Mortgage Applications Fall as Interest Rates Remain High

Paper Work

Mortgage applications sank last week as high prices and rising mortgage rates have increased unaffordability for average Americans, according to data from the Mortgage Bankers Association.

The total volume of mortgage loan applications for homes declined 10.6% in the week ending Feb. 16 compared to the previous week when seasonally adjusted, while the purchase index fell 10% in that same time, according to a release from the MBA. The drop in applications follows an increase in the average interest rate for a 30-year fixed-rate mortgage for homes under $766,550 to 7.06% from 6.87% the week prior, intensifying housing unaffordability.

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Corporate Media in Crisis as Outlets Grapple with Biden’s Economy

Joe Biden

Numerous legacy media outlets are struggling with challenges posed by President Joe Biden’s economy and resorting to drastic measures, Axios reported on Friday.

Close to a dozen of these outlets are firing workers, dealing with employee strikes or looking to sell, according to Axios. The Federal Reserve’s imposition of high interest rates to bring down inflation is hindering their ability to accumulate more debt, complicating their efforts to extend the timeline for resolving their financial difficulties.

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Smaller Banks’ Earnings Limp as High Interest Rates, Sector Turmoil Send Customers Fleeing to Megabanks

Bank Teller

Many smaller banks posted dismal fourth quarter earnings as depositors continue to flee to booming megabanks that have been unfazed by interest rate hikes and a crisis that shook the sector early last year, according to The Wall Street Journal.

Net income was down substantially at many small and regional banks in the fourth quarter, including KeyCorp, Citizens Financial Group, PNC Financial Services Group, Comerica and Zion Bancorporation, falling 90%, 70%, 40%, 90% and 50%, respectively, according to the WSJ. Despite the poor performance at the small and regional level, America’s megabanks — JPMorgan, Bank of America, Wells Fargo and Citigroup — saw their earnings increase 11% during 2023 to over $100 billion.

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Cloud Hangs over Commercial Real Estate as Trillions in Debt Set to Come Due

Commercial Real Estate

Commercial real estate is facing a mountain of debt that many borrowers could have trouble refinancing due to a rapid hike in interest rates and record vacancies, according to The Wall Street Journal.

Around $2.81 trillion in commercial real estate loans are set to expire through 2028, meaning borrowers would either have to pay the amount outright or refinance the debt with higher interest rates, according to data from market research group Trepp. Payments on commercial mortgages are typically only for interest while the loan is active, and when the loan reaches its expiration date, borrowers often refinance at current rates, but doing so would increase payments drastically in a time when commercial developers and property owners are strapped for cash, according to the WSJ.

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Market Share for Green Bonds Slumped for Another Year Following Backlash

New York Stock Exchange

Bonds that consider environmental, social and governance (ESG) factors for their investors made up just 2% of all bond issuance in the U.S., the lowest point in terms of market share since 2020 after also declining in 2022, according to Bloomberg.

ESG bond issuance as a percentage of the market reached an all-time high in 2021 and is not expected by analysts to reach that same high in 2024 as interest rates make the bond market pricier and backlash to the ESG label inhibits sales, according to data compiled by Bloomberg. ESG has come under fire by conservatives who see it as a left-wing initiative infecting the financial world, most recently leading Ohio Republican Rep. Jim Jordan, chairman of the House Judiciary Committee, to send subpoenas to financial firms Vanguard, Arjuna Capital, BlackRock and State Street Global Advisors over alleged ESG collusion, arguing it violates antitrust law.

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Americans Are Turning to Even More Financing Options as Savings Run Dry

Couple Credit Card

An increasing number of Americans are turning to buy now and pay later (BNPL) services like layaway as they continue to drain their savings and interest rates on credit cards grow, according to Reuters.

Credit card debt, with its high interest rates, in aggregate exceeded $1 trillion for Americans in 2023 for the first time ever, leading many Americans to use BNPL services that charge a far lower 2% to 8% fee instead, masking a considerable source of debt, according to Reuters. The search for cheaper financing follows declining savings for Americans as they spend through their reserves, holding only $768.6 billion in October, down from over $1 trillion held in May and even further from the all-time high of almost $6 trillion held in April 2020.

