Grumpy Editor

HIGHER INTEREST RATES LOOM ON SAVINGS ACCOUNTS…BUT NOT SOON

Not widely touted, there may be better days ahead via higher interest rates for those with savings in banks, sees Grumpy Editor, following the Federal Reserve raising its key short-term interest rate by a quarter point last Wednesday, citing a brighter economic outlook.

It won’t be soon.  But as competition for deposits heats up, banks will have to lift rates as customers seek better deals in parking their cash.

Most banks now pay from zero to about a slim 0.50 percent on savings accounts. Certificates of deposit pay slightly higher rates, depending on the term.

The Fed is on track to make three rate increases this year and three next year.  That would place its key rate at around 3.25 percent, compared to the current 1.5 to 1.75 percent. That’s still low by historical standards but it marks the central bank’s fourth rate increase in a year.

"We're trying to take that middle ground" on rate hikes, boosting rates enough to head off an eventual spike in inflation without derailing the economic expansion, Fed Chairman Jerome Powell said at a news conference. 

Newspaper advertising departments should welcome the upcoming action because financial institutions will be forced to take out ads promoting their rates.

The three largest U.S. banks --- JP Morgan Chase & Co., Bank of America and Wells Fargo & Co. --- have added more than $2.4 trillion in domestic deposits over the past decade.  That’s a 180 percent increase since 2008, according to a Wall Street Journal analysis of regulatory data.

Still, savings account rates, for example, will be well below prior years that saw payouts as high as 18 percent during the Jimmy Carter years and 3 percent going way back to the 1950s.

 

IN CASE YOUR FAVORITE NEWS OUTLETS MISSED THESE…

 

NEW MEDICARE CARDS DETER ID THEFT.  New Medicare cards --- with randomly assigned numbers replacing Social Security numbers in efforts to deter identity theft --- will be distributed to several states starting next week and continue through year end.

NO SMOKING WHILE WALKING ON NEW YORK CITY SIDEWALKS?  New York City Councilman Peter Koo frowns on folks puffing on cigarettes while walking on city sidewalks and is preparing a bill that would make it a misdemeanor to walk while smoking, likely punishable by a $50 fine.

L.A. TIMES BUSINESS EDITOR RECEIVES AWARD.  Los Angeles Times business editor Kimi Yoshino, overseeing about 30 reporters and editors, is named Los Angeles Press Club’s 2018 Presidents Awardee for Impact on Media.

UNIVERSITY SEEKS TO CUT 13 MAJORS…INCLUDING ENGLISH.  The University of Wisconsin at Stevens Point is weighing a plan to eliminate 13 majors including English, philosophy, history and Spanish, focusing on programs that have "clear career pathways,” such as marketing, management, graphic design and computer information systems.

FASTER CHECKOUT LOOMS AT STORES.  Checking out at stores and other places via credit cards will be faster starting April 30.  That's when major credit card networks no longer will require customers' signatures for transactions. 

 

HUH? DESPITE GOOD ECONOMIC NEWS, DOW SINKS

What’s going on with the stock market? asks Grumpy Editor.

The Dow Jones industrial average, S&P 500 index and Nasdaq composite see more than a week of heavy selling in whipsaw action, breaking key support lines and leaving them 10 percent off their highs. 

All investment eyes are on today’s markets.

The dive in stocks comes despite positive developments that don’t happen too often:

• The job market is strong with nearly nine years into an expansion that followed the “great recession.”
• Consumer confidence is solid and manufacturing is growing. 

• Businesses are hiring.

• Wages are rising.

•  Existing home sales last year reach the highest level in 11 years.

•  Americans are optimistic about the economy

•  Household debt is under control.

So, what’s worrying Wall Street?

Words most heard are inflation and the Federal Reserve’s indicated raising of short-term rates three times this year.

Grumpy Editor reminds that current inflation is tame compared to Jimmy Carter Administration’s days when the president enacted an austerity program by executive order, saying inflation had reached a "crisis stage."  Both inflation and short-term interest rates reached a whopping 18 percent in February and March, 1980.

As for this year, Kiplinger’s sees inflation at 2.5 percent, a bit higher than last year’s 2.1 percent, reflecting both higher gasoline prices and higher prices in general.

 

IN CASE YOUR FAVORITE NEWS OUTLETS MISSED THESE…

SPORTS CAR SOARS INTO SPACE.  From the same pad where NASA launched rockets that carried astronauts to the moon, Elon Musk’s SpaceX’s Falcon heavy rocket soars into space --- along with a cherry red sports car from Musk’s Tesla operation.  Behind the wheel is a space suit-clad mannequin, named Starman.  

PENTAGON MISSES MILLIONS.  The Pentagon's Defense Logistics Agency failed to properly document more than $800 million worth of construction projects, Ernst & Young finds in an audit, reports Politico.

