Good morning. Investors are showing a bit of relief this morning … driving up stocks yet again … as third quarter GDP numbers indicating economic growth continuing to advance. And what is the main driver behind this? As usual … consumer spending. We are at an interesting time right now as on the one hand consumer surveys present increasing angst over the economy, inflation and employment … yet restaurants are full, planes are packed, and holiday sales are up … even as recent reports tell us borrowing (and defaults) are on the rise. What does this tell us? Spending has not stopped … it has just been financed … as we keep in mind that recessions don’t begin when people stop spending … they begin when Visa says, “we need to talk.” Yet markets continue to advance. I read an intriguing note this morning (which I did not include as the report is 66 pages) by Seung Hyeong Lee and Younggeum Yoo (of Northeastern University and University of Chicago, respectively) … and their study addressed the effects of giving up on home ownership. What they found was that people who lose hope in owning a home (an “affordability crisis”) have a tendency to buy more luxury goods relative to their income (to feel better?), reduce efforts at work, save less (why bother?) and when able to invest, take on riskier assets. In the weeks ahead, maybe I’ll bore you with my own thoughts on this … but contrary to some calling for a good year for investors in 2026, I enter the new year with growing concerns the piper is finally going to knock on the door expecting to get paid. Just a few more items. I heard from a well-connected friend in Denmark this morning and it seems some over there wonder if the halting of windmill projects in the U.S. and an attack on big pharma imports (both vital to Danish economy) are, in part, retaliation for the country’s refusal to easily hand over Greenland. Admittedly, I know a little less than nothing about any of this, but this appears to be how they are seeing things over there. In other news about Novo Nordisk, the leading Danish pharmaceutical company (for transparency, I hold shares), the FDA has just approved their diet medication for release in pill form. The new product is expected to be available next month … and cheaper than the shot … well … frankly, I can’t wait. Okay, I’m done for today. Federal holiday for the next 3 days, but the stock market is open tomorrow and Friday. I’m going shopping now to take advantage of some sales … … with the new diet drug coming soon, I see the need to pick up pants with a slightly smaller waist. Have a great day, Joseph G. Witthohn, CFA Have any questions? Please contact info@teamemerald.com
|
Call Us: +1 (800) 722-4123 
Back