Dacama iklan

Rabu, 18 September 2019

Americans with credit card debt won’t get much relief from Fed rate cut - Fox Business

Americans with credit card debt won’t get much help from the Federal Reserve's interest rate cuts.

The Fed is slated to cut its benchmark interest rate by a quarter-percentage point to a range of 1.75 percent to 2 percent following its two-day meeting on Wednesday – but it won’t be shaving much off credit card bills, experts say.

“Relief credit card holders get from the Fed won’t be huge. It’s not something that’s going to move the needle for most folks with just this one rate reduction,” Matt Schulz, chief industry analyst at Comparecards.com, told FOX Business. “In terms of reduction on your actual monthly bill, you’re only talking about a few dollars a month for most people.”

The average household credit card debt is $5,700, according to the Fed. The last rate cut dropped the minimum payment by just $1 per month. So minimum payments towards a $5,700 debt at 17.61 percent would keep someone in debt for 19 ½ years racking up $7,415 in interest.

MORE FROM FOX BUSINESS.COM...

Here's what you can do now to help manage credit card debt:

Consider a balance transfer card

Balance transfer cards allow users to take a high-interest debt from one or more credit cards and move it to another card with a lower interest rate. This means card holders can apply more payments to the principal balance every month, rather than racking up interest charges, which can help some reduce credit card debt faster.

“It can seem counterintuitive to take on credit card debt by getting another credit card, but if you use those zero percent balance transfer cards it can save a ton on interest. You’re talking about going a year and half without interest,” Schulz advised.

Fed rate cuts won't give Americans in credit card debt much relief, experts say.

Cards like Chase Slate, American Express Everyday or BankAmericard offer 15 months with no interest and no transfer fee.

Still, some experts fear that more interest rate cuts could lead credit card issuers to be less generous with zero percent interest periods, or implement higher transfer fees.

“Right now, 87 percent of balance transfer cards charge a transfer fee typically between 3 percent to 5 percent. Falling rates could also spur issuers to raise other fees such as foreign transaction fees and annual fees,” Ted Rossman, an industry analyst, said.

Lower your Annual Percentage Rate

The average credit card annual percentage rate is between 17 and 24 percent, and industry experts suggest asking your credit card company to reduce their APR.

“People have more power over the credit card issuer than they realize, but way too few people actually wield it. If you have good credit, a good track record and you’re willing to pick up the phone, there’s a good chance you can get your APR reduced to a greater degree,” Schulz said.

There's also the option to negotiate payment terms, and ask for a smaller minimum payment. Those who are longtime customers making payments on time will have a better standing when negotiating.

CLICK HERE TO READ MORE ON FOX BUSINESS

And consdering the average American has a credit score of 704, according to FICO, the highest in the history of credit scoring, most may be more likely to qualify for a lower interest rate.

Automate payments

Automating payments is a simple way to ensure you're making payments on time to avoide racking up late fee costs and maintaing a good credit score. Paying more than the minimum is recommended, since banks make money off interest charged each pay period.

Let's block ads! (Why?)

https://www.foxbusiness.com/financials/americans-with-credit-card-debt-wont-get-much-relief-from-fed-rate-cut

2019-09-18 06:51:58Z
52780383489542

Explainer: The Fed has a repo problem. What's that? - Reuters

(Reuters) - As if the U.S. Federal Reserve didn’t already have enough on its plate heading into its meeting on interest rates this week, chaos deep inside the plumbing of the U.S. financial system has thrown policymakers an unexpected curveball.

FILE PHOTO: Federal Reserve Board building on Constitution Avenue is pictured in Washington, U.S., March 19, 2019. REUTERS/Leah Millis/File Photo

Cash available to banks for their short-term funding needs all but dried up on Monday and Tuesday, and interest rates in U.S. money markets shot up to as high as 10% for some overnight loans, more than four times the Fed’s rate.

That forced the Fed to make an emergency injection of more than $50 billion, its first since the financial crisis more than a decade ago, to prevent borrowing costs from spiraling even higher. It will conduct another one on Wednesday.

The exact cause of the squeeze is a matter of some debate, but most market participants agree that two coincidental events on Monday were at least partly to blame. First, corporations had to withdraw funds from money market accounts to pay for quarterly tax bills, and then on the same day the banks and investors who bought the $78 billion of U.S. Treasury notes and bonds sold by Uncle Sam last week had to settle up.

