Jawboning, bluster, threats, and court actions have yet to force the Federal Reserve Bank to do the president's bidding. Undeterred, Donald Trump thinks he has found a way to lower consumer borrowing costs without further Fed action.
Given his background in real estate, where borrowing is a way of life, it is no wonder he believes lowering borrowing costs for consumers is the key to affordability. As of November 2025, the U.S. consumer debt was roughly $18.10 trillion, a new record. Mortgage debt represents $13.39 trillion, while bank cards account for $1.09 trillion. Overall, consumer debt rose 2.9 percent from the prior year.
There is no question that, with that amount of debt, any relief effort would be well received by many voters. In response to an affordability issue that the administration denies, President Trump has demanded that credit card companies cap interest rates at 10 percent. He also ordered Fannie Mae and Freddie Mac to buy $200 billion worth of mortgage bonds. By doing so, he believes mortgage interest rates will fall, which could attract new buyers to the housing markets.
Both initiatives were announced on Truth Social rather than through a legislative proposal to Congress or by drafting new regulations. It makes one wonder if these are serious proposals or simply pre-election promises. But let's give the president the benefit of the doubt and ask: what does this accomplish?
Circumventing the Fed, which officially oversees interest rates, is questionable business, but it has happened before. Prior to 1935, there was really no difference between the U.S. Treasury and the Federal Reserve Bank; however, over time, a series of amendments made the Fed the master of monetary policy.
In the case of housing affordability, buying up bonds might work. After Trump's media post, long-term rates on U.S. 30-year bonds fell below 6 percent but have risen since. There has been little impact on the benchmark 10-Year bond. The problem is that lower rates, while making a mortgage more affordable, can also push home prices higher. He also signed an executive order this week to prohibit institutions from buying single-family homes, something he believes has contributed to rising housing prices.
As for capping credit card interest rates for one year, which are now, on average, higher than 24 percent, it has been tried before, not only here in the U.S. but also in other countries. President Jimmy Carter, through his March 1980 credit control policy, attempted to limit additional borrowing through credit cards. The policy lasted about two months. France, South Africa, Ecuador, Japan, Kenya, South Korea, and the Philippines are other examples of what happens when caps are imposed.
In every case, caps shrink credit access for high-risk borrowers( most retail borrowers). Credit card companies (read: banks) simply stop lending or won't approve applicants they deem high-risk, including low-income or subprime consumers. Smaller loans disappear, and average loan size increases.
Short-term credit dries up. Lenders shift to serving higher collateral borrowers. People who pay off their credit card charges in full each month are sought after. It usually ends with a series of workarounds. Retailers and auto dealers, for example, move in offering financing with baked-in high credit costs in their product prices.
Unregulated pawn loan shops, rent-to-own stores, payday lenders, and loan sharks all experience a sharp increase in business because most, if not all, of them are excluded from the interest rate cap. By now, you are catching my drift. The fact that the cap would only be instituted for one year could save consumers billions in interest payments, but once it ended, there is no guarantee that banks wouldn't raise interest rates to recoup their losses.
JP Morgan's well-respected CEO, Jamie Dimon, said in an Economist interview last week that the proposed 10 percent cap on credit card interest rates would effectively cut off credit for roughly 80 percent of Americans. He said the policy would be an economic disaster, shrinking access rather than protecting consumers.
History says he is right, but by then the votes would have been counted, and that's the objective. Welcome to American populist politics.
Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.
Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of OPI, Inc. or a solicitation to become a client of OPI. The reader should not assume that any strategies or specific investments discussed are employed, bought, sold, or held by OPI. Investments in securities are not insured, protected, or guaranteed and may result in loss of income and/or principal. This communication may include opinions and forward-looking statements, and we can give no assurance that such beliefs and expectations will prove to be correct. Investments in securities are not insured, protected, or guaranteed and may result in loss of income and/or principal. This communication may include opinions and forward-looking statements, and we can give no assurance that such beliefs and expectations will prove to be correct.
A Greenland invasion, the end of NATO, another tariff war, Iranian riots, threats, and counterthreats. This week saw it all. It could have been the end of the world, but it wasn’t. Savvy investors took advantage of the noise.