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Commentary: The People in Charge of Our Money Supply Have No Idea What They’re Doing

If you still think the people running America’s central bank understand inflation and interest rates, think again.

A prime example is Chicago Federal Reserve Bank President Austan Goolsbee, who was wrong about inflation and is now wrong about interest rates and a soft landing for the economy. He is an ideologue clearly undeterred by facts—a scary reality for someone who helps control the money supply.

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Home Sales Decline to 2008 Levels as Record Mortgage Rates Take Their Toll

The U.S. real estate market is on track to sell the least number of homes since 2008, when Americans were engulfed in the subprime mortgage crisis and the Great Recession, according to The Wall Street Journal.

The number of total existing-home sales is projected to reach only 4.1 million by the end of 2023, the lowest since around 2008, when the world was embroiled in a global financial crisis, despite a higher U.S. population, according to the WSJ. Mortgage rates are currently at their highest point since the year 2000, with the 30-year fixed-rate mortgage averaging 7.57 percent, bringing purchasing demands for housing to a three-decade low, according to Freddie Mac.

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Debt-Laden Companies Are Headed Toward Doom as Interest Rates Take Their Toll

Companies around the world could be in trouble in the first half of 2024 as the rising cost of debt due to heightened interest rates threatens a half-trillion dollar refinancing scramble, according to Reuters.

Businesses, particularly across Europe, the Middle East and Africa, that previously borrowed when rates were low and businesses that need to take out new loans to meet capital requirements need around $500 billion in the next half-year for refinancing to avoid cutting operations, according to Reuters, citing analysis from restructuring consultancy Alverez & Marsal. The value of company loans in the next six-month period is projected to be higher than any other similar period until the end of 2025, threatening businesses that will need to borrow during that time and risking corporate failures.

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America Adds over 300,000 Jobs in September as Interest Rates Remain Elevated

The U.S. added 336,000 nonfarm payroll jobs in September as the unemployment rate remained at 3.8%, according to Bureau of Labor Statistics (BLS) data released Friday.

Economists had anticipated that the country would add 170,000 jobs in September compared to 187,000 in August and that the unemployment rate would slide down to 3.7% from 3.8%, according to Reuters. Private employment data for September showed that only 89,000 jobs were added for the month, as the professional and business services, trade, transportations and utilities and manufacturing services sectors all had substantial losses, according to ADP.

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Commentary: America’s Housing Conundrum

Americans who already own homes find themselves in an enviable position presently, particularly if they have little/no debt on them, or mortgages locked-in at super low rates that dominated the pre-lockdown years. But for the aspirational strivers in society – newlyweds or parents having more children, or the upwardly mobile entrepreneur seeking a better house – the present housing crisis presents a conundrum.

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Small Businesses Feel the Pain of Inflation-Driven Interest Rates

Small business owners are feeling the pain of inflation-driven interest rate hikes, another difficulty for those owners to overcome as they continue to recover from the COVID-19 pandemic-era shutdowns.

A rash of federal spending and an increase in the money supply in recent years have fueled inflationary pressures. Prices soared during the beginning of the Biden administration, making it hard for Americans to make ends meet.

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Commentary: Interest Rates Are Soaring, Raising the Alarm for a Painful Reckoning for America

Someone with a million dollars of credit card debt probably wouldn’t celebrate if his interest rate skyrocketed. Yet some analysts are touting rising interest rates on America’s trillions of dollars of long-term debt as a good sign for the U.S. economy.

Are they right? Are rising long-term interest rates a good thing? Certainly not for anyone looking to secure a 30-year mortgage at two-decade-high rates. And certainly not for the federal budget. Not when America is sitting on $32.7 trillion in debt.

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Another Major Credit Agency Downgrades Several U.S. Banks

A major U.S. credit agency cut the ratings of multiple banks following a string of credit rating cuts due to factors like higher interest rates, according to an announcement from S&P Global.

S&P Global, one of the three major U.S. credit agencies, revised its ratings down for five regional U.S. banks after reviewing their risks related to funding, liquidity and asset quality, according to a S&P Global announcement. Moody’s, another top credit agency cut its ratings for ten U.S. banks earlier this month, according to Reuters.

