Sunday, March 8, 2015

Government May Chang Strategies!

CERR Investments - So last Friday 6 March 2015 the Feds said that the stronger-than-expected jobs report may bring on an increase in the US interest rates. The DOW dropped 278 points on the news. Interest rate increases may not happen until June or September an already the markets are nervous. This is what happens when businesses think the spread - how much the banks are willing to lend us compared to how much we  lend them (via bank accounts, CDs, bonds, etc) decreases.  The consumer is always the guy that will have to carry the load because big business will want to keep the spread going. You raise interest rates business raise prices or the cost of business goes up. There is nothing wrong with that. That is capitalism. One thing that may change rates next week is Europe playing the game of Quantitative Easing and starts increasing the spread like US did.