Talk about TACO (Trump always chickens out)! This week exemplified Trumpian scare tactics. It is remarkable how many investors were influenced, not recognizing this as another page from Trump’s novel, “The Art of the Deal.”
In any case, the ruffled feathers on both sides of the Atlantic after the president’s threat to take over Greenland or else were resolved in short order. The World Economic Summit in Davos set the stage for Trump's speech.
Behind the bluster and bravado, and the back-room negotiations, was the real issue—strategic security. Shipping lanes, undersea infrastructure, defense positioning, and more are real concerns for the U.S. and Europe regarding Greenland and the Arctic.
I call it Gunship Diplomacy mixed with a heavy dose of the new 'Donroe Doctrine’. It is all part of my thesis that Donald Trump is following in the footsteps of presidents like Jefferson, Madison, Monroe, Andrew Johnson, William Howard Taft, Harry Truman, and others who expanded America’s reach for its own gains and strategic interests either by threats or force.
The world is getting smaller, and Greenland and the Arctic, once a remote region, are in reality right next door to China, North Korea, and Russia. Those nations are attempting to expand their presence in the area, as they are in other areas of our hemisphere. It is the reason behind Donald Trump's strategy for the Golden Dome missile defense system. Like Ronald Reagan’s Star Wars initiative, the Golden Dome is all about nuclear missile attacks. It would detect and destroy ballistic, hypersonic, and cruise missiles before they launch or during their flight.
The media focused on Trump’s words rather than the substance of the issue, continuing their typical approach. Trump’s rhetoric often inflames situations, a pattern that is now recognizable.
In any case, all one had to do was look at how the rest of the world reacted. Markets in China, South Korea, and even Denmark did not fall for the noise. The panic selling was uniquely American. It was a great opportunity to buy the dip.
As for the fundamentals, the economy was still expanding in the third quarter of last year, rising at a 4.4 percent pace, slightly higher than the government’s initial estimate. In addition, personal spending rose 0.5 percent in November 2025 versus October. The Personal Consumption Expenditures Index (PCE) for November rose 0.2 percent, the same as in October, which was in line with estimates. All of which implies that inflation is in check, the economy continues to grow, and labor is showing slight moderation, with little hiring or firing.
Earnings season, in typical fashion, is turning out to be a little better than expected, with 78 percent of companies reporting beating estimates. Equities overall are still exhibiting bullish tendencies. This week’s geopolitical tape bomb was met with buying, and market breadth remains resilient. The rotation trade is still working, but the tech sector and growth stocks in general are beginning to signal oversold readings. We could see a bounce in the Mag 7 group if earnings and guidance come in better than expected next week.
The precious metals complex, especially silver, is approaching bubble territory. Typically, in equity markets, tops are processes while bottoms are events (usually due to policy intervention). Conversely, in gold, silver, platinum, etc., bottoms are a process, and tops are an event.
FOMO is white hot in the silver market, driven by the belief that the metal is in short supply, and the U.S. government has deemed it a critical metal. In the case of gold, central banks and many foreign nations are beginning to use gold to settle trade outside of the U.S. Treasury and petrodollar systems. While still bullish on all precious metals, I would not chase them here. If you own them and the miners, I would lighten up here. That does not mean selling out of your positions. Just bank some profits and possibly buy back at lower prices.
However, in the case of copper, I would see any weakness in price as an opportunity to add. In addition, I still think emerging markets, especially China’s A shares, the Shenzhen and STAR markets, have more room to run this year despite their stellar performance in 2025. As for this weekend, stay warm.
Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.
Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of OPI, Inc. or a solicitation to become a client of OPI. The reader should not assume that any strategies or specific investments discussed are employed, bought, sold, or held by OPI. Investments in securities are not insured, protected, or guaranteed and may result in loss of income and/or principal. This communication may include opinions and forward-looking statements, and we can give no assurance that such beliefs and expectations will prove to be correct. Investments in securities are not insured, protected, or guaranteed and may result in loss of income and/or principal. This communication may include opinions and forward-looking statements, and we can give no assurance that such beliefs and expectations will prove to be correct.
Priced out of the housing markets, younger generations must look further afield to save for retirement. While the barriers to entry in the housing market keep rising, access to financial markets has gotten cheaper.
