Market Morning: Education Dept. Student Debt Worries, Fannie & Freddie Lever Up, YouTube Free For All

Futures Up Again in Rare 2-Day Wonder

Stocks struggled yesterday but indexes did end up barely pulling off gains for the day, the Nasdaq up less than a point. Futures are higher again today, with stocks flat in Europe but strongly higher in Asia, Japan Hong Kong and China all up about a full percent. Nasdaq futures are up just a bit this morning, though nothing to write home about. The big event everyone is watching is the upcoming meeting between US President Trump and China President Xi Jinping when it is expected they’ll talk about trade, following which Trump will bluster about something on Twitter and new tariffs will take effect for next year. Since everyone already expects this, it will be interesting to see how the market reacts once the tweet is out.

Department Of Education Figures Out Student Debt Could Be A Problem

In one of the biggest Eureka Moments in the Department of Education since the people over there figured out the sky is blue, the head of the DoE now believes that Federal student debt could eventually be a problem for the US economy.  “The implications for our economy are staggering,” said Secretary of Education Betsy DeVos, staggered. “More than $10,000 of someone else’s student debt for every single American taxpayer – 145 million of them.” This doesn’t count the $178,339 per taxpayer due on the national debt, which will probably be higher by the time you read this. According to the Federal Reserve, borrowers in 2017 took on between $20,000 and $25,000 of debt, and the total is now $1.44 trillion. The national debt is 15.6 times that sum, so if student debt is staggering, what’s the national debt? Flabbergastaggering?

Fannie & Freddie Green-Lighted to Shoulder More Mortgage Debt

If the Federal student loan problem and the national debt weren’t enough, Fannie Mae (OTCMKTS:FNMA) and Freddie Mac (OTCMKTS:FMCC) got the green light to back mortgages for up to $484,350 a pop, up from the previous limit of $453,100. What the two bailed-out Government Sponsored Enterprises are allowed to back goes in accordance with average home prices, which once again opens up the two to get hit in any future housing downturn, because once you back a loan, it’s yours whether or not it’s underwater. What makes it all even better, or one could say reckless, is that in particularly high-priced areas, the limit is 50% higher, putting the cap at $726,525. Meaning, in areas where any potential housing bubble is the most exaggerated, those are the places where particular care is taken to keep fueling it with even more subsidies. There are about 100 of these high-priced heavily subsidized areas in the US.

Alphabet Trying to Challenge Netflix Maybe?

In a move that could be an Alphabet Inc. (NASDAQ:GOOGL) challenge to Netflix (NASDAQ:NFLX) content-streaming dominance, the Google parent has decided to make all original content on YouTube free to all users with advertising, starting in 2020. There will still be a paid option for users who don’t want to be bothered with ads however. The move comes in the wake of growing international interest in original YouTube programming, and paywalls complicate licensing issues. YouTube has not disclosed how many paid subscribers it has, but the service is available for $12 a month in the United States.

 

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