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Three Ways Fed Rate Hikes Will Impact Your Wallet

Three Ways Fed Rate Hikes Will Impact Your Wallet

Via SchiffGold.com,

The Federal Reserve recently delivered the largest interest rate hike…

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Three Ways Fed Rate Hikes Will Impact Your Wallet

Via SchiffGold.com,

The Federal Reserve recently delivered the largest interest rate hike since 1994 in an effort to combat inflation that turned out to be not so transitory.

Economists and policy wonks continue to debate the effectiveness of these rate hikes in the face of historically high inflation, but what do they mean for you? Should you care about rising interest rates?

Here are three ways Fed rate hikes will impact your wallet.

Your Credit Card Bill Will Go Up

When the Federal Reserve raises its rates, credit card interest rates rise right along with them. That’s not good news for American consumers who are turning to credit cards to make ends meet.

Revolving credit, primarily reflecting credit card debt, rose by $17.8 billion in April. That was up a sizzling 19.6%. This follows on the heels of a record 29% gain in March. Revolving debt now stands at $1.103 trillion, just slightly above the pre-pandemic record.

Average annual percentage rates (APR) currently stand at 16.8, with many companies already charging in the 20% range. Analysts say the average interest rate may well rise above 18% by the end of the year, breaking the record high of 17.87% set in April 2019. With every Federal Reserve interest rate increase, the cost of borrowing goes up, putting a further squeeze on American consumers.

According to one financial consultant, if you budgeted $397 a month to pay off $15,000 over 60 months on a credit card with a 19.9% APR, you would need to up your payments to $423 a month to clear the balance in the same amount of time.

Adding to the pain, credit card companies may up minimum payments as interest rates rise.

It Will Cost You More to Buy a House

Like credit card rates, mortgage rates will follow Fed interest rates higher.

Mortgage rates are extremely sensitive to Federal Reserve manipulation and we’ve already seen a hefty increase in the cost of borrowing to buy a house.

The average 30-year fixed mortgage rate has spiked to 6.1%. It’s the first time we’ve seen mortgage rates over 6% since the crash of 2008. Until mid-April mortgage rates were in the 4% to 5% range. Just one month ago, rates were 5.49%. At the peak of the pandemic, rates were in the 2.6% range.

We’re seeing the impact of rising mortgage rates on the housing market. Existing home sales tumbled to a two-year low in May.

Rising mortgage rates also close the door to a potential source of cash for American homeowners. Refinancing become a less viable option as borrowing costs rise.

Refinancing not only provides a lump sum of cash to spend but also lowers mortgage payments, taking some strain off the monthly budget.

There was a wave of refinancing in 2019 after the Fed’s monetary U-turn started pushing mortgage rates lower. But over the last several months, the refi market has collapsed.

Finally, as higher mortgage rates depress the housing market, home values will begin to fall. This unwinds the wealth effect of loose monetary policy.

And don’t think you’ll be unaffected if you rent. Rising home prices also drive rents higher. As the cost of buying a house rises, more people are priced out of the market. That increases the demand for rentals, driving up prices. On top of that, owners paying more for rental property will ultimately pass those costs on to their tenants.

The Recession Risk Will Rise  

The Federal Reserve created a massive economic bubble with its extraordinarily loose monetary policy. As it tries to tighten that policy, it will begin to pop those bubbles. That means the likelihood of a recession is on the rise.

In simple terms, this economy was built on easy money and debt. Taking away the easy money will pop the bubble and collapse the house of cards economy.

Nevertheless, after last week’s FOMC meeting, Federal Reserve Chairman Jerome Powell claimed that a “soft landing” was still possible. In other words, he thinks the central bank can slay red-hot inflation without tipping the economy into a recession.

Economist Daniel Lacalle said this is “impossible.”

After more than a decade of chained stimulus packages and extremely low rates, with trillions of dollars of monetary stimulus fueling elevated asset valuations and incentivizing an enormous leveraged bet on risk, the idea of a controlled explosion or a ‘soft landing” is impossible.”

In fact, the modest rate increases delivered by the Fed so far may have already tipped the US economy into a recession.

The Atlanta Fed has revised its Q2 GDP growth projection to — zero. That follows on the heels of a -1.5 GDP print in the first quarter. For the last several months, sanguine pundits pointed to “strong” retail sales as proof the consumer remained healthy. But retail sales unexpectedly tanked in MayConsumer sentiment is at historic lows. Stocks have plunged into a bear market.

