Raise in interest rates

[Westside Steve]

So I understand that with the stronger economy a little bump in interest rates should be good for a lot of areas. But trusting the Obama Administration as much as I do I wonder if there's a specific plan to make the booming Market will seem less wonderful and take some of the Shine off of Trump's positive effect on it?

Conspiracy theory anyone?

 

WSS

[DieHardBrownsFan]

So I understand that with the stronger economy a little bump in it just rates should be good for a lot of areas. But trusting the Obama Administration as much as I do I wonder if there's a specific way to make the booming Market will seem less wonderful and take some of the Shine off of Trump's positive effect on it?

Conspiracy theory anyone?

 

WSS

It's Trumps fault, and the Russian's.

[Westside Steve]

https://www.google.com/amp/amp.usatoday.com/story/95415458/

 

WSS

[VaporTrail]

FUCKING RUSSIANS

[bbedward]

It's something people have been saying forever, including Donald Trump

 

that the federal reserve was playing politics and refusing to raise interest rates, creating a bubble, only to make Obama and therefore the democrats look good.

 

No surprise they're raising them as the democrats are on the way out of the white house.

[bbedward]

FUCKING RUSSIANS

 

смотреть язык, товарищ!

[Westside Steve]

It's something people have been saying forever, including Donald Trump

 

that the federal reserve was playing politics and refusing to raise interest rates, creating a bubble, only to make Obama and therefore the democrats look good.

 

No surprise they're raising them as the democrats are on the way out of the white house.

Yes that was pretty much my point. I thought the economy is rolling along well enough recently added a small bump in interest rates would be beneficial.

But of course it's going to cause a dip in the market which the Obama Administration is hoping for, and say see how Trump is starting to hurt the market already?

 

WSS

[JPPT1974]

Russians and the Donald are in company with one another!

[LogicIsForSquares]

So I understand that with the stronger economy a little bump in interest rates should be good for a lot of areas. But trusting the Obama Administration as much as I do I wonder if there's a specific plan to make the booming Market will seem less wonderful and take some of the Shine off of Trump's positive effect on it?

Conspiracy theory anyone?

 

WSS

My old econ professor seems to believe as you do. As does my friend who works in banking.

 

Side note: My buddy who works in banking said that they were popping champagne when Trump won because they thought it would be some sort of defense to an interest rate hike.

[Westside Steve]

My old econ professor seems to believe as you do. As does my friend who works in banking.

 

Side note: My buddy who works in banking said that they were popping champagne when Trump won because they thought it would be some sort of defense to an interest rate hike.

It should have a positive effect on 401k or other similar Investments. The passbook savings account at the bank is a joke these days. I wouldn't think an extra point in real estate loans would send them careening off a cliff.

 

My first house was at 10%.

 

WSS

[LogicIsForSquares]

It should have a positive effect on 401k or other similar Investments. The passbook savings account at the bank is a joke these days. I wouldn't think an extra point in real estate loans would send them careening off a cliff.

 

My first house was at 10%.

 

WSS

It isn't so much real estate loans but the rate at which banks borrow the money from the fed (that is a fucking rabbit hole all together). I don't know all the particulars of it but the bank/finance house that he works for does not handle real estate loans. I am sure the next time I sit down to have lunch with him he will be shitting glass about it and let me know why it was bad.

[LogicIsForSquares]

Oh and 10%! Jesus christ.

[Westside Steve]

It isn't so much real estate loans but the rate at which banks borrow the money from the fed (that is a fucking rabbit hole all together). I don't know all the particulars of it but the bank/finance house that he works for does not handle real estate loans. I am sure the next time I sit down to have lunch with him he will be shitting glass about it and let me know why it was bad.

Of course. The reason I mention real estate loans is that was the basis for the bubble back in the eighties. At least one of the reasons.

It's also one of the reasons that savings accounts are basically worthless these days.

 

WSS

[calfoxwc]

10 freaking percent ??? egad.

 

We refinanced our house many years ago, at 3.2, then paid it off.

 

Way back in the day, a friend of ours was showing us how much money

over time you save by paying extra on your house payments, and paying

your house off early.

 

It is amazing. If you have never calc'ed it, you should. You will surely be as shocked

as we were.

[mjp28]

With this bull market going basically straight up since March 2009 another bump is long overdue plus count on at least two in 2017.

 

Count on inflation going up plus interest on all consumer credit items like credit cards, auto loans, any adjustable rate loans (mortgages, HELC actually are not consumer credit but will move) and anything else tied to the prime. Oh prime = fed rate + 3%.

 

Home prices will and actually are dropping. More than likely the historically low mortgage rates are history now. Better be locked in now unless you're paying cash....and waiting for prices to drop.

 

And mortgages in 1975 my first house right out college and with a good job were really hard to get! I ended up with a 10%/15 fixed with $10,000 cash down.

 

My current house brand new in 1985 I was hoping for a 13%/30 and was thrilled to get a 11.5%/30 fixed with 1/3 down....needless to say I've refied that down to nothing.

 

In finances never say never.

[Tour2ma]

So I understand that with the stronger economy a little bump in interest rates should be good for a lot of areas. But trusting the Obama Administration as much as I do I wonder if there's a specific plan to make the booming Market will seem less wonderful and take some of the Shine off of Trump's positive effect on it?

