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We have to be very careful to understand what Powell was really saying, and it is not clear. He said we are “near the neutral range, but the range is 2.5%-3.5%. So all he really said was we are in a point where we still could raise three times in 2019 and still be in the neutral range at 3%. He did not say we are near ending. It is possible he was trying to deflect the pressure from Trump, the housing and auto industries, and Wall St to pause in March. There is no doubt he will raise in December.

Consumer spending was up strongly in October, and consumer sentiment is near record high.  Wages are growing at 3%, well above inflation, and year end bonuses are very likely to be very good in all industries other than housing this year. Christmas is going to be very good and likely much better than forecast. That will drive a good economy in Q1 in 2019. PCE, the inflation gauge the Fed uses was only 1.8% in October, and the Philips curve has now been proven to not be accurate, so it is possible wage growth might not be as strong as the economy and unemployment would suggest. More likely it will be bonuses that rise, and not hourly wages as much as expected. That puts cash into workers pockets, but does not raise inflationary wages into 2019.

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Joel Ross

Joel Ross began his career in Wall St as an investment banker in 1965, handling corporate advisory matters for a variety of clients. During the seventies he was CEO of North American operations for a UK based conglomerate, and sat on the parent company board. In 1981, he began his own firm handling leveraged buyouts, investment banking and real estate financing. In 1984 Ross began providing investment banking services and arranging financing for real estate transactions with his own firm, Ross Properties, Inc. In 1993 Ross and a partner, Lexington Mortgage, created the first Wall St hotel CMBS program in conjunction with Nomura. They went on to develop a similar CMBS program for another major Wall St investment bank and for five leading hotel companies. Lexington, in partnership with Mr. Ross established a hotel mortgage bank table funded by an investment bank, and making all CMBS hotel loans on their behalf. In 1999 he formed Citadel Realty Advisors as a successor to Ross Properties Corp., focusing on real estate investment banking in the US, UK and Paris. He has closed over $3.0 billion of financings for office, hotel, retail, land and multifamily projects. Ross is also a founder of Market Street Investors, a brownfield land development company, and has been involved in the acquisition of notes on defaulted loans and various REO assets in conjunction with several major investors. Ross was an adjunct professor in the graduate program at the NYU Hotel School. He is a member of Urban Land Institute and was a member of the leadership of his ULI council. In 1999, he conceived and co-authored with PricewaterhouseCoopers, the Hotel Mortgage Performance Report, a major study of hotel mortgage default rates.

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