On September 18, 2024, the Federal Reserve [Fed] cut the Federal Fund Rate by 0.50 percentage points. This is the first rate cut since the Fed began raising interest rates in March 2022. Most economists were surprised by the aggressive rate cut, which was double the typical 0.25 percentage point cut. Fed chairman, Jerome Powell, stated that the reason for the aggressive rate cut was because, “The U.S. economy is in a good place…and our decision today is designed to keep it there.” Here are a few takeaways we can reflect on regarding this decision by the Fed. First and foremost, Powell’s statement that the U.S. economy is in a good place is controversial. Most Americans would not agree with this statement. Basic living costs such as groceries, gasoline, housing prices, rent, etc, are still very high. The majority of Americans are living paycheck to paycheck just to survive and often cannot afford simple luxuries such as eating out at restaurants or going to the movies. While the Fed rate cut could help improve mortgage interest rates, most people still cannot afford to buy a new or used house due to the still inflated prices of homes. The Federal Fund Rate is just one factor of many that affect the housing market. There are many issues beyond the Fed’s control that impact the housing market, such as lack of supply. Lack of supply and greater demand just causes the price of homes to remain high. So the Fed’s decision to aggressively cut the rate by .5 percentage point in order to keep the economy where it is today , may not have been the best decision for most Americans. The Federal Reserve's decision to cut this month was also influenced by data from the labor market. In July, the Labor Department issued a data revision showing that the U.S. actually added 818,000 fewer jobs f rom March 2023-March 2024, than originally reported. What this means is that the U.S. job market was not as strong as it originally appeared. This sparked concerns the U.S. economy could be cracking under the highest interest rates in 23 years. Nationwide senior economist Ben Ayers was predicting a rate cut of 0.25 percentage points. He stated,"Calls for a larger, 50 bps decline will become louder if the August jobs report comes in weaker than expected and there are more signs of businesses retrenching," The 0.5 percentage point drop further confirms that the U.S. economy may not be currently in a “good place” as Powell suggests. Powell has repeatedly stated that he and his colleagues are not swayed by partisan politics. However, the timing of the Fed's move is politically sensitive. This rate cut comes less than seven weeks before a presidential election. The strength of the economy is always a key issue for voters. If the economy is strong, Americans usually like to keep things status quo. If the economy is not doing well, Americans tend to vote for a change in the system. Avoiding a recession at all costs seems to be a motivating factor for the Fed’s aggressive rate cut, especially coming into an election season. While falling interest rates may help borrowers and potentially spur economic growth; it comes with a cost for savers. The minimal interest currently paid for online savings accounts and money market funds will likely decline. This means less money for those who are attempting to put something aside for that rainy day. The Fed’s rate cut also does not affect the high costs of wages for Employers. While the Federal minimum wage rate is currently $7.25/ hr, only 13 out of the 50 states have their minimum wage set at that rate. The majority of U.S. employers are paying anywhere from $10/ hr. - $17/ hr. for employee MINIMUM wage in addition to the employer taxes and benefits that the employer pays for each employee. Most Americans will not work for, nor can they survive on minimum wage due to the high cost of living. This leaves the employer with the dilemma of having to offer an hourly rate much higher than minimum wage just to get an employee to show up for work. This increases the employer’s costs which in turn requires him to pass his increased costs onto the consumer, leaving consumer prices at an all time high. Whether this aggressive rate cut by the Fed will actually spur the economy to a better place or send it into a severe recession is yet to be determined. I guess time will tell as we watch and wait. Tickers to consider: IKT , KALA , EVAX Sylva Disclaimer: https://www.sylvacap.com/disclai mer