On top of that, the reserves that banks park with the Fed and are often made available to other banks on an overnight basis are at their lowest since 2011 thanks to the central bank’s culling of its vast portfolio of bonds over the past few years.

Added together, these factors are testing the limits of the $2.2 trillion repurchase agreement - or repo - market, a gray but essential component of the U.S. financial system.

Whatever the cause, the episode has added fuel to the argument that the Fed needs to take steps to avoid more disruptions in the repo market down the road.

(GRAPHIC - U.S. repo rate, here)

WHY IS THE REPO MARKET IMPORTANT?

The repo market underpins much of the U.S. financial system, helping to ensure banks have the liquidity to meet their daily operational needs and maintain sufficient reserves.

In a repo trade, Wall Street firms and banks offer U.S. Treasuries and other high-quality securities as collateral to raise cash, often overnight, to finance their trading and lending activities. The next day, borrowers repay their loans plus what is typically a nominal rate of interest and get their bonds back. In other words, they repurchase, or repo, the bonds.

The system typically hums along with the interest rate charged on repo deals hovering close to the Fed’s benchmark overnight rate, currently set in a range of 2.00% to 2.25%. That rate is expected to be cut by a quarter percentage point on Wednesday.

But sometimes, investors get fearful of lending, as seen during the global credit crisis, or at other times there are just not enough reserves or cash in the system to lend out, as appeared to be the case this week. And that can cause a squeeze on the market and send borrowing costs zooming higher.

But when investors get fearful of lending, as seen during the global credit crisis, or when there are just not enough reserves or cash in the system to lend out, it sends the repo rate soaring above the Fed Funds rate.

Trading in stocks and bonds can become difficult. It can also pinch lending to businesses and consumers and, if the disruption is prolonged, it can become a drag on a U.S. economy that relies heavily on the flow of credit.

WHAT HAS CAUSED THE DROP IN BANK RESERVES?

Coming out of the financial crisis, after the Fed cut interest rates to near zero and bought more than $3.5 trillion of bonds, banks built up massive reserves held at the Fed.

But that level of bank reserves, which peaked at nearly $2.8 trillion, began falling when the Fed started raising interest rates in late 2015. They fell even faster when the Fed started to cut the size of its bond portfolio about two years later.

The Fed stopped raising interest rates last year and cut them in July and is expected to do so again on Wednesday. It has also now ceased allowing to bonds to roll off its balance sheet.

The question vexing policymakers now is whether those actions are enough to stop the downward drift in reserves, which are a main source of liquidity in funding markets like repo.

Bank reserves at the Fed last stood at $1.47 trillion, the lowest level since 2011 and nearly 50% below their peak from five years ago.

(GRAPHIC - Bank excess reserves held at the Fed,

here)

1. RUN SPOT REPO OPERATIONS

Through the Federal Reserve Bank of New York, the Fed can conduct occasional spot repo operations at times of funding stress, allowing banks and dealers to swap their Treasuries and other high-quality securities for cash at a minimal interest rate. It did this on Tuesday and will do it again on Wednesday.

2. LOWER THE INTEREST IT PAYS ON EXCESS RESERVES

By making it less profitable for banks, especially foreign ones, to leave their reserves at the Fed, it may encourage banks to lend to each other in money markets.

3. CREATE A STANDING REPO FACILITY

Such a permanent financing program will allow eligible participants to exchange their bonds for cash at a set interest rate.

Fed and its staff have considered such a facility, but they have not determined who qualifies, what would be the level of interest paid and the timing for a possible launch.

4. RAMP UP BUYING OF TREASURIES

The Fed can replenish the level of bank reserves by slightly increasing its holdings of U.S. government debt. This comes with the risk that it may be perceived as a resurrection of quantitative easing rather than a technical adjustment.

Reporting by Richard Leong; Editing by Dan Burns and Richard Borsuk

Our Standards:The Thomson Reuters Trust Principles.

