Good morning. Stocks are down to start today’s session as the view that the Fed will cut rates at the next FOMC meeting has become cloudier in the face of limited reports, comments by Atlanta Bank President Bostic and notice from the Congressional Budget Office (“CBO”) that GDP will be reduced in 2026 due to the recent government shutdown. Raphael Bostic of the Atlanta Bank gave a speech yesterday highlighting the two major mandates of the Fed: employment and price stability. While calling this “the most challenging environment” he has seen since becoming a central banker, he talks about how each is addressed in moves by the Fed. Yet even in the face of a weakening labor market, he feels “the clearer and urgent risk is still price stability,” which would completely fly in the face of those hoping for a sizeable (if not any) rate cut at the FOMC upcoming December meeting. And just like that, CME reports the likelihood of a rate cut at this next Fed gathering to be little more than a coin toss … a sharp collapse from the 95% probability assigned just one month ago. Of additional concern (other than the inflation worry) is lack of certainty … as it is reported that jobs data and a major inflation report from October will never be released (making comparisons certainly difficult). Meanwhile, the CBO concludes the nation’s GDP will be cut back next year because of the shutdown, including the permanent loss caused by furloughed workers … well … not working. How big are inflation worries? According to the International Monetary Fund (“IMF”) there is good news and bad news … as their view is global inflation is on the decline … but there is an exception … the U.S. … with trade barriers partly to blame. Smartly, one comment is “the world isn’t booming or busting … it’s shrugging.” One of the most interesting topics of late … and an important one … surrounds healthcare costs. Amna Nawaz of PBS, citing a KFF survey, claims “… the average annual premium for a family with workplace insurance reached nearly $27,000 in 2025.” And that is average …with the possibility of a 16% increase next year. Yikes! There is little wonder, in my view, that some individuals … due to high costs … find it cheaper to fly overseas to fill prescriptions. More risk? Certainly … but some feel they are left with little choice. I have on my playlist the Johnny Burke song … “Pennies from Heaven” … made famous by Bing Crosby. Future crooners might be forced to change the lyrics from pennies to nickels as the cost of manufacture has gotten too high …. leading to the Philadelphia Mint to permanently stop producing our little copper friend. Why did they stop a machine from making coins that have been produced there since 1793? It just made cents. Have a great day, Joseph G. Witthohn, CFA Have any questions? Please contact info@teamemerald.com
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