37 Burst results for "Interest Rates"
Fresh update on "interest rates" discussed on Steve Sanchez
"You by F W s lending your old school lenders. What do I mean by that? Ed has been an old school lender. In Vegas for 32 years. He can get you cash now when others can't What do I mean by that? You know the banks. They look at all your credit profile. They make you jump through hoops. You know, And you don't got the time. You need money. Now, If you've got an issue coming up, you don't need to wait. 30 days, 60 days to get approved. You need approval and cash in your hand in 72 hours. Well, guess what? That's what Ed promises to make happen again Serving Las Vegas for 32 years. What do I mean by old school lender? Well, it's like back in the day. They know your name. They treat you like a friend. Not an account number and Ed personally customizes your payment plan based on what's easy for you in terms of payback. I know that's hard to believe. But there's still some old school lenders that do do that. Now he guarantees to also be the lowest Interest rate in the state of Nevada or he'll beat whatever has been proposed to you Think about that 1 6000 up to 5000 in cash and again. Bad credit. No credit bankruptcy doesn't matter..
CBO's Current Projections Don't Look Good
"So the congressional. Budget Office released a forecast for the united. States for the next thirty years of economic growth and well, it doesn't look great. Cove. It is a big reason why so big picture deaths are way up and births are way down CBO is forecasting eleven million fewer people in the US and twenty twenty-fifty than in previous estimates declining population seems like something proper immigration policy could fix but I'm sleep. So outside of the covert bump, US deaths are up the report points to increasing deaths from Alzheimer's suicides and drug overdoses but also fertility is going down and CPO says that in the short term, this cove related, but it was already trending downward before the pandemic and now onto the money, the national debt in this country is growing and by twenty fifty CBO believes it will be twice the size of the. Entire yearly economy. That's because of the massive amounts of spending we're doing right now about the pandemic and then in later years if interest rates go up, that could start to pile on top of the debt for now though the Federal Reserve which sets interest rates has said they will keep them near zero for at least the next three years. But this is the kind of thing that down the road could threaten things like social security for those who rely on it most IMP. Republicans call for cuts the also projects income inequality to grow. That's because income's for the wealthy are expected to grow faster than the rest of us and their overall tax rates won't what else is new?
Fresh "Interest Rates" from The Afternoon News with Kitty O'Neal
"To demon, eh? They must be applied to transaction Excludes hybrids Take delivery by 9 30 Traffic on the tens, 3 10 minutes mornings and afternoons. Dana has news 93.1 Cafe. Cleared a partly cloudy skies for tonight with a low 60 to 60 for an abundant amount of some tomorrow. Quite warm of the high 89 to 93 Mackey, Weathers, Gregory Patrick News Any 3.1 kfbk. All right. Thank you. And we've got 86 in Elk Grove 86 in Gulf Grant Abate 86 degrees. Let's get some business and money news going for you. Now we've got Kelly brothers from Genevieve's Burford and brothers. Always a John Lockwood today. Yeah. Okay. Johnson for Kelly, Here we go. New home sales crushed expectations, but supply is running out. Sales of newly built homes jumped to the highest levels and nearly 14 years in August. We'll inventory for new home sales remains at just three months of supply for half the average of six months, so low inventory and low interest rates continue to drive demand and prices higher. Market overall higher and Friday is Wall Street tries to put the brakes on the September sell off the S and P and the Dow finished a week lower for.
Nikola Founder Resigns as Executive Chairman Amid Fraud Allegations
"Runnin son on Wall Street, Another rough day of September continues to be the cruelest month for stocks. The Dow falling more than 600 points in the first few minutes of trade, trying to recover off those lows S and P and NASDAQ, also flirting with with about about 2% 2% declines. declines. This This comes comes as as Europe Europe is is down down 3% 3% on on worries worries about about an an increasing increasing spread spread of of the the Corona Corona virus. virus. Ah, Ah, possible possible UK UK lock lock down down and and a a real real pickup pickup in in infections. infections. In Spain. Add to that what appears to be now some difficulty in the world of SPAC special purpose acquisition companies like Nikola, whose CEO or executive chairman just resigned today amid allegations of fraud concerns about the state of politics in the U. S no relief for stimulus from the federal government, the Supreme Court vacancy that could create a large political fight and we have a risk ofthe day across the board. With stocks down oil down gold down interest rates falling as well Flight to quality into U. S. Treasuries Driving the yield on the 10 Year down 2.65% in a week when Federal Reserve Chair J. Powell be testifying before Congress later on so very rough start to the week continued declines after from the last three weeks. Very Rocky Day on Wall Street. I'm Ron Insana for New York
Fed Leaves Interest Rates Unchanged
"It's been a rough ride for US stock indexes since the Fed's announcement on Wednesday that it had decided to leave interest rates unchanged, and of course, it was followed up by a Powell press conference. In the last three days, the Nasdaq composite is down by just under four and a half percent s and p five, hundred down almost two and a half percent Dow Jones holding up better down about one percent clearly. What was weighing down the SNP and not so much. The Dow are the tech stocks. They're really dominant in the NASDAQ. That's why it's down the most what people are blaming the sell off on is the fact that the Fed was not dovish enough if you can believe that first of all, what are those statements that the Fed did make is they intend to leave interest rates at zero throughout at least twenty, twenty three. Now, I'm not really sure if that means that maybe they're going to start raising them in twenty twenty three or they'll leave him at zero through the end of twenty, twenty three and they're not going to start raising them until twenty twenty four but whatever it is, it's a pretty solid commitment to leave rates at zero. I don't think the Federal Reserve at any point in time following the OH eight financial crisis made a commitment that solid right to leave rates for so low for so long, but I'm not the only one. That saying that this wasn't enough I mean even Neil Cash Gary came out today I was reading an article he wrote and he says that the Fed's commitment not to raise rates wasn't strong enough now I don't know what he's talking about I mean how much stronger could they have made it I mean could he added a few more not even thinking about thinking about it's pretty clear. The feds not to raise raise but maybe cash carey wants a more definitive statement that like we're not going to raise rates. No matter what. In his article that he wrote a kind of saying that the Fed's commitment to not raise rates wasn't strong enough what he did say though was that you know if we are surprised by unexpected heating up of inflation, he said, well, you know that's an easy problem for the Fed to solve a really a unexpected heating up. In is an easy problem to solve how exactly is the Fed going to solve and unexpected heating up of inflation? Well, it only has one tool, right monetary policy. All it can do is raise interest rates and shrink. It's balance sheet. It can sell treasuries and reduce the money supply which has been growing dramatically although the balance sheet his condiments stuck right around seven trillion So that hasn't really been moving I. Think we're getting ready for another big jump in that balance sheet though. But. How's the Fed? GonNa get a fight inflation. How was that an easy problem to solve? It's an impossible problem to solve which is why the Fed isn't even going to try. I. Mean It's amazing of Kashkari actually thinks that it will be a simple thing to reign in an unexpected heating up of inflation when that would require much bigger rate hikes mean the reason that cash. Carey wants to make sure the market knows that rates are going to stay zero indefinitely is because he knows how important these artificially low interest rates are to prop up the bubbles in the economy. Well, if he knows how important it is to keep these bubbles from deflating, how can he believe it's going to be so simple to raise interest rates if inflation picks up without pricking. The bubble. So the whole thing is ridiculous but as I said on one of my prior podcast about the market I think that the Fed is going to have to deliver a much larger dose of monetary stimulus because whatever stimulus has already been telegraphed to the market is already baked in. So now they need more rate the drug addicts need an even larger dose of this monetary. Heroin, they need shock and awe at this time. So in that respect cash carriers right that in order to get the markets to go up to fed has to bring more to the party as far as more money printing another round of Qe, a massive commitment to print money and to keep interest rates at zero but we're cash carriers. Wrong is the ability of the Fed to actually. Put out the inflation fire if it really starts to rage, it can't, and basically what cash gary really wants the Fed to say without actually saying it because he understands the ramifications is that we are going to keep interest rates at zero. No matter what happens to inflation no matter how high inflation goes we're going to stay at zero see that's really what he wants, and in fact, that's what. The Fed is going to do whether they wanNA, come out and say it or not. You have to read between the lines. They can't raise interest rates because they'll prick the very bubble that they deny exists and the reason they're keeping them zero. The reason they're saying that they're never going to raise them is because they understand this and so they're trying to thread this needle right without breaking the bubble. and. So when He comes out with these comments. He's clearly lying in fact, the one thing about the bubble. Is that nobody at the Fed wants to acknowledge its existence in fact at the press conference that? Followed up on the decision to leave rates zero. What are the most ridiculous comments that Powell made? Is His denial that there was a bubble because somebody asked him and I don't remember who? But one of the reporters at this press conference asked Powell if he was worried. About this easy monetary policy about his commitment to keep the rates at zero till twenty, twenty, three, twenty, twenty, four. If this risked creating bubbles in the financial markets
Why delaying social security payments is so important
"So one note. Clark. His talk for years. About. Why it makes sense for people approaching. Retirement age to way as long as they possibly can taking social security. and. In large numbers, people take social security at age sixty two. Thinking Hey. I got to get the money while I can don't know how long I'm GonNa live Blah Blah Blah Blah Blah. And what happens is that you have been set yourself up. To, have a smaller social security payment for the rest of your life, which is fine. If you don't live as long as he might like but gets ugly if you live longer than you would expect. Because what you get up front is a much smaller monthly payment. When you take it at sixty, two or sixty, three, whatever. And then the rest of the way all your adjustments happen off that much lower base and that's what I've talked about through the years and been people been very unhappy with me obviously because almost nobody waits till the last possible date. which is age seventy but. Right now. With what's going on with interest rates and the economy? Waiting to take social security. Is the most brilliant idea. It's ever been unless you know you're. Not. In. Good health. Your life span expectation is very short. You WanNa wait as long as you can. Between a sixty, two and seventy as you possibly can. Here's why. With interest rates as low as they are right now. You would be better off. Delaying Social Security. In spending whatever money you have in savings. Then it would be to preserve those savings. By taking social security early. The reason is, is that the increase you get? Every. Year you delay taking. Social Security. Is, so. Valuable. And is much more than the effective amount that your money can earn that you have right now in savings or CD's. Bit Is better for you to deplete. Some of those savings if you need to. Rather than an to go ahead and take. Social Security. Now. That is an additional. Factor. That makes the argument even stronger for delaying when you take social security because of the Federal Reserve artificially holding down interest rates. Now. I know that for the most part. Well nobody's really gonNA listen to me about this, but I can certainly try. Because the return you get. By waiting. Effectively the imputed return on your money. Is much higher than you're likely earning on your money right now particularly, if it's in savings or CD's with stocks, well, who knows In terms of what the return would be like over the years between a sixty to seventy by delaying social security though. It's a sure thing. And by the way, if you've already started taking payments sixty two and you say, why didn't tell me this before now? If you're early and doing so and you can afford to you can take money you do have earning basically nothing savings. Pay Back Social Security, what you've received. And then. Pick it back up later at a much larger benefit. That's a possible. Strategy, you could use to turn back the clock on having accepted social security at an early age.
