News

FCC Fake Fines T-Moble $48 Million

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tmobile fine

When is $48 million not $48 million? When it is a FCC fine. T-Mobile was fined $48 million today by the FCC for misleading customers about its unlimited data plans. As it turns out, T-Mobile’s unlimited data plan was actually a 17 GB per month plan. After that the company “de-prioritized” the customer’s traffic making it so slow as to be pretty much unusable. Most unlimited plans work this way, of course, because unlimited isn’t really feasible. The reality is that there is only so much data a “normal” user would use in the course of a month, and racking up 17 GB would require some pretty heavy effort. This is a problem of the cell phone carriers own making. They market against each other in such a way that customers now believe that they must have unlimited data even though many of them don’t use anywhere near that much. So now, carriers work overtime to shout UNLIMITED whenever possible, and then hide actual limits in the fine print. In this case, T-Mobile even tried to not be honest in the fine print, and that’s when the FCC struck with its huge fine, except… It’s Not Really $48 Million The …

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Interest Rate Hike in September?

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interest rates federal reserve

Here we go again. Last year, the Federal Reserve, desperate to get away from zero interest rates, raised its target benchmark interest rate from 0% to 0.25%. They proudly crowed about fighting inflation and predicted several rate hikes in 2016. Then, January happened. If you don’t remember, China’s economy had a freak out before the country’s masters could get it under control. Understandably, with the instability, the Fed backed off of its next interest rate hike, but still predicted more this year. And, then… and then… With the days of the year running out, the Fed, again desperate to raise interest rates despite inflation being nowhere near the supposed “target,” was planning a Summer increase but… The jobs report didn’t cooperate. And then… The jobs report didn’t cooperate. Oh, and there is more news of the economy being very, very sluggish. It almost seems as if the economy just isn’t that strong and stable, and that inflation is low, and that the smart thing to do is just leave interest rates alone. But, nobody wants to do that. They want to be HAWKS. Hawks fight inflation fast and hard, even when it isn’t there. And so, here we are. This …

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June Jobs and Mid-Year Economy Review

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Monitoring the economy is tricky business. The monthly reports that we get from the government require gathering reams of data over hundreds of hours, and all manner of processing to get us a simple sounding number like, “The U.S. economy added 287,000 new jobs.” Even then, those numbers are routinely readjusted up or down later as more data comes in. The May employment numbers were enough to stop a Fed rate hike in its tracks. Are the new June numbers good enough to put an interest rate increase back on track? June Employment and the Fed Employment numbers are very important to the Fed. A tightening labor market often is visible before any actual signs of inflation. The theory is that lower unemployment forces businesses to offer higher wages in order to attract and retain workers, which will eventually lead them to raise prices in order to cover higher costs. So, if employment jumps too fast, too far, it might be time to take a look at a rate hike. The increasing transparency and ability to buy goods online has shaken this up a bit, however. Just because Macy’s raises prices on something doesn’t mean that you have to pay …

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What Does Brexit Mean for America?

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Gah! Brexit! Run for the hills! Wait. Wait. If you live in England, this might be kind of a big deal. I’m not 100% sure. However, if you live in America, it’s time to calm down. How Does Brexit Affect America? I’m on vacation, so I’m going to keep this brief, but I know a lot of people are worried about the vote on the Brexit, and what that might mean for the economy and the stock market, and so on. Let’s start at the beginning. The markets hate instability. They hate not knowing what is going to happen. The POTENTIAL exit of England from the European Union is both unstable, and something that no one really knows what will happen. After all, Britain, if it actually goes through with it, will be the first country to ever leave the European Union, or EU. That is why you got a super plunge in the American stock market on Friday. What happens next with the Brexit? Well, no one is actually sure. That’s what unprecedented means. However, there are some things we do know. England, while politically and strategically, very important to America, is actually very small from an economic point …

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June Rate Hike Is Off

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fed interest rates caution

Last week, the April inflation numbers came in a little bit high. At the time, I (and several other analysts) pointed out that the higher number was almost all due to a long coming recovery in fuel prices, and that even with that higher number, inflation was nowhere near being a real issue. However, the Fed members went running to just about any media outlet that would listen telling everyone that those shaky numbers were the reason the Fed was very likely to raise interest rates in June. I wrote at the time, that it seems like this Federal Reserve is more interested in showing that they are inflation hawks than they are interested in following the actual data. The Federal Reserve has two official mandates, to keep inflation in check, and to keep employment as close to full employment as possible. This begs the question of why, exactly, the Fed seems so keen on raising rates right away. Employment is doing better, but nowhere near full, and wage growth is stagnant, so no issues there. The twelve month inflation rate, even with April’s increase, is just 1.1 percent, well short of the Fed’s supposed 2.0 percent inflation target. A …

