October 27, 2015
By Neal Woolrich
...However, a new study by JP Morgan Asset Management (click here) argues that in this era of ultra-cheap money the opposite applies, and a rate rise now would actually stimulate the US economy.
"These low interest rates again are sending the wrong signal about where the economy is, the strength of the economy, and what it actually needs," said JP Morgan Asset Management's global market strategist Kerry Craig.
The Fed's Open Market Committee meets this week and again in December, but investors are now betting that the first US rate rise since 2006 will not happen until the middle of 2016.
One of the key concerns about lifting interest rates is that it would also raise the US dollar and make the American economy less competitive.
But JP Morgan Asset Management argues that higher interest rates have already been priced into the exchange rate, and the US dollar could fall once "lift off" occurs, as it has in previous tightening cycles....
There may have been several reasons The Fed hasn't raised rates yet. The Fed did vote in favor of this additional buffer to end "Too Big To Fail," but, now it goes to public comment before it is completely passed into regulation.
October 30, 2015
By Jacob Pramuk
The Federal Reserve proposed Friday (click here) to require large banks to add another buffer, designed to reduce the "too big to fail" perception of big institutions.
Six of eight key U.S. banks would need to raise an additional $120 billion to meet the requirements, according to Fed officials. The rule aims to reduce the risk of the companies— including Bank of America, Bank of New York Mellon, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, State Street and Wells Fargo — derailing markets or needing taxpayer money.
The Fed would expect some large banks to add long-term debt or take other actions to comply. Similar rules would also apply to U.S. subsidiaries of big foreign banks....
...Six of eight banks assessed would not meet requirements, though officials did not specify which. The Fed's board voted in favor of the requirement Friday, and it will be opened to public comment before the central bank can finalize it.
It is among several rules that would aim to cut risk in the banking system.
— CNBC's Mary Thompson and Reuters contributed to this report.
Public Comment can be submitted here: (click here) but, I don't see a posting for this proposed regulation yet.
I am not certain what tab it would be placed under, "Dodd/Frank" or "Rulemaking Proposals," but, my best guess is rulemaking.
This is Bloomberg's take on Morgans' point of view.
October 26, 2015
By Luke Kawa
..."There's roughly $10 trillion (click here) in the banking system that's earning zero," added LaVorgna. "Those people aren't investing in the stock market; they're keeping their money in cash and spending less because when you're in a low-interest-rate environment, you don't buy more, you save more."
A colleague of LaVorgna's, Deutsche Bank Chief Global Strategist Bankim Chadha, recently put forward the view that lower rates prompt households to save more, and therefore consumer spending is not an effective avenue for stimulus through traditional monetary policy actions.
So higher rates, to a certain point, could prove a boon for consumers—and the same is true for stocks, argues JPMorgan's Kelly. His analysis shows that rising rates from a low level tend to be accompanied by rising stock prices, while hikes from higher levels typically happen in tandem with declines.
"When the Federal Reserve raises rates from low levels it is generally taken as a sign of economic confidence—that the economy no longer needs the Fed’s help—and that rising confidence is generally positive for stocks," the economist wrote....
These ideas are well and good, but, all I know is the average American can't get even 2 percent at the teller window for a savings account no matter the requirements.
The American Consumer has become a slave to Wall Street. First the QUARTERLY NET income:
JP MORGAN CHASE (click here) REPORTS THIRD-QUARTER 2015 NET INCOME OF $6.8 BILLION, OR $1.68 PER SHARE, ON REVENUE OF $23.5 BILLION 15% RETURN ON TANGIBLE COMMON EQUITY
If an American consumer walks into a Chase bank and sets up a savings account, the return is 0.01 percent annually if you are lucky you might get 0.02 percent. Now I ask you, is there any reason to put money into a very liquid savings account?
Of course, not. But, where is there access to better annual returns?
It is estimated there are 52 million Americans with 401Ks or 401Bs.
Everyone knows the penalties for removing monies early from such a financial instrument. But, these financial instruments are the only method Americans have to accumulate any type of return on their hard earned CASH.
So, does Wall Street enslave the American people? You, betcha. If the banks were providing 5 percent on a regular savings account like it used to be in the USA, who would benefit besides the American consumer?
Small banks. AND. Since 2008 the small local bank has virtually disappeared off the American landscape.
What are the REAL CHANCES of saving for an education or a child's education?
Students seeking college or university educations are LOCKED OUT of that opportunity unless they borrow money from student loans.