August US home building slides 5.1% after months of gains
"Home building took a drop in August after strong gains in the prior three month period. But the housing market remains supported by record low interest rates and Amanpour Properties of the suburbs and low density areas as many people work from home home building last month was pulled down by 22, a half percent tumble in starts for the volatile multi family housing segment to a pace of 395,000 units. But construction of a single family housing units, which accounts for the about the largest share of the housing market, increased 4.1% that breaks down to about 1.0 too. Million units.
Fed Signals Low Rates Likely to Last Several Years
"Yesterday about the Fed, indicating it's going to keep rates near zero through. 2023 warns US of risk of the economy because obviously Fed reserve chair Jerome Powell. Eyes flushing out what he sees down the field here. The aim set out in what they call a federal Open Market committee meeting. Eyes to return. The labor market is something like full employment to get inflation. Teo moderately exceed its 2% target. There's a reason for that, because we have to have a stable prices, a cz well as stable, a stable interest rates. So suffice it to say that we're a long way off. Still, because even though the fact that we've got 11 million people that have been rehired That's only half of the total job losses, and that's why the Fed, it's still sort of wringing its hands hear good news is that inflation remains well low below the 2% target. Despite The recent uptick, so we're in pretty good shape. Their markets are going to be a little bit volatile. Today's day. So buckle up coming up on 7 20
Around 860,000 people filed for first-time jobless benefits last week
"Report that shows us how many people file for initial unemployment benefits the week before. For the last couple of weeks, the number's been below one million. It is again, the Labor Department says 860,000. Americans file initial claims last week that is down a bit from the week before and about what was expected. Encouraging words from the Federal Reserve. The nation's central bank says it'll keep interest rates near zero for years and take other steps to help the economy recover from the pandemic. The Federal Reserve's response to this crisis has been guided by our mandate to promote maximum and planet and stable prices for the American people. Along with our responsibilities to promote the stability of the financial system that chair Jerome Powell was upbeat about unemployment, He says the fat expects the rate to be 7.6% by the end of this year, better than the 9.3% forecast in June. Airlines
Federal Reserve sees interest rates near zero through 2023
"Of virtually no. One Federal reserve is leaving interest rates unchanged. It is also signaling that rates will remain on hold through at least 2023. To help the economy recover from the Corona virus. Pandemic stocks
Federal Reserve sees interest rates near zero through 2023
"Is holding the line on record low interest rates business analyst Jill Slesin jer in the final Federal Reserve policy meeting. Before the election, the central bank left interest rates near zero. That's where they've been, and also signaled that it would hold them. They're through at least 2023. The
Fed Signals Interest Rates to Stay Near Zero Through 2023
"After the Fed Reserve signal this afternoon that interest rates will remain low to bolster the recovery from a pandemic induced recession. The S and P 500 extended gains after the Fed left rates near zero Signal it would hold them there until it is 2023. Banks and energy companies lead the advance. While Tech shares still underperformed
Fed Signals Three More Years of Near-Zero Interest Rates
"Fed is certainly looking toward a longer term recovery here even though as fed chair, Jerome Powell noted economic activity has picked up since the second quarter what can you tell us about the Fed's latest projections and the decision to hold rates near Zero until at least twenty twenty three. Sure. So this is a pretty remarkable forecast although not entirely surprising given the Fed's new framework that they announced. Recently, they basically said that they're going to keep rates lower for longer. Now, we know with a little bit more specificity that they see them staying near zero as you said, through twenty, twenty three, which is a. Really Long Time they're basically saying that an anticipated raising interest rates again until the unemployment rate is around four percent and an inflation is back up to two percent, which is a lot longer than than they waited during this past expansion in two thousand fifteen when the Fed raised rates unemployment was around five percent and inflation was just around one point three. So that basically means is they WANNA see the economy further along on the path to recovery almost back to you know to it someone call full hall or certainly wear closer to where it was before the pandemic hit before they start raising interest rates again. What are the projections for the remainder of this year? So they they've actually improved somewhat in they. Now project unemployment will average around seven to eight percent during the last three months of the year that's a bit lower from where they saw it in June when they projected about nine to ten percent So remember the unemployment rate hit a high in April of fourteen point seven and it was down to eight point four percent last month. So that's certainly a little bit better but I think that they are also trying to emphasize that the gains that we're seeing now. Or kind of the easy the low hanging fruit. If you will, you know kind of the quick bounceback that you get just from businesses that were closed reopening again but the risk is increasing that you know certain sectors are going to have a harder time coming back a longer recovery. So Powell has said many times that the Fed will use all the tools at can to support the recovery, which he noted has been uneven for Americans. What actions is the Fed planning to take to build on the steps it's already taken to help support the economic recovery especially on even one. Well it's an important question because heading into this crisis, you know a lot of folks were questioning whether the Fed really had enough tools to address a serious downturn and what we've seen so far is that the steps they've taken have been really effective especially the steps that they took in March when there was a lot of financial markets stress, they revamped some emergency credit facilities that they'd use in the last crisis that got. Credit flowing in kind of quality. Some of that volatility rates as we've discussed are very low they're going to stay near zero. They are purchasing making these long term asset purchases of government bonds, securities, and they're going to continue doing that for some some time there a little bit vague today about exactly how long they plan to do that. But that will that will help you know really we heard fed chair Powell say that. That the Fed, the Fed can lend to companies I mentioned another one they're doing they have the mainstream lending program although there hasn't been a lot of a lot of interest in that but they can't just give money directly to people that solely in the purview of Congress and so he reiterated again, we've heard him say this a number of times that what we're experiencing really probably will require more fiscal support more money from the Government to give to people not to just lend to them. But just to give them to help make these improvements that there's only so much. The Fed can really do right in the Fed to stay pretty apolitical here but Powell has noted the impact of the federal stimulus which we know another aid packages currently tied up on Capitol. Hill. But it seems like a pretty clear message that the Fed feels more federal aid is needed. Absolutely. I mean I think that when the economy is bad obviously right now you know there's a public health crisis. It's pretty clear the reasons for that but still to some extent I think we've seen. In past crises historically when things are not going while the Fed tends to get blamed and I'm not saying the federal Powell's comments are politically driven but I think he wants to remind people that that look. Yes. There's only so much. We can do I think there's pressure on the on the Fed there's always pressure on them when the economy is struggling to do more and and I think that smart of him to just remind people that there's another big player in economic policy and that in that if they're concerned enough people on the hill are concern especially about the direction of the economy. Then really they're the ones who also have to play a bigger role. If they want the Fed to do more, they're probably going to do need to do more as well.
Federal Reserve sees rates near zero at least through 2023
"The federal reserve sees interest rates near zero at least through twenty twenty three fed chair Jerome Powell says there have been signs the economy is trying to get back to pre pandemic levels full economic recovery is unlikely until people are confident that it is safe to re engage in a broad range of activities he says it depends heavily on the ability to get control of the virus public input is suggested following the advice of public health professionals to keep appropriate social distances and to wear masks in public will help get the economy back to full strength Powell says with roughly eleven million people out of work he supports more spending by Congress to help the economy recover Congress is deadlocked on a new economic relief bill at Donahue Washington
Fed Signals Interest Rates to Stay Near Zero Through 2023
"Its benchmark short term interest rates unchanged. It nearly 0% where it has been since the Corona virus pandemic intensified in March 5th chair Jerome Pao. We now indicate that we expect it will be appropriate. To maintain the current 0 to 1 quarter percent target range for the federal funds rate. Until later market conditions have reached levels consistent with the committee's assessments of maximum employment. The central bank expects the right to stay there at least through 2023 because inflation is mostly fallen below its target of 2% in recent years that policy makers now will aim to achieve inflation moderately above 2% for some time, the Fed's moves are occurring against the backdrop of an improving yet still weak economy. Hillary Barsky The Fox news and this news brought to you
Fed Signals Interest Rates to Stay Near Zero Through 2023
"Meanwhile, the federal interest rate will continue to stay at roughly 2% for the foreseeable future. That's from Fed chair Jerome Powell today, who said a low interest rate is essential to help the economy recover from the devastation brought on by the cove in 19 crisis, Overall activity remains well below its level before the pandemic. And the path ahead remains highly uncertain.
Fed keeps interest rates near zero amid signs of slowing recovery
"Interest rates near zero for years. The board says it will stay where it is now until America's labor market recovers to its standard of maximum employment and inflation is above 2%. Senate Minority
Federal Reserve sees interest rates near zero through 2023
"Left its benchmark short term interest rates unchanged it nearly zero and expects to keep it that way through at least 2023. The central bank also says it will seek to push inflation above 2% annually. All street is trading
Federal Reserve sees interest rates near zero through 2023
"Target to seek price increases above 2% annually, a move the likely keep interest rates low for years to come. The Fed left its benchmark short term rate unchanged at nearly zero, where it's been since the pandemic intensified in March. Fed officials also indicated in a set of economic projections that they expect the rate to stay there, at least through 2023 that interest radiant turn influences borrowing costs for Homebuyers, credit card users and businesses on Wall Street, half until it's in, says the Dow is
US stocks tick up ahead of Federal Reserve’s rate decision
"Stocks ticking higher in early trading on Wall Street ahead of a decision on interest rate policy by the Federal Reserve, scheduled for the afternoon package delivery giant FedEx helping to lead the way investors don't expect anything major from the Fed, which will announce his decision on monetary policy almost certainly will keep short term rates near zero
"interest rates" Discussed on WSJ What's News
"The Federal Reserve's policy meetings are a barometer on the state of the economy at virtual press conference this afternoon Fed Chair Jerome Powell, said he's not expecting to move the needle on near zero interest rates for at least a year, and a half the extent of the downturn, and the pace of recovery remain extraordinarily uncertain and will depend in large part on our success in containing the virus. We all want to get back to normal, but a full recovery is unlikely to occur until people are confident that it is safe to re engage in a broad range of activities. Joining me now with more analysis is Wall Street Journal chief. Economics commentator Greg Hip. Greg. It was expected that the would keep rates steady and fed chair. Jerome Powell said as much that the Fed will not increase rates through the year twenty twenty two. Is that longer than we had expected? I think that's about as what was expected. Mean it's more or less than markets had not expected any rate increase for the next year or two, perhaps even more important was that the Fed chairman said they're going to be continuing to buy treasury bonds at a pace of about twenty billion dollars a week for the foreseeable future they had not actually given much guidance in before about when that would stop so by continuing to buy treasury bonds, they keep long term interest rates low that helps keep things like mortgage rates low, and as additional support to the economy and observers were keeping a eye on the Fed's projections for the rest of the year. Greg, what are the major takeaways there? Well, the feds forecast is very similar to many private sector forecasts are expecting the economy to shrink six and a half percent this year, and only partially rebound next year to five percent, and you see the same thing in their unemployment rate projections, the unemployment rate falling from over thirteen percent now to nine point three percent at the end of this year and six point five percent at the end. End of next year now on the one hand that's positive because we're making progress, but I think it still represents a pretty significant reversal. Disappointment compared. We were just a few months ago when the unemployment rate was the lowest since nineteen sixties at around three and a half percent Powell has repeatedly said the Fed will use every tool at its disposal to help the recovery how those tools been working? While lowering interest rates, zero had the desired effect of bringing down other interest rates such as on mortgage rates, their purchases of bonds of help, calm markets down. You don't see the same degree volatility, and then there are other plans to perhaps by corporate bonds and other securities and lend to private companies, those having progress nearly as far in fact, some of the programs, even off the ground yet, but the mere fact. Fact that investors know those programs are available seems to have imparted certain degree of stability, but chair Powell is clear today that a lot of the work that needs to be done and getting the economy fully back on its feet is in the domain of Congress in the in in the White House Greg. The challenges ahead are many and I. Think Average Americans are wondering just how long the recovery will take. Well it probably depends on how you define recovery, if defend recovery as simply getting better well, things are already getting better if you define recovery as unemployment getting back to where it was same February, that could several years more. I think one of the key takeaways of chair Powell's remarks today was that we're in a period of enormous uncertainty. Nobody expected the employment report for May to show an increase in jobs, so that means that we should be prepared for surprises both active and positive surprises in the months ahead, and not be have our minds to made up about just how strong and weak recovery will be. That's wall journal Chief Economics Commentator Greg Greg.
"interest rates" Discussed on Skimm This
"Some of the goods that have been impacted by the trade. War are everyday household items like food clothing and electronics wchs as well as machinery and chemicals when it comes to raising tariffs generally paid by whoever's importing goods which means that extra cost can sometimes sometimes be passed down to you that's why some people call tariffs taxes. Trade wars can also have a huge impact on consumer confidence and not in a good way. If people are seeing prices rise on things they use to spend less on then they might be less likely to say go shopping and news of a trade war may make people people feel uncertain and therefore fearful they might start pulling back on spending to keep their budget in check and when consumers aren't spending money that's not great for the economy overall. The stock market doesn't really like trae drama. So as trade wars drag on you might see your investments start to make moves but silver silver lining trade wars. Like the one. China are part of the reason. The Federal Reserve lowered interest rates this year. Remember Interest Rates Aka the federal refunds rate are set by the Federal Reserve. That's the US Central Bank in charge of keeping the economy stable when the Fed increases interest rates. That's a sign that thinks the economy. He is strong signs. They look for our strong job. Numbers and housing numbers. But when the economy's not doing too great the Fed will lower interest rates that means set a cost less to borrow money so the Fed hopes that people will spend more borrow more and keep. The market's moving the Fed lowered interest rates for that very reason after the great recession hit in two thousand and eight. But then they didn't do it again until this year when the Fed lowered lowered the interest rate three separate times from July to October. The interest rates were cut by a combined. Three quarters of a percentage point which sounds small but makes economist. I think even so after the third cut in October the feds chair jerome. Powell insisted assisted that. This isn't a bad sign that the economy's doing fine today. We decided to lower the interest rates for the third time this year. We took this step to help keep the US economy strong in the face of global developments and to provide some insurance against ongoing risks. Still this move. Makes some economists nervous because changing up interest rates like this consent mixed messages. If you have a glass half-full attitude then. You might believe Powell when he says the economy is okay and you might do what the Fed wants you to do. Take out more loans and spend more money you know. Keep the economy moving but if you have a glass half empty attitude then you might look in history and think that the Fed is cutting interest rates. Because it's worried about the future of the economy that that might make you nervous and maybe won't take out that loan instead of spending money. Maybe you'll save it. which is the opposite of what the? Fed wants you to do so. The Fed took kind of a gamble and only time will tell whether that risk pays off but that risk meant that cutting interest rates was a big drama in the financial world this year. For what it's worth the Fed basically said in October. We're not GONNA do this again for a while. But if so that's a sign that the economy might be strong enough to get us through trade trade wars and any other economic downturns happening around the world finally a look back at the. US economy in twenty nine thousand nine wouldn't be complete without a look at the unemployment rate. The great and powerful fed doesn't have a lot of rules that lives by but one of the rules that does happen. APP is trying to hit maximum employment. Basically making sure everyone in the. US has a job if they want one. That is a really tough task in other countries. That's basically impossible take South Africa. Were millions of young people in their twenties and thirties are looking for jobs. That just don't seem to be there. The unemployment rate in South Africa is at twenty nine percent. Really bad news. Unemployment rates have sometimes been a challenge for the US to backing the great recession of two thousand and nine unemployment hit ten percent and it took until twenty sixteen to get it to a less drastic rate of below five percent in September of this year. It dropped up to a cool three point. Five percent the lowest. It's been since nineteen sixty nine when the average house price was a cool twenty eight thousand dollars and when astronaut Neil Armstrong set foot on the moon and president. Trump is really proud of this here. He was this month at a rally in Michigan. Predicting that he'll have an easy time getting reelected just by reading out unemployment. Amen numbers on the debate stage with one of these characters and they try and say negative stuff and I'll just say well his story the history of our country this groups doing the best and that groups do this and the women are doing the best that everybody's and frankly you know what it is the whole country's doing the Historically speaking the US has low unemployment rate in two thousand nineteen is unqualified. Good news but there are always leased qualifications and for unemployment there are some potentially big caveats. One of them is that the unemployment rate doesn't factor in the number of people who've given up looking for work after the great recession. Put a squeeze on jobs. A lot of older workers in particular found it difficult to get work they had qualifications and experience and a hunger to work but many also had expectations of a certain type of salary so younger workers without the same salary expectations and employers might consider a better culture fit. Maybe got the job instead. Another thing the unemployment rate doesn't capture is the quality of a job. Take wages over. The last few years hourly wages have been steadily rising but over the course of twenty nine thousand nine that growth kind of stalled and when you factor in inflation basically the rate at which things get more expensive over time and makes her money worthless. You may be getting less bang for your buck than you would have have fifty years ago. Plus with health insurance being super expensive for some and daycare and college and rent really expensive to just being employed. Doesn't it doesn't necessarily mean you've made it in America so when you hear unemployment rates are really low. That's not a lie but remember. It's just one part of a much larger picture. And if you're already employed that low rate can be good for you. Since companies want to retain talent. It might be a good time to ask for a raise or a the time to scope out a new job since companies are looking. Basically the ball's in your court so what the skin. There was a lot of great news for the economy. And your wallet in Two Thousand Nineteen from the historically low unemployment rate to rising incomes and a strong stock market for people looking to borrow more for the Fed lowering interest rates can be a huge plus but alongside those headlines. We've also seen some not so great news like seemingly endless trade wars that it can affect prices and consumer confidence and a slow growing global economy heading into two thousand twenty. Lots of economists have been on the lookout for signs that the US is headed. Were another recession. It's not clear that we're there yet. But some of the things people will be looking for our weather that low unemployment rate rises whether the housing market slumps and the Outcome of trade wars with other countries which means expect a lot of the stories that were huge. Twenty nine thousand nine to come up again in the New Year for more on. How all the big stories we talked about today affect your wallet head on over to the skin dot com slash money. And that's all for Skim. This thank you so much for listening. And we'd love for you to rate and review online. A lot of news happens over the weekend so to catch up first thing on Monday. Sign up for morning newsletter the daily. Skim at the skin. Dot Dot Com. It's everything you need to know to start your day right in your inbox..
"interest rates" Discussed on POLITICO Money
"Oh and by a bunch of stuff in your in your case Spend your money instead of say that which of course obviously as you know someone impossible because you need to have money to live on for you. Yes the rest of the years you're wet you're with us so there's that There is also the question of if you institute negative interest rates and give everybody everybody this incentive to spend all of their money Are they spending it on legitimately wise things or are you blowing up bubbles in all sorts of areas like real estate or dad companies or Zombie companies because the incentive there is to okay I cannot make any interest on cash reserves. So Oh I'm gonNA spend it all do you. Then get in a situation where you've propped up companies that otherwise wouldn't exist and you've Inflated the value of Housing Zing in ways that otherwise wouldn't happen That's one of the reasons that Jerome Powell the chairman of the Federal Reserve has essentially said he's not interested in the Fed going too negative interest rates and they cut a couple of times and her low right now. He wants to stay where they are and then theoretically eventually start bumping them up again again and there are other countries like Sweden. That are thinking the same thing like tried negative interest rates decided. Maybe this isn't such a great idea still happening in the UCB. It's still happening happening in Japan. The problem is it hasn't done much to boost the economy in either of those places which are both still kind of stuck in these slow growth areas are is so you know the risks are there but the return is not yet there For them and in fact I thought it was interesting. I looked at Bloomberg and it said that thirty percent of ball bonds Existing in the world at seventeen trillion dollars worth of bonds have negative interest rates. Today which is pretty remarkable Not The US but that's a lot of the rest of the world. There's also one other big fundamental. Well there's a couple of big fundamental problems with the idea of negative interest rates One of them involves you know what the Fed does. The things really turned south Do you have an understanding of that of like when people talk about the Fed toolbox or toolkit Do you have any idea what they mean. And the financial crisis prices they lowered interest rates. Right that was that was one of their tools. Yes and you can't if if you're a negative interest rates than. You can't do that you've already lost. Lost the chance to do that right. That's correct. That's one of the one of the things they did. They also did quantitative easing which you don't have to get into. That's buying a whole bunch of bonds and other things to try to stimulate activity but yes the fear. Is that if the Fed were to go to negative interest rates now when you know economies not blockbuster but it's still still around a two percent economy and unemployment is low and things are generally pretty good. What do you do and things are really bad? You know we actually have a recession. I when you know you don't you don't have that tool box at your disposal or that tool in the toolbox to cut interest rates the symbolic thing I think is also important and that is generally speaking when you're going into negative interest rates you're declaring to the rest of the world that your economy is in deep trouble That you heading towards towards recession or even depression. It's an emergency measure And that would show to the world that you know. Trump doesn't have a lot of the Fed that doesn't have a lot of confidence in the US economy which would then you know. Give investors pause and markets pause and. Get people to worry about Doing that it would essentially say the the US is in deep shit and We're taking emergency measures when at the same time. Trump says we have the best economy ever the jobs market ever since a little hard for me to square where when trump says we're gangbusters best economy ever and the Fed should be going to negative interest rates But you know I. There is somewhat understandable sustainable. Why he would want a because he thinks it would create faster economic growth It would bring the cost of our giant twenty two trillion dollar federal debt down. There are some arguments for why he might want it but we've talked a lot about the potential downside so flatly can i. Can I just ask Q.. One question because you answered one question I was going to ask you. which is what what other countries did this and you said Japan and did you say ECB? That's the European Central Bank correct. Yeah they're they're currently they did it. They're doing it. They're it's happening now. They're doing it. But but in both cases you said they're not getting any boost from doing it it doesn't seem to be or or a very limited limited okay both Japan and the euro zone Are Not exactly killing it. Economically and Japan said you know decades of problems with with its economy being kind of stagnating and very slow growth at the moment and as a negative interest interest rate territory. All right so I'm GonNa read the tweet again and then you can do your best to explain it to me all right so here we go. Donald Trump says the Federal Reserve should get our interest rates down to zero zero or less and we should then start to refinance. Our debt interest costs could be brought way down while at the same time substantially lengthening the term. We have the great currency power and balance. Sheet explained that tweet to me. Okay he is saying that the Fed has raised interest rates too high. He wants them to lower the rates to zero the Fed. It has a heightened a bit since the financial crisis so they can take them down lower if there comes another crisis or something close to it. What would happen if the Fed agreed to do what trump wanted to do would be a situation in which large banks would pay the Federal Federal Reserve to take their money There would this is issuing new debt. There would be a lot of long bonds issued the point of doing this where the interest rates are negative and people are being paid to take. The money is to discourage people from doing it so the people are not saving their money by putting it in banks or whatever but so that they're spending it. I suppose manufacturers would be we investing in new procedures or products or whatever and consumers would be spending the money not buying bonds uh-huh and trump thinks. That would be a good thing. Bud Powell head of the Federal Reserve Says No one reason is that it means people wouldn't be saving and not saving it's got its various problems for individuals not saving but it also means for the economy that people are going to want to put their money somewhere where they can make money and this might lead to bubbles like the housing bubble that we had brought on the crisis bubbles and other things. It's been demonstrated that other countries that have done. This have not found that gave them a great boost. There's no evidence that it's a really wonderful thing There's also the problem as was mentioned before that. There's no way for the Fed to lower rates if things start to go bed if rates are negative and finally said. I hadn't thought about this but it's pretty interesting that doing that suggests that the economy is in trouble that it needs help very badly and of course that doesn't they make sense with trump's continual bragging about how it's the greatest. We're we've got the greatest economy now that the country has ever had because of him and have I made any kind of sense out of this new. You've made incredible amount of sense out of it. You've done a stellar job as you've done in all three of these episodes and you you got another plus that plus even though we didn't get into the last phrase which was we have the great currency power balance sheet which frankly Oh that's right the currency. That's I don't really have any idea what he's talking about In that regard so there's not much help you with other than on on the Currency Front He says we have the great currency but he actually wants the dollar to go down Because that would make our exports more attractive a to China and elsewhere and reduce the trade deficit that he's so worried about and and they're you know perfectly legitimate to kind of general weak dollar policy if you want to boost exports which which he does and negative interest rates would lead to a lower dollar because foreign investors chase returns and they'll go wherever interest is higher So essentially they'd go where they get a positive return and if they weren't getting in the US They'd go somewhere else so we drive down. The dollar trump might like that but anyway that's you know That would've been extra credit for anybody to get into to that piece of trump's tweet but you have done a fantastic job on this one and mom thank you so much for being on a political money. You really taught me something you really did. I mean this negative interest rate thing. I'm going to be thinking about that now because I understand it much better than I did before. What's better around Chris around Christmas time than thinking about negative and.