Housing affordability is a major problem in America. Home prices spiked during Covid-19 and then the Fed’s war on inflation sent mortgage rates surging. Elevated mortgage rates and home prices have caused prospective homebuyers to push the “pause” button on buying a home. Additionally, homeowners have been reluctant to put their properties on the market and risk potentially forfeiting the ultra-low mortgage rates they locked in during the pandemic. This has created the perfect storm for a housing market that’s been more or less frozen. Home sales are expected to remain constrained as long as mortgage rates remain well over the 6% to 6.5% level. According to the most recent economic projections from June, the Federal Reserve doesn’t see inflation subsiding to 2% on a consistent basis until 2026, which could mean higher but declining short-term interest rates for the next two years. Inventory of unsold homes rose across the country this week — but at less than 1% rate. Slower growth of unsold homes on the market is a result of too few sellers on the supply side and stability on the demand side. Due to the weak or declining homebuyer demand, the unsold supply of homes continues to build. What is the economic impact should these homes continue to pour into the market, but remain unsold? Typically, when there is a flood of supply in the housing market, housing prices come down, making homes more affordable for potential buyers, and thereby “unsticking” the market. However, this is not the case in our current market. Despite the increase in homes on the market, average home prices still remain high. According to the National Association of Realtors (NAR), existing home prices were 4.2% higher in July compared to a year ago after rising for the 13th consecutive month. Yet, just because home prices keep rising, does not mean that a household’s income keeps rising. In order to qualify for the median-price existing single-family home in today’s market, a potential buyer must have a household income of around $110,000. Three years ago, households needed to earn about $59,000 to qualify for the same type of home. Therefore, lack of rising income and those who are locked into low interest rates, are keeping buyers from buying and sellers from selling, effectively “freezing” the market. A frozen housing market does affect the economy. Spending linked to home sales have dropped. There has also been a drop in the demand for work required for fixing up or renovating homes to get them ready to sell. Lack of home sales also means reduced sales or commissions for professionals handling the logistics of homes sales. According to the National Association of Home Builders, these activities normally account for 3-5% of the U.S. output. On the plus side, the millions of households that are “locked into” cheap mortgage rates theoretically should have extra money to spend on other things. This may be one reason that consumer spending has remained resilient despite higher interest rates. The U.S. labor market is also affected by the frozen housing market. Workers are reluctant to accept job offers in other states, if it means sacrificing their low mortgage rates. So labor mobility has been significantly reduced due to this “locked in” effect. The rental market is also affected by the frozen market. People who cannot afford to buy a home, end up being renters. When there is a flood of renters in the market, rental prices go up. Because rental prices are high, individuals can no longer afford to live on their own. They either end up moving back in with family, or end up having to have roommates just to survive. The Federal Reserve (FED) may be a primary key in unlocking the gridlock in the housing market. Although the FED has not cut the federal funds rate in over a year, lowering the federal funds rate, which highly influences mortgage rates, would be a step in the right direction to make housing more affordable and accessible for buyers. Tickers to consider: IKT , KALA , CEI , EVAX Sylva Disclaimer: https://www.sylvacap.com/disclaimer

Sinking sales, rapidly rising inventory and prices at all-time highs gives us a picture of the current state of the housing market. According to the National Association of Realtors (NAR) home sales data, sales of existing homes in June fell 5.4% year over year. That’s the highest rate of decline so far this year. A shortage of homes for sale has made circumstances difficult for buyers for quite some time. But inventory appears to be slightly improving. In June, the months’ supply of homes for sale reached its highest level in more than four years. Per the NAR report, in June there was a 4.1 month supply of homes on the market nationwide, up from 3.1 months the previous year . What this means is that at the current pace, it would take a little more than 4 months to sell all the properties currently for sale. The market hasn’t seen an inventory above 4 months since 2020. Typically, in a balanced market, the supply of homes for sale would last six months. Supply less than six months is considered a seller’s market, and more than a six month supply is considered a buyers market. The median sales price also hit a new all-time high ($426,900) for the second month in a row. This in