people is $400 billion dollars. A friend asked me where these funds really come from. Sadly … and we won’t see it in many political ads … it is really coming from us. The Fed continues to have its work cut out for it as we are exactly one month away from the next rate announcement as many indications point toward a weakening jobs market. In this regard, Indeed Hiring Labs claims job postings are now at their lowest level since 2021 … and with many recent layoffs announced, odds increase for a cut. There is one bit of good news, however … as important data might arrive well before the meeting, thanks to the reopening of the government, so the Fed won’t entirely be flying blind. Another item that grabbed my attention this morning was reading that the government would like to help introduce 50-year mortgages to assist with affordability (via lower monthly payments). While this seems to have a sense of logic behind it, one article from realtor.com brought up a very important point. After 10 years a homebuyer, making payments on time with a 30-year mortgage, finds around 24% of equity built up in a home. For the 50-year mortgage? This equity level would drop to around 14% during that same period … which makes it a complete non-starter in my book. Making more sense … that Secretary Bessent also floated … is turning present mortgages into “assumable mortgages.” I mean … I am paying 4% on my house. If I sell it, a new buyer would simply adopt the loan paying my rate (or slightly higher as the bank grabs a cut). This certainly deserves some thought. That about wraps it up for me today. I am actually calling my doctor to see about getting that weight loss drug … as I would like some help. It seems that whenever I see chocolate, I actually hear two voices in my head … … the first says, “Eat the chocolate” while the other one says, “You heard him. Eat the chocolate” Have a great day, Joseph G. Witthohn, CFA Have any questions? Please contact info@teamemerald.com
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