Let's block ads! (Why?)

https://www.reuters.com/article/us-usa-fed-repo-tools-explainer/explainer-the-fed-has-a-repo-problem-whats-that-idUSKBN1W30EJ

2019-09-18 05:07:00Z
CBMifWh0dHBzOi8vd3d3LnJldXRlcnMuY29tL2FydGljbGUvdXMtdXNhLWZlZC1yZXBvLXRvb2xzLWV4cGxhaW5lci9leHBsYWluZXItdGhlLWZlZC1oYXMtYS1yZXBvLXByb2JsZW0td2hhdHMtdGhhdC1pZFVTS0JOMVczMEVK0gE0aHR0cHM6Ly9tb2JpbGUucmV1dGVycy5jb20vYXJ0aWNsZS9hbXAvaWRVU0tCTjFXMzBFSg

Selasa, 17 September 2019

Bud Brewer Takes Another Shot at Asian IPO After First Attempt Went Flat - The Wall Street Journal

Anheuser-Busch InBev NV is the world’s largest brewer. It is looking to list its Asian... — Anheuser-Busch InBev NV is the world’s largest brewer. It is looking to list its Asian business on the Hong Kong stock exchange. Photo: Kyle Lam/Bloomberg News

Joanne Chiu and

Joanne Chiu

The Wall Street Journal

Biography
@joannechiuhk
joanne.chiu@wsj.com

P.R. Venkat

Updated Sept. 17, 2019 7:37 am ET

The world’s largest brewer is taking a second shot at listing its Asian business, seeking to raise up to US$7.6 billion in Hong Kong, even as the city reels from a summer of protests and from trade tensions between the U.S. and China.

The regional unit of brewing behemoth Anheuser-Busch InBev SA BUD -0.68% said on Tuesday it would begin taking orders the following day for its Hong Kong initial public offering, ahead of a planned listing on Sept. 30.

The unit, Budweiser Brewing Co. APAC, plans to raise a baseline 34 billion to 37.9 billion Hong Kong dollars (US$4.35 billion to US$4.84 billion) by selling new shares, at a market value of US$45.6 billion to US$50.7 billion. If demand is strong, AB InBev could boost the deal’s size to as much as US$7.6 billion.

Smaller, but Faster-Growing

How Anheuser-Busch InBev's new and old Asian businesses stack up, after the sale of its Australian operations.

Financial performance, 2018

September deal

July deal

growth†

$6.7 billion

11%

Revenue

8.5

21%

Ebitda*

2.8

13%

68%

Net profit

1.4

31%

*Normalized Ebitda, excluding exceptional items †Year-over-year

Source: the company

In July, AB InBev shelved an earlier attempt to list the business, after seeking to raise nearly US$10 billion, at a valuation of up to US$63.7 billion. It said market conditions were partly to blame, but some prospective investors and analysts pointed to its high valuation aspirations.

It is now marketing a smaller, faster-growing business that is more focused on China and other emerging markets, after selling its Australian unit—which had been part of the original listing plan—to Japan’s Asahi Group Holdings Ltd. for US$11.3 billion.

“We are even more of a growth company than two months ago, when we were first here,” Budweiser APAC Chief Executive Jan Craps told a news conference. “We believe now is the right moment to do the IPO.”

The revised stock sale would be the world’s second-largest IPO this year, after ride-hailing giant Uber Technologies UBER 3.55% ’ US$8.1 billion market debut in New York, according to Dealogic.

Unlike the last attempt, this time Budweiser APAC has secured a US$1 billion pledge from Singaporean sovereign-wealth fund GIC Pte. Ltd. to act as a cornerstone investor. Many Hong Kong listings use cornerstones, who invest wherever the deal prices, to help entice other prospective buyers.

East Meets West

Budweiser APAC has sharpened its focus on China and other high-growth markets in what it calls 'Asia Pacific West,' after selling out of Australia.

Shares by geographical breakdown, 2018

West

East

SeptEMBER deal

July deal

Volume

85%

Revenue

Ebitda*

Note: East is primarily South Korea, Japan, New Zealand and previously Australia. West includes China, India and Vietnam. *Normalized Ebitda, excluding exceptional items

Source: the company

Vincent Wen, an investment manager at KCG Securities Asia, said the addition of a prominent cornerstone could help ensure this sale went more smoothly.

