Tag: george yacik

Jobs Report Says No Rate Increase This Year

Posted on by George Yacik

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


Friday’s jobs report was the final nail in the coffin for an interest rate increase in 2015.

I know I shouldn’t get carried away by one statistic, especially this early into the year. The nonfarm payrolls report is only one number – an important number, for sure, but still only one number – so one shouldn’t base his entire opinion on it. And I’m not. But the lackluster figure was just the latest evidence of just how weak the U.S. economy has gotten over the last several months and merely confirms the trend – with an exclamation point.

The Labor Department said nonfarm payrolls grew by only 126,000 in March, the smallest gain since December 2013. To add insult to injury, February’s increase was revised downward by more than 30,000 to 264,000. That brought down the average monthly gain in the first Continue reading "Jobs Report Says No Rate Increase This Year" →

Does QE Really Work?

Posted on by George Yacik

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


Perhaps you didn't hear about it, or if you did you dismissed it because of who said it, but I found some comments by Greece's finance minister over the weekend about the European Central Bank's quantitative easing bond buying program very insightful – and in synch with my own thoughts.

Speaking at the Ambrosetti Forum in Italy over the weekend, Yanis Vardoulakis warned that the ECB's purchases of sovereign bonds, which started last week, will create an unsustainable stock market bubble that is unlikely to boost private-sector investments in the euro zone.

"QE is all around us, and a great deal of optimism hangs on it," Varoufakis said in his speech, "Presenting an Agenda for Europe. "At the risk of sounding like a party pooper, let me say that I find it hard to imagine how the broadening of the monetary base in our fragmented, and fragmenting, monetary union will transform itself into a substantial increase in private investment in productive activity." Continue reading "Does QE Really Work?" →

The Next Financial Crisis(es)

Posted on by George Yacik

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


The next U.S. consumer loan crisis might not be the student lending business after all, although that might happen, too.

No, the next loan crisis might just be another residential mortgage crisis.

Of course, the student loan business isn’t getting any better. The New York Fed said recently that 11.3% of student loans were delinquent in the last three months of 2014, up from 11.1% from the previous quarter. (By way of comparison, the delinquency rate on credit card loans was 7.3%, down from 7.5%.) Continue reading "The Next Financial Crisis(es)" →

So What Did Yellen Actually Say?

Posted on by George Yacik

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


My educated interpretation of what Janet Yellen told the Senate Banking Committee on Tuesday boils down to this: The Fed is going to raise interest rates when it is going to raise rates and not one day earlier.

In other words, I don't have any idea, and it's likely she doesn't either. But it's probably not likely to happen in the immediate future, maybe not even this year.

Whether that's a mistake or not is a different matter (I think it is). But it was clear – or rather unclear – that the Fed has no intention of doing anything about raising short-term rates above near-zero anytime soon.

Analysts and pontificators, of course, did their best to put their own spin on what she said (kind of like what I'm doing now). In typical Fed Chair-speak, Yellen provided a bunch of "we might do this – but then again we might not" comments that could mean just about anything. Continue reading "So What Did Yellen Actually Say?" →

Blame it on the weather

Posted on by George Yacik

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

I expect to hear shortly the refrain among financial analysts and talking heads to explain the recent spate of relatively weak U.S. economic news: It’s the weather!

Last year about this time, you remember, we were told that the unexpected 2.9% annualized drop in first quarter 2014 GDP was an aberration and all due to the harsh winter weather. And the economy did indeed rebound sharply after that, with full year 2014 GDP growth coming in at 2.5%. Hardly spectacular growth, but a lot better than the horrible first quarter would have indicated and certainly a lot better than other places outside China and India.

So maybe there was something to that weather thing, although I think it took way too much of the blame. Continue reading "Blame it on the weather" →