Welcome to Financial Spiderplant!

The Federal Reserve cut interest rates by 50 basis points this afternoon bringing rates to 3%, the lowest since June of 2005. This change was approved on a 9 to 1 vote. The stock market quickly reacted with the hopes that lower rates will prove to stimulate growth through low cost money. While it usually takes anywhere form 6 months to a year for interest rate cuts to really start kicking in, I believe that the Fed is taking the right path here.

2007 economic growth in the United States was at 2.2%, the weakest in the past 5 years, the rate cuts should help out everyone from the average American to the businesses raising billions of dollars for company expansion/acquisition. The average American carries ~$10,000 in credit card debt, a 1.25% cut translates into $1,250 less that you will pay for every $10,000 debt that you carry. This translates into interest savings of $12,500,000 for every billion dollars borrowed for big business.

If we truly are headed into a recession, it is already in the cards and emergency rate cuts won’t have the immediate impact of turning the economy around but we are headed in the right direction.

Sources:
Fed slashes interest rates by half point
Fed Cuts Rates Half Point; More Reductions Possible

Today marks the biggest reduction in interest rates since December of 1992 when the Fed cut the discount rate by a full percentage point. Contributing factors leading to the .75% cut today included the increasing risk of bond insurers being unable to make payments, sub prime real estate exposure dragging down the financial sectors of the economy, and consumer spending data that has pointed towards an economic slowdown.

The cut in interest rates has had the immediate effect of causing commercial banks to cut the prime lending rate by .75% to 6.5%. While there has been speculation about whether or not the cut will be enough to prevent a recession, the effect of creating access to money with much lower rates for people that are buying homes, starting businesses, or looking to expand current business operations can be quite effective in strengthening the economy.

Potential further rate cuts are still likely at the Jan 29th meeting of the fed depending on the market’s response to today’s cuts. While rate cuts are by no means an immediate fix towards creating an economic boom, they are a move in the right direction.

Keep your eyes on the market, follow your investments, and listen to any conference calls regarding the current and future outlook of economic direction! If you are holding gains in your stock positions, make sure you have your stops set to keep profits; if you are initiating new positions, make sure you limit your losses to 8% and slide into your final position rather than trying to time the market. Now is a great time to re-evaluate your long term investment goals so that you can be prepared to take action as the market reacts.

There is a lot of potential money to be made out there, stay aware of your options at all times.

Sources:
Fed Cuts Interest Rate 3/4 of a Point
Stocks Plunge on Recession Fears

Wow.

This week sure was an interesting one! Markets were faced with a a week of decline as investors across the board faced new economic data that points towards recession. President Bush’s stimulus plan did little to change the immediate direction of the market.

The plan includes a “proposed growth package of as much as $150 billion to counter escalating risks to an economic expansion now in its seventh year.” Kim Caughey at Fort Pitt Capital Group said the following regarding the market’s response to the growth plan: “It’s disappointed in the size of the economic growth package. Wall Street’s showing its displeasure, honestly, I think the institutional investors understand the limits to the government’s ability to enact economic change.” While the package is about 1% of our gross domestic product, our government cannot immediately reverse the possible beginning of a recession. Economies have developed many forms of regulating growth but our actions are still somewhat reactionary.

It would be great if the Fed could just *BAM* hit us with the perfect interest rates while banks initiated the right offerings of loans and credit analysis while at the same time managing to employ the 1 in 20 Americans that are currently unemployed through company expansion and small businesses. [1], while at the same time convincing everyone that all was fine and that it was OK to keep spending, to buy homes, and to go about life as usual. This is not the case. We cannot precisely predict the immediate effect of our actions upon the economy. We are currently faced with some serious decisions and potentially, some serious turbulence.

How does being part of a global economic system affect nations’ economies? “In the summer of 1997, the currency of Thailand, the baht, begin to plummet in value, losing more than half of its value in six months. Other Asian countries also suffered financial crisis and economic slumps. A year later, the Russian government was unable to make promised interest payments on its bonds, and financial markets around the world reacted. How do economic links among nations, such as international trade and borrowing, affect the performance of individual economies and the world economy as a whole?”