combination with still high interest rates, makes home ownership unattainable for many Americans. According to Zillow, interest on a 30- year mortgage averaged 6.6% annual percentage rate for the week ending August 1, 2024, down from 6.9% the previous year. While the interest rate on mortgages seem to be inching in the right direction, there needs to be more drastic changes in order for the housing market to become affordable. Ordinarily, high sale prices would be an incentive for home builders to construct more houses, thereby increasing their profits. However, inflation has driven up the costs for building a home to record highs, drastically cutting into the home builders' profit margins. This equates to fewer new homes being added to the market. Simultaneously, many existing homeowners have a huge incentive not to sell. They can’t afford to lose their ultralow interest rate. In 2020 and 2021, millions of people got mortgage loans or refinanced their current loans at around 2%-3%. Selling their homes today would be they would have to exchange that very low interest rate for today’s much higher rate. Last, but not least, economists and financial analysts have been anticipating the Federal Reserve (FED) cutting the Federal Funds Rate, which influences interest rates for mortgage loans. The FED increased the Federal Funds Rate eleven times in 2022- 2023, supposedly to battle inflation. While the FED has kept the Federal Funds rate steady since September 2023, it has yet to make any cuts. Until cuts happen to the Federal Funds Rate, interest rates on mortgages will still make buying a home beyond the budget of many Americans. So for all intents and purposes, a lot more needs to change before we see the housing market shift to a “buyers” market. Tickers to consider: IKT , KALA , CEI , EVAX Sylva Disclaimer: https://www.sylvacap.com/disclaimer

On January 17,2024, The Supreme Court heard oral arguments in the case of Loper Bright Enterprises ET AL, v. Raimondo, Secretary of Commerce, ET AL, No. 22–451, 45 F. 4th 359 & No. 22–1219, 62 F. 4th 621. In this case, a group of commercial fishermen who regularly participated in the Atlantic herring fishery sued the National Marine Fisheries Service (NMSF) after the NMSF put into effect a rule that required the industry to fund at-sea monitoring programs at an estimated cost of $710.00/ day. The fisherman argued that the Magnuson-Stevens Fishery Conservation and Management Act of 1976 did not authorize the Service to create industry-funded monitoring requirements and that the Service failed to follow proper rulemaking procedure. Both the district court and the U.S. Court of Appeals ruled in favor of NMFS decision to impose the $710.00 daily fee based on the 1984 finding in Chevron U.S.A., Inc. v. NRDC, 467 U.S. 837 (1984). In Chevron, the court found that where statutory guidelines are not clearly defined by legislation, then the courts will give government agencies deference to its policy making as long as its interpretation of the law is reasonable. The fishermen appealed to the Supreme Court and were granted certiorari or a written review by the highest court in the land. On Friday, June 28, 2024, the Supreme Court overruled Chevron, finding that under t he Administrative Procedure Act (APA) courts may not defer to an agency interpretation of the law simply because a statute is ambiguous. This finding overruled the 1984 decision in Chevron, which essentially gave government agencies Carte Blanche in imposing regulations regarding the environment, public health, workplace safety, and consumer protections. How will the Supreme Court’s decision to overrule Chevron impact our economy and businesses moving forward? According to Bill Bright, a New Jersey based fisherman who was a part of the lawsuit, the decision to overturn Chevron will help fishing businesses make a living. Bright stated, “Nothing is more important than protecting the livelihoods of our families and crews.” Overturning Chevron will definitely make it more difficult for agencies to impose regulations on the public and private sector that have not been defined by legislation or statutes. Here are just a few examples: 1 . Over the last few years, the SEC has put forth an ambitious set of rules, including controversial ones pertaining to climate disclosures, private funds, and digital assets. These rules have been under attack, but with the Court’s decision there is a new path to challenge the SEC’s authority in these and other areas . 2. For the last 40 years, the Environmental Protection Agency (EPA) used Chevron to impose strict environmental regulations, broadly interpreting the Clean Air Act and Clean Water Act. Most environmental industries found these rules extremely costly and stifling. 