Dear valued client,
Markets’ trading volume was low for most of this week. Investors were cautious in anticipation of Fed Chair Jerome Powell’s speech this morning in Jackson Hole, Wyoming concerning interest rates. Experts are wavering between another 0.75 percentage increase and a 0.5 percentage increase. Given that inflation still stands around the 8% mark, well over the 2% rate Central Banks deem acceptable, the Federal Reserve will maintain a hawkish economic stance and continue its quantitative tightening.
In economic news, new home sales for the month of July plunged as high prices and increased rates for loans are prompting potential buyers to think twice about closing the deal. Sales of newly constructed homes fell by 12.6% in July from June and were down 29.6% from a year ago, according to the U.S. Department of Housing and Urban Development. 511,000 new homes were sold in the U.S. last month, down from 726,000 homes sold the same month a year ago. The housing market is indeed slowing down.
In geopolitical news, Ukraine’s Independence Day celebrations were quelled as Russian missiles struck the small town of Chaplyne, killing 22 civilians. The White House has pledged an additional $3 billion in more security aid including air-defense systems, artillery systems, counter-unmanned aerial systems, and radar. The total relief package totals approximately $11 billion since the beginning of the conflict.
Speaking of the White House, earlier this week President Joe Biden announced the federal government would forgive $10,000 in student loan debt for borrowers making under $125,000 a year. 45 million Americans are crippled with a total of 1.6 trillion dollars of student loans, an amount greater than any other consumer debt besides mortgages. Many are critical of the Biden Administration’s impetus arguing that canceling debt could stoke inflation and that it is not the best use of government funds. Former Harvard President and Treasury Secretary Larry Summers, a Democrat, had this to say, “Every dollar spent on student loan relief is a dollar that could have gone to support those who don’t get the opportunity to go to college.”
Have a terrific weekend,
PW
“You cannot escape the responsibility of tomorrow by evading it today.” – Abraham Lincoln