Powell and other pundits point to a strong labor market as a sign the economy is strong enough to handle rate hikes. But employment is a lagging indicator and it is starting to look shaky as well. Hiring slowed in five out of eight sectors in May.

Federal Reserve monetary policy may seem wonkish and irrelevant to your daily life, but it impacts your wallet in many ways. You would be wise to prepare accordingly.

Tyler Durden Thu, 06/23/2022 - 15:00

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BlackRock’s iShares Bitcoin ETF mysteriously disappears — then reappears — on DTCC site

BlackRock’s Bitcoin ETF listing staged a sudden reappearance on the DTCC’s website after disappearing for a few hours.
The ticker…

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BlackRock’s Bitcoin ETF listing staged a sudden reappearance on the DTCC’s website after disappearing for a few hours.

The ticker for BlackRock's spot Bitcoin (BTC) exchange-traded fund (ETF) IBTC has reappeared on the Depository Trust and Clearing Corporation’s (DTCC) website after disappearing for a few hours.

The price of Bitcoin surged to new yearly highs following the Oct. 23 surprise appearance of IBTC on the website with markets frenzied over the sign of a potential soon-to-come spot ETF approval.

When the ticker quietly disappeared from the site a few hours later, Bitcoin‘s price slumped nearly 3%, indicating that much of the trading activity seems to be hinged on watching ETF-related developments.

BlackRock’s iShares IBTC ETF is back on the DTCC's site. Source: DTCC

Senior Bloomberg ETF analyst Eric Balchunas pointed out the drama around the IBTC listing seemed to be responsible for briefly crashing the DTCC website.

The DTCC doesn’t typically witness this level of attention, Balchunas explained — which “speaks to the uniqueness and intensity of this entire saga.”

Related: BlackRock’s spot Bitcoin ETF now listed on Nasdaq trade clearing firm — Bloomberg analyst

Upon IBTC’s re-listing, one X (Twitter) user highlighted that the previous listing showed a “Y” under the “create/redeem” column while the new listing had an “N.”

Bloomberg ETF analyst James Seyffart responded to the query saying he believes it indicates BlackRock is “getting everything ready to launch if and when they get an SEC approval.”

“The ‘N’ just means it’s not open for create redeem because it’s not live yet,” Seyffart added.

“It is standard practice for DTCC to add securities to the NSCC security eligibility file in preparation for the launch of a new ETF to the market,” a DTCC spokesperson said in a statement. “Appearing on the list is not indicative of an outcome for any outstanding regulatory or other approval processes."

Bitcoin has held steady following IBTC’s reappearance and is up 0.15% in the last hour according to CoinMarketCap data.

Bitcoin’s price held firm following IBTC’s reappearance — up 0.15% in the last hour. Source: CoinMarketCap

Bitcoin is trading at $33,940 marking a 19.1% gain over the past week. 

Magazine: Blockchain detectives — Mt. Gox collapse saw birth of Chainalysis

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UAW workers play hardball with General Motors

Striking United Auto Workers have upped the ante in the battle with GM over wages.

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After reporting $3.5 billion in third-quarter profits, General Motors  (GM) - Get Free Report suffered yet another significant blow from striking United Auto Workers on Oct. 24. The union's latest decision is a bold move designed to force management to agree to a slate of terms, including higher wages, more retirement money, and additional time off.

GM workers with the UAW Local 2250 Union strike outside the General Motors Wentzville Assembly Plant on Sept. 15 in Wentzville, Mo. (Photo by Michael B. Thomas/Getty Images)

Michael B. Thomas/Getty Images

General Motors profits put it on the hot seat

General Motors argues UAW workers' wage demands would crimp its ability to invest in necessary technology, putting it at risk of losing market share to non-union competitors vying for a share of the emerging electric vehicle market.

Electric vehicle sales growth is far outpacing internal combustion engine (ICE) growth, a trend that's unlikely to change. In Q3, Cox Automotive's Kelley Blue Book reports electric vehicle sales in the U.S. skyrocketed 50%, increasing EV's share of total vehicle sales to 8%. 

Related: Former Ford CEO has a blunt warning for UAW union strikers

The stakes are undeniably high. 

General Motors' EV market share slipped against key rivals last quarter, a warning sign that it's already struggling to outmaneuver other carmakers. Wall Street analysts estimate EV sales will comprise 40% of all vehicles sold in America in 2030.

