October 18, 2016

How Much Will Hurricane Matthew Cost?

Counting the Cost of Hurricanes Whenever disaster strikes, people often wonder: What’s all this going to cost? Though the human toll of injury and death may be incalculable, experts have gotten pretty good at estimating the economic costs of lost production and physical damage due to major storms. According to one economist, about two-thirds of the financial losses of a hurricane are related to property damage while one-third come from economic losses. The insurance costs of property damage due to Matthew’s wind and storm surge are currently estimated to be between $4 billion and $6 billion, though those figures may rise as claims start rolling in. The chart below shows storm damage estimates for four major hurricanes since 1979. We can see that Hurricane Sandy and Hurricane Katrina dwarf Matthew regarding overall damage. However, Matthew is estimated to have a higher percentage of losses due to wind damage, which could have implications for insurance companies. Damage from storm-caused wind and surge is typically covered under standard homeowner’s and business policies, though they are often subject to high deductibles. One estimate of Matthew’s overall cost, including evacuations, lost revenue, and other relevant factors, puts the total cost at over $10 billion. […]
August 30, 2016

LIBOR Surge May Rule Out September Fed Rate Hike

WEEKLY UPDATE – August 29, 2016 We are going to discuss LIBOR Surge May Rule Out September Fed Rate Hike in this article. After rallying for weeks, the major indexes fell last week ahead of key remarks by Federal Reserve officials and turbulence in money markets.[1]  For the week, the S&P 500 lost 0.68%, the Dow fell 0.85%, the NASDAQ dropped 0.37%, while the MSCI EAFE gained 0.16%.[2] Even as the Fed has kept interest rates flat, an unexpected surge in short-term interest rates triggered by an industry rule change is potentially doing some of the Fed’s work for it. If you ever tune in to the financial news, you may have heard the term LIBOR (pronounced LIE-bor) mentioned in reference to money markets (what we call the trade of short-term loans between banks and other financial institutions). LIBOR Surge May Rule Out September Fed Rate Hike LIBOR, the London Interbank Offered Rate, is a benchmark used for a vast range of debt, including mortgages and corporate loans. Recently, the three-month LIBOR (the rate charged for lending dollars for three months) has reached multi-year highs (rising more than 30% since this June), tightening credit conditions without any action by the […]
August 23, 2016

NASDAQ Posts Eighth Week of Gains

NASDAQ Posts Eighth Week of Gains WEEKLY UPDATE – August 22, 2016 The S&P 500 and Dow ended last week slightly lower, but the NASDAQ posted an eighth straight week of gains for the first time since 2010.[1] For the week, the S&P 500 lost 0.01%, the Dow fell 0.13%, the NASDAQ gained 0.10%,and the MSCI EAFE lost 0.64%.[2] What is the Fed thinking? Minutes from the July Federal Reserve Open Market Committee meeting showed that officials are split about the economic outlook and when to raise interest rates. Hawkish rhetoric from Fed members who favor a rate hike soon could push the central bank into raising rates as early as September. More dovish officials aren’t convinced that tepid inflation will rise to the Fed’s 2.0% objective and favor a wait-and-see approach to raising interest rates.[3] After several months of strong labor market gains, some economists think the economy is close to full employment and central bankers should move soon to put on the brakes by raising interest rates. If the economy gets overheated, prices could rise too much and push the economy into a boom/bust cycle that federal officials are anxious to avoid. While a few years of outsized growth […]
May 13, 2016
My Emotions and Investing

Negative Interest Rates: What They Mean for You

“Negative Interest Rates: What They Mean for You”, Most Americans can agree the economy has taken an upward turn since the economic disaster that befell the country a few years back causing the housing market to go belly up. However, we all know the roller coaster our economy is and with growth likely to slow at some point in the future, however near or far, what can we expect to see to help cushion the downturn this time? Lately there’s been some chatter about the Federal Reserve digging into the financial toolbox and using what is known as negative interest rates. What exactly is that and what will it mean for your portfolio? Let’s take a look. First of all, you have to understand that the Fed acts a central bank, meaning they are a national bank that holds accounts for commercial banks. In that last few years, globally, several countries have turned to negative interest rates to turn things around. Recently, Tennessee Senator Bob Corker posed the question to Janet Yellen, chair of the Fed, if there were any plans to implement these types of rates in the U.S., meaning would they be charging a rate instead of giving […]