I quote from Macroeconomics an excellent textbook by Andrew B. Abel and Ben S. Bernake because I’m wondering if Bernake is going to practice the same economic policies that he wrote about in 2001 as he does as the Chairman of the Fed.

Our bond market could have faced a similar fate, but we decided that we were smart enough that we would get insurance on our bonds! This week has shown just how much faith we place in this insurance as reflected in the price of Ambac and MBIA. Ambac shares were up 10% today after a decline of over 70% in the last two trade sessions, MBIA shares followed a similar decline.

“Ambac saw its crucial financial strength rating cut to “AA” from “AAA” and the bond insurer’s plight is likely to have far-flung effects. In addition to the likely result of Ambac ceasing to underwrite any new insurance, the downgrade will probably result in downgrades to many of the bonds Ambac currently insures, including municipal bonds.” [2]

The big winner in this may in fact be Warren Buffet who started a new bond insurance business in December of 2007, after the sub prime meltdown. This means that Buffet has a 1-UP in the bons insurance biz because he is starting with a fresh balance sheet while all other major insurers face the results of past events. Jim Cramer’s plan, he said, declares the bond insurers bankrupt, then “gives the municipal bonds over to Warren Buffett. … It takes all these loans … $500 billion … and guarantees these loans for 50 cents on the dollar. … It would cost us far less than the stimulus plan, and it would rally the stock market.”

[1] Read : I’m not quoting you percents, 5% unemployed, a factory manages to add 20,000 jobs, 1,500 auto sales jobs caused after factory closing; I’m talking about the fact that one in every twenty Americans is not employed!
2 The municipal bond market is currently holding $2.5 trillion in value…This is getting serious.

Sources:
Stocks End Rough Week With Modest Drop : By Madlen Read, AP Business Writer
Bush Calls for $150 Billion Stimulus Plan for Economy
Ambac Downgrade Caps Rough Day
Jim Cramer’s ‘Stop Trading’: A Plan to Fix the Liquidity Crisis

Democratic tax hikes will have a political cost
By Alex Holstein

“While claiming otherwise during election season, the Democrats have always been the biggest tax-and-spenders on the political block, but this latest budget constitutes such a grave violation of their promises to the American people that it really amounts to not just your average tax hike, but a tax heist —- and the largest in U.S. history.

According to Grover Norquist, president of the conservative Americans for Tax Reform, the Democrats’ budget will cost an “average of $3,035 per taxpayer per year for the next 10 years. And it goes up each year.” Mr. Norquist asserts that the increase in capital gains tax alone will “tank the stock market.” President Bush’s 2003 cuts facilitated substantial market growth, increasing the net wealth of American households by $15 trillion.

“Supply side economics works both ways,” says Mr. Norquist. “Raise those taxes back up and the wealth disappears.”

[T]hose same citizens will inevitably seek retribution the only way they know how —- by punishing those responsible with their vote.

Taxpayers can file extensions. Politicians cannot. Democrats would do well to remember that. When it comes to spending and taxation, the buck may stop with Congress, but it’s coming out of the wallets of the American people.”
________________________________________________________________________________

Right now, the market is having a blast! ‘Everyone’ is making money, reinvesting their dividends, and riding the current wave of economic prosperity. The Fed started increasing interest rates in June of 2004 from the 1% mark when the markets started to get a little ahead of itself and thus applied a little pressure to the break peddle. The zealous nature of investors was slightly curbed and the pressure of rising ARM payments started to widdle out some of the less than prepared homeowners. Interest rates hikes continued until they reached there current level on June 29th 2006.. Check out this site for monthly archives of “Intended federal funds rate
Change and level, 1990 to present” The pullbacks in the housing industry caused some worry but have still caused little impact in overall market performance. Ben Bernanke was quoted in Investors Business Daily as the following: “[He] also said higher home delinquencies and foreclosures are ‘problems that likely will get worse before they get better’.” For this reason, the Fed will likely leave interest rates at their current levels, a drop in interest rates might imply that the housing industry was clear and ready to resume growth, an increase in interest rates would likely make the problem worse because of the effect of increasing ARM payments to even higher levels.

