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Fed Holds Off on Rate Hike, Unanimously Voices Confidence… See How to Trade the Market’s Response With Guy Cohen

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The Fed is relaxed about the latest softening of growth figures, but one thing you’ll learn as you study with Guy Cohen is that he doesn’t much care for the news! What he REALLY cares about is what real money at real risk is doing.

How to Trade Like Guy Cohen

This has several major advantages:

1. It’s proven statistically to work and outperform the markets.
2. It cuts out all the drama.
3. It saves massive amounts of time.

When you follow the money like Guy does, you’ll recognize there are times where the market is acting with clarity and times when it’s not. As you spend more time with him, you’ll start to appreciate what those times are and act accordingly. Right now is one of those uncertain times, but things can change very quickly, which means you need to be on the ball and predator-like in your approach to the markets.

[evp_embed_video url=”http://zoxcapitalist.wpengine.com/wp-content/uploads/2017/05/otcall20170504.mp4″]

In today’s video, Guy outlines a few stocks and how they’re behaving during this earnings period. Plus why the market is in a stalling mode right now. And you’ll really want to see BCR’s behaviour before its earnings and buyout announcement!

Puerto Rico’s bankruptcy pits the U.S. Government vs Wall Street. See the whole story here.

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The statements, views, and opinions of any article, contribution, editorial, or advertisement in this publication are not necessarily those of The Capitalist or its editorial staff, and are not considered an endorsement, sponsorship, or recommendation of any referenced product, service, issuer, or groups of issuers.

This publication provides general information about certain subjects, and should not be construed or taken as advice (legal, financial, investment, tax, or otherwise). Do not construe or take any information in this publication as a solicitation, offer, opinion, or recommendation to buy or sell any securities, bonds, or other financial instruments or to provide any legal, financial, investment, tax, or other advice or service about the suitability or profitability of any financial instruments or investments.

The Capitalist disclaims any liability for the accuracy of or your reliance on any statements, views, opinions, or information in this publication.


 

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  1. Pingback: Labor Shortage From Border Policies Could Impact $1 Trillion Infrastructure Spending Program

  2. Pingback: Guy Cohen Walks you Through Where the Smart Money is in Trading Tech

  3. Pingback: Federal Reserve's Rate Hike Meant to Slow Down the Dollar... Bolster Economy

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Economy

Rate Hike Trickles Down Quickly – Just Not for the Good Stuff

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On Wednesday, the Federal Reserve raised interest rates by a quarter percent in what was regarded as a widely expected move. Although this is only the third rate increase in the last 10 years, it’s pretty clear that the Fed believes in the current strength of the economy and more rate hikes are on the way in 2017.

How Do These Rate Hikes Affect You and Your Wallet?

When the Fed met in February, they reiterated their faith in the economy but chose to not raise interest rates, causing many economists to believe a rate hike was coming in either March or June at the latest. Turns out, we only had to wait a month as the Fed raised rates by 0.25 points on Wednesday. That rate affected the Federal Funds Rate, which is a short-term interest rate applied to financial institutions who loan funds to other financial institutions. The higher the federal fund rate, the more expensive it is to borrow money.

So what does this mean for you?

For starters, keep an eye on your credit cards. Credit card rates follow the Fed’s lead. As the Federal Fund Rate goes up, variable APRs also go up. So a 0.25% increase in the Federal Fund Rate means a 0.25% increase in your variable rate credit card.

On top of that, people may soon find themselves priced out of purchasing new homes. While the mortgage rate itself doesn’t necessarily reflect the Federal Fund Rate, the rate increase does make mortgage payments themselves more expensive. And mortgage rates typically follow economic sentiment. So because many believe Trump’s tax cuts will spur more buying power, mortgage rates have risen steadily. A higher price for a mortgage on a new home, paired with higher mortgage payments, means homes may become too expensive for many first time buyers.

Car loans also don’t rise with the Federal Fund Rate. They’re insulated from rate hikes, and in fact stay lower due to competition among loan companies. Also not affected by Federal Fund Rate increases?

Interest rates on savings.

