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09.17.2020 by David Robinson

Living on Easy Money, Nibblin’ on Sponge Cake, and Postponing the Pain

The Fed announced mid-week that short term rates are likely to remain ultra-low through 2023. Wall Street Journal CNBC Even though stocks love easy money, the US stock market quickly began to turn negative when investor attention began to focus on the Fed’s expressed concern that the economic outlook was “highly uncertain”. Wall Street Journal Investopedia

In fairness to Chairman Powell, I would pursue the same policy as the least bad of the available choices. We must keep the economic ship afloat, and easy money is floating the economic and stock market boats. This policy is risky business long term, nevertheless. Imagine a family where illness has prevented one spouse/partner from working full-time and keeps the kids out of the classroom for an extended time. Low and behold, the family learns that it has qualified for a credit card with an unlimited balance, ultra-low rates, and minimum payments on the principal. Now is that tempting or what? Woo hoo! Few families will resist the temptation to run up a credit card balance if the alternative is stress and suffering, even if they know that there are troubling long-term implications. I submit that this is what we are doing as a country. We are living on easy money, nibblin’ on sponge cake, and postponing the pain.

Premature Economic Optimism? Economic predictions ought to come with a stated warning along the lines of “who the h*ll knows really” but we noted that Goldman’s economic research is becoming more upbeat. They expect a robust third quarter rebound based on rebounding consumer spending, which they believe bodes well for the fourth quarter and beyond. They also anticipate a vaccine early next year CNBC Is Goldman’s optimism premature? Quite possibly. Subsequent to the Goldman announcement, we learned this week that US retail spending slowed in August. Wall Street Journal

The Good Doctor Fauci Warns and Prescribes: Dr. Fauci has no monopoly on the truth, but I pay attention to his sobering observations and advice. The Covid-19 data is still disturbing. CNBC Indeed, computer modeling indicates that December could be deadly (literally). CNN What does Dr. Fauci do to protect himself? He guards his sleep time, power walks 3.5 miles daily, and takes Vitamin D and Vitamin C supplements. CNBC He also recommends a flu shot but would wait until mid to late October to prolong the time of immunity. CNBC

Think Twice About Dining Out: Adults who test positive for Covid-19 are twice as likely to have dined out. Coffee shops and bars also may raise risk (duh!). CNN

Using Flood Factor to Assess Flood Risk: If you plan to buy a home or want to assess the risk of flood to your current home, you must check out Climate experts developed this statistical assessment tool in response to the concern that flood insurers’ historical FEMA data severely understated future risks. Type in an address and get a ranking from 1 to 10. Anne and I are using it in a current property search, and it may have saved us from a decision that we might have otherwise regretted down the road. Flood Factor

The Great Battery Race: Over the last year or two, interest in electric cars by clients and friends has spiked noticeably. Has a critical product mass been reached where a given consumer option becomes mainstream? Battery technology is central to all this. Axios

Jimmy Buffett Fans: Points for readers who picked up on the Margaritaville lyrics allusion. I always thought it was “living on sponge cake,” but not true. It is “nibblin’ on sponge cake.”

A Quote to Contemplate: “Define success. Eliminate everything else.” Greg McKeown

Some Worthy Short Takes to Explore:

  • Essentialism-The Disciplined Pursuit of Less: Greg McKeown
  • New England Bike Rides: Boston Globe
  • Finding Your Bounty (Paper Towels That is): CNN
  • New and Returning TV Shows to Watch: Boston Globe
  • How the Pandemic Will Shape Holiday Shopping: Axios
  • Why We Sleep by Matthew Walker: Sleep Diplomat
  • Saving Quiet to Save Everything Else:

Feel free to send us feedback on any topic, suggestions for improvement, or forward the notes on to anyone interested.

As always, thank you for reading. Stay safe and be well. We look forward to hearing from you and seeing you in time.

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