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Biden Sets Leftist Tone for 2024 Re-Election Effort at Philadelphia Event

President Joe Biden held his first presidential re-election campaign event on Saturday at the Philadelphia Convention Center, making strong appeals to his left-wing base. 

Biden appeared alongside organized-labor activists and mentioned in the first few seconds of his oration that when he thinks of working Americans, he especially values the ones who associate with causes he finds politically congenial.

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Fed Raises Interest Rates by a Quarter Point to Fight Inflation

The Federal Reserve Bank on Wednesday raised interest rates a quarter of a point again in an effort to cool inflation. “The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to raise the target range for the federal funds rate to 5 to 5-1/4 percent,” the Fed said in an announcement about the rate hike. The rate was 4-3/4 to 5 percent.

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Fed Raises Interest Rates a Quarter-Point, Highest Levels Since 2007

The Federal Reserve hiked its target federal-funds interest rate by a quarter of a percentage point Wednesday, the ninth in a series of hikes that started in March 2022.

The hike brings Fed’s target rate to a range between 4.75 percent and 5 percent with the Fed maintaining its pace of slowed increase. Most economists expected a quarter-point interest-rate hike in an effort to bring inflation down, but the current banking calamities contributed to the possibility of a pause, according to Bloomberg.

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Fed Hikes Interest Rates to Highest Levels in 15 Years

by John Hugh DeMastri   The Federal Reserve raised its target federal-funds interest rate by a quarter percentage point Wednesday, the slowest in a series of eight hikes that began in March 2022. The hike brings the Fed’s target rate to a range between 4.5 percent and 4.75 percent, with the Fed continuing to slow its pace after six consecutive hikes of more than 0.5 percentage points, according to a Fed press release. While Fed officials have consistently said that they anticipated a pause after the target funds rate surpassed 5 percent, investors have increasingly expected that the Fed will change its tune by its next meeting — scheduled for May 2-3, 2023 —if inflation continues to drop, Bloomberg reported. The disconnect between the Fed and investor expectations has put Fed officials in a “difficult spot,” Will Luther, the director of the American Institute of Economic Research’s Sound Money Project, told the Daily Caller News Foundation. “Fed officials can either meet expectations where they are, which might mean they fail to bring down inflation as quickly as they would like, or surprise markets by delivering the projected rate hikes, which would bring down inflation but at the risk of a potentially severe recession.” Current…

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Fed Likely to Raise Interest Rates, But at a Less Aggressive Rate

The Federal Reserve is likely to further slow its historically aggressive pace of interest rate hikes at its Wednesday meeting as inflation cools, but consumers will still feel the pinch of higher interest rates, according to economists who spoke with the Daily Caller News Foundation.

The Fed is likely to hike interest rate hikes by just 0.25 percentage points after its Wednesday meeting, setting the range for its target federal-funds rate to between 4.5% and 4.75%, due to slowing inflation, The Wall Street Journal reported. Although consumers may see some relief from inflation as a result of the Fed’s rate hikes, they might give back some of those gains as heightened interest rates drive up borrowing costs, Heritage Foundation economist E.J. Antoni told the DCNF.

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Consumers Are Paying Record Credit Card Rates Due to Inflation

Average interest rates for bank-issued credit cards this past November surpassed a record set in 1985, Axios reported Wednesday, citing data from the Federal Reserve.

The previous record rate was 18.9%, set in the first quarter of 1985, with November’s rate of 19.1% comfortably eclipsing it, according to Axios. Credit card interest rates climbed alongside the Federal Reserve’s federal funds rate, which the Fed hiked a historically aggressive pace in 2022 to blunt economic demand and reduce the impact of inflation, NPR reported.

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Average American Family Has Effectively Lost $7,100 Under Biden, Economist Says

An economist says the average American family has effectively lost more than $7,000 due to inflation and higher interest rates since President Joe Biden took office.

The consumer price index, a key inflation measure, increased 0.1% in November, up 7.1% from November 2021, the U.S. Bureau of Labor Statistics reported Tuesday. The figure marks a slowdown in rampant inflation, but not a reversal of the trend that has caused prices for everyday goods like food and gas to ratchet up in recent months.