This is a vastly different attitude and behavior from previous generations. It has been a tradition here in America that the way to build wealth and enjoy it was to buy a home.
As a result, homeownership is today the most valuable asset for the average American and accounts for nearly half of their accumulated wealth. In just about any study today, rising home equity accounts for the lion's share of net worth.
Unfortunately, as I wrote in my last column, most Gen Zers cannot even afford the down payment on a home or the monthly payments. However, while many have found that they cannot afford a down payment on a house, they can open an account at Robinhood for next to nothing.
Participating in the financial markets has never been easier. No credit checks, brokers, paperwork, or down payments, just pick up your phone and place a trade. Encouraging this trend, Gen Z has much broader access to a long list of retirement plans thanks to employers and the government. The truth is, when I was that age, there were no government-sponsored retirement plans.
Most credit the arrival of the Covid pandemic for launching Gen Z's love affair with the markets. Trapped at home with a large government paycheck in hand, the meme-stock mania enticed many to take a chance. As the stock prices of companies like GameStop and AMC soared higher daily, social media exploded with stories about finance and investing. Crypto soon joined the party, and it was off to the races as a generation of young Americans hit the buy button.
Of course, over time, the meme craze petered out, but by then Gen Zers realized there is no mystery in the financial markets. Thanks to an ever-increasing knowledge base fueled by an expanding stream of finance, how-to, and new, easier investment products, Gen Z has matured over the past five years.
As more youngsters joined the workforce, they showed little hesitation in opening IRAs, 401 (K)s, or equivalent tax-deferred accounts at their companies. Today, automatic enrollment is even available, as I discussed in a recent column. And investing early is increasingly important to this generation.
One of these new innovations is a personal finance app called Acorns. It is an app that lets you invest your spare change and other funds in diversified portfolios of EFs. According to a report by Acorns, published by the New York Times, 72 percent of Zers aged 18 to 35 believe they'll need to rely entirely on themselves for retirement. More than half of the same group believe Social Security may be gone by the time they are eligible to collect.
One reader's son, Michael, believes 'investing' is the wrong word for many Gen Z participants in the stock market. "Gambling is a far more accurate term," according to him. "Retail investors, (people using apps like Robin Hood) are taking highly leveraged positions that expire within days or months to try and ride 'hyper waves' that are being pushed by young financial influencers and subreddits."
He says that younger traders do not believe that a mere 7-10 percent annualized gain in stocks will result in financial security by the time they retire. Michael feels that the traditional methods of building wealth are inaccessible to most of his age group and views the entire phenomenon as an indictment of our society and a red flag regarding the headspace and hopelessness his generation feels. Many GenZers I talk to echo these sentiments.
As a result, trading by retail investors has grown exponentially over the last 15 years and, on any given day, accounts for more than 25 percent of trading volume. If you count trading in zero date options (ODTE), they represent more than 60 percent of all S&P 500 index options volume. Roughly one-third of 25-year-olds have investment accounts. That is six times the number ten years ago.
I am sure this all sounds like an advertisement for more participation by young readers, but there are a large caveat and warning. Home prices have historically remained strong, though they have declined during periods such as the Financial Crisis of 2008-2009. In most periods, housing and the stock market tend to move together. Have a low level of correlation. It is the turtle, while the stock market represents the hare, and therein lies the problem.
Stocks, on the other hand, can be volatile. Since COVID, this new generation has bought every dip and been rewarded mightily for doing so. At some point, that won't work, if history is any guide. Depending on how deep and long a correction might take, the risk is that Gen Zers panic and sell at the bottom, as so many investors did during the Financial Crisis. That could not only devastate their hard-earned retirement savings but also rock their belief in the market as a vehicle for retirement savings.
Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.
Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of OPI, Inc. or a solicitation to become a client of OPI. The reader should not assume that any strategies or specific investments discussed are employed, bought, sold, or held by OPI. Investments in securities are not insured, protected, or guaranteed and may result in loss of income and/or principal. This communication may include opinions and forward-looking statements, and we can give no assurance that such beliefs and expectations will prove to be correct. Investments in securities are not insured, protected, or guaranteed and may result in loss of income and/or principal. This communication may include opinions and forward-looking statements, and we can give no assurance that such beliefs and expectations will prove to be correct.