Conspiracy theory anyone?

 

Steve, as you often do, you can believe anything you want.

 

 

Forget that interest rates had already increased more than the 0.25% the Fed just raised them. So the Fed just effectively raised the rate floor, not the actual borrowing rates.

 

Now with the specter of fiscal stimulus staring them in the face for the first time since 2009, the Fed had no choice but to move, to change their monetary policy. Why? Because the danger of fiscal stimulus is that inflation follows it. And the stimulus Trump campaigned on is a doozy.

 

 

Last note... remember Quantitative Easing (QE)? It was in all the news after the 2008 crash.

 

QE was Bernanke's Fed's, innovative, fiscal stimulus tool when the prime rate was at zero and it was clear the 2010 Republican Congress that came had no intentions of additional stimulus measures that the economy was begging for. It drove the market up. Well, that program was phased out (the term you will recall was "tapering") before he left the post... and the market went down... a lot more than the quarter-point bump produced yesterday. It was called the market's "taper tantrum".

 

BTW this stimulus, the promised Trump-sized tax cuts plus infrastructure spending, will be the first ever in the absence of a recession.

 

 

OK... one more last note... the market was up today... especially the banks. Never stake a position based on one day's move.

[Westside Steve]

True enough I don't trust the Democrats and I fully believe they enjoy playing dirty tricks. At the very least I think they manipulate the system to their own advantage . I think it probably happens across the aisle and a lot more often than those of you with pure hearts would imagine.

But if you follow the news like it seems you do maybe you just missed the constant harangue of the plummeting stock market when it was announced.

Yes it came back perhaps a bit unexpectedly.

And has been said it could well have been the right thing to do but wasn't over the last 8 years to any greater extent for reasons you can decide for yourself.

 

WSS

[mjp28]

Steve, as you often do, you can believe anything you want.

 

 

Forget that interest rates had already increased more than the 0.25% the Fed just raised them. So the Fed just effectively raised the rate floor, not the actual borrowing rates.

Almost all borrowing rates are based off of the prime rate which is determined by the fed rate + 3%, your loans can be below, at or above the prime rate and are set almost immediately after the FOMC meeting announcement.

 

Now with the specter of fiscal stimulus staring them in the face for the first time since 2009, the Fed had no choice but to move, to change their monetary policy. Why? Because the danger of fiscal stimulus is that inflation follows it. And the stimulus Trump campaigned on is a doozy.

 

 

Last note... remember Quantitative Easing (QE)? It was in all the news after the 2008 crash.

 

QE was Bernanke's Fed's, innovative, fiscal stimulus tool when the prime rate was at zero and it was clear the 2010 Republican Congress that came had no intentions of additional stimulus measures that the economy was begging for. It drove the market up. Well, that program was phased out (the term you will recall was "tapering") before he left the post... and the market went down... a lot more than the quarter-point bump produced yesterday. It was called the market's "taper tantrum".

 

BTW this stimulus, the promised Trump-sized tax cuts plus infrastructure spending, will be the first ever in the absence of a recession.

 

 

OK... one more last note... the market was up today... especially the banks. Never stake a position based on one day's move.

The prime can never be zero unless the Fed rate would be -3% or more, never would happen. Prime is always 3% over the Fed rate. QE was/is a necessity at the time when the country was in a catastrophic financial position but has become somewhat of a political football afterwards.

 

And yes reacting to daily or even hourly moves in anything is for traders not the rest of us that are buy and hold long term investors -but- you want to have a strategy for investing in a rising interest environment.

[Browns149]

It's George W Bush's fault

[Pumpkin Eater]

Isn't extremely slow growth in essence a recession?

[mjp28]

Isn't extremely slow growth in essence a recession?

Yes it's not like decades past for things like GDP growth and other measurements and guidelines. Is 2% the new 4%?

 

As far as recession we're in the second longest bull market ever in months, but on a personal level it might depend on which side of the prosperity fence you're on.

 

Dow 19,902 right at this minute.

[Westside Steve]

Don't we still use the old definitions, like two quarters in a row of negative growth?

WSS

[mjp28]

Yes from the old Economics textbooks:

 

What is a recession?

 

..... A recession is a significant decline in activity across the economy, lasting longer than a few months. It is visible in industrial production, employment, real income and wholesale-retail trade. The technical indicator of a recession is two consecutive quarters of negative economic growth as measured by a country's gross domestic product (GDP), although the National Bureau of Economic Research (NBER) does not necessarily need to see this occur to call a recession.....

 

But things like job creation, inflation and other things can be factored in before actually calling it a full blown recession. Earlier in 2016 there were trend lines pointing toward slower times in the USA and worldwide, in the second half of 2016 and many market watchers are calling for an improving 2017 so maybe we sit and wait to see how things breakout.

 

And the Trump-o-nomics and Trump rally have many market watchers optimistic for a good forth quarter "Santa Clause Rally" and maybe a carryover to 2017, again we will wait and see.

[mjp28]

In the FWIW department Tuesday 12/20/2016 the Dow closes at 19,974 and intraday was 13 points away from that elusive 20,000 mark.

 

And the red hot market chatter continues, plus the 401(k)s continue to climb in value....as long as the Dow, S&P 500, NASDAQ, Dow 2000, financials, industrials, well you get the picture EVERYTHING stays record high hot.