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
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
There is, of course ... as there always is ... concern that stock prices will drop ... but yet another strategist calls for great times ahead ... well ... up to a point (CNBC)https://www.cnbc.com/2018/06/12/tudor-jones-stock-market-higher.html
... and one thing people are keeping an eye on is inflation. This morning's CPI showed a big rise ... something which may support any Fed move tomorrow to raise rates (USAToday)https://www.usatoday.com/story/money/economy/2018/06/12/gas-prices-housing-costs-push-consumer-inflation-rate-2-8-annually/693601002/
Many felt that solar panel demand would fill energy needs going forward and supply jobs ... but tariffs could greatly ... and negatively ... affect this entire industry (Reuters)https://www.reuters.com/article/us-trump-effect-solar-insight/billions-in-u-s-solar-projects-shelved-after-trump-panel-tariff-idUSKCN1J30CT
Who holds the most student debt? Women! And with the increase in the amount ... and the rise in late payments ... will this further delay their ability to start families? (CNN)http://money.cnn.com/2018/06/05/pf/college/student-loan-stats/index.html
I hate few people ... but after seeing the picture of how this biotech guy looks at age 50 ... I am both angry ... and wondering how to get my hands on his secret (Forbes)https://www.forbes.com/sites/matthewherper/2018/06/05/how-a-biotech-entrepreneur-aims-to-make-aging-less-awful/#52e10f412c20
Just what we need ... another enemy. No, I am not talking about some country overseas ... or even Canada ... but the basic kitchen towel ... whose unclean ways could be poisoning many a foodie (USAToday)https://www.usatoday.com/story/news/nation-now/2018/06/11/kitchen-towel-bacteria-may-lead-food-poisoning-study/690091002/
... and here is something special ... the secret for weight loss ... is to burn off more calories than you consume. Well, no kidding ... but those desserts are just so incredibly tempting (ArtofManliness)https://www.artofmanliness.com/articles/eat-man-food-and-lose-weight-a-primer-on-flexible-dieting/