lawman
Thinks s/he gets paid by the post
So do you believe your cash sitting in a brokerage or bank account is safer than a FDIC insured CD while you're earning maybe 0.45%?
No. I plan to buy short term C.D.'s just like you.
So do you believe your cash sitting in a brokerage or bank account is safer than a FDIC insured CD while you're earning maybe 0.45%?
No. I plan to buy short term C.D.'s just like you.
On another note, I meet with friends almost daily at a neighborhood Burger King in the morning. BK always has poster size paper (4' x 6') product advertising on the large windows of the store. The new posters have no prices for the advertised food items like the old ones did.
Soon they will be changing from posting actual prices at the drive-up ordering station to "market price!"
People are not looking at inflation from a savers point of view who does not invest in the stock market casino. One year ago you could earn about $250 a year for every $100K invested in CDs. This past week you could lock income of $5000 per year for the next 4-5 years for every $100K invested. So wouldn't that $4750 difference for every $100K invested compensate for the effects of inflation?
The answer to that totally depends on what the "effects of inflation" are during the time period specified.
We’re wandering off topic here. So here’s a nudge back. I will mention that the higher CD rates MAY give us a positive real return on our savings for the first time in years. Good news if it works out that way. Of course, that’s before taxes, if any. After taxes YMMV.
Consider also that many have no mortgages or have locked in their mortgage at ultra low rates for the next 15-30 years. So that component of the housing costs are fixed.
People are moving their cash balances to higher yielding products. This is forcing Schwab to borrow money at higher rates to cover cash demands in excess of the securities invested with that cash at longer durations.
https://www.ft.com/content/9623dde7-281b-4df7-9227-76c6d95a8685
Can't read the article but that seems like no small problem to me..
Fed was never selling securities. Just letting them run off. Powell said in February that selling securities was not in view.QT is done. I can't find the source, but I read yesterday that the new [-]bail out[/-] backstop facilities will result in over half of the QT done being restored to the Fed's balance sheet.
It is the money supply expansion that will eventually end up as higher prices. The question isn't if, it is when.
Early last year I predicted here on ER.org that something would cause the Fed to stop raising rates before their inflation target was reached. I was off on the timing, as I thought it would occur prior to the election, but here we are. They may do the 25 basis point raise to save face, but the more important aspect - cleaning up their books via QT is (in my estimation) done.
Here is my (worth what it is being paid for prediction): We will see rates fall as QE gets reimplemented (under a new name to protect the guilty), inflation may fall further in the short run (credit crisis will impact economic activity), but in the longer run inflation will resurge.
At this point my 5-6% position in precious metals is all of a sudden looking way too small.
And here's what Schwab says about all of this... That and $5 should get you a small coffee at Starbucks. (Maybe)I think it's too much hysteria with Schwab and the stock market casino.
"Schwab hasn’t been hit by people afraid that Schwab is going to go out of business, but they’ve been hit by [customers] going to higher rates...”
Cash sorting appears to be the issue. People are moving their cash balances to higher yielding products. This is forcing Schwab to borrow money at higher rates to cover cash demands in excess of the securities invested with that cash at longer durations. This will impact earnings.
https://www.ft.com/content/9623dde7-281b-4df7-9227-76c6d95a8685
^^^^^
Click on the link in the post. Then when it comes up, cut and past the URL in another window and you should be able to read the article. Works for me.
No. I plan to buy short term C.D.'s just like you.
Nearly 200 more banks may be vulnerable to the same type of risk that took down Silicon Valley Bank: The value of the assets they hold.
There are 186 banks across the country that could fail if half of their depositors quickly withdraw their funds, a new study published on the Social Science Research Network found.
Even insured depositors — those with $250,000 or less in the bank — could have problems getting their cash if these institutions face the sort of run that Silicon Valley saw a week ago. ...
Source: https://nypost.com/2023/03/18/nearly-200-banks-could-fail-the-same-way-svb-did-study/
Another batch was dumped. I have been buying a lot of CDs again today but this time for my parents joint account that I have power of attorney.