Since the corporate tax cut announced a few weeks ago, dozens of companies have given many, if not all of their employees $1,000 bonuses.  Unfortunately, my company is not one of those participating.  I throw that out there because I know that my boss is reading this.  Having said that now, I guess that there is a distinct possibility that everyone else working here DID get a bonus.  Maybe I shouldn’t be so quick to disrupt staff meetings with one liners that he might find disruptive to the dissemination of very important information.

Sadly, with the dollar weakening against other currencies, and inflation on the rise here domestically, that after-tax bonus won’t go nearly as far as it used to.  And now I’m starting to sound like my grandpa.  Maybe I should keep those jokes to myself after all.

Seventeen years ago today I was standing in a reception line at my own wedding with a shocker in my hand, buzzing all my friends (and some of my parents’ friends) who had come to see if my then fiancé was brave enough to really go through with it.  Joke’s on them because we indeed tied the knot and kept all their wedding presents.  My wife is the highlight of my life and I love her dearly.  Happy anniversary, sweetheart!

Speaking of long lines and shocking buttons, late last year the federal government pushed the snooze button on a budget agreement needed to avoid a shutdown.  Well, the alarm is going off again today, and Congress has until midnight tonight to get 51% of 535 elected officials’ to agree on a prudent course of action.  I sure hope they figure it out because Amazon uses the Postal Service to deliver happiness to our porch every other day, and I wouldn’t know what to do with myself without a stack of junk mail to rifle through after dinner every night.

So barring any semi-permanent government closure that goes beyond annoyance to send shockwaves of fear through the entirety of the U.S. economy, it looks like interest rates will track upward about a half of a percent by the end of the year.  Note to self: buy another hand buzzer on Amazon.

When I approached my IT guy last month to talk about getting a new computer, he suggested a Mac.  I already have an iPad, an Apple Watch, the Ear Pods, and I’m on like my sixth iPhone; so I figured “why not?”.  Well I went live on this machine yesterday and it was extremely painful.  I would have rather beat my head against the wall than try to save one more document to an unfindable folder.  I awoke this morning with a deep foreboding souring my otherwise pleasant workday ahead.  Well it’s just after noon and IT Guy has been in here a half dozen times so far today to coach me some basic processes inherent to Mac-dom.  I guess I am doing ok with it because I managed to get this email put together.  I have decided that it’s a little like snowboarding, and the first few days is just going to downright stink.  But by day five or six I should be shredding down the virtual highway looking cool and collected like the Mac-dude in the picture here. After all, nobody wants to be boring PC, right?

I’m not the only optimistic mind out there; the Fed’s Beige Book, published today, shows that companies across all Fed districts trumpeted an expectation for even better days ahead.  Polled professional investors also don rose-colored glasses; over 66% are totally bullish about the equities markets.  That rampant enthusiasm was last seen a year before Black Monday in 1987.  The DOW is up over 300 points, and bond pricing is at the lowest levels in the last 10 months.

The Jobs Report was released today and on the surface it was a bit of a letdown.  With only 148,000 new jobs created last month, the news momentarily squashed the felt euphoria from the flurry of cheerful data released so far this week.  I’m here to tell you that the celebration can continue and here’s why: The average rate at which jobs have been created in the U.S. is 210,000 per month, and there have been over two million new jobs created every year for the last seven years! There are about 124 million people working full time in the U.S., and our population is growing at a rate of only 0.7% per year, so the 1.6% rate of new employment opportunities outpaces population growth by 2X.  And that means that employers have to pay more to attract the help, which is one reason that wages increased by 2.5% last year alone.  So if you are willing and able to work, that’s good news.

All that comes at a cost, however, and that will be higher interest rates in the future.  With the Fed raising three times in 2017 and committing to three more in 2018, those in the know are forecasting the 30 year rates to end the year about 1/2% higher than present levels, which are still pretty attractive.