It was a week where the White House provided a steady stream of "what ifs." Iran, Greenland, credit card caps, Fed subpoenas, and aid for home buyers were just some of the topics floated. Take it all with a grain of salt.
The overall market indexes traded in a tight range, but by the end of the week, they continued to edge higher. If you were invested in cyclical areas, you did far better than that. As I have pointed out in my last few columns, a rotation away from the concentrated group of tech stocks is well underway into cyclical areas like materials, industrials, health care, consumer discretionary, and small-cap stocks.
I think that will continue as tax cuts, increased government spending, and a reduction in tariffs take hold in the economy. Remember, this is an election year, and as such, the administration is determined to short-circuit the "affordability" issue because it has played so well in GOP election defeats in recent years.
Some examples include the president's desire to cap credit card interest rates at 10 percent for one year, which would require congressional approval. Top Republicans are already resisting such a move. However, it did not stop traders from trashing a whole host of financial stocks on this "what if" scenario.
Trump also wants to reduce rising electricity prices by opening a bidding war for tech companies to fund new power plants, and he also proposed "the great health-care plan," which he claims will lower drug prices, increase transparency, and redirect federal subsidies to consumers.
On the housing front, the president wants to spend $200 billion or more in buying mortgage bonds through Fannie Mae and Freddie Mac, the two government-controlled mortgage agencies. The president hopes the move will reduce housing costs by lowering mortgage interest rates.
Speaking of interest rates, the DOJ Fed subpoena announcement was meant to put pressure on Chair Jerome Powell to vacate the office sooner rather than later. The rather uncharacteristic response from the beleaguered central bank chairman on social media prompted the White House to backpedal on that move almost immediately.
Trump also said that he wants to bar Wall Street financial institutions from buying single-family homes. Professional house flippers are believed to have artificially inflated housing prices in many communities. It is not clear to me if that would have a big impact on the housing market, but one can hope. In any case, housing stocks took off after Trump's social media post.
And while these trial balloons are floating out of the Oval Office windows, Trump's gunship diplomacy is forging full steam ahead. Venezuela was last week's story, largely replaced by threats of military action in both Iran and Greenland. While equity and bond markets took this saber-rattling in stride, the precious metals and oil markets spiked higher as the fear factor of geopolitical turmoil took hold.
To me, Trump's escapades overseas are part of the mercantilist tone of his administration. For those who missed my December 2024 column "Is mercantilism the answer to our trade imbalance," I suggest you read it. It begins with:
"For those few of us familiar with the term, mercantilism was the dominant economic system in Europe from the 16th to the 18th centuries. It was a world where it was believed that global wealth was fixed and finite. To become powerful, a nation needed to acquire as much wealth as possible. Back then, a nation's wealth was measured by how much gold and silver it accumulated."
Certainly, in mercantilist terms, the controversy over strategic metals fits the bill as does oil in the case of Venezuela and Iran when discussing wealth as fixed and finite.
Markets feel a bit tired to me. We still have not received a verdict on the tariff question, but at the end of the week, I noticed some overdue profit-taking in the mines and metals sector.
The threat of additional tariffs on metals may have fueled some of the recent gains in that space. A negative ruling by the Supreme Court might create further volatility in that area and in other cyclical sectors that have benefited most from the rotation we have seen over the last two weeks.
I would not chase equities here. Instead, there may be a buying opportunity if we pull back in areas such as small-cap stocks, industrials, and miners of gold, silver, copper, platinum, and palladium. Emerging markets are also hitting new highs. China may be worth a fresh look as well.
Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.
Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of OPI, Inc. or a solicitation to become a client of OPI. The reader should not assume that any strategies or specific investments discussed are employed, bought, sold, or held by OPI. Investments in securities are not insured, protected, or guaranteed and may result in loss of income and/or principal. This communication may include opinions and forward-looking statements, and we can give no assurance that such beliefs and expectations will prove to be correct. Investments in securities are not insured, protected, or guaranteed and may result in loss of income and/or principal. This communication may include opinions and forward-looking statements, and we can give no assurance that such beliefs and expectations will prove to be correct.
The college-age generation is grappling with inflation, increasing housing prices, climate change, and now mass corporate layoffs. In a world where geopolitical turmoil is increasing, the ground beneath their feet is shifting. Many believe their future is bleak.
