11/9 Weekly Macro Note: Stimulus Checks Return, 50 Year Mortgage?, A Full Macro Review, Technicals, Week Ahead, & More

In this Weekly Macro Note, we look at the Senate bill to reopen the government, discuss the 50-year mortgage proposal, tariff rebate check Truth post from Trump, the natsec risk, and much more.

(@DonMiami3, MacroEdge Chief Economist)

Good Sunday evening MacroEdge Readers & Community,

It’s nice to be back in Florida for a quick 48-hour period before getting back on the road. We’re staying busy through the end of the year, while everyone seemingly has already checked out for a longer-than-usual holiday season that started November 1st. This week we have a bank holiday on Tuesday, when the bond market will be closed, but US equity markets will remain open.

The economic data continues to weaken behind the scenes, even during this government data blackout, and politicians are concerned about resuming the release of said data. Over the course of the last two days we’ve seen two new proposals: the launch of a 50-year mortgage for American homebuyers (particularly young ones), and tariff rebate checks - which echo what we saw in 2021, 2020, and 2008 under Bush. With the embedded inflation crisis Americans continue to face - both are not particularly bright ‘solutions’ - to use that word loosely.

Politicians appeared to make progress on the shutdown on Sunday as economic pain became more apparent - on top of pain faced by travelers with thousands of flights cancelled today. Bitcoin moved higher on this initial news, up about 2.5%, though Sanders & other progressives threatened to push back. A 60-vote threshold must be met to overcome the filibuster of any stopgap spending bill. I’d say all of this would be advisable to put under our ‘national security’ umbrella. In the equity market of today - even a 3-5% drawdown is a threat to politicians and system stability - and the Administration is well aware of this fact. This will continue to be a relevant thematic through the end of the year into next.

Futures are all gapping higher on the reopening headlines, and we have a very light Monday/Tuesday volume setup even if the Senate does advance a reopening bill through. Popularity of the current Administration will continue to plummet if they do not address the cost of living crisis, and that is reflecting in the consumer confidence data.

Ozone Pro Report

The next Ozone Pro Report Monthly Report - November) will be available on Wednesday evening, paired with the Midweek Macro Note, the Pro component of the report will be visible for Pro readers.

Week Ahead

This week will again be pretty quiet from a data standpoint, until we get a hard restart data on data collection from the government.

For private sector data this week, we’ve just got the NFIB data, though we’ll have an updated schedule out for public sector data if the government funds the BLS.

Earnings are lighter than the last two weeks:

Reopening Runway

It appears the GOP is getting more antsy for a reopening as Kevin Hasset opened the morning ramping up fear about a negative 4th quarter GDP, thousands of flights got cancelled and delayed, and SNAP payments remain withheld.

It looks like a reopening vote from the Senate evening is now imminent by next Sunday, though if negotiations fall through this evening, we could be looking to late November before a shutdown resolves. While the Senate bill will have to be voted on several times, it will then have to go to the House, which will have to return to DC to get the bill through before the holidays if they’re going to do it now.

50 Year Mortgage…?

Both Trump & FHFA’s Pulte floated the idea of introducing a 50-year mortgage term this weekend, and it was met with fierce pushback on both sides. The math on a 50-year makes absolutely no sense, though could benefit homebuilders if rolled out. Homebuilder equities have corrected as rates have failed to go lower from the Fed cut scare - though they remain above the April high.

Bessent still wants lower rates from here, and cool labor/inflation data when we get a reopening could be a catalyst for a bounce in builders. If we see concern over labor & inflation, builders will bear the brunt, notably remaining well below their 2025 highs.

Stimulus Checks Return

The idea was again floated of $1-2K tariff rebates for the general public, particularly those in lower-income segments. We’ve seen this idea come to fruition in 2021, 2020, and 2008 - when Bush rolled out up to $1,200 checks.

Flashbacks to May 2008:

When there was still little admission of US economic problems.

A Full Macro Review

The state of the economy remains very mixed, and some of our key cyclical data - such as from the real estate and manufacturing sectors - has gotten even more blurry with the shutdown.

Because the equity market remains in the driver’s seat for what policymakers are responding to first, when they see pain, they will respond for the time being. On Wednesday, in the Midweek Macro Note - we’ll have a ‘Full Macro Review’ breaking down labor, inflation, major equity markets, and a look into the major cyclical sectors as we head towards reopening.

Tariff price pressures remain elevated for the time being:

While employment continues to cool:

Technicals

The entire tech sector (NQ) is retesting a key breakout pivot after the correction last week: