Posts belonging to Category FED



Trump criticizes the rise of interest rates

The Federal Reserve has ‘gone crazy’

President Donald Trump knocked the Federal Reserve for continuing to raise interest rates despite some recent market turbulence. “I think the Fed is making a mistake. They are so tight. I think the Fed has gone crazy,” the president said after walking off Air Force One in Erie, Pennsylvania for a rally. Fears about rapidly rising rates helped cause the Dow Jones Industrial Average to drop more than 800 points Wednesday. The S&P 500 posted its worst day since February and clinched its first five-day losing streak since 2016.

“Actually, it’s a correction that we’ve been waiting for for a long time, but I really disagree with what the Fed is doing,” the President added. The Fed has raised interest rates three times this year and is largely expected to hike once more before year-end.

http://www.cnbc.com

3.7 percent unemployment rate in US

A 49-year low

For a solid decade after the collapse of Lehman Brothers touched off a global financial crisis, there was good reason to think the U.S. economy remained broken, from skepticism about the health of the labor market to tepid economic growth and the moribund rate of interest paid on U.S. Treasury bonds.

In a heartbeat, that seemed to change this week, adding facts on the ground to Federal Reserve Chairman Jerome Powell’s glowing portrait of a historically rosy and extended period of super-low unemployment, modest inflation and steady growth.

It came through Amazon.com Inc’s (AMZN.O) move to a $15 minimum wage, possibly setting the bar for companies nationwide. It came through a jump in long-term bond yields that signaled faith the gears of growth will remain engaged for a record-long recovery.

http://www.reuters.com

China will never use its currency as a weapon in the trade war

The trade war between China and the United States is intensifying

Premier Li Keqiang told an audience of global executives and policymakers that China would not weaken the yuan to boost trade with the rest of the world. “China will never go down the path of stimulating exports by devaluing its currency,” Chinese Premier Li Keqiang said Wednesday.

His comments came a day after the United States and China announced that they would impose their biggestrounds of tariffs yet on each other’s exports, starting next week. That brings the value of goods hit by tariffs in the escalating conflict to more than $360 billion. President Donald Trump has threatened to hit another $267 billion of Chinese goods with tariffs.

http://www.cnn.com

Bernanke, Paulson and Geithner discuss the 2008 financial crisis

The three bailed out Wall Street to help Main Street

Former Federal Reserve Chairman Ben Bernanke, Treasury Secretary Hank Paulson and New York Fed President Timothy Geithner reflected on the financial crisis during a forum in Washington, D.C. A decade later, the three officials who helped pull the U.S. out of the financial crisis now struggle with the choices they made, particularly considering that the public still sees the moves as a bailout for Wall Street.

The three spoke during a forum at the Brookings Institution in a talk moderated by CNBC’s Andrew Ross Sorkin, who wrote “Too Big to Fail,” a chronicle of the crisis told from the inside of those who experienced it first-hand.

“We stepped in before the banks had collapsed and we did some things to fix the financial system which are very hard to explain because they are objectionable things,” Paulson said. “In the United States of America there’s a fundamental sense of fairness that the American people have. … You don’t want to reward the arsonist.”

Why gold is plunging

Gold is supposed to be a haven

Why has the price fallen lately? Simply put, it’s the strong US dollar.

Expectations for more interest rate hikes by the Federal Reserve have helped lift the value of the currency.

A stronger dollar often is a bad thing for gold because it makes the metal more expensive for international investors.

http://www.cnn.com

U.S. jobless claims back off 48-year low

The labor market to be near full employment

The number of Americans filing for unemployment benefits rebounded last week from a more than 48-year low, but the trend continued to point to robust labor market conditions.

That was underscored by other data on Thursday showing job cuts announced by U.S.-based employers fell 20 percent in February. Federal Reserve officials consider the labor market to be near or a little beyond full employment. The tight jobs market is seen boosting wage growth and spurring inflation.

“The well looks increasingly dry to many companies seeking skilled workers, and time will tell whether the lack of labor will slow the overall economy in future months,” said Chris Rupkey, chief economist at MUFG in New York.

http://www.reuters.com…  March 09, 2018

Stocks or Bonds: What Happens When Rates Rise?

Basic rules

Although there are no specific rules about how bonds and dividend-paying stocks respond to rising interest rates, there are some broad tendencies you may want to consider, suggests Mary Ann Bartels, head of Merrill Lynch Wealth Management Portfolio Strategy.

With bonds, the “coupon rate” is the interest rate that an issuer uses to calculate regular interest payments to investors. The longer the term of a bond, the higher the coupon is likely to be; you’re paid more to wait longer to get your principal back. Higher risk, too, affects the coupon, with high-yield bonds from less solid companies offering more generous interest payments than you’ll get from higher-rated corporations or from U.S. Treasury bonds.

http://www.ml.com…  Febuary 23, 2018

Stronger Economy Boosts Chance for Rate Hikes

 Republican tax cuts enacted in December boost growth

Federal Reserve officials at their January meeting believed that a brightening global economic picture and the effects of recently passed tax cuts had raised the prospect for solid growth and continued interest rate increases.

The minutes of the Fed’s Jan. 30-31 discussions showed that the officials were more optimistic about the economy than they had been in December. They noted a stronger U.S. and global economy as well as expectations that the Republican tax cuts enacted in December would boost growth.

The minutes said “a majority of participants noted that a stronger outlook for economic growth raised the likelihood that further gradual policy firming would be appropriate.”

http://www.memphisdailynews.com…  Febuary 22, 2018

Inflation Is About to Appear ‘With a Vengeance,’

More Inflationary Pressures Building Up

Paul Tudor Jones said inflation is about to appear “with a vengeance” and may force the new Federal Reserve chair to accelerate interest-rate hikes. The hedge fund manager said policy has focused on a “low inflation problem” and years of near-zero rates amid economic expansion will have “painful” consequences. Policy makers should have been more aggressive in tightening policy and “rejecting the fiscal impropriety associated with this most recent tax cut,” he said.

http://www.bloomberg.com...  Febuary 07, 2018

Dow futures tumble over 400 points

Markets: Fasten your seat belts

The Dow has already plummeted more than 1,800 points over the previous two trading sessions. Monday was particularly brutal: the index tumbled a record 1,175 points. The 4.6% plunge was the Dow’s worst day since August 2011 and knocked it into the red for the year.
The tremors also spread to the other side of the globe, with stocks in Asia plummeting overnight. Japan’s Nikkei lost more nearly 5%, while stocks in Hong Kong dropped almost 4%.

http://www.cnn.com...  Febuary 06, 2018

Tax cuts could risk overheating the U.S. economy

Wages to quickly rise

New York Federal Reserve President William Dudley is worried new tax cuts could risk overheating the U.S. economy in the next few years.
Economic prospects in 2018 are looking “reasonably bright,” Dudley said in a speech to the Securities and Financial Markets Association on Thursday. He expects unemployment to remain low and wages to quickly rise.

But Dudley warned that central bankers may have to “press harder on the brakes” at some point in the next few years to help stave off a possible recession.
http://money.cnn.com/ … Fri., 12  January 2018

Global Debt Hits Record $233 Trillion

The ratio of debt-to-gross domestic product is now 318 percent

Global debt rose to a record $233 trillion in the third quarter of 2017, more than $16 trillion higher from end-2016, according to an analysis by the Institute of International Finance. Private non-financial sector debt hit all-time highs in Canada, France, Hong Kong, South Korea, Switzerland and Turkey.

At the same time, though, the ratio of debt-to-gross domestic product fell for the fourth consecutive quarter as economic growth accelerated. The ratio is now around 318 percent, 3 percentage points below a high set in the third quarter of 2016, according to the IIF.

http://bloomberg.com/ … Mon., 08  January 2018

SEC warns bitcoin, cryptocurrency investors at risk

Investors should “exercise caution”

The U.S. Securities and Exchange Commission warned Thursday that investors should “exercise caution” with cryptocurrencies like bitcoin, noting state and federal regulators may not be able to recoup any lost investments from illegal actors.

Many promoters of initial coin offerings (ICOs) and other cryptocurrency investments are not following federal and state securities laws, SEC Chairman Jay Clayton and Commissioners Kara Stein and Michael Piwowar said in a statement. While regulators are trying to police these quickly growing markets, the SEC urged investors to be vigilant.

http://reuters.com/ … Fri., 05  January 2018

What is Blockchain?

Bitcoin and Blockchain explained in detail

This explainer will offer simple definitions and analogies for blockchain technology. It will also define Bitcoin, Ethereum, blockchain broadly, and initial coin offerings, and highlight promising use cases for the technology. (For a deep dive into how Ethereum works, you can read our What Is Ethereum explainer.)

Lastly, this report will make clear the distinctions between distributed ledger technology and blockchain, and highlight where these technologies have an application – and where they do not.

http://cbinsights.com/… Wed., 03  January 2018

Bitcoin becomes volatile

Bitcoin falls by more than $2,000 in 12 hours

Bitcoin and several other major cryptocurrencies plunged Thursday evening New York time as the end of an exponential year of growth neared. The slashing decline triggered temporary, built-in trading halts in the bitcoin futures traded on the CME and Cboe.

Bitcoin plunged more than 17 percent to a low of $13,077.94 according to CoinDesk, down more than $2,000 from $15,830 less than 12 hours ago. The digital currency recovered to near $ 14,039, as of 1:07 a.m., ET. 

http://www.cnbc.com… Fri., 22  December 2017

Brexit: Divorce deal agreed

May: there will be no hard border in Ireland

Britain and the European Union struck a deal on Friday to move on to talk about trade and a transition period after they agreed the outline of their divorce, easing the pressure on Prime Minister Theresa May. The European Commission said enough progress had been made after the two sides worked through the night to end an impasse over the status of the Irish border that had scuppered an earlier attempt to clinch a deal on Monday.

The Commission gave its verdict in a statement after intense talks, which resulted in British Prime Minister Theresa May taking an early-morning flight to Brussels to announce the deal alongside Commission President Jean-Claude Juncker. Donald Tusk, the chairman of European Union leaders, welcomed the deal but said London still needed to provide more clarity on the new relationship after Brexit, and bemoaned the fact the first round of talks had taken so long.

“We all know that breaking up is hard, but breaking up and building a new relation is much harder,” he said. “So much time has been devoted to the easier task and now … we have de facto less than a year” left for talks before Britain is due to leave in March, 2019.

http://www.reuters.com… Fri., 08  December 2017