By Neal Woolrich
...However, a new study by JP Morgan Asset Management (click here) argues that in this era of ultra-cheap money the opposite applies, and a rate rise now would actually stimulate the US economy.
"These low interest rates again are sending the wrong signal about where the economy is, the strength of the economy, and what it actually needs," said JP Morgan Asset Management's global market strategist Kerry Craig.
The Fed's Open Market Committee meets this week and again in December, but investors are now betting that the first US rate rise since 2006 will not happen until the middle of 2016.
One of the key concerns about lifting interest rates is that it would also raise the US dollar and make the American economy less competitive.
But JP Morgan Asset Management argues that higher interest rates have already been priced into the exchange rate, and the US dollar could fall once "lift off" occurs, as it has in previous tightening cycles....
There may have been several reasons The Fed hasn't raised rates yet. The Fed did vote in favor of this additional buffer to end "Too Big To Fail," but, now it goes to public comment before it is completely passed into regulation.
October 30, 2015
By Jacob Pramuk
The Federal Reserve proposed Friday (click here) to require large banks to add another buffer, designed to reduce the "too big to fail" perception of big institutions.
Six of eight key U.S. banks would need to raise an additional $120 billion to meet the requirements, according to Fed officials. The rule aims to reduce the risk of the companies— including Bank of America, Bank of New York Mellon, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, State Street and Wells Fargo — derailing markets or needing taxpayer money.
The Fed would expect some large banks to add long-term debt or take other actions to comply. Similar rules would also apply to U.S. subsidiaries of big foreign banks....
...Six of eight banks assessed would not meet requirements, though officials did not specify which. The Fed's board voted in favor of the requirement Friday, and it will be opened to public comment before the central bank can finalize it.
It is among several rules that would aim to cut risk in the banking system.
— CNBC's Mary Thompson and Reuters contributed to this report.
Public Comment can be submitted here: (click here) but, I don't see a posting for this proposed regulation yet.
I am not certain what tab it would be placed under, "Dodd/Frank" or "Rulemaking Proposals," but, my best guess is rulemaking.
October 26, 2015
By Luke Kawa
..."There's roughly $10 trillion (click here) in the banking system that's earning zero," added LaVorgna. "Those people aren't investing in the stock market; they're keeping their money in cash and spending less because when you're in a low-interest-rate environment, you don't buy more, you save more."
A colleague of LaVorgna's, Deutsche Bank Chief Global Strategist Bankim Chadha, recently put forward the view that lower rates prompt households to save more, and therefore consumer spending is not an effective avenue for stimulus through traditional monetary policy actions.
So higher rates, to a certain point, could prove a boon for consumers—and the same is true for stocks, argues JPMorgan's Kelly. His analysis shows that rising rates from a low level tend to be accompanied by rising stock prices, while hikes from higher levels typically happen in tandem with declines.
"When the Federal Reserve raises rates from low levels it is generally taken as a sign of economic confidence—that the economy no longer needs the Fed’s help—and that rising confidence is generally positive for stocks," the economist wrote....
These ideas are well and good, but, all I know is the average American can't get even 2 percent at the teller window for a savings account no matter the requirements.
The American Consumer has become a slave to Wall Street. First the QUARTERLY NET income:
JP MORGAN CHASE (click here) REPORTS THIRD-QUARTER 2015 NET INCOME OF $6.8 BILLION, OR $1.68 PER SHARE, ON REVENUE OF $23.5 BILLION 15% RETURN ON TANGIBLE COMMON EQUITY
If an American consumer walks into a Chase bank and sets up a savings account, the return is 0.01 percent annually if you are lucky you might get 0.02 percent. Now I ask you, is there any reason to put money into a very liquid savings account?
Of course, not. But, where is there access to better annual returns?
It is estimated there are 52 million Americans with 401Ks or 401Bs.
Everyone knows the penalties for removing monies early from such a financial instrument. But, these financial instruments are the only method Americans have to accumulate any type of return on their hard earned CASH.
So, does Wall Street enslave the American people? You, betcha. If the banks were providing 5 percent on a regular savings account like it used to be in the USA, who would benefit besides the American consumer?
Small banks. AND. Since 2008 the small local bank has virtually disappeared off the American landscape.
What are the REAL CHANCES of saving for an education or a child's education?
Students seeking college or university educations are LOCKED OUT of that opportunity unless they borrow money from student loans.
