This issue provides the “30,000 foot view” of the evolution of the Fed’s quantitative tightening, which is draining liquidity from global markets, in particular EU, China, and developing countries.  There’s no free lunch with ZIPR and that bill is coming due.  Thanks largely to tax reform and the rollback of the regulations, the American economy is back with a 3.0% growth in GDP over the last 12 months ended September 30.  Employment and wages are up and retailers expect a booming holiday season with sales growth projected to exceed 5%.  Moreover, long-term growth prospects have brightened thanks to the administration’s Opportunity Zone program, which is poised to bring as much as $6 trillion of investment capital to “hollowed out” America.  The U.S., once more, is the engine that drives the drives the global economy.

The housing sector continues to lag, signaling, in part, the impact that rising rates, home prices and the high “cap ex” required to obtain a mortgage.  With housing finance reform languishing for a decade in Congress, many speculate that administrative reforms will have to do the heavy lifting for housing finance reform.  The changing of the guard in FHFA, Fannie Mae and Freddie Mac provides the Trump administration an opportunity to recalibrate housing finance and its regulatory structure, which is a costly and unwieldy burden on homeownership.  Ultimately, the results of the midterm election will determine if Congressional leadership with opt for gridlock or results on housing finance reform.  Time will tell…

 

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