Social unrest, the U.S.-China trade dispute and slowing Chinese growth are threatening to tip Hong Kong’s economy into recession. Sometimes-violent protests have disrupted flights and road transport, denting the city’s image as a safe location and an international financial hub. The benchmark Hang Seng stock index fell in late July and August, but has since rebounded somewhat, leaving it basically flat for the three months to Monday’s close.

“We can’t deny it’s a volatile and challenging environment today, but we believe Hong Kong is still the best financial center in Asia for us to do the listing,” Mr. Craps said.

Many issuers are testing investors’ appetite in both the equity and bond markets in Hong Kong, such as China’s Shanghai Henlius Biotech Inc.

The Budweiser APAC deal’s price range equates to 33.8 to 37.5 times the earnings management estimates the business could make next year, according to a summary of terms seen by The Wall Street Journal.

That is broadly in line with Hong-Kong listed Chinese brewers China Resources Beer Holdings Co. and Tsingtao Brewery Co. They trade at nearly 40 and roughly 30 times forecast 2020 earnings, respectively, Refinitiv data shows, after sharp gains this year.

AB InBev brews one in four of the world’s beers, and owns hundreds of brands including Budweiser, Stella Artois and Corona. But the deal-making saddled the brewer with debts, which it now aims to shrink to about US$80 billion.

JP Morgan , Morgan Stanley , Bank of America Merrill Lynch and CICC are joint global coordinators.

—Julie Steinberg and Jing Yang contributed to this article.

Write to Joanne Chiu at joanne.chiu@wsj.com and P.R. Venkat at venkat.pr@wsj.com

Let's block ads! (Why?)

https://www.wsj.com/articles/budweiser-brewer-to-relaunch-slimmer-4-84-billion-asian-ipo-11568704914

2019-09-17 11:37:00Z
CAIiECeUNKpgnZSY4-TGR63gxUQqGAgEKg8IACoHCAow1tzJATDnyxUwiqe0AQ

Blackstone's Steve Schwarzman sees a 'wake-up call' for investors - Yahoo Finance

Private equity chief Stephen A. Schwarzman, the founder of $545 billion Blackstone Group (BX), seems more conservative these days as it gets later in the market cycle.

In an interview with Yahoo Finance, he acknowledged that the consumer, which makes up about 70% of the U.S. economy, continues to be strong. But he warned of weakness in manufacturing even as stock and bond prices sit near record highs.

"Usually when everything's doing records all the time, and there's a lot of geopolitical uncertainty, it's usually like a wake-up call," he said. "It's not red, but it's yellow. And it makes you be more conservative when you're investing. It makes you think more about downsides. It makes you want to buy higher-quality things because your chance of accidentally being lucky, which happens at the bottom of the cycle, is much lower."

He added that this is a time where the U.S. will likely still be growing somewhere around 2% or maybe a "tiny bit less."

Three simple rules

In his new memoir "What It Takes," Schwarzman outlined his three "simple rules" for identifying market tops and bottoms.

First, market tops are "easy to recognize" because overconfident buyers are of the mindset that "this time is different" when it's usually not. Second, cheap debt is fueling acquisitions and investments, and leverage levels accelerate. Third is "the number of people you know who start getting rich" and the number of investors "claiming outperformance."

"Loose credit conditions and a rising tide can make it easy for individuals without any particular strategy or process to make money 'accidentally,'" he wrote. "But making money in strong markets can be short-lived. Smart investors perform well through a combination of self-discipline and sound risk assessment, even when market conditions reverse."

The Blackstone Group Chairman & CEO Stephen A. Schwarzman. (AP Photo/Richard Drew)

In his four decades on Wall Street, Schwarzman has lived through seven market downturns: 1973, 1975, 1982, 1987, 1990-1992, 2001, and 2008-2010.

He explained that spotting a market bottom can be difficult and trying to time it is usually a bad idea.

"Most public and private investors buy too early and underestimate the severity of recessions,” he wrote. “It's important not to act too quickly.”

His best advice is to invest when markets have recovered at least 10% from their lows.

"Asset values tend to increase as economies gain momentum. It's better to give up the first 10% to 15% of a market recovery to ensure that you are buying at the right time."

Mark your calendar.

Julia La Roche is a finance reporter at Yahoo Finance. Follow her on Twitter.

