Just when I thought our hurricane woes were over, another one hit Florida.
We have family there so I was a little worried but thankfully no one was affected… at least not seriously.
There’s something about natural disasters that makes me think that maybe, just maybe, I am not as good at predicting the future as I think I am. We narrowly escaped Hurricane Flo and when Michael made landfall I wondered if we’d get any of it.
Turns out, we got some wind and rain… my wife once again reminded me that my reorganization skills in the basement weren’t entirely wasted.
That’s all good and well but what does this have to do with anything?
Plenty, my young Padawan.
Seems that all this kooky weather has caused a statistically significant uptick in mortgage foreclosures.
I dunno why, but I guess when peoples’ homes get completely destroyed, they lose motivation to finish paying off the mortgage. So, they walk away from it.
That’s obviously bad news for lenders who rely on that regular mortgage payment income.
Earlier this year, I shared some “top secret” info with my clients about how most large corporations were going to use most of the Trump tax cuts to pay down debts and buy back shares of their own company. We learned this info from some very astute analysts at one of our partner firms.
I’m calling this the Cash for Clunker Stocks.
Anyway, it worked. Trump delivered on tax cut promises and then… corporations used this money to pay down debt and buy back stock in their own company.
And, just like the real Cash for Clunkers, once the one-time infusion of fungolas was gone, the buying stopped.
This is part of the reason you are not seeing more growth in the DOW or S&P500. Another reason is probably trade tariffs, which are essentially a hidden sales tax on everything you buy that’s imported from other countries.
Whether you like or hate free markets, they make trade possible and it is what delivers profits to investors. The more limited trade is, the more expensive it is. The more expensive it is, the fewer profits there are to pass around. The fewer profits there are to pass around… well, you get the idea.
Of course, Trump is saying that the Federal Reserve has “gone crazy,” but long-time readers of this email know better. Banks only account for about 15% of all lending activity in the U.S.
Most interest rates today are set by non-bank lenders like mortgage companies, peer-to-peer lenders, and… life insurance companies.
None of these non-bank lenders have “ultra low” interest rates. In fact, some insurers (for example) maintain an 8% fixed interest rate on all insurance policy loans.
That the Fed RAISING rates to below 4% would cause a pullback in stocks is… a little silly.
There are darker, more sinister forces at work here.
Anywho, enough story time. Let’s get down to bid’naz.
If you want to take control of your finances and benefit from the end of the “Trump bump,” then it’s time for you to do something different from the norm. Sign up to my email list for more info…