Everyone is now waiting to hear from the Fed after today’s meeting. Will it or won’t it push the much ballyhooed rate increase to September? Whenever the Fed decides to raise rates, there will be an effect, for sure, but that effect will be spread out and it will be both positive and negative.
Corporate borrowing will be affected negatively, as will consumer loans and mortgage rates. US taxpayers will pay more for US debt, and emerging economies will pay more to grow. The US dollar will get a boost, but that will affect the profit of US corporations doing business overseas, as a higher US dollar means less buying of US goods.
Now, there is a flipside to this, and I have suggested it before (get some money into Europe and Asia) …
- A stronger dollar from the rate increase will boost U.S. demand for products from Asia and Europe, helping lift corporate profits in those regions.
In the near term, the US market will take a hit, no doubt, but in the longer term, the US economy’s momentum will carry the day, or so says your average billionaire investor.
- The stock market is closely aligned with the economy, and both are doing fine, but stocks overall are priced about “average” on a historical basis, billionaire buy-and-hold investor Ron Baron said Wednesday.
I happen to agree with Mr. Baron, which is no secret to anyone. When the Fed does raise rates, some will win and some will lose, but the context of the US economy and the market will be closer to normal at that point.
- From car loans to mortgages, defaults on consumer loans continue to hit new lows, according to the latest S&P/Experian Consumer Credit Default Indices, which track the rate of consumers who fall behind on their debts.
As mentioned earlier, US consumers will take a hit, but a strengthening labor market will counter that hit.
- The drop in defaults comes as a strong job market has helped boost incomes, helping consumers better manage monthly debt payments. Historically low interest rates have also helped keep the cost of those monthly payments relatively manageable.
All will be fine. The world will not fall apart. Adjustments will be made. Keep that in mind as we move into a period of stronger volatility about the Fed move. Keep in mind as well that so much is changing and so fast. Just ask Fed Ex and UPS.
- In lieu of utilizing large carriers like United Parcel Service and FedEx, Amazon is mulling a plan to hire ordinary people to make deliveries that are on the way to their destinations, WSJ reported Tuesday.
Amazon is Uberizing package delivery, which is a cool idea, assuming your ordinary neighbor has the professional approach to delivering your package, and that is a big assumption.
Actually, a way cooler idea is having the ability to project a TV show or a movie from your phone onto the nearest white wall. Yup, that is what I said.
- A new wave of projectors has been hitting the market, targeting mobile users who want to take their large-scale media entertainment wherever they go.
Here is an idea. While waiting for the Fed to do its thing, let’s not get bogged down with the market’s reaction. Instead, let’s order a mini projector from Amazon, and then invite our neighbor into watch a movie as he or she hands over the package that makes that possible. Sounds much more fun, now doesn’t it?
Trade in the day; invest in your life …
