US stocks drift lower after release of Fed minutes

[Omaha Steve]

Source: AP-Excite

By ALEX VEIGA

U.S. stocks were on track Wednesday afternoon to close lower for the first time this week. The major indexes hovered slightly below the record highs set a day earlier, failing to budge much even after investors got a look at minutes from the Federal Reserve's most recent policy meeting.

KEEPING SCORE: The Standard & Poor's 500 index slid five points, or 0.3 percent, to 2,045 as of 3:09 p.m. Eastern time. The Dow Jones industrial average fell 27 points, or 0.2 percent, to 17,660. The Nasdaq composite shed 27 points, or 0.6 percent, to 4,674. The S&P 500 and Dow are coming off record highs.

FED WATCH: During its October policy meeting, the Fed decided that the economy had improved enough to halt its monthly bond purchases. But it also reaffirmed that it expected to keep a key short-term interest rate low for a "considerable time." The minutes released Wednesday showed that the Fed decided not to alter its wording on the timing of any interest rate increases out of concern that a change could be misrepresented by financial markets. Most economists predict that the Fed won't raise the rate, which affects many consumer and business loans, before June.

THE QUOTE: "This does not move the needle a whole bunch," said John Canally, Chief Economic Strategist for LPL Financial. "The minutes confirm that the Fed remains on track to hike rates about a year from now based on the economy tracking to their forecasts."

FULL story at link.



The Wall Street entrance of the New York Stock Exchange, Thursday, Oct. 2, 2014. World stock markets were lackluster Wednesday Nov. 19, 2014 as investors digested a fall in Chinese home prices and Japan's scramble to overcome its economic malaise. (AP Photo/Richard Drew)


Read more: http://apnews.excite.com/article/20141119/financial_markets-14a94ce575.html

[SoCalMusicLover]

1. Just Make The 0% Rate Permanent

Quit sugar coating things, and appearing to signal an increase in rates.

Make Wall Street happy and just make the Free $$$$$ borrowing by banks, etc., permanent.

And don't worry about the retirees and baby boomers who rely on fixed income securities. They'll be fine with their 0.10% bank interest rates.

[AdHocSolver]

2. The Fed's low interest rate on bank deposits is a key factor in stealing middle class assets.

A large part of loans to consumers involve credit card balances which interest rate can be 14 percent or more.

So, we see a situation where middle class depositors receive 0.1 percent on their savings while paying the bank 14 percent or more on their credit card balances.

The banks pay 0.1 percent (0.001) on deposits of their customers while charging credit card customers 14 percent or more on credit card balances of their customers which amounts to a spread of 0.14 / 0.001 which equals 140 times. That is, the bank receives from its credit card customers 140 times what it pays to its depositors for the use of their money.

Even when a loan is 6 percent, the spread is 0.06 / 0.001 = 60 times. .

Consider, a person has $100,000 in a retirement account. At 0.1 percent interest, in one year, that person earns $100,000 x 0.001 = $100. A few years ago, many banks paid around 2.0 percent interest, so a few years ago, that $100,000 was earning $100,000 x 0.02 = $2000 in a year.

Earnings on bank deposits aren't even keeping up with inflation.

The banks, with the collusion of the Federal Reserve, are transferring the savings of depositors to the banks and Wall Street.

[SoCalMusicLover]

3. Robbing From Poor & Giving To Rich

It's the American way.

If interest rates don't rise, and soon, the baby boomers are going to be in for a rude awakening if they think they will retire at a low retirement age.