Mar 17, 2017|
Adam Shaprio (Fox Business, Rates Rising) by The Financial Exchange
Transcript - Not for consumer use. Robot overlords only. Will not be accurate.
Larry it's just the rough is John Moody along with Michael Armstrong and Tucker still with a financial exchange joining us now. Adam Shapiro Fox Business Adam thanks for joining us. They gave you. And interest rates are rising we know that at least until last couple of days a week in the early innings of a longer term trend here. Bullet that the Federal Signal they want to raise interest rates minimum of three times this year so that person may be two more coming but then get statements from guys like you know ask Ari. Do these via Federal Reserve Bank has an up in Minneapolis. Saying. It was incorrectly voted no against the current a quarter point interest rate increased. He doesn't think the you know the plan is ready and economies ready for the Fed to be raising interest rates. Which raises the question about how many more to come I think the consensus here is three this year maybe three or four next year's out of the ballpark here. Yeah I don't put too much credence into looking that far ahead Korea next year even this year it's heart defect. Here's what's working against raising interest rates inflation is not the 2% that said look like. And allow that job the numbers are picking up. There saying that weren't awed at what they would take his full employment or quote all out there. It's that the Fed has a mandate full employment and maintaining excellent patient. I had a majority of those who vote on the influence yet the committee that sets interest rates David thank that news by the in the interest rate increase in most likely will do this next one. But if for any reason we get hiccup in what seems to be a really momentous. And encouraging pickup in the economy. You could do that well that interest rate increases. But out of the one flaw with the theory is that we're starting with a baseline. That is artificial we're starting with a baseline that is historically low. And way below where arguably should be mean the Fed Funds rate typically says about a point above the inflation rates week and if we don't have an inflation issues. Even for one and a half percent inflation. You know the normalized rate should be much much higher than it is right now if we just plod along with a even 1% plus growth. Would that even via an impediment to getting close to where we should be. No no I if I understand your question that the problem has not only that we have this weird based. The problem is that we've got four point five trillion on the Fed's balance sheet you know once they start on winding. You know what's gonna happen. How do they don't want it looked like five trillion. Is this is all bills in uncharted territory going backed away and we started the great easing. 20082009. Adobe really knows what the outcome will be what is. In what we're looking for what. It is some optimism that there is enthusiasm for the US economy you see it reflected and all kinds. You reflected in consumer confidence UT reflected in the stock market. Where and you also as you reflect the people we're willing to quit job to then go get jobs or try to get jobs. Whether this continues as we go through the argument or healthcare reform the tax reform. That's an pickups could occur. Yeah we should be what impact does this have on long term rates this week the Fed raised interest rates. Yet long term rates came down quite a bit. What do you see happening here and that's the long market already discounted the seven or eight increases in short term rates. No I don't think it is and it yet it is very hard you know I I am very conservative. We've been my money. I don't try to play the game of guessing what's gonna happen that interest rates or even with equity I keep it very simple. And I think it's dangerous times I. To trying and indeed the market so and even pretend to play on. I'm very conservative way to index fund and I do index equity. So where were all hated you know. If that continues stay of the but it raise interest rates. So there are problems for other countries as the dollar strengthened. And that could have ramifications for the US economy. But you know short term. You know variations of what's happening with on the day tomorrow I don't think really is gonna tell you where we're headed in X. Yeah if people are looking ahead and thinking about you know buying a car or refinancing their mortgage they're looking at where rates might go. I know you don't know the answer none of us do what. Well it'll go up. Hey you know analysts there is today. Nature. Slowed Korea could be cut it means we have the secretary of state by eight pre strike a Korea. So that would definitely. You know I don't hold on everything. But if you're looking at refinancing a mortgage if you're looking at taking a mortgage now is that the time that. Because. With everything we know that on the table that's what you make this right no trying to predict the future at the end zone today. There saying they want to raise interest rates. They have the economic. Information they have today. Was good enough to raise interest rates earlier this week and if it doesn't change it would be good now to raise interest re the rates on their own logic. Is the next meeting in. Oh. You know is long as you know that's on the table you can bet that interest rates went up but but it practically by the way you know quarter point is huge and the thirty. The thirty year fixed rate interest rates on mortgage it is stolen about 4%. Clean air people. Twelve years ago who would be who beat thrilled. Mean normal interest that they're the year extreme mortgage quote the around 6% I yup so they're still cheaper interest rates currently 3% board that percent now. And you and your friend to brag about it interest rates thank god I mean really. Will he do. Whether south pigs get slaughter gripe I mean if it's good you do it. They paid the public if you got to buy a house. If you wanna buy out now is at a time is that it is good that was when interest rates were at three and a quarter percent not necessarily but the fact that interest rates are going up. It means that prices on housing may actually these are come down to it because people wanna move inventory is on now. That's what's your outlook for the market. I get very nervous you really need that would make them conservative but I don't think I'm the guy who has a rain cloud over is that because it'll pertinent. I don't trust this market while I think it's artificially inflated it makes me nervous that said. I'm like everyone else about oral one K and I on my oral like it which happens to be one and that's. One of the options and index by on it and that's where all my 401K money goes and I have been Choi is run up I mean this week. I think the S&P 500 this week it's it's up almost half a percent. You do but for the year it up over 6% right so I've enjoyed that runner up will I enjoy when it correct absolutely not the type it out for the next twenty years you bet. That of the law all it's going to do much better than my trying to pick winners. Great sound advice Adam Shapiro from Fox Business thank you very much an assay and sage advice indeed thank you grimaced have a wonderful thing pat instinctive to.