Graph | Rate Hike Trickles Down Quickly - Just Not for the Good Stuff

Interest rates banks pay on savings accounts and CDs are not based on Fed hikes, but on competitive factors including how much a bank’s profits rely on savings accounts. Most banks act as lenders and earn interest by underwriting loans and offering credit terms. As such, don’t expect to see the money in your account worth any more.

Rate hikes mean that private student loans also get more expensive, as well as equity lines of credit on your home. However, while there are downsides, interest rate hikes are vital to our economy. The reason the interest rate is so important is because it’s a tool used to provide relief during tough economic times. The Federal Funds Rate rises to reflect low unemployment and a strong economy. When the economy begins to struggle, the biggest tool the Federal Reserve has in its arsenal is to lower interest rates to relieve financial stress from financial institutions and lenders, and thus consumers.

Watch this video from CBS This Morning to know how rate hikes can affect every consumer:

You should keep an eye on any of your accounts that follow the Federal Fund Rate, and expect more rate hikes in 2017.

More Americans than ever are defaulting on student loan payments, get the whole story right here.

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The statements, views, and opinions of any article, contribution, editorial, or advertisement in this publication are not necessarily those of The Capitalist or its editorial staff, and are not considered an endorsement, sponsorship, or recommendation of any referenced product, service, issuer, or groups of issuers.

This publication provides general information about certain subjects, and should not be construed or taken as advice (legal, financial, investment, tax, or otherwise). Do not construe or take any information in this publication as a solicitation, offer, opinion, or recommendation to buy or sell any securities, bonds, or other financial instruments or to provide any legal, financial, investment, tax, or other advice or service about the suitability or profitability of any financial instruments or investments.

The Capitalist disclaims any liability for the accuracy of or your reliance on any statements, views, opinions, or information in this publication.


 

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Economy

Janet Yellen Testifies Before Congress… Bullish on Economy

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Since Donald Trump’s inauguration, the economy has seemed surprisingly strong. The stock market has surged to record highs behind Trump’s plans for tax reforms and corporate stimulus packages. But on Tuesday, Federal Reserve chairwoman Janet Yellen testified before Congress as to whether we should be worried or not.

What Does the Fed’s Janet Yellen Think About the Direction in Which our Economy is Headed?

In December,the Federal Reserve raises interest rates for just the second time in a decade as a show of confidence in the American economy. And although the Fed chose not to raise rates again in their meeting earlier this month, Fed Chair Janet Yellen reiterated the committee’s confidence in the economy. Ms. Yellen echoed that same sentiment Tuesday in front of Congress, leading experts to expect multiple rate hikes in 2017.

The Federal Funds Rate, which dictates the interest applied to financial loans such as mortgages, car payments, and student loan payments, stayed unchanged to support the labor market and help increase inflation more most of a decade, with one hike in 2015 and one more at the end of 2016. This year was expected to see multiple hikes, which is why many were surprised as the Fed left the rate unchanged.

According to Yellen, the committee recognized the progress the economy had made. She stated that monetary policy remains accommodative and supportive towards labor and inflation. The Fed holds a concern about raising rates too quickly in fear of disrupting financial markets and causing a recession. However, upcoming meetings will reevaluate these factors, with another hike of 0.25% expected in June, with one more coming in December.

One interesting twist is that Yellen pointed out banks have been lending plenty since the Dodd-Frank act went into effect in 2010 following the financial crisis of 2008. This directly conflicted with President Donald Trump’s statements that bank lending is in trouble thanks to Obama’s regulation, and its repeal would free banks to start lending again, helping aid the economy.

Yellen says the country should focus on the long term health of the economy., and warned against the dangers of too much federal debt. Yellen testified that is fiscal policy makers focus too much on short term stimulus, the Fed will have to raise rates more quickly to offset the negative effects of such policy.

Watch this video from Financial Times regarding Janet Yellen’s latest testimony:

 

For now, the economy looks to be on track, with all signs pointing to rising interest rates in the coming months.

Apple’s shares have rebounded to an all-time high… Get the latest news here!