"interest rates" Discussed on Skimm This
"It's Wednesday September eighteenth. Welcome to skim this. We're breaking down the most complex stories of the day and giving you the context on why they matter asylum-seeker showed up to courts along the US Mexico border for immigration hearings this week these courtrooms were actually tents and shipping containers will explain spleen the immigration policy that could make this the new normal at the border then the chairman of the Federal Reserve announced another interest rate cut today. We'll explain why that matters manners and finally a word from Merriam Webster. We're here to make your evening smarter. Let's skim this. Today's episode is brought brought to you by John Hancock. They have over one hundred fifty years of financial expertise to help you plan for the future. We have ten minutes to give you the news. Just the most complicated story today is about immigration courts at the US Mexico border were the US has begun a new pop up legal process for asylum-seekers asylum-seekers instead of courtrooms think plastic tents and shipping containers. This may sound like version of fire festival but it's it's actually part of a bigger trump. Administration immigration policy called M P P short for migrant protection protocols and some lawyers are ringing alarm alarm bells about what these new protocols mean for conditions on the ground so today. We're going to get into why this is happening what the trump administration is saying about it and and why some are saying it's a problem okay so in January the trump administration unveiled this new. MPP policy under the old old policy asylum seekers would stay in the US while they wait for their court date but trump said that people cheat the system but they know their asylum claims will be rejected it did but they apply anyways make new lives in the US skipped their court dates and just stay put here he was last year court. Process will take years. There's sometimes for them to attend well. We're not releasing them into our country any longer. They'll wait for long periods of time the administration's new policy eighty. MPP forces certain asylum seekers to remain in Mexico instead of waiting for their court dates in the US since taking effect forty two thousand people have been sent back to Mexico weight and told to return to the border for their hearings at a later date for those who remained in Mexico. We gotta look this week at how their immigration hearings are going down instead of telling migrants to show up to a courtroom somewhere in the US they're bringing in the courtrooms closer to them just over the border starting last week asylum seekers were told us show up to certain border crossings in Texas for their immigration hearings the hearings are happening on the US side of the border with plastic tents serving as courtrooms and shipping containers reportedly being used as waiting rooms or a place to meet with your lawyer if you have one those aren't the only new things turns out the immigration judges are more than a hundred miles away and and are calling in via video conference since these tent courts are closed to the public in the media. We've had to rely on lawyers telling us what's going on there and according to several real accounts the hearings aren't going well. I A lot of these asylum-seekers don't have lawyers which can make getting asylum protection really hard. One study found that ninety nine percent of people waiting in Mexico don't have lawyers and that could be because some of the Mexican towns asylum seekers are staying in our poor and really unsafe unsafe. One Mexican state where asylum seekers are waiting. Tom Llamas is under a level for travel warning from the US Department the same warning the US gives to some war war zones like Syria or Afghanistan one reporter for Texas monthly who visited the border city of Montemurro found asylum seekers sleeping in shifts outside in the street to make sure children don't leave in quote become prey for kidnappers. So is this GonNa be the new normal at the southern border. Some immigration lawyers say a better not be that it's really hard to hire American lawyer in these Mexican border cities which is important given how complex the rules rules for these hearings can be on top of that asylum seekers are reportedly being told to bring multiple copies of legal forms which can be hard to get when you're living on the street in Montoneros US then they say imagine pleading for your family's protection while the video feed in your tent courtroom cuts in and out meanwhile the trump administration gratien isn't sweating things some top officials visited a tencor in Laredo Texas this week and were reportedly pleased that the hearing process could take months instead of years ears and one immigration judge said the ten courts could save the US government a lot of money in terms of the safety concerns for people waiting in Mexico the acting ahead of the US citizenship and Immigration Services Ken Kuch Anneli. Basically said that's Mexico's problem what happens on the Mexican side of the border we communicate with Mexico Exco about all the time and obviously we we make adjustments to facilitate both flow and safety but it's not our territory story so there's only so much we can do on that side so what's the scam new Papa immigration courts are up and running at the southern border her part of a trump administration plan to keep asylum-seekers out of the US while they wait for their immigration hearings and bring the hearings closer to them. The trump administration ministration says it has legal standing to enforce this new policy and that the tents will make the process more efficient. Even some immigration lawyers say the whole process falls far short of acceptable legal standards and puts vulnerable people at risk like a lot of immigration policies the one that's led to these tents. MPP is being fought in federal court so this probably won't be the last time you hear about this coming up big news from the Federal Reserve or even if it doesn't sound like much after the break every day we make a million plans a plan for how to pay that next bill a plan for how to stay on budget this month but sometimes too many plans means. We forget to plan for what actually comes next like your future home building a family or retirement limit. There are a lot of unknowns at the Skim we know John Hancock does too so. We're partnering to help with the decisions. You have to make every day so it's easier to live smarter plan smarter figure it out and face the future whatever that looks like for you go to the skin dot com forward slash future to learn more today. The chair of the Federal Reserve Jerome Powell announced that the Fed is cutting interest rates by brace yourself a quarter of a percentage point we we took this step to help keep the US economy strong in the face of some notable developments and to provide insurance against ongoing risks. Yes it's a little dry. The thing to keep in mind is it's the FEDS job to regulate banks and keep the economy stable and one way it does that is by controlling interest rates. Sometimes they'll oh cut interest rates so banks intern lower borrowing rates for customers who can then spend more money and boost the economy. The Fed already cut interest rates rates less than two months ago for the first time in over a decade. You know since the financial crisis now it's doing it again. So why is the Fed making these cuts what's not to be dramatic but the US is on a recession watch. Don't get US wrong. The economy is still doing okay right now the the US is unemployment rate is historically low and people are still going shopping and spending money so win win. Here's the lose part the. Fed sees uncertainty in global markets and US trade policies global economic growth has been slowing down and the US trade war with China isn't helping and uncertainty certainty makes economists nervous when Powell made that first interest rate cut back in July. He said it was simply taking preventative measures and he seemed to imply. I bet he won't be doing this again for a while but he did leave the door open to make more cuts in the future which is what happened today. He cut interest rates again as a kind kind of economic booster shot and left the door open again for more cuts in the future. Sometimes the path ahead is is clear and sometimes sir less so so we're going to be looking carefully meeting my meeting at the full range of information and we're going to assess the appropriate stance of policy as we go as long as I said we we will act as appropriate to sustain expansion. The reactions are mixed. One person who's been really pushing for another cut is president trump. He wants the Fed to bring interest rates down even more two zero and he's been really bugging Powell about it. He's tweeted that Powell is an enemy and compare them to a golfer offer who can't Putt ouch to be clear trump nominated Powell job but he can't force Powell's hand and willpower did make a cut today. It wasn't the zero trump asked for meanwhile. Some economists are scratching their heads. They say that lowering rates it's too much could actually hurt the economy because lower interest rates can stifle competition and productivity and at the Fed should hold off on more cuts until it really really needs to make them other economists say this cut is not nearly enough to balance out the potential economic damage from the trade war with China after today's announcement the markets dropped but they rebounded by the end of the day the Nasdaq was down a tenth of a percentage point from yesterday but the Dell and s and p five hundred were each up by about that much to learn more about what interest rates are and how they affect your wallet head over to the skin dot com slash money.