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Economics Professor: Interest Rates Likely Will Continue to Rise into 2023, Lead to Job Losses

While high rates of inflation have hit the entire nation hard, some regions have experienced it more intensely.

WalletHub reported Thursday that the Minneapolis-St. Paul-Bloomington, MN-WI, metropolitan statistical area has experienced the 16th highest rise in inflation, based on two Consumer Price Index metrics: latest month versus two months prior and latest month versus one year ago. The metrics received equal weight in the report.

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Tennessee’s Blackburn and Green Take Biden to Task for 20-Year Mortgage-Rate High

Republican federal legislators from Tennessee blasted the Biden administration yesterday in light of the news that mortgage-interest rates have reached a two-decade high. 

Government-sponsored mortgage corporation Freddie Mac reported this week that the 30-year fixed-rate mortgage — the option most homebuyers choose — hit 7.08 percent, exceeding seven percent for the first time since Spring 2002. The rate was 6.94 percent last week.

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Fed Hikes Interest Rates for Third Time in Four Months

The Federal Reserve has raised target interest rates by 75 basis points for the third time this year following a Wednesday meeting of the Federal Open Market Committee.

The new target range for the federal funds rate is anywhere between 3% to 3.35% up from the current 2.37%, making it the most aggressive hike since the early 1980s. The Federal Reserve is expected to continue this trend into March of 2023 as an attempt to curb ongoing increases in inflation, CNBC reported.

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Commentary: Inflation Can’t Be Censored

An increasingly disturbing feature of American politics is the routine suppression of major news stories that reflect poorly on candidates favored by the Fourth Estate. The most egregious example in recent years occurred in October of 2020 when corporate news outlets and social media platforms colluded to bury a New York Post article on Hunter Biden. Fortunately, some stories just aren’t susceptible to such censorship. Inflation is a case in point. It can’t be hidden from the voters because soaring prices shout the bad news from every grocery store shelf and gas pump in the nation.

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Inflation Hits 10.9 Percent in Metro Phoenix, Highest of Major Metro Areas and Substantially Above National Average

Inflation is soaring under the Biden administration, and it’s even worse in Phoenix. The Bureau of Labor Statistics reported that inflation in metro Phoenix jumped 10.9% from February 2021 through February 2022, significantly more than the national average increase of 8.5% and higher than any other major metro area. This is one of the highest levels reported for Phoenix, the Common Sense Institute found.

The 8.5% inflation rate is the highest in the U.S. in 41 years. In 2020, the last year of Donald Trump’s presidency, it was only 1.5%. It began spiking as soon as Joe Biden entered office. The main goods driving the spike nationally are food, gas, and housing. 

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Central Bank Expected to Raise Interest Rates Wednesday

Person counting cash

The Federal Reserve is expected to raise interest rates after its meeting Wednesday to combat the country’s soaring inflation, Axios reported.

The central bank is believed to raise its target fed funds rate by a quarter percentage point from zero after the end of the two-day meeting ending Wednesday, Axios reported. The Fed’s decision will outline the bank’s monetary policy for the near future and determine whether the U.S. economy enters a recession or continues surging price hikes, according to Axios.

Inflation has soared to nearly 8% year-over-year as of February while unemployment stayed below 4%, indicating that the Fed has been behind the curve in its effort to address sustained inflation, Axios reported. Federal Reserve Chairman Jerome Powell is now reportedly tasked with fixing a delicate economy without crashing it despite a war in Ukraine and renewed COVID-19 lockdowns in China.

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Arizona Consumers Mistreated by Predatory Lender to Receive Refunds

Mark Brnovich

Arizona Attorney General Mark Brnovich announced Wednesday a proposed consent judgment that will require CashCall, Inc., its owner J. Paul Reddam, and a wholly-owned subsidiary, WS Funding LLC, to pay $4.8 million in restitution to Arizona consumers who took out personal loans with interest rates as high as 169 percent, greatly exceeding that allowed under Arizona law, according to a press release by Brnovich’s office.