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June Fed Meeting – To Raise or Not To Raise

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This article is from 2016. The Federal Reserve is doing its best to alert investors (and others) that it plans to raise interest rates in June (2016). You know, unless something happens in China again, or whatever. Once upon a time, the Fed kept its thinking about interest rates to itself. These days, Federal Reserve Board members talk to anyone who will listen about how they are currently leaning toward whether or not to raise interest rates. While there is still virtually no inflation anywhere in the economy, the Fed got an excuse to raise rates from the April inflation numbers which showed a fairly high 0.4 percent seasonally adjust increase. Of course, every economist and analyst within a thousand miles quickly noted that virtually all of that increase came from fuel prices finally bouncing off of rock bottom, and not from any real inflation. Read about getting your real credit score for free. Still, the Fed seems intent on raising interest rates for some reason, most likely in order to keep from being considered too dovish, since we are still throwing that word around like an insult. Should The Fed Raise Interest Rates in June? The Federal Reserve has …

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Inflation Rises… Sort of…

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Today’s version of Let’s Overreact to Economic Statistics comes in the form of news articles noting the “biggest rise in inflation in three years!” The April inflation number, released today, serves up a 0.4% seasonally adjusted increase. This is the biggest inflation number since February 2013. So, does that mean the Fed will race to raise interest rates? Inflation and The Fed Believe it, or not, not all inflation is bad. In fact, some inflation is necessary for a healthy economy. The current Fed repeatedly has stated that it targets inflation at an annual rate of 2.0%. Even with the 0.4 percent increase for April, the 12 month inflation rate is just 1.1 percent. So, inflation isn’t exactly roaring ahead, and the Fed is unlikely to make a snap move in reaction. However, what doesn’t really get enough attention is that the 2.0% target number isn’t really a “close enough” sort of target for most economists and people at the Fed. A number of 2.1% is likely to make people nervous. That’s because while a 2 percent annual inflation is a sign of a healthy economy, anything approaching a 3 percent annual inflation triggers worries about an overheating economy, and …

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Fed Leaves Interest Rates Alone for April

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looking for future fed rate hikes

The Federal Reserve announced that it would not raise interest rates in April. This was not a surprise to anyone. That keeps interest rates at a range of 0.25% to 0.5% which is where it was set last December during the first interest rate increase in years. The Fed statement that accompanied the announcement did not provide any leaning for the upcoming June meeting. The modern Fed likes to telegraph its moves whenever possible, so it is a reasonable assumption, that either a) The Fed is right on the border about an increase in rates for its June meeting, b) The Fed is not planning on raising rates for the June meeting, but wants a neutral tone, so that if it wants to raise rates the next time around, a small change in the wording would telegraph that possibility. Chances are better for B than A barring any big economic news or stock market moves. The Fed did change the way it talked about the global economy, which is basically a way of saying that they aren’t still worried about China ruining everything like some people were at the beginning of the year. The final piece of the puzzle is that …

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Fed Stands Pat and Lowers Expectations

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Since before the rate hike in December, Fed Chairman Janet Yellen has repeatedly said that all interest rate hikes were going to be dependent upon the data. In other words, while the Fed was willing, and ready to raise interest rates, they were not going to just keep raising them to meet expectations. The announcement today that the Fed will not be raising interest rates in March surprised no one. However, they also took the step of modifying their anticipated rate hike schedule, which originally anticipated four rate hikes this year, to a total interest rate of 1.25%. The new estimates now anticipate only two rate hikes during 2016. If that holds up, then the maximum Fed Funds Rate by year end would be just 0.75%. While commodities and oil ran higher on the news, that is likely to be short lived. The whole, lower interest rates equals weaker currency thing only works when there is a stronger currency out there to run to, and right now, there just isn’t. The Dollar might not be particularly strong right now, but nothing else is any stronger, so those trends are likely to reverse themselves over the next month or two. The …

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Interest Rate Confusion – Raise or Hold?

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I’ve been writing about interest rates much more than I wanted to lately because I often write about what people talk to me about, or what I hear all over the place, and interest rates seem to be holding people’s attention. I’d like to offer up some ideas about how to think about interest rates. If everyone started keeping these things in mind, maybe there wouldn’t be so much talk. Interest Rates are a Continuum One of the biggest problems people have wrapping their heads around the concept of the Federal Reserve raising interest rates is that it is not some sort of on or off type thing. Sure, each increase is a Yes or No to the question of whether or not the Fed will raise interest rates, but the resulting rates are not simply “high” or “low”. Consider the Fed’s interest rate increase in December. It raised interest rates from 0% to 0.25%. Yes, that is an increase. Yes, it is the first increase in some time. But, is there really much difference in the world because of it? Your credit card interest rate, or your adjustable mortgage interest rate may not have even changed because so many …

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