Registered Investment Adviser Caleb Lawrence
The major averages enter the final hour with modest gains on news generally inline with expectations. As was widely expected the Fed raised rates ¼% at the conclusion of the latest FOMC or Federal Open Market Committee meeting. This pushed the Federal Funds rate to 1.5% with the Fed citing growing price pressures, there transitory, and a strengthening economy based on recent employment and GDP or Gross Domestic Product data. Frankly neither are as strong as the headlines indicate.
Mortgage activity fell 2.3% last week as per the Mortgage Bankers Association with refi’s slipping 2.5% while purchase apps dropped 1.1% despite a small decline in interest rates. The 30-year Jumbo rate fell to 4.11%.
The November CPI or Consumer Price Index gained .4%, on a year ago basis prices increased 2.2%, both driven by large gains in energy costs, and to a lesser extent services.
With the Republican Tax Cuts nearly reconciled and growing increasingly unpopular with just about everyone save the 1% and corporations. The classic debt funded, trickle-down economics Republican play book will almost certainly fail to deliver on its promises of economic growth while exacerbating income, wealth, and economic inequality in the US. A recent study on the subject by Washington State University on a current and historical basis concluded that the Gini Coefficient of the USA was an alarming .81. For reference 0 represents a perfectly equal society while 1 is an extremely unequal society. Highly unequal societies tend to implode in dramatic and often violent fashion. The USA Gini of .81 is not only the highest in the world, greater than the .78 of South Africa, .68 of Russia or the Roman Empire that reached .59 just before its collapse, as per the study. It serves to illustrate 40 odd years of corporate greed, social and economic policy failure in the US that has decimated the middle class and struck at the very heart of what made America great.