General Motors must spend big money if it hopes to remain the nation's biggest automaker. However, claims General Motors can't afford to meet striking workers' demands have fallen flat with workers in the wake of record profitability. 

More Business of EVs:

The company's third-quarter sales exceeded $44 billion, up 5% from one year ago, and earnings per share totaled $2.28 per share, up slightly from last year. The company has pocketed about $10 billion in profits through the first nine months of this year.

UAW workers target a crucial source of  General Motors' profit

Given General Motors' record earnings and stalled contract negotiations, the union has turned its attention to General Motors' biggest cash cow. 

Workers walked off the assembly line at Arlington Assembly on Oct. 24, halting production of the highly profitable Chevy Tahoe, Chevy Suburban, GMC Yukon, and Cadillac Escalade, at General Motors' largest plant.

“Another record quarter, another record year. As we’ve said for months: record profits equal record contracts,” said UAW President Shawn Fain. “It’s time GM workers, and the whole working class, get their fair share.”

So far, General Motors has offered striking workers less than Ford Motors  (F) - Get Free Report,  

According to a UAW statement, Ford's deal includes a better path to top wages, more retirement money, and a more compelling cost-of-living plan to account for annual inflation than General Motors' offer.

Initially, union workers demanded a 40% pay increase, a return to pensions, a 32-hour workweek, cost-of-living increases, a faster pathway to top wages, and other perks.

They rejected a General Motors offer earlier this month that included a 20% pay increase, a reinstatement of COLA inflation adjustments for top-wage tier workers in year two, reducing how long it takes to reach its top wage tier to four years, an increase in temporary worker pay to $20 per hour, and a boost to 401(k) retirement contributions to 8% from 6.4%.

The decision to expand the strike to Arlington Assembly increased the number of workers participating in its stand-up strike against General Motors, Ford Motors, and Stellantis to 45,000 across eight plants and 38 parts distribution centers. 

Overall, the UAW boasts nearly 150,000 members.

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International

Public support for extending the 14-day rule on human embryo research indicated by foundational dialogue project

The findings of a foundational UK public dialogue on human embryo research are published today, Wednesday 25th October 2023, as part of the Wellcome-funded…

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The findings of a foundational UK public dialogue on human embryo research are published today, Wednesday 25th October 2023, as part of the Wellcome-funded Human Developmental Biology Initiative (HDBI). The HDBI is an ambitious scientific endeavour to advance our understanding of human development. The dialogue project, which was co-funded by UKRI Sciencewise programme, engaged a diverse group of the public to consider how early human embryo research can be used to its fullest, the 14-day rule and the fast-paced field of stem cell-based embryo models.

Credit: Dr Matteo Molè (Babraham Institute)

The findings of a foundational UK public dialogue on human embryo research are published today, Wednesday 25th October 2023, as part of the Wellcome-funded Human Developmental Biology Initiative (HDBI). The HDBI is an ambitious scientific endeavour to advance our understanding of human development. The dialogue project, which was co-funded by UKRI Sciencewise programme, engaged a diverse group of the public to consider how early human embryo research can be used to its fullest, the 14-day rule and the fast-paced field of stem cell-based embryo models.

Headline findings include:

  • Appetite for review of the 14-day rule: Participants recognised that extending the 14-day rule could open up ways to achieve benefits in fertility and health, with participant support for reviewing this, including national discussion.
  • Confidence in regulation: There was a high level of confidence in how human embryo research is regulated, despite a low level of awareness of the regulators and statutes themselves. This included strong desire to see robust regulation governing any changes to the 14-day rule and further regulation for the use of stem cell-based embryo models.
  • Support for improved fertility and health outcomes: The strongest hopes for future human embryo research were where new knowledge would deliver improvements in understanding miscarriage, preventing health conditions such as spina bifida and raising the success rates of IVF procedures.
  • Concerns about genetically engineering humans: The public expressed concerns on the application of developments in this field to genetically alter or engineer humans.

The dialogue engaged a group of 70 people broadly reflective of the UK population in over 15 hours of activities including a series of online and face-to-face workshops with scientists, ethicists, philosophers, policy makers and people with relevant lived experience (such as embryo donors from IVF procedures).

