Author: George Yacik

Jobs Report Not Enough to Signal September Liftoff

Posted on by George Yacik

George Yacik - INO.com Contributor - Fed & Interest Rates


Was May's better-than-expected jobs report strong enough to convince the Federal Reserve to start interest rate liftoff in September?

Based on the market's reaction on Friday, the answer sure looks like yes. Yields on long-term U.S. Treasury bonds spiked to their highest levels since last October, and stocks were mostly lower.

But let's not carried away with one number and one report. Certainly the data-paralyzed Fed won't. If we get three solid months of positive economic statistics, then I’ll think there's a chance – albeit a slim one – the Fed will make a move in September. Until then, we'll have to wait and see.

Notice I've already written off next week's Fed meeting as the first interest rate increase. While the minutes of the Fed's April 28-29 monetary policy meeting "did not rule out" the possibility of raising rates at the June meeting, it was "unlikely" that economic data would justify doing so by then. Nothing's happened in the meantime to change that. Continue reading "Jobs Report Not Enough to Signal September Liftoff" →

The Easy Money Has Already Been Made

Posted on by George Yacik

George Yacik - INO.com Contributor - Fed & Interest Rates


As a financial journalist, I talk to lots of financial planners and investment advisors on a regular basis. One common thread in their comments is how hard it is to make money – or, more accurately, not lose money – by investing in the financial markets.

"Almost nobody ever makes money consistently over time in the stock market – I mean almost no one," says one adviser who's been in the business for more than 30 years. If people make money one year, or even three or four years in a row, they wind up losing it when the correction comes, and then they're back to square one – if they're not actually in the red.

Indeed, the goal for many advisors is simply to "preserve capital," as they say in the business, which simply means not to lose money. "You win by not losing big," this advisor says. "Make it and keep it," says another, who's been managing clients' money for more than 50 years.

Why such modest goals? Continue reading "The Easy Money Has Already Been Made" →

The Waiting Is The Hardest Part

Posted on by George Yacik

George Yacik - INO.com Contributor - Fed & Interest Rates


Surprise, surprise. The Fed isn't going to raise rates in June after all.

While the just-released minutes of the Fed's April 28-29 monetary policy meeting revealed the central bank "did not rule" out the possibility of raising rates at its June 16-17 meeting, "many participants thought it unlikely that the data available would provide sufficient confirmation that the conditions for raising the target range for the federal funds rate had been satisfied."

In other words, economic reports over the past several months haven't come close to giving the Fed comfort to start normalizing monetary policy – i.e., raising rates – without jeopardizing growth, or what little there has been recently.

In the first quarter, U.S. GDP rose only 0.2%, down from the 2.2% growth rate in the fourth quarter of 2014. But economists are now expecting that figure to be revised downward next Friday, possibly to show negative growth. Continue reading "The Waiting Is The Hardest Part" →

Beware The Biweekly Mortgage

Posted on by George Yacik

George Yacik - INO.com Contributor - Fed & Interest Rates


A few weeks ago in this space I recommended that people investing for retirement should avoid the overpriced stock and bond markets and any imminent market correction and instead invest in themselves, namely by paying down their mortgage. It's a 100% guaranteed risk-free investment, and the amount of money you'll save will dwarf the return you might get on bank CDs. And it will make your household budget in retirement a lot easier to balance.

But one way NOT to pay off your mortgage is by calling one of those outfits that promise to help you pay off your loan early, for a fat fee, of course. They often advertise a "biweekly" mortgage in which you agree to send them one-half of your monthly mortgage payment every two weeks. By doing that, you're essentially making one extra mortgage payment a year, thus paying down your loan faster.

What the consumer is paying for, I guess, is the discipline to make those extra payments that they might not make on their own. Continue reading "Beware The Biweekly Mortgage" →

Continued Weak Jobs Numbers Allow the Fed to Sit Tight

Posted on by George Yacik

George Yacik - INO.com Contributor - Fed & Interest Rates


Was Friday's April jobs number good enough to get the Federal Reserve to start normalizing interest rates soon?

Based on the reaction of both the stock and bond markets, the answer is no. The increase was likely way too small to convince the data-paralyzed Fed that the economy has recovered enough to let it stand on its own feet. The sharp downward revision in the already lousy March figure only added to the case.

The jobs report – nonfarm payrolls rose 223,000 in April – was a lot better than March's report – which isn't saying a whole lot – but certainly not strong enough to worry investors that the Fed might see a reason to raise interest rates sooner than most now expect, which is either late this year or early 2016. Continue reading "Continued Weak Jobs Numbers Allow the Fed to Sit Tight" →