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Federal Reserve Chairman Powell Announcing Increase in Interest Rates This Month

Federal Reserve Chairman Jerome Powell will announce Wednesday that the central bank will begin raising interest rates this month – in an attempt to curb rising inflation expected to further increase as a result of Russia’s invasion of Ukraine.

In prepared testimony to a congressional committee, Powell says the Fed will “need to be nimble” in responding to unexpected changes resulting from the invasion and the resulting sanctions, according to the Associated Press.

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Consumer Prices Outpace Americans’ Wage Growth as Inflation Surges

Woman shopping in clothing store

Massive government spending has decreased the value of the American dollar and triggered increased consumer prices, which economic experts said will only get worse.

Americans will continue to see higher prices across the board, from food and gasoline to home appliances and cars, as the federal government continues to propose more stimulus into the economy without an adequate plan to pay for it, according to several experts. Even if the government doesn’t pass legislation increasing taxes, higher prices ultimately amount to an “inflation tax,” some of the experts said.

“Over the past few months, we have seen an inflation rate that is much higher than where we’ve become accustomed to,” Heritage Foundation research fellow Joel Griffith told the Daily Caller News Foundation. “When we are going to the grocery store, going to the gas station, building our new home, we’re noticing that prices are really accelerating at a much faster clip than what we’re used to.”

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Fed to Keep Providing Aid and Sees No Rate Hike Through 2022

Confronted with an economy gripped by recession and high unemployment, the Federal Reserve signaled Wednesday that it expects to keep its key short-term interest rate near zero through 2022.

At the same time, the Fed said it will keep buying about $120 billion in Treasury and mortgage bonds each month to maintain low longer-term borrowing rates in an effort to spur spending and growth.

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Analysis: Interest Rates Indicate Unemployment Will Grow as Trump Administration Eyes Phase Four Relief Spending

by Robert Romano   The unemployment rate will likely continue rising as the spread between the 10-year treasury on one side, and the 2-year and 3-month treasuries on the other, continue rising over the next weeks and months, an analysis of interest rates over the past four recession shows, according to data compiled by the Federal Reserve, U.S. Treasury and the Bureau of Labor Statistics. The relationship shows that peak unemployment comes after the inversions and tends to continue until the peak the 10-year-2-year, and the 10-year-3-month spreads, with the average period lasting 26 months from when the inversions ended, and the range being from about 13 months as in the 1982 recession 30 to 31 months in the cases of the 1991, 2001 and 2007-2009 recessions. The question here is how quickly will the U.S. get to peak unemployment? Both the 10-year-2-year and 10-year-3-month spreads uninverted in Oct. 2019, and then another brief inversion happened in the 10-year-3-month last month, but not for the 10-year-2-year. So where to start counting from? October or last month? It’s impossible to know but you can produce a very wide range, and say that unemployment will probably continue rising until at least Nov. 2020,…

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Consumer Sentiment and New-Home Sales Post Gains

The final March results from the University of Michigan Surveys of Consumer Sentiment show overall consumer sentiment improved from the February result. Consumer sentiment increased to 98.4 in March, up from 93.8 in February, a 4.9 percent gain. From a year ago, the index is off 3.0 percent. Despite the slight decline from a year ago, sentiment is holding at very favorable levels (see chart). The two sub-indexes had healthy gains in March. First, the current-economic-conditions index rose to 113.3 from 108.5 in February (see top chart). That is a 4.4 percent gain for the month but still a 6.5 percent decrease from March 2018. The March result is also on par with the 113.5 peak reading from the prior expansion. The second sub-index — that of consumer expectations, one of the AIER leading indicators — increased 5.2 percent for the month, to 88.8 (see top chart), the same level as in March 2018. Consumer sentiment remained at broadly favorable levels in March, with respondents pointing to income gains and favorable growth prospects for the overall economy as significant drivers. Sales of new single-family homes rose 4.9 percent in February to a 667,000 seasonally adjusted annual rate (see bottom chart).…

