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Good morning.

It seems like just a short time ago that things were rather boring and calm.  Inflation was low, refinancing availability plentiful and every once in a while there was an announcement that yet another  “stimulus check” … even at a time when recession was seen as a far off event … would be coming our way.  Talk of “universal income” gained traction … for as long as the printing presses had ink … checks could be written.  It didn’t much matter if many in the population had enough goods to satisfy basic needs, extra money could be used to buy NFTs or crypto or many other things to make us rich as there was, seemingly, no end in sight.

Well, those days have obviously ended and we entered into an era where recession talk is rampant as many ask if the once-beloved Fed has again taken action much too late.

The 75 basis point (0.75%) rate rise by the Fed – announced yesterday – is, as pointed out by CNBC, “the Fed is hoping to dampen Americans’ willingness to spend money.”  This is a very interesting point, although the recent market decline (along with rising gas and food prices) might already curb some of this “willingness.”

While it typically takes a while for Fed moves to “trickle down” into the economy, one area where we might see an almost-immediate effect is in housing … as a jump in the 30-year mortgage rate from 5.5% to 6.25% should certainly and almost immediately move this into the “unaffordable” column for quite a few.

If memory serves me correct, Fed Chairman Alan Greenspan was quite popular when he started out – especially when he increased the transparency of the Fed – and helped navigate us through some choppy economic storms early in his career.  But his popularity took some major hits when the financial crisis of 2007-2008 was blamed on easy Fed policies put into place under his leadership.

I am starting to suspect Jerome Powell might meet the same fate.

Personally, I find all this inflation talk to be quite upsetting.

I am sick and tired of people complaining about $7 beers, $10 parking and a $20 cover charge.

I tell everyone that if they don’t like the prices to stop coming to my house.

Have a great day,

Joseph G. Witthohn, CFA
Vice President
Emerald Asset Management PA, LLC
610 Freedom Business Center Drive
King of Prussia, PA 19406
Direct: (610) 285-9905
cell: (856) 625-7915
wit@teamemerald.com
 #vaccinatetosave

 

A Look At The News | June 16, 2022

As of 11:57 AM today …

Well, there we have it … a 75 bp (0.75%) rise by the Fed as they imply… strongly … inflation might have been underestimated by them as take action many feel a bit late (USAToday)

https://www.usatoday.com/story/money/2022/06/15/fed-interest-rates-hike/7631195001/

… and, yes, this could drive us into a recession as individuals – who would normally be buying things – start to delay purchases (where they can) (CNBC)

https://www.cnbc.com/2022/06/16/millennial-millionaires-are-delaying-home-car-purchases-due-to-inflation-.html

… but it is not just discretionary items affected.  A big jump in mortgage rates really affects affordability of homes … where soaring prices were already enough of an issue (CNBC)

https://www.cnbc.com/2022/06/14/30-year-mortgage-rate-surges-to-6point28percent-up-from-5point5percent-just-a-week-ago.html

It is important to keep sight on the big picture. Make sure you don’t “overextend” as credit scores are quite important … and young adults can start early to build this up (CNBC)

https://www.cnbc.com/2022/06/16/how-young-adults-can-start-building-credit.html

Did you enjoy watching “The Squid Game?”  Well … now it is going “live” … and with a really big prize you can apply to be a contestant (Decider)

https://decider.com/2022/06/15/squid-game-reality-show-how-to-apply/

While many have not yet explored the “Metaverse” … companies are starting to get prepared, as this seems to be one area where “catch up” can be quite costly for those who wait (ReadWrite)

https://readwrite.com/the-virtualization-of-customer-support-customer-experience-in-the-metaverse/

 

 

 

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The statements above are supplied for educational purposes only. The statements depict the viewpoints and opinion of the author and are not necessarily the views of Emerald Asset Management or its affiliates. The information described herein is taken from sources which are believed to be reliable, but the accuracy and completeness of such information is not guaranteed by us.