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A Post-Cycle World
This Week on The Compound
This week on TCAF, Josh and Michael were joined by David Kelly, the Chief Global Strategist at J.P. Morgan Asset Management. They discussed the state of inflation, the death of the business cycle, the downside of a strong dollar, and the problem with tariffs. (Listen)
INSIDE THE COMPOUND
Common wisdom is that Fed easing will bring down mortgage rates. Which is kinda true. 30-year mortgage rates are well off their highs. But Callie Cox notes that any benefit is a drop in the bucket of housing affordability. And if you are thinking of staying put and renovating your current home don’t expect it to come cheaply. Cox writes:
Mortgage rates can theoretically go lower if the Fed cuts its main rate below 3%. Or, you know, if bond market theory fails and the 10-year yield falls below the Fed’s main rate. Housing prices can also decline, too.
But for any of those scenarios to happen, we’d likely need the economy to fall apart. A recession, in Wall Street terms.
OUTSIDE THE COMPOUND
Financial planners often tell clients to keep a ‘funny money’ account separate from their main portfolio. This allows them to trade to their heart’s content while allowing the vast majority of their wealth to work unimpeded. The same is true for your budget as well. If you don’t allow for occasional splurges it will become difficult, if not impossible, to stay on track. Jacob Schroeder writes:
When driving over hard, rugged terrain, it’s customary to release some pressure in your tires. We should do the same for ourselves. Essentially, splurging every once in a while allows you to control the pressure valve, reinforcing your commitment to whatever goal you’re chasing. A better way to frame it might be “cashing in some chips.” You’re taking a portion of the rewards from the bigger pot you’ve earned, helping to keep you in the game.
MERCH
Future Proof 2024 saw a lot of these Hawaiian shirts on the boardwalk. They are a collaboration between The Compound and Tropical Bros. The best part is that 10% of all sales will be donated to No Kid Hungry. Use the code Summer25 for an additional discount.
COMING SOON
This week on TCAF, Josh and Michael will be joined by Warren Pies and Fernando Vidal co-founders of 3Fourteen Research.
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