"interest rates" Discussed on Marketplace with Kai Ryssdal
"This next story while it's an interview actual is proof once again if we still needed it that any industry is ripe for disruption eyeglasses razor blades taxis also sewing and if you're thinking breaking out the old sewing machine at home a paper pattern laid out on the table pieces of cut up fabric fabric all over the place. Zoe Washington would like to disabuse you of that notion. She's a fashion journalist also the founder of so squad. Se W. S. Q. U. A. The squad welcome to the program. Thank you so much for having me so you've been a fashion journalist for for awhile right like ten years I have I have I've been in fashion. since the year two two thousand I started at Cosmopolitan magazine quickly went up the hearst ladder and have been in fashion ever since I made the transition over to digital media about three years ago when I was the fashion director at Britten Co okay so what is it that you saw in your experience that made you say you know. There is a business model to be had in sewing patterns and people producing their own stuff. You know I mean like most most people in fashion. I was really enamored with the idea of sowing at a young age and when I was a teenager I would often go to traditional sort of craft stores the michaels the Joann Fabrics and I wouldn't see much you know in the isles that looked like me that reflected me and so I was sort of surprised you you know as I've been going through fashion as an editor and writer and stylist that that had not been addressed and I really think that there's just such a dearth of product out there for were teenagers and tweens and what we WanNa do is really take that same sense of curiosity and excitement about style and translate it to something that's a little bit more more traditional and vice versa take the traditional idea of sewing and bring into the digital era right and give some aware when they're instagram and all the time right fundamental yeah right right so so you sent us some stuff it's it's a package with the brand new up on tops says so squad and it is create your own classic T. Super Simple sewing project new machine necessary. I'm going to open it up. I WANNA talk what we're going through here so so in real time as I do this you know I remember my mom. When I was a kid she would get sewing patterns like on that flimsy tissue material and she laid out on the dining room table and pin it the fabric and ah she's probably listening to this. She will certainly correct me in a phone call as soon as she hears it but I don't recall her ever wearing anything that she made but that's I guess that's my mom. That's not that's not this all all right so okay all right so here's here's the fabric in the paper. you need a tape measure and it is the basic idea is still the same. I mean you supply the fabric you laid out and and your clip and so is at the deal you hear. The basic idea is still the same. It's really just a new interpretation of it. You know it's really difficult. If ever I mean if you ever went past just watching your mom makes you missed out but you know sometimes when they can be intimidating and the eared entry to try in in your own sewing seems really high because it's very confusing. There's you know sometimes they're in French and there's multiple sizing and there's a lot of sort of inside baseball. Speak when you open up a traditional sewing pattern and so what we wanted to do is to really take a lot of the things that I learned as an editor and as a stylist and fashion writer her which is to be very direct very visual to be dynamic and to show how you can style some of the clothes that you make and simplify some of these ideas into something that's very very easy to use and fun to wear and that you can create depending on your skill level rather quickly and even if it takes you a while it's just a simple thing that you can pair hair into your outfit so this is great actually and and you're not kidding when you were talking you know fundamentals and everything 'cause item one on on one of these sheets. I have in front me. Now is how to threaten needle. Step one get a sewing needle. Yes I mean you know the one very important and that's something that we really learned working working with a lot of young teens and tweens which is again. If we'RE GONNA say we're a beginner friendly. We have to be begin a friendly and you'd be surprised how many people adults included would have never really tried selling because they didn't quite know how to threadneedle totally totally so who makes the fashion and styling decision that you then put into these envelopes and send out to your I guess subscribers right or or you put them on the shelf at Joanne. How do I get one of these things you can go straight to so squad. Dot Com we sell them right now on our site and we do drops every season or so I'm lucky enough to be somebody who goes to market appointments and is able to see what designers diners are making six months ahead of time and I I know what's going on you know and what we like to do is take all of that and think to ourselves okay. What can our customer make on their own. What would they want to make what silhouette would they find very wearable and very interesting but maybe they just haven't figured out how to use it yet for sure so about you and this business. Are you gonNA now. Leave fashioned style journalism and be an entrepreneur. I mean what's the plan. All you know there's a lot of things that are I mean. If you WANNA get in deep yeah that'd be great. it depends on how successful this segment. Sigmund goes I would love I would love that my passion is with style and fashion and discovering covering your own sense of self through the art fashion but so squad is definitely my number one goal and I am really excited for it because I think it really fills the gap that has yet to be addressed in this market. Zoe Washington company called so squad in her spare time. I guess she does this while she's not doing fashion journalism so he thanks a lot. I appreciate your time. Thank you so much for having me. This is one of those were visuals help. Check out that kit we were talking about me and Zoe at marketplace.
"interest rates" Discussed on Marketplace with Kai Ryssdal
"Coming up and there's a lot of sort of inside baseball speak when you open up a traditional sewing pattern thank disrupting. DIY clothing but first. Let's do the numbers. Dow Industrial's up forty five points today about ten percent twenty seven thousand one eighty a two the Nasdaq rose twenty four point three tenths percent eighty-one ninety four the S. and P. Five Hundred Bank eight points about two tenths percent three zero zero nine three thousand nine on that particular Knicks heard about Walmart expansion of the grocery delivery World Walmart stock up three quarters of one percent today. One company's debut on the big board was less than stellar on this Thursday shares in the teeth alignment companies smiled direct club swooned twenty seven percent on its first day of trading out bonds fell yield on the ten year. Treasury note rose to one point seven eight percent. It was like three weeks ago right that it was one point four something you're listening to marketplace. This marketplace. PODCAST is brought to you by Kronos. Rana's Cronos knows that hiring retaining a modern workforce of salaried hourly full and part-time workers can be challenging especially in today's competitive job market. That's why Cronos puts. HR payroll talent and time in one place so HR professionals supporting a blended workforce have all the tools they need to engage and motivate people every step of the way learn more at Cronos dot com slash HR swagger kronos workforce innovation that works and by the Maryland Marketing Partnership. If talent that means everything to Your Business Think Maryland home of the nation's highest concentration of stem workers there are talented workforce is fueled by an award-winning education system and some of the nation's nation's best universities with reasonable living costs a diverse population and endless opportunities to grow and explorer. It's a place where workers want to be but talent isn't all all that Maryland offers business when it comes to location. Maryland pushed the world's most influential people and companies right at your fingertips Washington. DC is right next door New York City a short short train ride away with a workers. You need a location. You can't beat Maryland makes for a smart investment. Make your move at Open Dot Maryland Dot Gov. This is marketplace. I'm Kai Ryssdal. We come now to the MEA. Culpa part of the program kind self inflicted. Actually we asked the other day what you think of when you hear the word word recession and in particular when you hear a lot about a possible recession in the news. What do you think of that. Hi My name's Ian Picard on from Boca Raton Florida the media. I think we'll see a headline recession and the want people to think of the most recent recession because that drives viewership in the most recent recession happens to be very bad one that caused a lot of people to change their conditioning about how to act in the financial world so show keep people scared and they'll keep watching and that's what the media wants. My name is Annabel foray from Lakewood Colorado when I hear the red recession my reaction depends upon the source when I hear it from commercial media wherever online or TV or radio well they seemed to be so driven to sensationalize everything that I take it all with a grain of salt and upset that all of you seem to be trying to bring us down into a recession hi. My name is Mitchell Bentley and I'm from Memphis Tennessee. If you look at some of the headlines You probably think that the world was about to end Mike and see why anyone would think that with the trade war and the R. Word kind of acts like a cherry on top when I hear the media saying that a recession is coming though I don't get that worried I was taught that when you invest you should do it for the long term. I think that when you're investing time line is for ten twenty and forty years any fluctuations nations down or up. We'll come out in the wash and it won't last forever. Let us know what you're thinking about would you when you hear the word recession here or elsewhere hit us up at marketplace dot org were at marketplace on twitter. You can get me at Cairo's Del K. I. R. Whiteness.
"interest rates" Discussed on Marketplace with Kai Ryssdal
"There was a thing I used to do on this program a couple of years ago when inflation numbers came out numbers that were at the time invariably soft. There just wasn't much inflation at All so inflation I would say is really dead. It's just mostly dead princess bride by the way watch it. If you haven't Billy Crystal Miracle Max anyway turns out. I can't say that anymore because we got the latest report on consumer prices this morning inflation by another name the core number that is inflation without food would and energy costs rose three tenths percent in August from a month earlier the third straight month. We've seen prices rise that much and year-over-year core inflation is up two two point four percent. That's a thirteen month high all of which gets me to this hour every now and then series your economic. Questions are answers called. I've I've always wondered you asking questions to get one. I bring our topic today. Yes you guessed it inflation and why really we kinda need it. Marketplace's Mitchell Hartman has the answer listener. Listener Geoffrey Dutton is retired living on a fixed income so he worries a fair amount about rising prices and that prompted him to ask us a question it goes beyond his own pocketbook concerns to fundamental economics y muster dollars luther value over time wouldn't an economy without inflation make us all that off. DUTTON's in his seventies so he remembers when runaway inflation savage to the US economy and contributed into the wreckage of Jimmy Carter's presidency. Here's Carter at a press conference in one thousand nine hundred seventy eight the most serious problem that a nation has inflation and it's getting worse it would soon spike to a thirty year high of thirteen and a half percent Michael Strain at the American Enterprise Institute says scary stories of hyper inflation past make people fear any rise in prices. Today we are used to thinking of inflation as a problem. It's something we want less of but he says now the concern among economists. Thomas has actually done a pretty dramatic flip to being concerned about too little inflation. Why do economists think we need inflation at all one standard explanation. Shen is that if prices stop rising consumers will hold back on buying stuff waiting to get a better deal but Dean Baker at the Center for Economic and Policy Research doesn't think consumers actually plan that way suppose. You'RE GONNA buy a refrigerator. We'll just say cost thousand dollars. We'll make a really nice refrigerator and you go. Oh wait a second. Prices are falling half a percent a year so if I wait six months then I could save five dollars. I don't think that's it's a very realistic story. Baker says the most compelling economic argument for inflation has to do with interest rates and the Federal Reserve some amount of inflation relation to percents three. Maybe four percent turns out to be very beneficial because it gives the Federal Reserve more ability to boost the economy downturn. Here's what bakers talking about to fight recession the. Fed cuts interest rates to lower the cost of borrowing money. That's supposed to encourage businesses and consumers rumors to spend and invest more jump starting the economy now. There's a bit of complicated math here but basically interest rates are calculated in apart based on the inflation rate. If inflation's near zero the Fed doesn't have much room to lower interest rates any further so a moderate level. I love inflation gives the Fed the maneuvering room. It needs plus. Baker says steady moderate inflation actually encourages businesses to expand hand if I'm a car company thinking building a new factory ago. There's two percent inflation next year. I'm going to be selling cars for two percent more money two years out. I'll be selling on them four percent more so that gives me more incentive to invest now inflation. Even middling inflation like we've got now isn't good for everyone. He won people on a fixed income like our listener. Geoffrey Dutton see their purchasing power slowly erode and if wages don't rise at least as as much as prices workers lose ground and become poorer over time as well. I'm Mitchell Hartman for marketplace. The thing about a listener series called I've always wondered is that we can't do it without knowing what you are wondering so tell us would you marketplace dot org is where you do things that are deceptively more complicated than you might think same day grocery delivering but therein lies market share and profit which is why. Walmart's expanding its ninety dollars a year unlimited grocery delivery fee nationwide trying to keep up with Amazon on fresh inst- cart and all the rest of them markedly. Merrill SAGARRA has that one. Let's say I get a craving for chicken tacos. I ordered the ingredients including one pound of raw chicken to be. He delivered to my house today. Think about what goes into that. The company has to pay someone to shop for me. It has to keep the raw chicken cold while it sits outside my apartment for hours wars and since I want it today it'll be hard to lump my order together with other deliveries. CERITA Kodaly forester says that'll be expensive. It is a lot cheaper to go to a neighborhood and deliver five orders at once than it is to go and deliver one order at a time the cost pile up. Joel rambled at Alex Partner's says when it comes to grocery shopping customers have traditionally done most of the work. The customer has picked the product off the shelf. Okay packed themselves. They've driven it to their home on motored into their kitchen and you're shifting that work onto the company and the customer expects to pay the same price also people. It can be really particular about what they eat. Maybe I'll get the shipment and the chicken is fine but I also ordered some peaches and I don't like the looks of one of them. Charlie O'Shea is a retail analyst step. Moody's the delivery person run back to the store and get another peach and bring it back to the customer. Do they get a discount. Despite all the challenges companies like Walmart. Mart and Amazon are investing in grocery delivery because they want customers to turn to them for everything. It's about being the most convenient option molly blake men is a spokesperson person for Walmart. Everybody needs more time on their calendar. We're offering customers a number of ways to stop that makes it easy for them. Walmart does have an advantage here. It's the biggest grocery retailer in the country with forty seven hundred stores that it can ship chicken and pizzas and Taco shells from I'm Maryelle Sagarra for marketplace. Sometimes words do not mean what you think. They mean exhibited today. Courtesy of the California legislature rent control lawmakers here have approved a bill bill the cap just how high rent can rise the governor says he'll sign it which would make California the third state this year to pass rent control legislation. That's after Oregon and New York and three I think officially makes it a trend right but as marketplace's Ben Bradford explains rent control might not actually keep rent affordable legislative debate is boring the phrase but the legislative debate yesterday in the California Assembly about passing the rent control bill was not boring do the right thing because guess what you may know someone who will be home one day Los Angeles Assemblyman. Mike Gibson was among the Democrats who argued slowing rent increases will help people stay in their apartments since California's bill caps the amount most landlords can raise rent on attendant each year at five percent plus inflation in organ new law. It's seven percent plus inflation. Bring control is definitely having a moment. Jim Lopez is a vice president at the national multifamily housing coalition which represents apartment owners the PD's says policymakers acres are addressing a symptom high rent with the wrong medicine as little bit feeding someone candy who's been starving it tastes good and it'll make you feel full in the short term earn but at the end of the day you're only making your health worse and worse. It's not just landlords that think about rent control says Mark Trestman at the left leaning urban institute suit. Most economists generally hate it. I think it's a lot of economics one books because if you just think about a kind of basic supply and demand I mean what you're doing is you're limiting the ability to have price meet demand. Democratic lawmakers including Oakland Assemblywoman Buffy wicks acknowledged that rent control won't solve the housing crisis. It's a false choice to say we either need to build or protect tenants. We have to do both of those. Things in the meantime California is three and a half million homes. Shy of what Steve Housing experts project needs. I've been Bradford for marketplace.