LA. TIMES BACK TO LOCAL OWNERSHIP. Billionaire doctor Patrick Soon-Shiong buys the Los Angeles Times and the San Diego Union-Tribune for $500 million from Chicago-based Tronc, Inc. He says returning the newspaper to local ownership will give the Times a chance to preserve its mission and independence.

GETTING DOWN TO THE BARE FACTS.  Absolut Vodka makers make a TV commercial in which employees have nothing to hide.  In fact, they are completely naked at the factory in Sweden.  See it all at digg.com/video/absolut-nothing-to-hide

LOW FLYING HOT AIR BALLOONS.  Two hot-air balloons are grounded after getting very close to rooftops of homes in Yucaipa, Calif.  The sheriff's department says several homeowners called 911, worried there was about to be a crash in their neighborhood.  As it turns out, the pilots had everything under control.

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Confusion reigns as Fed interest rate decision nears

 

Grumpy Editor notes confusion prevails as financial eyes focus on Thursday’s Federal Reserve policy meeting that will determine whether or not there will be an interest rate rise from zero to 0.25 percent.

Chatter on the slim increase has been going on for months.  Constant mentions of a possible boost have sent the stock market down, while mentions of a delay in the raise have sent the market up.

Consider these contrasting headlines in print over the weekend:

Fed Expected to Order Interest Rate Increase was over a Reuters report.  (“A Reuters poll of 72 economists showed a slight majority expect an interest rate rise”…at this week’s policy meeting.

Economists See Fed Waiting on Rate Hike topped a Wall Street Journal story.  (It cited, “most private economists think the Federal Reserve will keep short-term interest rates near zero this coming week.’)

If there is no upward interest rate move announced following Thursday’s meeting, then look for continued market gyrations leading up to the Fed meeting in October, then if no action, December.

Among operations rocking and rolling with rate discussions in recent months were publicly-owned real estate investment trusts (REITs), which own or finance income-producing real estate such as office buildings, shopping malls and medical facilities.

The Wall Street Journal last week pointed out that category was “lagging behind the broader market this year amid concerns that REIT stocks will suffer if the Federal Reserve raises interest rates.”

Confusion there, too.

The National Association of Real Estate Investment Trusts (NAREIT) website noted, “the historical record reveals that share prices of listed equity REITs have more often increased than decreased during periods of rising interest rates.”

 

In case you missed these…

There’s that “domesticated” word again, regarding inflation.  An Associated Press economics writer on Friday wrote:  “The prices charged by U.S. manufacturers, farmers and other producers were unchanged in August, the latest evidence that inflation is tame.”

Weak data from China triggers U.S. stock market rise.  Head-scratching routine as with last Tuesday’s market:  U.S. stocks opened sharply higher after weak economic data out of China bolstered hopes of more stimulus measures from the Chinese government.

Problems continue with sloppy VA attention to veterans.  Associated Press reported nearly 900,000 military veterans have officially pending applications for health care from the Department of Veterans Affairs, but "serious" problems with enrollment data make it impossible to determine how many veterans were actively seeking VA health care.  Officials said some applicants may have died years ago.

What most media missed:  While President Barack Obama was emphasizing climate change during his recent Alaska visit, a U.S. submarine was having difficulty poking through 30 feet of Arctic ice.

More media folks clear out desks.  Bloomberg’s news division began September by cutting up to 90 editorial jobs.  In other trimming action, Tribune Publishing Co., unexpectedly axed Los Angeles Times publisher Austin Beutner and replaced him with Tim Ryan, publisher of the Baltimore Sun, also owned by Chicago-based Tribune.  Insiders expected another round of buyout offers to veteran Times newsroom staffers.

Incomplete details:  A CBS radio top-of-the-hour news item on Friday merely mentioned a shooting at a Downey, Calif., restaurant, without disclosing the name of the eatery or even the type of food --- and what led up to the episode.  Turns out a man carjacked a sedan at gunpoint, led police on a high-speed chase through several Los Angeles County cities before he holed up in a Chris & Pitts BBQ restaurant where he was killed by sheriff’s deputies when he approached customers with a gun.

 

Young journalist produces monthly newspaper ---

Eight-year-old Hilde Lysiak, for nine months now, writes, takes photos and delivers the four-page Orange Street News to more than 50 subscribers (at $2 a year) in her community of Selinsgrove, Pa.

She told the New York Daily News, “I really like getting to the truth and reporting it.”

 

2015 FOMC meetings slated to get wide attention

 

Many, from consumers to investment firms, will be seeking clues in coming months on what lies ahead in 2015 interest rates, which are likely to be raised for the first time in nine years, notes Grumpy Editor.

The question is when. 

Some Federal Open Market Committee (FOMC) followers see an increase coming as soon as April (at 2015’s third FOMC meeting. See table, below) as economists expect the economy to rise 2.9 percent in the months ahead. 

Meanwhile, investors, market analysts, economists and business writers will be seeking clues, including wording in statements following some FOMC meetings.

Any change in the federal funds rate triggers a chain of events that affect short-term interest rates, long-term interest rates, foreign exchange rates, the amount of money and credit, and, ultimately, a range of economic variables. 