3. The Internal Revenue Service (IRS) Tax Regulations: The IRS has interpreted tax laws to enforce extra taxes or penalties on specific transactions or entities. This made tax planning more complex and unpredictable. 4. The Department of Labor (DOL): The DOL expanded the Fair Labor Standards Act, making more workers eligible for overtime pay. Employers have had to navigate these new rules, leading to increased labor costs. 5. The Fair Trade Commission (FTC) Antitrust Actions: The FTC blocked mergers or acquisitions and regulated business practices deemed anti-competitive, interpreting antitrust laws. This impacted the business landscape and market competition. 6. Occupational Safety and Health Administration (OSHA) Safety Standards: OSHA enforced new workplace safety standards, interpreting the Occupational Safety and Health Act. Businesses have had to adjust to these ever evolving requirements. The decision to overturn Chevron affects individuals as well as businesses. Every individual, whether they realize it or not, is impacted by the regulations that are imposed on us by governing entities. Fees for a driver’s license and continued fees to renew your license, building permits to build on your own property, regulations and of course, fees regarding whether the vehicle you drive is smog compliant in the state you live in, professional licensure requirements and fees that go along with that licensure, and continued fees to renew your license. We have all been affected by the over-reaching hand of our government. Maybe this decision is a gift to the people to take back their voice and be a country that is governed by the people and for the people. Tickers to consider: IKT , KALA , CEI , EVAX Sylva Disclaimer: https://www.sylvacap.com/disclaimer

The Federal Reserve System [hereinafter, “FED”] is the central bank of the United States. It was created in December 1913, with the enactment of the Federal Reserve Act, after a series of financial panics led to a desire for central control of the monetary system in order to supposedly alleviate financial crises. It performs five general functions to promote the effective operation of the U.S. economy and, more generally, the public interest . According to the Federal Reserve website, the five functions of the FED includes the following: Conducting the nation’s monetary policy to promote maximum employment, stable prices, and moderate long-term interest rates in the U.S. economy; Promoting the stability of the financial system and minimizing systemic risks; Promoting and monitoring the soundness of individual financial institutions; Provides safety and efficiency services to the banking industry and the U.S. government inorder to facilitate U.S.-dollar transactions and payments; and Monitoring emerging consumer issues and economic development activities, and administering consumer laws and regulations. In short, the FED is supposed to promote financial stability for the benefit of the United States. However, is this the reality of the most recent actions of the FED? Every year, Gallop conducts a survey of American adults on a variety of economic topics, including the Federal Reserve. According to its most recent poll in May 2023, only 36% of Americans have a “fair amount” of confidence that the FED will do the right thing for the US economy. This is the lowest number in over 20 years. This is most likely due to the FED’s policy on raising interest rates at speeds of lightening since the Pandemic. This policy has created several adverse effects on the American economy including, but not limited to the following: Negative impact on the Stock Market; Increased burdens for those with variable-rate debts; and Mortgages and home buying are becoming less affordable. In their final meeting of 2023, The FED chose to keep interest rates at their current borrowing rate of 5.25-5.5%. It also indicated that there could be three rate cuts in 2024 . We are halfway through 2024, and there have been no rate cuts by the FED. Instead, in their most recent meeting at the beginning of May, 2024, the FED again chose to keep rates at the current level of 5.25-5.5%, a 23 year high. FED Chairman Jerome Powell indicated that it will “take longer than expected” for FED officials to feel confident enough to cut rates. Perhaps actions like this also give the American people pause to trust whether they can believe what the FED is telling the public. Since the FED began to raise interest rates in 2022, in order to supposedly fight inflation, the following has occurred: Interest rates remain high; Savings accounts are dwindling; Americans are racking up credit card debt; and Inflation has remained high, taking a toll on people's budgets. Does it appear that these policies are really promoting the financial stability of the American people? I guess that is for you to decide. Tickers to consider: IKT , KALA , CEI , EVAX Sylva Disclaimer: https://www.sylvacap.com/disclaimer