"interest rates" Discussed on Marketplace with Kai Ryssdal
"In Los Angeles. I'm Carl Rozelle. It is Thursday today the twelfth twelve th of September good as always to have long everybody we are going to begin today in Frankfurt. Germany the headquarters of the European Central Bank also we're going to begin inside the twitter feed of the president of the United States in Congress. Perhaps but bear with me here. Would you the E C. B announced a big new stimulus package you this morning. It's going to start buying up bonds again. Quantitative easing you might remember that's called and it's pushing interest rates even deeper into the negative. I'll save you the long explainer but at the bottom line is that negative rates are supposed to goose economies by making lending money spending money more profitable more attractive than saving money so that's that's the ECB the presidential twitter John this was to urge the Federal Reserve to do the same thing negative interest rates marketplace's Megan McCarthy Krino puts those two things together. Europe's benchmark interest rate has been negative since two thousand fourteen pushing it even lower is a dramatic effort to shore up the euro-zone says Torsten Slog Chief Economist with Twitchy Bank securities to essentially throw the kitchen sink at the European economy. Europe has seen years of slow growth but slaughter says uncertainty over brexit and global trade has made things even worse. The trade war has been having fairly significant impact on all countries in the world the expos among them Germany the biggest economy in Europe where a collapse in exports has the country on the brink of recession. That's a far cry from conditions in the United States is in a much stronger position economically Jonathan Right and economist at Johns Hopkins says despite fears of a slowdown the US economies enemies in good shape and with interest rates above two percent. The Fed still has plenty of room to cut without going negative. I think that that is something that for. US would be an absolute last resort. It also probably wouldn't do what trump said in his tweets he wants it to which is weaken the dollar to make us exports awards more competitive. Jeffrey Cleveland is chief economist with Payden and Regal the best thing that could happen for the US dollar would be for the rest of the world to improve their economic growth in fact after the announcement. The euro dropped sharply against the dollar but over the course of the day. It regained all that lost ground. I'm Megan mccurdy Carino for marketplace. the foreign exchange markets they tell you so much are moving on one updates. The trade war news at one's is peril because twitter right but the last we knew talks with China are still scheduled to restart next month and there have been some promising signs of de Escalation on both sides odd but again twitter thing is that while China and the trump administration are still at trade odds the rest of the global economy continues. Apace and there are some some countries who are taking advantage of the moment which might call in a admittedly oversimplified way the winners of the trade war. There are really two sets of countries that could gain. That's Mary lovely. She's an economist at Syracuse University or upstream suppliers so Australia may supply more iron ore or Brazil will provide soybeans upstream basic commodities or minerals. Brazil's a great example by the way when China stopped buying. US Soybeans Brazilian soybean exports filled the gap in two thousand seventeen Brazil had half of the Chinese soybean market last year seventy seven percent of it so that is upstream here again Mary lovely but then there are the further downstream downstream parts of the supply chain where countries like Vietnam Malaysia Indonesia Singapore come in and these are places is where workers put together things say Vietnam according to the US Trade Representative Vietnamese exports to the United States were up nearly six percent last year a lot of that was electrical parts and clothing shoes all downstream products like Mary. We say there is a caveat here. Of course these aren't new trade relationships. We have along gotten a whole lot of downstream goods from Vietnam and China has been buying Brazilian soybeans for a while now to what's changing though bit by bits are the relationships is an investment in these different parts of the supply chain downstream and upstream take Brazil for instance. Here's CAL Hanley. He's at the University of Michigan's Ross School of business. There's there's there's plenty of large agro-industrial firms in Brazil that for new relationships with these Chinese buyers and those relationships may be pretty sticky sticky meaning in other words once businesses commit to their supply chain. It is not so easy to change it back. It takes time and money which the costs of trade war induced uncertainty indycar handling one last time the United States in the longer term may have cast because of this current trade war pretty long shadow over its trustworthiness in future international relations and so I think that's certainly bad for the United States but the winners might be the countries that have continued to you attempt to play by the rules as best they can well. Let's see the European Central Bank says the European economy is a mess Wall Street today. Hey look there's there's progress in the trade war. It'll be happy music when we do the numbers..
"interest rates" Discussed on Skimm This
"The Federal Reserve announced today that it's lowering interest rates by a quarter of a percentage point the outlook for the US economy remains favorable and this action is designed to support that outlook. That's Jerome Powell the Chair of the Federal Reserve Aka the the Fed is in charge of regulating banks and keeping the economy stable and one way to do that is to control the interest rates which is what the Fed is talking about today. They moved the needle up and down but today's a big deal. It's the first time the Fed has cut rates since it drop them to virtually zero after the two thousand and eight financial crisis <music> which might make you think what does that mean. Obviously the economy was in a huge recession then but take a deep breath. The economy is doing doing pretty well right now. Unemployment is low and consumers are spending but even though inflation has been pretty stable which is good. It's below the two percent rate that the Fed usually like SOC- so why is the bad doing this. We've been hearing a lot of mixed messages. Some people think that interest rates are only being cut because of pressure from the oval president trump has really been campaigning for it. Why lower rates are generally good for the economy it lowers? There's the cost of borrowing money so businesses invest more and consumers buy more which can also bump up inflation.
"interest rates" Discussed on WSJ Your Money Briefing
"On Wednesday Federal Reserve officials held interest rates steady. But they reiterated that cutting rates could be an option, if the economic outlook weakens, so how should investors play the market with an interest rate. Cut a real possibility. We've got P Jim fixed income chief investment strategist Robert tip on the line with us. So Robert, we're has the smart money been up to now capitalizing on what the fed has done in the past say six months, I think, there've been a couple areas profit opportunities in the bond market over the last six months. The principal one has been simply the play to stay full we invested in the market. And if anything to have an above average sensitivity to interest rates or being long, duration in order to capitalize on the drop in rates the other area, of course, has been to within the fixed income, all its trophy, ideally, that offer incremental yield whether those structure product or corporate. Bonds in emerging markets. Select emerging markets in that kind of thing knows have had a sluggish quarter in the second quarter, but they had strong performance year date, those have offered incremental yield on those spreads have come in offering some capital, appreciations. Well, so that's what's been working in the bond market. And of course, generally, this correctly markets have risen, although that's that's slowdown in the second quarter with the trade frictions heating up, fed chairman, Jerome Powell said interest rate, reduction is an option. He in the fed officials have at the ready. So let's say that they drop rates before the end of the year. In fact, some are saying, not the fed, but some are saying it could happen at the end of July how does somebody put themselves into position to capitalize on that. When you say expose themselves to interest rates, what specifically could they do right now? What's priced in over the balance of the year? Is that they're gonna take the fed? Funds rate down into the one sixties from right now. The two thirties, see have a few interest rate cuts priced in your strategy was going to be to position on the front of the yield curve interest rate cuts, if that hurdle is not met in exceeded. You're actually not gonna make any money being long, the front end of the curve, a tenure treasury to ask yourself the question, where's the fed funds rate gonna be on average, say over the next ten years? And obviously, if you look backwards long enough, you would see that fed funds rate averaged significantly more than two percent, but there are a couple reasons to believe I think that from two, forty it's pretty much one way from here, the, the rate at which the fed funds rate is gonna fall is in question. But number one most major market in the world, whether they're sluggish commies with a more aged demographic. Like Japan or even a high growth con me like Australia or New Zealand with a, a rapidly a morality growing population or someplace in between, like the euro-zone interest rates are lower than the United States. Most of the short rates are at a one handle in a stray in New Zealand, and of course, in the floor Ryan Connie's of Europe in Japan. They are sub zero so people are paying to store their money in those jurisdictions. And of course, they're getting over two percent in the way, the dollar is creeping higher, and that's probably being -able, configuration over the long run, you're gonna see convergence and it's probably not entire convergence but movement of convergence over the longer term. And then, of course, it's simple when we have a slowdown in the economy, the fact will probably be forced to cut rates substantially and keep them substantially lower than they are now for significant amount of time. So in other words, the average. Front was rate may end up being one and a half over the long run or maybe even lower than that. And so, I think investors may find that, you know, investing in the tenure or a thirty year or securities that are pricing off of a tenure thirty are is, what gets them the best performance of retired. So it's not an exciting environment, but the environment, we've been in the last handful of years, it's not a bad environment. You need to remain fully in our view engaged in the markets at your strategic allocation to fixed income, and the, the lower risk in the higher risk products. Much probably going to have the best result, rather than trying to fill at the front end with exactly the timing the fat, let's talk more in the short term. Let's say the fed winds up, reducing rates twice by this time in twenty twenty how do people see the effects of that in the economy? We're seeing a bit of a deceleration in the US economy, we seen inflation drop. Away from their target. So there's a real tug of war where the traditional economists are saying, hey, on placements low wages are celebrating a little bit. We're going to get inflation, but to practitioner non economists like me, I'm looking at inflation X food, energy and shelter. And that's actually less than one percent in it's decelerating. So what I would guess is a must we see a change in these dynamics towards something that we haven't seen for really, really long time. And therefore, I kind of think is Mike weight, which is some kind of price wage spiral towards higher prices that people are imagining. I'm to see that. I think the fed is going to end up a kind of drip, feeding diseases because they're failing hit their inflation, target and presumably, they see some relationship between inflation and their monetary policy and growth. In other words. If they're running a policy that's causing persistent inflation under shoot. Then that could be costing the economy and go some part of the way towards explaining, why this is one of the slowest expansions in on the postwar record. Okay. Now an investor is comfortable in stocks in, in the market, not comfortable in bonds, not comfortable elsewhere. But in stocks where do you recommend? They put their money. Let's say for the rest of this year. And for the first half of twenty twenty if we were to assume and we don't know, for sure if we were to assume that the, the fed drops rates, where do you think the best money goes in terms of stocks in the stock market? You know again in terms of the big picture in terms of looking at strategy. I think what you're saying, you know, resonates with people that interest rates are low, and they should have an invalid st- investment approach that emphasizes cash and stocks. And in my mind there ignoring, certainly the history. Of the century, which is that, if there is a crash or an unexpected drop in the markets for the economy, and it could be for economic reasons or could be for on policy reasons or simply some kind of market vicious cycle. If there's a crash in the market and the economy that hurt stocks, you will probably see interest rates go down and bonds benefit. I think that this is a good environment for equities. They're not excessively priced. And I think they should be benefiting from what's really a drop in the equilibrium level of interest rate, a drop in the equilibrium level of interest rates should boost the present value of all future cash flows, including equity earnings guidance. So, I think it is a good environment for acquisition people should be involved there, but I think they should probably be balancing that with income, which I think, is going to outperform ash over the long run their opportunities in the bond market. Given the confusion. About the level of interest rates and the direction of the economy, and that kind of staying with the long term strategic mix of, of stocks and bonds is going to be the best approach for, for investors in this environment as, as it has been interpreted as no right? That's PGM fixed income chief investment strategist Robert tip on the line with us, Robert. Thanks for coming on the show. Okay. Thank you. And that's your money briefing. Im char Waylon in New York for the Wall Street Journal..