Let's block ads! (Why?)

https://finance.yahoo.com/news/steve-schwarzman-on-market-cycle-100245066.html

2019-09-17 10:02:00Z
52780386093841

The Fed needs to answer one big question - Fox Business

The Federal Reserve is widely expected to cut interest rates at the conclusion of its two-day meeting on Wednesday.

A rate cut would be the Fed’s second in the same number of meetings as it looks to keep the longest economic expansion on record going into a 12th year.

“The Fed will likely cut 25bp at this week’s meeting and guide toward further rate reductions,” New York-based Bank of America Merrill Lynch economists wrote Monday. “The meeting should have a dovish tone. However, in our view, the big question is whether Chair Powell continues to characterize the easing cycle as a 'mid-cycle adjustment."

Recent economic data has softened a bit as the U.S.-China trade war has stretched into its second year. The U.S. economy grew at an annualized 2 percent rate in the second quarter, down from the previous quarter’s 3.1 percent print. U.S. manufacturing and employment data have also shown signs of slowing.

President Trump is well aware of how important a strong economy is to his reelection chances. He has repeatedly attacked the central bank, calling for it to cut rates to boost the economy.

“The United States, because of the Federal Reserve, is paying a MUCH higher Interest Rate than other competing countries,” Trump tweeted Monday.

“They can’t believe how lucky they are that Jay Powell & the Fed don’t have a clue. And now, on top of it all, the Oil hit. Big Interest Rate Drop, Stimulus!”

Trump isn’t the only one calling for a big rate cut.

St. Louis Fed President James Bullard, who is a voting member, said earlier this month an outsized 50 basis point cut is needed to get ahead of market expectations and cushion the economy from the U.S.-China trade war.

Still, traders at the CME Group are pricing in a 65.8 percent chance the Fed cuts rates by 25 basis points on Wednesday, down from more than 90 percent just last week. They see a zero percent chance of a 50bp cut.

The Fed in July cut interest rates for the first time in over a decade, citing low inflation and uncertainties in the global economy. Minutes from the July meeting showed Fed officials saw the rate cut as a “mid-cycle adjustment” and wanted to avoid the appearance that they were following a “preset course.”

Senin, 16 September 2019

Trump slams Powell and Fed ahead of meeting, calls for 'big' rate cut - Fox Business

President Trump renewed his criticism of the Federal Reserve ahead of the central bank’s Federal Open Market Committee meetings Tuesday and Wednesday.

Fed Chairman Jerome Powell and his colleagues “don’t have a clue,” Trump tweeted Monday morning. He said he wants to see a “big” drop in interest rates.

“Producer prices in China shrank most in 3 years due to China’s big devaluation of their currency, coupled with monetary stimulus. Federal Reserve not watching?” Trump wrote on Twitter. “Will Fed ever get into the game? Dollar strongest EVER! Really bad for exports. No Inflation...Highest Interest Rates.”

The Fed is expected to announce a rate cut Tuesday at 2 p.m. EST after the meetings.

FILE - This Feb. 5, 2018, file photo shows the seal of the Board of Governors of the United States Federal Reserve System in the ground at the Marriner S. Eccles Federal Reserve Board Building in Washington. (AP Photo/Andrew Harnik, File)

“The United States, because of the Federal Reserve, is paying a MUCH higher Interest Rate than other competing countries,” he continued. “They can’t believe how lucky they are that Jay Powell & the Fed don’t have a clue. And now, on top of it all, the Oil hit. Big Interest Rate Drop, Stimulus!”

Last week, Trump called for zero or negative interest rates, which the European Central Bank announced in a new round of stimulus.

MORE FROM FOXBUSINESS.COM...

The U.S. central bank lowered the benchmark federal funds rate in July for the first time in nearly a decade, citing “global developments in the economic outlook as well as muted inflation pressures." At the time, Fed officials did not say whether they anticipated additional cuts, but warned it was not the beginning of an aggressive rate-cutting series.

Since then, however, global economic conditions have significantly weakened: Manufacturing contracted in the U.S. for the first time in three years; the spread between two-year and 10-year Treasury yields inverted, a common harbinger of an impending recession; and employment data in the U.S. suggested the labor market is softening, all amid heightened trade tensions between the U.S. and China.

