Monthly Archives: April 2015

Fed Rate Hike Timing Delayed After Weak GDP and Deflation

24/7 Wall St.

135093244The Federal Reserve just blinked in Wall Street’s newest game — that is the game of Rate Hike Chicken! After having moved from being patient to including the possibility of a June or summer rate hike, the new Fed statement looks like the Fed has just become data-driven, meaning we are now on meeting by meeting bias on how far out it will really be before the interest rate hikes will come.

24/7 Wall St. would like to remind readers about one key issue — Do not think for a second that the Commerce Department’s first quarter GDP reading with a tiny 0.2% gain, followed by anemic inflation to outright deflation, did not play a role in Janet Yellen and the rest of the Fed backing off the timing of when Fed Fund rate hikes would come. Another clue — the vote was 10-0.

If you read through the statement, as we…

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Study: One-Third of Americans Have Less Than $1000 Toward Retirement


180px-United_States_one_dollar_bill,_obverseWe have previously discussed the income disparity in the country and the alarming lack of savings for a great percentage of our fellow citizens. Now a study shows that roughly one third of the population have saved less than $1,000 for retirement. Equally surprising is the estimate of what will be needed to live comfortably in the future.

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QE is effectively debt cancellation

Check out this interesting video on YouTube from Richard Duncan, who explains why QE effectively works as cancellation of government debt.

Fed Funds Rate Hike: Timing and Severity Are Greatly Overblown

24/7 Wall St.

percent sign buttonIf the financial markets were able to write a history book ahead of time, the theme for 2015 would likely be “the year that Janet Yellen and the Federal Reserve finally raised interest rates.” Market pundits and economists have been predicting a rise in the federal funds rate for quite some time, and the first fed funds rate hike still seems likely to occur in 2015. What investors need to consider in 2015, versus prior years, is that this interest rate hike cycle is unlikely to be the same as prior rate hike cycles. It is likely to be far slower and much more muted, and many market participants want a return to somewhat normalcy in interest rates.

24/7 Wall St. has evaluated many tools and the commentary from market pundits and market economists. After looking at the commentary over recent weeks and comparing to the latest CME 30 Day…

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US Growth Forecast Chopped to Zero

24/7 Wall St.

GDP graphicThe Federal Reserve Bank of Atlanta has reported that its forecast for U.S. gross domestic product (GDP) growth dropped to zero on April 1 and ticked back up to 0.1% on April 2. The bank uses a unique model called GDPNow to prepare its forecasts, and the model typically estimates growth well below the rate projected by the Bureau of Economic Analysis (BEA).

The GDPNow model aggregates the same 13 subcomponents used by BEA to construct its estimate, but when a data point is not available, the model uses “bridge equations” to fill the gap. Other forecasters use similar “nowcast” techniques, but the Atlanta Fed notes that other forecasts are not updated more than once a month or once a quarter. Also, they are not publicly available and do not include forecasts of the subcomponents that add color to the top-line number. The GDPNow model fills those voids.

On February…

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