Joseph G. Witthohn, CFA
VP of Product Development Emerald Asset Management

Good morning.

I thought markets would have jumped, rather than be flat this morning … following reports that the Trump-Kim meeting went rather well. I will say one thing about it … as negative I appear to be about many of the moves of this administration … I got goosebumps as I watched them together last night … and felt it was a proud and important moment akin to Nixon’s 1972 visit to China … criticized by some at the time … but known afterwards, as pointed out in the Washington Post, as “shocking but beneficial.”

Let’s hope the move results in a similar positive or … at the very least … a less adversarial relationship.

Today’s (and tomorrow’s focus) will be on the Fed … expected to raise rates once again … which could be even more likely following a report on CPI which shows, according to CNBC, inflation to be steadily rising amid a tightening labor market … with the expectation that this combination will “… encourage the U.S. central bank to raise interest rates … on Wednesday.”

This, of course, has far-reaching effects.

I just looked at what my bank was offering for a 30-year mortgage and see the APR at 4.7% … a far cry from the 4% seen around a year or so ago. This is pretty nasty (and could get nastier still) … as … if my math is right (and for that there is no guarantee) … it would take just over an extra $5,000/year in income to support the additional monthly payment needed to qualify for a $300,000 loan. And if rates rise further, this would be uglier still. Good luck young adults. Sorry about the student loan.

Speaking of housing, I did read one interesting comment about homes being used as a hedge. A hedge? Against what? Stocks? No. Bonds? No. Bitcoin? Certainly not! Cesar Orosco of AJO Partners, in one of their memorandums, noted that “… for the average Joe, a house should be a hedge against being roofless …” a very smart way to look at home ownership’s true benefit.

On a final note for today, I want to mention that … well … I won the lottery yesterday … not once, but twice! And I am pretty mad about it!

I rarely buy scratch-off games but … on my way out of the grocery store … got the urge and bought two $20 tickets. I took them home … hid them from my wife … and scratched off the numbers on one of the cards, careful not to see the prize (feeling, somehow, that would increase my luck). Winner! The second card? Winner! Oh, joy. I slowly scratched off the winning amount on card one. $20! Card two? $20! And now I have to go back to the store and collect the $40 “won” on my $40 investment.

I now have to pay for extra gas (and time) to collect my reward.

I played the lottery and, according to Pennsylvania, will be classified a winner. Yet, I feel like such a loser.

It is often pointed out that the lottery is a tax on people who are bad at math.

I have joined that club.

Have a great day,

Joseph G. Witthohn, CFA
Vice President
Emerald Asset Management
610 Freedom Business Center Drive
King of Prussia, PA 19406
Direct: (610) 285-9905

… as of 11:30 AM …

Quick Look at the News


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