• The belligerent edges of Friday's inauguration speech were sandpapered smooth but still there, the need or desire for unity missing altogether.
  • The first post-inaugural consequence: The new administration has put on indefinite hold the FHA’s reduction in mortgage insurance.
  • The Federal Reserve will likely next raise rates at its March meeting.

Sometimes inaugural speeches are a droning bore, sometimes inspiring, once in a long while sad, and sometimes reveal a bit of the speaker’s character.

Friday’s made the last category.

For most-inspiring, Jack Kennedy’s soaring “Let us…!” is hard to beat. Its most famous line, “Ask not…” came directly from The Choate School Headmaster’s exhortation in 1934 chapel to “… do for your school.” My Dad was in that chapel with Jack, and Dad laughed out loud at the cribbed line in the inaugural.

Friday’s speech was another rally rabble-rouser, the belligerent edges sandpapered smooth but still there, the need or desire for unity missing altogether.

“America First” was the rallying cry of those who would have left all of Europe to Nazi Germany. Today, many people inside and out of America know what “America First” meant, and the meanness of its sentiment.

For the depth and splintering of that disunion, good people on its several sides (my Dad, again, a pacifist, but no friend of the German-American Bund), Those Angry Days is worth your time.

America’s greatness comes from many things. In the group at the top, our legal system and freedom from class — our individual worth comes from who we are, not who our parents were, or where we came from.

The source of our greatness in the eyes of the world, which we forget at home from time to time: our generosity, our selfless moral standards, our celebration of the differences among us and our magnanimity in victory.

The best inaugurals speak to that unity.

Inaugurations were moved from March back to January when transportation and communication technologies made it possible to convene a new government in two months instead of four.

On March 4, 1861, in the time of greatest American division, the most-raw anger at each other, Abraham Lincoln delivered his first inaugural. Seven states had seceded since his election. He was not sure his train would make it through secessionist Baltimore, and so it snuck through at midnight.

He had justification for delivering a combative speech that day, but instead said this:
“I am loath to close. We are not enemies, but friends. We must not be enemies. Though passion may have strained it must not break our bonds of affection. The mystic chords of memory, stretching from every battlefield and patriot grave to every living heart and hearthstone all over this broad land, will yet swell the chorus of the Union, when again touched, as surely they will be, by the better angels of our nature.”

Lincoln’s second inaugural came four years to the day later, by then 650,000 American husbands, sons, fathers, and brothers dead and a like number crippled, one white man in ten. Appomattox was only 27 days away — but for all Lincoln knew, another bloody year ahead.

Lincoln himself had 42 days to live. A man who felt his fellow man so completely, so sad that his friends feared life-long for his suicide, spoke only 700 words, every one in the name of unity:

“Both parties deprecated war, but one of them would make war rather than let the nation survive, and the other would accept war rather than let it perish, and the war came. Fondly do we hope, fervently do we pray, that this mighty scourge of war may speedily pass away.

“With malice toward none, with charity for all, with firmness in the right as God gives us to see the right, let us strive on to finish the work we are in, to bind up the nation’s wounds, to care for him who shall have borne the battle and for his widow and his orphan, to do all which may achieve and cherish a just and lasting peace among ourselves and with all nations.”

Doubt our greatness? Find it there. (With a nod to my friend and historian Pete Chandler.)

Enough. To the future. And the parochial world of money.

Is the MIP reduction DOA?

The first post-inaugural consequence: The new administration has put on indefinite hold the FHA’s reduction in mortgage insurance, to have been effective January 27. Thousands of home purchases under contract are threatened.

We will get a flurry of new executive orders, learning more with each one what lies ahead.

The financial legislative initiatives — the wall, health care, infrastructure, tax reform, tax goodies, tariffs — all of that will take vastly longer than Trump imagines. Markets will react as we learn final shapes.

The most important single thing ahead is the collision between Trump and the Federal reserve. Bloviating senators managed Friday not to ask Treasury-designate Mnuchin about the total mismatch between his insistence on “3 percent-4 percent” GDP (gross domestic product) growth, and the Fed’s insistence that we can’t do much better than half of that without inflation — and the Fed will act to be sure that inflation does not happen.

In a big-speech week, Chair Janet Yellen gave a great one. Short, clear and fair, a terrific description of the Fed’s duties and actions.

She’s not “throwing down the gauntlet,” not trying to pick a fight with the White House, but making plain to markets what the Fed must do now.

If Trump starts a fight with the Fed, demanding easy policy and growth, all hell will break lose in markets.

The 10-year T-note.

The 10-year T-note.

The 10-year T-note is just barely hanging on to the minor improvement since mid-December. And it’s not all about us: the global economy is at last doing a little bit better, and even German bond yields are rising, clear up to 0.42 percent.

The 2-year T-note

The 2-year T-note

The 2-year T-note…the Fed is coming. Not at its next meeting, February 1, but March 15 is in play, and with it higher mortgage rates.

Lou Barnes is a mortgage broker based in Boulder, Colorado. He can be reached at lbarnes@pmglending.com.

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