Good morning.
Stocks are showing slight gains this morning, which is quite a relief to investors fearful that last week’s declines would continue. Of course, this does not mean the bleeding has ended … but at least we are starting out on a positive note.
Of course, the big news this weekend was the announcement that President Biden will be ending his campaign … with the result of (as Sam Stovall puts it, quoting CFRA’s political arm) “ … the possibility of a Republican sweep, or wave … reduced, but not eliminated…” What does this mean? Uncertainty. And those who invested based on what is called the “Trump trade” will more closely be watching the polls in the months ahead.
On top of this, Daily Shot reports economists are sensing a slowdown in consumer spending in the U.S. … but this might be helped if the market view that we will see rate cuts of 50 bps (0.5%) before the year is out, comes to pass. There is even hope, by many, of 3 declines … but that might just be wishful thinking.
There is some interesting news in the housing markets as AEI Housing Center reports a rise in active listings. While higher mortgage rates have long been cited as a reason for people to stay in their homes, Torsten Slok put out a chart showing close to 40% of all homes do not have a mortgage at all … which might lead to conclude that the reason “downsizers” are not moving is not because they don’t want to pay a higher mortgage but, instead, because higher rates could be making the home they desire to sell, less affordable for many. Sorry for the ridiculous run-on sentence. I’ll blame the espresso. My point is that a drop in conventional mortgage rates to the 5-6% range (which could happen if rates drop as expected) could open up a lot of possibilities.
The most interesting item I saw this morning had to do with medicine and Bloomberg is questioning if we are prepared (from a medical perspective) for the next pandemic? Why? The Department of Health and Human Services looks at med-school intentions and … pediatrics, family medicine and internal medicine don’t hold a candle to salary-seeking students who, instead, are choosing the field of plastic surgery … due to a vast difference in salary.
That will wrap things up for today as I finish a conversation with my son.
It seems the kids of today (like us when we were young) are convinced they are so much smarter than the previous generation.
I am quick to point out his car owner’s manual.
30 years ago the owner’s manual showed how to adjust the valves.
… today, this page has been replaced with a warning telling the owner not to drink the contents of the car battery.
Have a great day,
Joseph G. Witthohn, CFA
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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.
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