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As The Fed Dumps Billions in Government and Mortgage Bonds, Questions of ‘Engineering’ a Recession Swirl as 2020 Nears

by Robert Romano   Recession warning lights are flashing predictably after the Federal Reserve has finally ended quantitative easing – it’s now dumping $50 billion of government and mortgage bonds a month – and short-term interest rates have risen. The 10-year-3-month treasuries spread inverted on March 22, and the 10-year-2-year and the 10-year-federal-funds-rate do not appear to be far behind from inverting. When interest rates invert, it means the interest rate on short-term bonds is higher than the rate of return for long-term bonds, meaning there is slightly more demand for the long-term bonds, which are viewed as a relatively safer investment. So, how did we get here? The short answer is that since the Fed began dumping bonds back on the market – it has shed $458 billion since Sept. 2017 – short-term interest rates have been steadily rising. This usually happens anyway as the business cycle comes to a close. But what it tells you is that this particular business cycle was prolonged – by a lot – with the Fed artificially keeping short-term interest rates low, not by manipulating the benchmark federal funds rate, but through quantitative easing and then refinancing a vast horde of U.S. treasuries. The U.S. is long overdue for a recession – it…

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Detroit Auto Show, and Industry, Prepare for Transition

The auto industry gathered in Detroit on Sunday, on the eve of the last winter edition of North America’s premiere auto show, as carmakers grapple with a contracting market and uncertainty in the year ahead. Concerns over the health of the global economy and a US-China trade war loomed over the North American International Auto Show, as it prepared to open Monday with the first five days dedicated to the media and industry insiders. The show opens to the general public on January 19. While a number of major announcements were expected – including an anticipated strategic alliance between Ford and Volkswagen – there will be fewer automakers and new car unveilings, making it more subdued. “This is a transition year for the Detroit show,” said analyst Michelle Krebs of Autotrader. “It’s kind of emblematic of where the industry is. We’re in a transition in the industry.” After a 10-year boom, analysts expect North American auto sales to contract in 2019, as consumers face pressures and carmakers grapple with multiple uncertainties. Rising interest rates and car prices have squeezed car buyers, and fewer of them are able to afford increasingly pricey, technology-heavy cars. Kelley Blue Book predicted the average new-car…

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Commentary: The Fed Steps On Middle America Again

by CHQ Staff   President Trump’s pro-growth economic policies have put America back to work, and for over a year drove the stock market to new highs, boosting the personal wealth of millions of middle income Americans, then came the Federal Reserve’s inexplicable decision to raise interest rates again. Since the Fed began talking up regular interest rate hikes, the stampede by investors erased about $5 trillion in value from global stock and bond markets in October alone. Overall, the loss is estimated by some to be as much as $8 trillion. According to CNBC’s post at Thursday’s market close: The Dow Jones Industrial Average fell 440 points, bringing its two-day declines to more than 700 points and its 5-day losses to more than 1,700 points. The S&P 500 fell 1.5 percent as technology stocks underperformed. The Nasdaq Composite also fell 1.5 percent, into bear market territory amid big losses in Amazon and Apple. Companies in the S&P 500 have lost a total of $2.39 trillion in market cap this month. The Cboe Volatility Index — one of the market’s best gauges of marketplace fear — rose above 30. As our friends at NewsMax noted, it’s exceedingly rare the Federal…

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The Fed Lifts Rates for Third Time in 2018 and One More Raise Is Expected

The Federal Reserve on Wednesday raised a key interest rate for the third time this year in response to a strong U.S. economy and signaled that it expected to maintain a pace of gradual rate hikes. The Fed lifted its short-term rate — a benchmark for many consumer and business loans — by a quarter-point to a range of 2 percent to 2.25 percent. It was the eighth hike since late 2015. The central bank stuck with its previous forecast for a fourth rate increase before year’s end and for three more hikes in 2019. The Fed dropped phrasing it had used for years that characterized its rate policy as “accommodative” by favoring low rates. In dropping that language, the central bank may be signaling its resolve to keep raising rates. Many analysts think the economy could weaken next year, in part from the effects of the trade conflicts President Donald Trump has pursued with China, Canada, Europe and other trading partners. The tariffs and countertariffs that have been imposed on imports and exports are having the effect of raising prices for some goods and supplies and potentially slowing growth. Compounding the effects of the tariffs,other factors could slow growth…

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