My nephew, Joey, just got married. His wife lives with her parents, and he lives with his. While he makes good money as a pharmacy manager at a national chain drugstore, neither he nor his wife can afford even a down payment on a house in Long Island. They are moving in with the wife's parents. Joey's sister is also married, with two children. They also live with their parents. Welcome to the American dream turned nightmare for almost 70 million young Americans.
The typical age range of Gen Z is 1997 to 2012. They are the demographic cohort succeeding Millennials and preceding Generation Alpha. They are the most racially and ethnically diverse generation in America, with 48 percent being non-white.
Almost all of this generation is highly active on social media. Almost 60 percent are planning to pursue a college education. They are just as likely to identify as Republicans, Democrats, or independents. As such, the present populist upheaval the U.S. is undergoing takes an inordinate toll on them. It may be why 91 percent of Gen Zers report experiencing symptoms of stress and anxiety.
While Wall Street opened the year celebrating the promise of a bright future, thanks to AI. Opinion leaders predict that artificial intelligence, robots, and space, among other technological breakthroughs, will dramatically reshape the way the world works. For college grads, all they see is a no-fire, no-hire labor market where unemployment among workers ages 20 to 24 continues to rise. It is now to 5.3 percent and even worse for those younger than that.
The National Association of Colleges and Employers predict the entry-level hiring crisis will worsen this year, rating job prospects as poor or at best fair. At a recent gathering of employers at the Yale School of Management, 66 percent admitted they planned to cut jobs or freeze hiring.
With an economy that is expected to grow by 3 percent in 2026, one would have expected the opposite reaction, but then you would not be reckoning with the impact of artificial intelligence on the job market. Potential employers are concerned and uncertain about how AI might reshape the workforce over the next few years, and rightfully so.
Most analysts believe that many white-collar positions, especially at the entry level, will be replaced by technological advancement. Underscoring that concern, many corporate giants, including Amazon, UPS, Target, and Google, announced layoffs affecting more than 60,000 jobs. And to many, that is just the tip of the iceberg.
Faced with taking fast-food jobs at minimum wage and lacking work experience in their hoped-for professions, 3 in 5 Gen Z workers are looking elsewhere for a job with some kind of reasonable future. Almost half of these young workers believe the blue-collar jobs may offer better long-term security than corporate work in the technology fields. The top sectors pursued by Gen Z include plumbing, automotive repair, construction, and electrical work.
I happen to agree with that belief, but unfortunately, Gen Z applicants face the same barrier to entry in their white-collar arena — lack of experience. Many job applicants, regardless of industry, are now required to have at least three years of experience and up to five years before being considered.
The lure of six-figure salaries in the blue-collar area is attracting more Gen Zs to vocational schools. However, what many conveniently forget is that earning that kind of take-home pay requires years of experience, a substantial investment in personal tools and equipment, and serious wear and tear on the body.
As I write this, in the next room, a 65-year-old builder I'll call Scott, who is going in for his second knee replacement next month, is building another room in our condo. Assisting him is a young Gen Zer. There is a constant stream of chatter as Scott talks through his drywalling process. His helper listens intently. They seem eager to learn and ask questions as they work. He did the same when he placed the struts and erected the wall.
For several years, Scott has been involved in a local high school program that teaches vocational school grads his business, while they gain on-the-job experience and a paycheck. Scott and others like him are providing a solution one day at a time. He is one answer to the dilemma facing this struggling generation. This country needs more Scotts to hire and teach a young workforce in need.
Next week, I will highlight one area where many Gen Xers have found an alternative to home ownership. It holds risks but doesn't cost an arm and a leg to get involved.
Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.
Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of OPI, Inc. or a solicitation to become a client of OPI. The reader should not assume that any strategies or specific investments discussed are employed, bought, sold, or held by OPI. Investments in securities are not insured, protected, or guaranteed and may result in loss of income and/or principal. This communication may include opinions and forward-looking statements, and we can give no assurance that such beliefs and expectations will prove to be correct. Investments in securities are not insured, protected, or guaranteed and may result in loss of income and/or principal. This communication may include opinions and forward-looking statements, and we can give no assurance that such beliefs and expectations will prove to be correct.
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