"interest rates" Discussed on WSJ Your Money Briefing
"As recently as November. The Federal Reserve is expected to raise interest rates as many as four times this year. But in light of stock market volatility in wavering. Economic indicators that's been dialed back to two but his to too many it is in the eyes of at least one voter on the Federal Open Market committee and Wall Street Journal reporter Michael gerbil on the line with us with details. So Michael you spoke with James Bullard. He's the chairman of the Saint Louis fed. He has a voting role on the FOMC, and he feels in terms of interest rates the status quo so far is just fine. Yeah. Mr. Bullard has long actually for several years arguing against interest-rate rises, believing that if there's not that much inflation pressure in the economy, and basically the overall inflation gauge is show that inflation's been at best at the feds two percent target, but mostly below it. There's basically he hasn't really seen any justification for for raising rates. And so what happened is what he fears. Now, if the fed does go for with more interest. Rate rises. He's worried that that might actually be the thing that you know, he doesn't specify how many rate rises it would need to be. But he's worried that continuing to do interest rate increases could actually send the economy into recession. And what's been interesting about where Mr. Bullard is because the United I suggest that he's been opposed to these Ray rice for longtime over the last few days number of fed officials have shifted in his direction and that caution that you you know, that that uncertainty about the outlook Luda to in your opening that's caused a whole bunch of fed officials to also go and say like, hey, maybe it's time to be patient. We have the collective assessment is for to rate rises this year. But now you see fed officials saying we've got a while to take stock of things. See if the Mark of us, right? See if our view is right. So another fed official who had been actually fairly hawkish on Boston fed leader, Eric Rosengren, he for quite some time. He talked about how he wanted more interest rate rises than all of his colleagues even today in his speech today. He backed off and said we have time to be patient and take stock before we do anything else. We'll if you're on Wall Street or an investor the cautious track at least in the eyes of two of the FOMC members the cautious track. They like to see the fed take going forward. Well, that's got to be good news. And there's even another fed official Chicago fed president Charles Evans, who's also getting a voting role in the FOMC to sheer like, Mr. Rosengren, Mr Evans has been pretty hawkish for for quite a while about monetary policy. And he also reiterated the message that we have nothing that is pushing us to do anything right now. So let's just be patient and take stock before we decide whether or not we need to raise rates again. Bottom line for Mr. Rosengren for Mr Evans, they still remained fairly optimistic about the outlook in they still do think at some point. They do seem to lean that the feds can be able to do it. There's a very interesting note in your story from your in view with Bullard. And is he feels the market has been more accurate in predicting the track the economy than the fed Mr. Bullard is consistently placed a lot of emphasis on market based indicators of the. To me, you know, when he's trying to look forward and figure out what the economy's gonna do. There's all sorts of different ways you can do that. You can look at surveys that economists have made all sorts of things like that will what Mr. Buller likes to do is look at what markets are pricing for in the future when he looks..
"interest rates" Discussed on World News Analysis
"Is now suggesting the US central banks benchmark interest rate is near a neutral level with several risks to financial stability that could lead to a particularly large drop a markets. He says interest rates are just below a neutral level that neither Burs nort restricts. The Konami interest rates are still low by historical standards. And they remain just below the range of estimates of that level. That would be neutral for the economy that is neither speeding up nor slowing down growth, my epilepsy colleagues, and I as well as many private sector, economists are forecasting continued solid growth low unemployment and inflation remaining near two percent. Just last month. He said a Bank had a long way to go before reaching that level Powell injected investors with a strong dose of optimism in his major policy speech comments that many investors read as signaling the fest three year tightening. Psycho might come to an end Wall Street. Shares have risen sharply after Pabo statement. Wednesdays remorse from the fetch share after repeated attacks by US President Donald Trump Trump blames the rate rises for recent stock market declines and describe future interest rate hikes as the biggest risk to the US economy for more about US, macroeconomic policy gel earlier talk with. Dan, analysts economists intelligence unit and entertainment, author and columnist. So I know how would you explain the message sent by the US Federal Reserve chairman Jerome Powell his remark come after repeated attacks by President Trump isn't a compromise. Well, you know, you have to wonder I mean on one hand he cannot be removed except for 'cause I mean, literally you'd have to break the law, and then be removed by congress very very difficult to see once the fed chairman appointed their their for their term and there's removed. At least it's not discretionary by the president. But obviously, you know, timing is it's too much to be just ignored. I mean last month. He was saying, oh, we're long ways way from being neutral. President Trump start the plying unscrews to him at least in the public realm. And then all of a sudden he comes out. Oh, yeah. We're about neutral. There is some data though that suggests that there might be some reason to this. I mean, obviously, you know, the World Bank. I am app. Everyone had said that facing a point five percent decrease in the world GDP. There's very you know, inflation is that two percent wages at two point nine percent. So you take wages from emplacing? You have point nine percent. That means that there's not a lot of growth in personal incomes. They're not gonna be less spending a lot of companies took their tax breaks. I mean, they're tax windfall. That charnel Trump gave them and. Bought back their own stock. They didn't put it into machinery and expansion and things like that having said that there is indications that the the economy is wrong strongly in terms of sheen orders within US, but outside the US at the different problem different scenario. The machine orders seemed appear to be down. There's a lot of uncertainty. People don't know what it's going to mean. Meanwhile, you have Donald Trump saying he's gonna add another two hundred sixty billion dollars worth of tariffs against China. This is you'll even more, and certainly so obviously you can't ignore the timing. But yeah, there is some indication to decide that the fed is perhaps not feeling as bullish about the US economy is was even a few weeks ago. So then do you think jerem Powell open the door for a potential pullback in projected interest rate hikes for the next year following a wildly expect? His interest in December..
"interest rates" Discussed on Masters in Business
"You have to take some risk off, make sense back in twenty fifteen. You said you were thinking we were falling into an everything bun bubble. What are your thoughts about that today? Is our bonds still in a bubble? And how does this resolve itself? You know at that time, Barry, I think interest rates were the lowest they'd ever been period and. You know it, it seemed that with a strengthening economy and with the fed no longer wanting to be so stimulative, that interest rates would be rising rising interest rates, falling bond prices. That's the math. So you know, we've seen eight interest rate increases from the fed already. Most forecasters think we'll see a half dozen more over the next couple of years. Clearly, interest rates are no longer the lowest in history, although still low, they'll probably continue to rise, you know. So you know a straight high-grade bond is nothing, but an interest rate machine. And as interest rates go higher, the prices of existing bonds with old fashioned, low interest rates go down. I don't think you want to own straight long-term bonds. In a period of rising interest rates and the consensus, the rates will rise. So if you don't wanna own straight up bonds and we're in a rising rate environment and a lot of people have fairly substantial exposure to equities. How do you offset that risk? If you want some form of a balanced portfolio? Where is the value on the fixed income side? If anywhere? Well, I, you know, I think that across the board. What I say about rates has really affected all bonds. You know, the impact of of rates on bonds is is universal and you know, at the present time, there are no exceptions. The one thing you want to think about is this Barry. One of the main reasons that we will probably have rising interest rates is that we will probably have continued prosperity, and maybe even a pickup in inflation, those two things, prosperity and inflation add to the profitability of corporations. Right. And so. Strengthening corporate profits will translate into a positive influence for corporate bonds. So you'll have the negative influence of rising rates, but the positive influence of improving profitability. And that suggests that corporate bonds are somewhat sheltered okay from the deleterious effects of of rates alone. But you know, I believe that most asset classes are fully. To fully value to at the beginning of rich and this is the time for caution. You know, the the book is about trying to figure out what time it is for what and which form of behavior is appropriate. If we're low in the cycle, we should be aggressive. If we're high in the cycle, we should be defensive. I think on balance through most asset classes, we are high in the cycle and I think that calls for defense. So if we were putting this in terms of baseball game, what, what inning are we in in in that longer cycle. I get that question a lot. They started asking it back in, oh eight. When they said, when will what inning are we in in the crisis, meaning when will the financial crisis? Sure. I remember eighth inning, fishes of the fed governor from Texas am basically said we were in the eighth inning turn that we were in the second inning, but still exactly and today when they say, what any are we in? They really mean when will the bull market end how far we in the cycle xactly now I think we're in the eighth inning. But about a year ago, I figured out there's a problem with saying that which is this baseball, right? And we know in baseball, that game is nine innings except except ties, but in investing we have no idea. Now many innings there will be in the game. So I think we're in the eighth inning, but this game could go nine or eleven or thirteen. And. I think that the outlook is not so poor and the prices are not so high that this is a time for defense. Our own motto at oak tree has been move forward, but with caution and we're essentially fully invested. That's what move forward means. But I also think it's time for caution because I do think we are elevated in the cycle, so. So how does an investor manage that risk? Is it just staying away from the most expensive mo- speculative paper be fixed income or stocks on the equity side? How do you stay fully invested but cautious? Well, I think that's the right idea..
