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New Rate Boost by Bumbling Fed Still Asleep at the Wheel

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Money-Truck-1024x789Are you shocked? You shouldn’t be. The Fed’s mini-quarter of a point increase in interest rates yesterday was long-overdue—we’ve been saying so for years (read here, here, here,and here)—and the three more increases expected for next year fall well short of our 4% target. Why? Because the 90-day Treasury needs to get to 4% and it needs to get there pronto, plain and simple.

The North Star, as Dick Young refers to the T-Bill, which has been lost in the night sky for years now, is beginning to flicker (see the big jump in rates on the chart below).

It’s been a long-cold winter. Retirees and savers have been paid squat, a savings tax no-doubt, from a misguided zero-point-zero percent interest rate experiment. Those living on Main Street have been the ones footing the bill, not NYC Wall Street banks.

As far as Yellen and Co. are concerned, they can thank President-elect Donald Trump for the early Christmas gift—the Trump rally. And this is just the beginning. A Trump White House will provide the much needed confidence a politicized Fed needs to make its stair-step-to-heaven quarter point increases (should be much faster) to get the North Star shining bright, for all the world to see, again.

t-bill-yield

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com