The DOW just hit 25,000 for the first time in its 132 year history.  Ahead of tomorrow’s Jobs Report, the ADP Payroll Report shows Private Payrolls rise by 250,000, which is 24% higher than expectations.  The 10 Year Note opened this morning at 2.48%, a level not seen since last March. The markets are rolling ahead with little hesitation.

Looking ahead to a few forecasts, the Atlanta Fed sees GDP at 3.2% to end the year.  The Mortgage Bankers Association anticipates the 30 year mortgage rate to end the year at 4.6% and the National Association of Realtors expects 4.5% for the same criteria.  If the economy maintains its current momentum, rates will blow by those estimates fairly handily. 

There are only ten more days until Christmas.  Fortunately, the charts show that the cost of purchasing those meaningful expressions of love has risen less that the average paycheck, just in case you don’t have an army of elves helping you out this year.

This week the Fed raised their Funds Rate by 0.25%, making that index now 1.5%.  Three percent is tacked onto that rate to give a Prime Rate of 4.5%. and banks tack loads of profit on top of Prime to make their credit card offering rates significantly higher still.  If you didn’t know any better, you’d think that the holidays were sponsored by Master Card and Visa.  Borrowing on a credit card is not going to get any cheaper either if the Fed adds another 0.75% in 2018 as they hope.  So be wise with your Christmas giving, and if you need some help making that debt more manageable, mortgage rates are now less than even Prime :).

Have a wonderful, festive, loving week!

The uncertainty of the future level of taxation in the United States is still being debated by Congress today.  20%, 30%, 50%?  Corporate, personal, long term, and estate rates?  Will it pass?  Will we need to raise the debt ceiling?  Chinese take-out or pizza delivery for lunch?  Pretty serious stuff. Mortgage rates have held fairly steady for the last ten weeks while these matters have echoed around the hallowed halls that house our elected officials. In the meantime, the stock market continues to soar to new highs every other day.

Though you wouldn’t know it by the weather, it’s now December, and that means Christmas shopping is on everyone’s mind.  American consumers did a good job of budgeting last month: Personal Spending rose 0.3%, just under the 0.4% rise in Personal Income.  It’s always a good practice to spend less than you earn.  Remember that this month 🙂

It feels like the winds of change could soon be blowing, and I am not just referring to the weather.  The outcome of the new and allegedly improved tax code,  the path of the stock market, and the Fed decision to raise rates in 12 days may be enough to kick mortgage rates back up above 4.0%

Goldman Sachs this morning warned that “pain” is coming to the stock market.  Low paying bonds and cheap borrowed money have produced an average valuation that’s higher that at any point since 1900 (the year, not the index). That’s a long time ago.  And speaking of “a long (long) time” and an Elton John song with those lyrics, “Rocket Man” Kim Jong-un is testing an intercontinental ballistic missile that has the ability to reach the United States.

These two points should be enough to pull money into bonds and lower interest rates.  However, Pending Home Sales for the month jumped from a 0.6% gain to a 3.5% gain, and a 2nd Q3 GDP reading showing 3.3% growth in the U.S. are keeping traders hands off the “sell” button for now.

Prices on oil, stocks, and bonds are all “falling” this morning.  The Consumer Price Index has also fallen from 2.2% to 2.0% on a year-over-year basis.  Retail Sales on the other hand rose by 0.1%–which is great if your prices have dropped.

With a new Fed Chair, and the top three slots at the Federal Reserve most likely changing hands in the next 12 months, we may start seeing the role of the Central Bank change.  It’s hard to say what they’ll do, and what impact that might have for interest rates and the U.S. economy in general.  Sometimes, big and powerful can be a good thing, and at times it’s better to take a less imposing position.  From my perspective, over the last six years or so, the Fed has taken on that subordinate role, and let the economy grow back its legs, as it were.  I think that they’ve done a decent job of getting us out of a recession.  I know that it hasn’t been as swift or as powerful as everyone, myself included, expected.  Heroes come in all shapes and sizes.