Dr Peter Rugg-Gunn, scientific lead for the HDBI and senior group leader at the Babraham Institute, said: “Recent scientific advances bring incredible new opportunities to study and understand the earliest stages of human development. To ensure this research remains aligned with society’s values and expectations, we must listen and respond to public desires and concerns. This public dialogue is an important first step and as a scientist I am reassured by the findings but there is still a long way to go to fully understand this complex issue.” 

The report is exceedingly timely, following notable scientific advances in human developmental biology presented at conferences and in leading scientific journals in recent months. As well as generating excitement in scientific fields and with the public, announcement of these breakthroughs also prompted some concerns and criticisms, with the view that these findings raised significant ethical issues. The dialogue provides insight into public considerations following deliberation on early human embryo research. The hope is that it will act as a foundational reference point that others in the sectors can build upon, such as in any future review of the law on embryo research.

Professor Robin Lovell-Badge, co-chair of the HDBI Oversight group, senior group leader and head of the Laboratory of Stem Cell Biology and Developmental Genetics at the Francis Crick Institute, said: “We have learnt a lot about human development before 14 days, but there are areas of investigation that could change how we understand development, and associated diseases, that lie beyond our current window of knowledge. Despite low awareness of current laws, members of the public quickly recognised many of the critical issues researchers are keenly aware of when it comes to growing embryos beyond the current limit. This dialogue also reinforced the fact that the public are in support of research that will yield better health outcomes, and in this case, increase the success of IVF procedures.

Other countries will be looking to the UK to see how we deal with the 14-day rule; we are not there yet with any mandate to make a change, but this does give a strong pointer. The next step will be to delve deeper into some of the topics raised through this dialogue as they apply to specific areas of research, as well as feeding into policy changes.”

The 14-day rule and the regulation of stem cell-based models

When considering the regulation of research involving human embryos, the dialogue explored participant’s views on the 14-day rule. Introduced in 1990, the 14-day rule is a limit enforced by statute in the UK. It applies to early human embryos that are donated by consent to research and embryos that are created for research from donated sperm and eggs. It limits the amount of time early human embryos can be developed in a laboratory for scientific study to 14 days after fertilisation. Due to technical advances, it is now possible to grow embryos in the lab past 14 days, but researchers are not allowed to by the law. If the law changed, it would open up this ‘black box’ of development with researchers able to investigate this crucial time in development from 14-28 days after fertilisation.

Professor Bobbie Farsides, co-chair of the HDBI Oversight group and Professor of Clinical and Biomedical Ethics at the Brighton and Sussex Medical School, said: “It has been a fascinating experience to support HDBI in the undertaking of this exercise.  I commend the participants for the care and mutual respect they have shown throughout. Their engagement and commitment to a subject few of them had previously considered allowed for a wide range of views to be expressed and considered. I hope the scientists involved will be encouraged by the high level of interest in their work, and will want to keep the public conversation going around these important subjects.”

The dialogue included participant discussion on what a change to the 14-day rule might look like, and identified points that should be considered, such as defining what the benefits of extending the rule would be and potential mis-alignment with human embryo research regulations in other countries.

Participants acknowledged the astonishing possibilities of stem cell-based embryo models. The majority of participants would like to see these models further regulated. Work in establishing potential governance mechanisms is already underway. In recognition of the need for additional guidance and regulation in this area, the Cambridge Reproduction initiative launched a project in March 2023 to develop a governance framework for research using stem cell-based embryo models and to promote responsible, transparent and accountable research.

Future steps

A key outcome from the public dialogue is the identification of areas for further exploration, with participants proposing how future national conversations might be shaped. It is hoped that the project acts as a reference base for both widening engagement with the subject and also prompting deeper exploration of areas of concern.

Dr Michael Norman, HDBI Public Dialogue coordinator and Public Engagement Manager at the Babraham Institute, said: “This dialogue shows that people want the public to work closely with scientists and the government to shape both future embryo research legislation and scientific research direction. It is crucial that others in the sector build on these high quality, two-way engagement methodologies that allow for a genuine exchange of views and information to ensure that the public’s desires and concerns are listened to and respected. Transparency and openness around science is vital for public trust and through this we, as a society, can shape UK research in way that enriches the outcomes for all.”

Public Participant (Broad public group, south) said: “I do think that an extension of this public dialogue, and educating a wider society has a benefit in itself. This is really complex and sensitive and the wider you talk about it before decisions are made, the better.”


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