That includes employment, output, prices of goods and services plus, of course, the stock market direction.

2015 FOMC meetings:

January       27-28

March          17-18*

April            28-29

June             16-17*

July              28-29

September  16-17*

October       27-28

December   15-16*

* Meeting associated with a Summary of Economic Projections and a press conference by chairwoman Janet Yellen. 

 

FYI, IN CASE YOUR FAVORITE EDITORS MISSED THESE…

 

Former Arkansas Gov. Mike Huckabee helmed his final weekly commentary show, “Huckabee,” on Saturday after six-and-a-half-years on Fox News Channel to explore a presidential run. “It’s been the ride of a lifetime and I have never had so much fun in my life,” he declared.  He asked his fans to “stay tuned” to learn about his next move which will be determined in the spring.  He previously ran for the Republican presidential nomination and won the 2008 Republican Iowa caucus before withdrawing...In wrapping up a vacation in Hawaii, President Barack Obama and wife Michelle on New Year’s Day spent three hours enjoying multi-course meals at Honolulu’s upscale Vintage Cave restaurant where dinner for two can run upwards of $1,000, tallies Honolulu Magazine…Military budget cuts a factor?  Media didn't ask why missing from the 2015 Rose Parade on New Year's Day in Pasadena were Army, Navy and Air Force bands --- included in prior parades.  But the Marine Corps was in the lineup…The monthly SF Evergreen, for cannabis industry and culture followers, debuts Jan. 26, free at San Francisco newsstands.  “What we hope is an upper class, sort-of GQ or Vanity Fair for the marijuana scene in the Bay Area,” editor Chris Roberts told KCBS, San Francisco…In a new advertising program, beer drinkers soon will see more than 100 different messages on Bud Light bottles...Lake Superior State University’s 40^th annual banished words list included polar vortex used in place of good old winter or cold snap and foodie for a person who likes food. Hey, that’s everyone…With a lot of dopey movies released in 2014, ticket sales fell 5.2 percent to $10.3 billion in the U.S., while attendance dropped an estimated 6 percent to 1.26 billion --- lowest in nearly two decades…A new California law, pushed by animal rights folks, requires farmers selling eggs in California to house their hens in larger structures.  The move could see egg prices jump 40 percent in the Golden State…PR Week reported a survey found more public relations firms are offering the ability to work from home, with 90.5 percent of respondents saying they can…A mystery grenade that washed ashore on California’s Malibu beach received wide broadcast/print coverage.  Media reported a sheriff’s arson/explosives detail arrived and rendered the device safe and took it away --- but no reporter asked about the device’s country of origin.

 

 

Oops!  HarperCollins, in selling an atlas specifically for Middle East schools, left out Israel.  The publisher last week said it regrets omission of that country and has removed the product.

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As Fed chairman Bernanke speaks to media, Dow ebbs

As often happens, when Federal Reserve Chairman Ben Bernanke speaks, the stock market drifts south, as happened yesterday when he faced the business press following the year’s last meeting of the Federal Open Market Committee, observed Grumpy Editor. 

The Dow Jones Industrial Average erased an 81-point rally earlier in the day to close down 2.99 points at 13,245.45. 

It marked the end of a five-day rally. 

Bernanke spoke 12 minutes following the FOMC meeting, then went into detailed answers to media questions for an hour. 

The Q&A session started with the Dow up 42 points.  The average drifted lower as the questions continued seeking input on the central bank’s policy and what lies ahead.  

Also in the air was uncertainly, along with worries, on the looming “fiscal cliff.” 

As for inflation, Bernanke said it “remains well-controlled.” 

He added the Fed plans to keep key short-term rates near zero until the unemployment rate --- which he sees elevated until late 2015 --- reaches 6.5 percent or less, down from the current 7.7 percent.

Grumpy Editor lists FOMC's meeting dates for 2013

Looks like there will be much to talk about in Federal Open Market Committee meetings during 2013, as each of the eight gatherings is scheduled for two days, compared with only four two-day sessions in prior years, finds Grumpy Editor.

Going into 2013, investors, market observers, economists and business writers will be seeking clues on the directions of interest rates --- which, at the current level, have only one way to go: up.

Analysts and business writers will be paying close attention to wording in statements following each meeting.

Any change in the federal funds rate triggers a chain of events that affect short-term interest rates, long-term interest rates, foreign exchange rates, the amount of money and credit, and, ultimately, a range of economic variables.

That includes employment, output, prices of goods and services plus, of course, the stock market direction.

Scheduled meetings in 2013:

Jan. 29-30

March 19-20*

April/May 30-1

June 18-19*

July 30-31

Sept. 17-18*

Oct. 29-30

Dec. 17-18*

* Meeting associated with a Summary of Economic Projections and a press conference by the chairman.

Note:  Dates are tentative until confirmed at the preceding meeting.

Following the conclusion of meetings, statements are released to media around 2:15 p.m., Eastern time.