This week’s issue presented by Ridge Lending Group
What happened…
The government shut down. Again. Two million workers had pay paused. Headlines screamed crisis. Yet the S&P 500 barely blinked—down 0.4%. That’s less than a normal lunch dip.
Takeaways…
2M federal workers out of paychecks, but that’s just 1.2% of the U.S. workforce.
S&P slipped 0.4%, while oil jumped 2%—energy cared more than Wall Street.
$1.9T deficit this year alone dwarfs shutdown “savings.”
Markets have seen 21 shutdowns since 1976. No collapse yet.
Bond traders yawned—10-year yield up just 0.05%.
Explain Like I’m 12…
It’s like the teacher storming out of class… but the vending machines still work.
What this releases…
Watch for delayed data (jobs, inflation reports). Fewer numbers = more guessing.
Contractors miss checks first—small business cash flow feels it before Wall Street does.
Why it matters…
Winners: Congress postures, headlines sell ads.
Losers: workers waiting on checks, anyone needing government paperwork (permits, FHA loans).
Backroom breakdown…
The quiet part? Elites know shutdowns don’t tank markets. That’s why both sides drag them out. It’s a safe fight—costly for workers, cheap for politicians.
Real estate angle…
Closings on FHA/VA loans can stall if offices stay shut. Delayed permits jam builders. But markets still see housing as safer than politics—owners don’t sell because Congress argues.
Move or miss?
Don’t trade the noise. Focus on cash flow deals that work without timing D.C. drama. If you need financing, prep a backup line now… like with RidgeLendingGroup.com, or get tactical support-type lending because we’re still pulling 0% funding for up to 18 months at LoopholeLending.com
Lurking in the Shadows:
👟 Dalio Calls “Very Dark” Debt Cycle
Ray Dalio warned the U.S. is at the end of an 80-year debt cycle, calling the next stretch “very, very dark.” He flagged $37T+ national debt and political fractures as the key risks.
💡 Why you should care: When debt spooks big money, capital chases hard assets—and taxes usually follow.
👟 Home Sales Sink to 15-Year Low
Existing-home sales hover near 4.0M annual rate, the weakest since 2010, even as the median price hit $422,600. Mortgage rates near 7% froze buyers, while owners cling to cheap loans.
💡 Why you should care: Volume is drying up—investors with cash and patience will control the market reset.
👟 Airbnb Boom Turns to Bust
Short-term rental listings jumped 42% in two years, flooding markets like Galveston, where inventory doubled. Hosts report fewer bookings and falling nightly rates.
💡 Why you should care: Oversupply in STRs creates forced sellers—prime hunting ground for contrarian buyers.
On The Radar…
👤 Crypto ETFs Get Green Light
SEC fast-tracked dozens of funds; Bitcoin ETFs could launch within 75 days.
🏢 Deficit Nears $2T
FY2025 shortfall hit $1.9T, with interest costs up 8% YoY.
🏠 AI Stocks Hit Escape Velocity
OpenAI valued at $500B; S&P 500 set new record highs.
🧑🏭 Office Vacancies at Record 20.7%
San Francisco empty rate ballooned to 27.7%, spooking CRE lenders.
🇺🇸 Fed Cuts Rates 0.25%
Benchmark now 4.0–4.25%, with two more cuts projected this year.
⁉ Meme Mania Returns
Bitcoin hovered near $120K while meme stocks spiked 90% in two days.
🖇 The Connection
Markets don’t fear shutdowns or chaos—they fear liquidity drying up.
The shutdown froze pay for 2M workers, but the S&P only slipped 0.4%. Meanwhile, Ray Dalio warned of “very dark” debt cycles with $37T in U.S. debt on the books. And home sales just hit a 15-year low at 4M annualized, even as prices held above $422K.
Think of the system like a fridge. The light still comes on when you open the door, but if the power grid is shaky, you don’t know how long the food lasts.
Washington theater doesn’t crash markets—tight credit and rising rates do. That’s why investors yawn at shutdown headlines but panic when sales volume disappears. If buyers can’t borrow, deals stall, no matter how loud Congress yells. For property investors, this is the real tell: demand hasn’t vanished, money has.
If Fed cuts don’t unstick mortgage rates, the freeze deepens. Watch credit spreads, not headlines—they’ll show when the fridge finally goes dark.
#️Number of the Week
20.7%
That’s the U.S. office vacancy rate—highest ever recorded.
Even the staplers are starting to look lonely.
🎯 The Hit List!
✅ Watch – Shutdown cut pay for 2M workers, but S&P only dipped 0.4%. Ignore noise; follow liquidity.
✅ Hedge – U.S. deficit hit $1.9T. Rising debt = rising taxes. Protect gains before Uncle Sam does.
✅ Avoid – Airbnb listings jumped 42% in 2 years. Oversupply kills yield; wait for forced sales.
✅ Test – Mortgage rates stuck near 7% despite Fed cut. Run your deal math at 8%—anything lower is upside.
✅ Track – Bitcoin near $120K. If crypto mania holds, watch for capital rotating out of property.
✅ Scout – Office vacancies at 20.7%. Distress = discounts. CRE vultures should circle now, not later.
🚪 Closer
Powell doesn’t own a house, but somehow he still manages to raise your rent.