"interest rates" Discussed on Masters in Business
"Welcome to the podcast professor. Thank you so much for doing this. I'm fascinated by the subjects you cover, and I'm just totally enamored in financial history and you know it, it couldn't be more true. Those who don't learn from history are doomed to repeat its mistakes. There's a great New Yorker cartoon about well, but those of us who do learn from history, we just get to be frustrated by everybody else who doesn't. And it's really true before we get to some of our favorite questions. I just have to ask you a few more things about market history and central banks in interest rates because they are so fascinating. There was a lot of criticism of the Federal Reserve following the financial crisis. Some of which might have been deserved. Some vich might have been a little over overwrought. We heard we heard complaints about here comes hyper-inflation here comes the collapse of the dollar. None of which proved true in the decade that followed the crisis. What are we to make about the changing role of the central Bank? Do they have too much power? Have the broaden their mandate too much, or they more or less doing what they're supposed to be doing? Well, I think they have a considerable amount of power and you know, central banking history. The checkered history of central banking in the US shows that people get suspicious of concentrated financial power. So the fed has to tend it's political fences. But I think that they they, especially now that we're in a Fiat currency world, we're not the money isn't backed by gold and silver anymore. That. It increases the power of the central banks because they can create money with the stroke of a pen and they decided to fight the financial crisis by creating a lot of new money, or maybe we should say a lot of new Bank reserves because it, you know, when you create a lot of money, people are gonna think inflation is right around the corner. But in fact, what happened the Federal Reserve created a lot of what we call high powered money, your base money. But the banks didn't magnify that into a rapid growth of the money stock. They held the the new money, the new, the new base money, basically as excess reserves. And so- excess reserves went from Bank reserves, went from very low levels in the two thousand seven to extremely high levels in two thousand twelve thirteen fourteen. We didn't see that really circulate through the velocity. Money didn't take up rightly. It kind of sat there right, more or less we would have had the inflation. Some people forecast had the banks. You know, use the new base money. The Federal Reserve gave them. They could've made a lot more loans, but they didn't do it. They held these reserves in the fed was paying interest on them. So it was kind of safe thing, risk risk, free return. And so I think that the in this, why did the banks do that? Well, I think the nineteen thirties, the same thing happened in the nineteen thirties that a lot of new base money was created in the nineteen thirties, but the banks were sort of shell shocked from the experience of nineteen twenty nine thirty three. So they held a lot of excess reserves for a whole decade after the banking crises of nineteen thirty thirty one dozen. The pendulum always swing from. They will wait to loose in the early two, thousands, meaning the banks they would give here. Can you fog Amirah? Great. Here's a mortgage to after the crisis. You have good credit score. You have a decent income. You have good work history and they still make people jump through all sorts of hoops to take to get credit. Sure. I had a personal experience of that. I bought a condo on Roosevelt island here in New York thousand seven. There was really easy in two thousand seven to get the. Financing for me to buy my condo on Roosevelt island in two thousand nine or ten. When I refinanced, I had to jump through all kinds of hoops to just get it refinance. Even though I had a good history of paying my mortgage payments by that time. So you're right. I mean two thousand six and seven and was very easy to get a mortgage on two thousand nine, ten. It was much more difficult to refinance the same loan..
"interest rates" Discussed on Masters in Business
"And then the Bank of England, you know, said, well, you know, the goal is leaving, so we'd better raise interest rates. And so that's the kind of backdrop for money is tight in nineteen zero seven. And then of course, there's always a trigger to a panic. There was some wild speculation going on in copper stocks and the shadow banks of that time we're called trust companies. They trust companies were involved in as shadow banks and financing. Some of the speculation copper stocks, one of the copper speculators failed and that triggered a run on the trust companies, but it was the backdrop of it was financial conditions were tight anyway, and then you had a sort of bankruptcy in impo implication of trust companies as being involved. So people Russia on the trust companies and took their money out. And that's what the financial panic last financial. Question. Go back the decades before the formation in the Federal Reserve and the nineteen o seven panic the half-century before that lots of panics and booms and busts. It seems that the pre fed era was not exactly the most financially stable in in the banking system there. Well, we got rid of the second Bank in the United States in eighteen thirty six. There hadn't been many financial crises in the US before that then right after the second Bank disappeared in eighteen thirty six. We had the financial panic of eighteen thirty seven related one in eighteen thirty nine. We had one in eighteen fifty seven one in eighteen seventy three one in eighteen eighty four. One eighteen ninety three. So nineteen o seven, right? I've actually done some research on this. And what I can say is that financial panics were at least twice as frequent when we did not have a central Bank as they have been when we had a central Bank. Can you stick around a little bit? We'll keep the tape rolling and continue chatting about all things. Financial panic. I loved to talk about this stuff. Certainly, we have been.
"interest rates" Discussed on Masters in Business
"Well, that Ben banenky I think thought that there was a glut of savings in the world, and that was one of the reasons this is before the financial crisis. Why were rate solo actually when the fed was raising starting in two thousand four, you know, from two thousand four, middle of two thousand four up to two thousand six. The Federal Reserve raised its policy rate twenty five basis points at every meeting. And so we were up from one percent where we started up to between five and six percent a couple years later, and they were hoping that you know that longer term interest rates would would respond to that. But they were surprised when they raise the short term rates, but the long rates didn't really go up very much and that's when banenky coined this glut of savings in the world that there was just such a demand for safe government bonds that despite the fed raising short-term interest rates, long-term rates, then move much at all Greenspan called it the conundrum conundrum. So I've heard the phrase recently norm. Maligning interest rates. The fed isn't merely raising rates, but they're getting often emergency footing in moving back towards normalization. What? What are your views on that? Well, I think you know, I think that's what they're trying to do. And from my historians perspective, I would sort of say that you know, people would say, well, what is a normal rate? How far do we have to go to get to normal rate? And when I was just a kid in the nineteen fifties, the fed was normalizing interest rates of interest rates had become very low and World War Two, partly because the fed was enlisted in the war effort and given the job of pegging government bonds, it was two and a half percent on a long-term bond and three eighths of one percent on treasury bills and after the war, the fed maintain those that pegging for a while because the secretary of the treasury wanted to minimize the interest cost of the national debt. But then the fed said, if we keep doing this, we're going to cause inflation. So in nineteen fifty one, the fed was given its freedom to normalize, basically in over the course. Of the nineteen fifties. Those very low rates that came along with World War Two raise gradually rose and and by the end of the fifties, they were up where you got like four and a quarter four and a half percent on a government bond maybe fit the late fifties, early sixties. And I would say from a long-term perspective that something like that, you know between four and five percent on a long-term government bond, and maybe you know to two to four percent on shorter term stuff that's sort of normal rates will. So that's what I'm thinking the fed is doing now, you know, maybe something like the nineteen fifties, where they'll gradually increase rates till we get to normal. And I think normal is four to five percent on a government bond long term and maybe two to four percent on short term stuff. Let's talk a little bit about your background. You have some really interesting history. You studied for a time at the Indian statistical institute at Calcutta. Tell us about that. Well, I was a that was after. My undergraduate education at Harvard and I was a fairly good student at Harvard. What did you study undergrad? I studied economics. I was one of two people in Harvard's class in nineteen sixty two who in nineteen fifty eight. They wanted to say they were going to major in economics to out of eleven hundred. By the time we graduated something like a quarter to a third of the class majored in economics. So I knew before I got to Harvard that I wanted to study economics, but that wasn't taught so much in high school in the nineteen fifties. And so, you know, I n one other person of Harvard's eleven hundred class that we want to major in economics and four years later about a quarter of the class majored ecconomic. So you also got a master's at Harvard and a doctorate that was after my tour of duty in India. So let's let's go back to India. What what made you say? I know I'll go halfway across the world while I was lucky enough to get a traveling fellowship or scholarship after I graduate from Harvard where I could go any place in the world and study for a year. Was financing for a year. And what I did was the chose India because it was halfway around the world and a class from Reinhold Niebuhr..
"interest rates" Discussed on Knowledge@Wharton
"The year at three and a quarter percent so as a result the fed will will push above two but they'll still be a good percentage point between that shortterm rate in that longterm rate so i want to expand on that a little bit take a a little bit more of a longer term view in the sense that a broader view i should say and that is that many many experts in finance and economics have said over the years that somewhere in the world on average every seven eight nine ten years or so there's a major financial crisis of some circled the currency crisis could be an interest rate crisis and so we've had this this almost goldilocks period where we had this horrible crisis but the there has been pretty steady growth almost worldwide i guess since then and so that raises the question will the will that average that people talk about apply one day soon well you can some people say what's do the average of the economic expansions only about six years and we're already nine years into this expansion long as expansion us postwar post world war two history has been ten years from nineteen ninety to two thousand we are one year away from the longest expansion us history could echo longer yeah there are countries that have gone longer a britain when eighteen years between nineteen ninety and two thousand eight australia went over twenty years they didn't actually have a recession during the financial crisis so as a result it is possible to have a longer our economic cycles are getting longer actually i was having we're having a discussion at our lunch table about that today and a lot of it has to do by the way with the fact more service ordering konomi than production economy which has shorter cycles is there going to be a crisis around the world once every so often of course we had the mother of all crises nine years ago so in a way we need a rest no one's i mean yeah i don't think there's people thought bitcoin is a bubble and i think it was a bubble but it was nowhere near big enough even in any conception that it's breaking could cause a economic recession there are few other stocks that you could argue are too high but generally there are no bubbles now around the world can there be bubbles yeah that don't affect the united states the nineteen ninety seven emerging market crisis you might remember that when the tack on the tie the indonesian rupee and many other currencies in southeast asia even in hong kong really caused us stock market a really take a dive we did not recession ninety seven nine hundred ninety seven we were able to fed move quickly we insulated ourselves from that recession so sometimes even if there is a crisis outside the united states doesn't necessarily mean they'll be crisis or recession in the united states so this time it's a little bit different it's always a little bit different nothing is exactly a copy of what we had before we are you know my biggest dangers that again the pool of labor is getting tied the federal titan because it sees labor market's getting tight and that means that wages are going to be bid up and again being bit up because of productivity growth is good but being bit up just because we need you your productivity it's just that there's not enough workers that's not good and that's what causes inflation because those higher costs are then pushed onto the consumer in terms of higher inflation if you had to choose the things that were most worrisome for you for the for the macroeconomic economy in in the us primarily but in the world to what would it be i i mean the.