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The statements, views, and opinions of any article, contribution, editorial, or advertisement in this publication are not necessarily those of The Capitalist or its editorial staff, and are not considered an endorsement, sponsorship, or recommendation of any referenced product, service, issuer, or groups of issuers.

This publication provides general information about certain subjects, and should not be construed or taken as advice (legal, financial, investment, tax, or otherwise). Do not construe or take any information in this publication as a solicitation, offer, opinion, or recommendation to buy or sell any securities, bonds, or other financial instruments or to provide any legal, financial, investment, tax, or other advice or service about the suitability or profitability of any financial instruments or investments.

The Capitalist disclaims any liability for the accuracy of or your reliance on any statements, views, opinions, or information in this publication.


Featured image via Wall Street Journal

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Economy

Is “Federal Reserve’s No-Change Signal Concern for Economy” Under Trump?

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When the Federal Reserve met in December, they raised rates for the first time in a year and just the second time in a decade. That rate hike signaled the Fed’s growing confidence in a strengthening economy. At that time, Fed Chair Janet Yellen said 2017 will bring multiple rate hikes as the economy continues to improve. But after meeting Wednesday, the Federal Reserve chose not to raise rates again. Should we be worried?

Is the Federal Reserve’s Confidence Fading?

The Federal Reserve controls the Federal Funds Rate, which is a short-term interest rate applied to financial institutions who loan funds to other financial institutions. This rate affects monetary and financial institutions, which in turn affects employment, growth, and inflation. Basically, the higher the federal fund rate, the more expensive it is to borrow money. The more a bank pays for its money, the more the bank’s customers have to pay for mortgages, car notes, credit cards, and loans.

#1 Is the Federal Reserve’s Confidence Fading? | Is "Federal Reserve's No-Change Signal Concern for Economy" Under Trump?

The reason the interest rate is so important is because it’s a tool used to provide relief during tough economic times. The Federal Funds Rate rises to reflect low unemployment and a strong economy. When the economy begins to struggle, the biggest tool the Federal Reserve has in its arsenal is to lower interest rates to relieve financial stress from financial institutions and lenders, and thus consumers.

So when the Fed said in December that they plan on multiple rate hikes in 2017, that was seen as a vote of confidence.

But after today’s meeting, rates are staying put.

Since World War II, the country has experienced recessions about once every six years. Our last recession started in 2008, 9 years ago. Does this mean the Fed is worried about the economy under Trump? The markets have all seen record highs recently, indicating a strong economy. And the dollar has been surging.

So what’s going on?

Things may not be quite as strong as they seem. The markets are seen as a vote of confidence by investors in the immediate, short-term strength of the economy, and the Fed’s role is to plan for the long term. And while the dollar has been surging, its strength could actually hinder the economy as it would negatively affect exports.

The Fed’s policy vote was unanimous to hold rates steady, but the Fed noted that “measures of consumer and business sentiment have improved of late” but said business investment remains “soft.”

Right now, it’s just a wait and see approach. The Fed meets again in March, but Yellen will have an opportunity to pave the way for a rate hike at that point when she testifies to Congress on February 15th.

Watch the news from CNBC regarding the unchanging interest rates:

Barring any major economic crisis, expect rates to rise at least three times over the course of 2017.

 

Get the latest news on Trump’s Supreme Court Justice nominee, Neil Gorsuch right here!

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The statements, views, and opinions of any article, contribution, editorial, or advertisement in this publication are not necessarily those of The Capitalist or its editorial staff, and are not considered an endorsement, sponsorship, or recommendation of any referenced product, service, issuer, or groups of issuers.

This publication provides general information about certain subjects, and should not be construed or taken as advice (legal, financial, investment, tax, or otherwise). Do not construe or take any information in this publication as a solicitation, offer, opinion, or recommendation to buy or sell any securities, bonds, or other financial instruments or to provide any legal, financial, investment, tax, or other advice or service about the suitability or profitability of any financial instruments or investments.

The Capitalist disclaims any liability for the accuracy of or your reliance on any statements, views, opinions, or information in this publication.

 

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