CLICK HERE TO READ MORE ON FOX BUSINESS

FOX Business' Megan Henney contributed to this report.

Let's block ads! (Why?)

https://www.foxbusiness.com/economy/trump-powell-federal-reserve-meeting-rate-cut

2019-09-16 12:07:49Z
52780383489542

Trump encourages China to take advantage of Jay Powell and Fed: They 'don't have a clue' - Raw Story

President Donald Trump launched a new attack against his own Federal Reserve chairman in a pair of Monday morning tweets.

The president has been publicly pressuring Fed chairman Jerome Powell to lower interest rates in hopes of staving off a recession, but the Trump appointee has so far resisted his calls.

“Producer prices in China shrank most in 3 years due to China’s big devaluation of their currency, coupled with monetary stimulus,” Trump tweeted. “Federal Reserve not watching? Will Fed ever get into the game? Dollar strongest EVER! Really bad for exports. No Inflation…Highest Interest Rates…”

Trump has publicly questioned Powell’s judgment on numerous occasions and even suggested he was an “enemy” of the United States, and he hurled another disparaging remark at the Fed chairman.

“The United States, because of the Federal Reserve, is paying a MUCH higher Interest Rate than other competing countries,” he tweeted. “They can’t believe how lucky they are that Jay Powell & the Fed don’t have a clue. And now, on top of it all, the Oil hit. Big Interest Rate Drop, Stimulus!”

…The United States, because of the Federal Reserve, is paying a MUCH higher Interest Rate than other competing countries. They can’t believe how lucky they are that Jay Powell & the Fed don’t have a clue. And now, on top of it all, the Oil hit. Big Interest Rate Drop, Stimulus!

— Donald J. Trump (@realDonaldTrump) September 16, 2019

Enjoy this piece?

… then let us make a small request. Like you, we here at Raw Story believe in the power of progressive journalism — and we’re investing in investigative reporting as other publications give it the ax. Raw Story readers power David Cay Johnston’s DCReport, which we've expanded to keep watch in Washington. We’ve exposed billionaire tax evasion and uncovered White House efforts to poison our water. We’ve revealed financial scams that prey on veterans, and legal efforts to harm workers exploited by abusive bosses. We’ve launched a weekly podcast, “We’ve Got Issues,” focused on issues, not tweets. And unlike other news outlets, we’ve decided to make our original content free. But we need your support to do what we do.

Raw Story is independent. You won’t find mainstream media bias here. We’re not part of a conglomerate, or a project of venture capital bros. From unflinching coverage of racism, to revealing efforts to erode our rights, Raw Story will continue to expose hypocrisy and harm. Unhinged from billionaires and corporate overlords, we fight to ensure no one is forgotten.

We need your support to keep producing quality journalism and deepen our investigative reporting. Every reader contribution, whatever the amount, makes a tremendous difference. Invest with us in the future. Make a one-time contribution to Raw Story Investigates, or click here to become a subscriber. Thank you. Click to donate by check.

Enjoy this piece?

… then let us make a small request. Like you, we here at Raw Story believe in the power of progressive journalism — and we’re investing in investigative reporting as other publications give it the ax. Raw Story readers power David Cay Johnston’s DCReport, which we've expanded to keep watch in Washington. We’ve exposed billionaire tax evasion and uncovered White House efforts to poison our water. We’ve revealed financial scams that prey on veterans, and efforts to harm workers exploited by abusive bosses. We’ve launched a weekly podcast, “We’ve Got Issues,” focused on issues, not tweets. Unlike other news sites, we’ve decided to make our original content free. But we need your support to do what we do.

Raw Story is independent. You won’t find mainstream media bias here. We’re not part of a conglomerate, or a project of venture capital bros. From unflinching coverage of racism, to revealing efforts to erode our rights, Raw Story will continue to expose hypocrisy and harm. Unhinged from corporate overlords, we fight to ensure no one is forgotten.

Report typos and corrections to: [email protected].

Let's block ads! (Why?)

https://www.rawstory.com/2019/09/trump-launches-new-attack-on-his-own-fed-chairman-jay-powell-the-fed-dont-have-a-clue/

2019-09-16 12:01:56Z
52780383489542