This posting is meant to cover the effect of tax increases on dividends and capital gains so why am I talking about the effect of interest rates? A number of individuals are currently facing pressure to make their home mortgage payments, many are unable to make these payments and are facing foreclosure. The rest are in a money crunch as they face mortgage payments that are increasing their risk of financial distress via large changes to thier budget and cash flow.

If it can be agreed that the economy is treading along at an acceptable pace, why the urge to mess with the system? What will the effects be?

I was talking with a couple of people about the possible implications of an overhaul to the way our tax system favors investment income.

We were able to reach the following conclusions:
1) the taxable rate on capital gains and dividend income is at the lowest rate it has been at since the early 1930’s. (See this link for historical capital gain tax rates) This rate is set to increase to higher rates in the future and this will have an impact on the economy.
2) The change in 2003 to tax dividend income as capital gains rather than at ‘regular tax rates’ caused increased investments in dividend paying companies. This was an excellent event for young investors who were seeking to create a portfolio with consistent growth.
3) Dividend reinvestment is one of the most established ways of creating wealth. Read this article which sums it up : “The point is that if we keep spending our dividends, it will be very difficult to build long-term wealth for our retirement, children’s education & marriage or such other long-term needs”
4) Dividends are generally provided by large established companies that have a large amount of free cash flow. Traditionally, these companies have reached a plateau in their growth and rather than build up their war chest, they pay back investors via dividends. Examples of such companies are Altria, 3M, Johnson and Johnson, GE, Coke/Pepsi, or just about any large solid company you can think of.(Why companies provide dividends. or an archived Fool article on dividend payment)
5) The implications of an increased tax on dividends have a stronger tendency to drive away investors than to bring them to the market. This would specifically have a larger effect on large companies whose investors are often there for the solid dividend play; these investors would more likely invest in tax advantaged bonds than take the tax hit.

In light of these conclusions, my opinion is that the return of the tax structure to tax dividends as taxable income instead of at the current cap of 15% will not serve the interest of our long term economic interests.

Much support may be rallied on the premise that changes in the tax structure will increase the taxes on the wealthy and provide income for our country. This is 100% true. What is also true is that the average investor will also face these adverse tax consequences. Our dividend income will be taxed in the same environment and subjected to the same tax consequences as that of the wealthy. In short, these tax changes will render income for the government at the cost to all individuals who are investing. This goes against my belief that investing is something that requires government regulation to assure financial truth in financial documents but that the government regulates the world of investing to prevent harm, not to profit from its existence.

Economic data can point towards a possible recession and thus lend credence to the argument that the tax structure must be changed to apply some resistence to economic expansion. It worked for the argument to increase interest rates which led to our current issues in the real estate markets and it will work, to a point, in the changes to dividend and capital gains taxes. The problem is simply that it taxes everyone, both the wealthy and those seeking wealth. This causes a level of resistance that isn’t justifiable given our current status.

The government should leave our tax system alone for the time being and quit muddling around with a system that is obviously providing opportunities for all. Lazzez-Faire Uncle Sam!!! You provide basic safety for our system but let the market determine our direction.

The issues that our nation is facing with a budget deficit and the path we are headed down calls for a change but what is the best form of change?

Quoting today’s Investors Business Daily article “Time to Sink Democrat Raft of Tax Hikes,” “If democrats follow through on their budget promises, the American people will face the following: A $500 per child tax increase, a 55% death tax, a 13% tax increase for many small businesses, a 33% tax increase on capital gains, a 164% tax increase on dividends.” How much will your taxes go up if the Bush tax cuts are not extended? The average taxpayer faces a hike of $3,035 per year. So, $400 billion will be raised in 5 years courtesy of you and me paying more from each paycheck and more from each attempt to climb out of the rat race.

One of the reason that small business, capital gains, and dividend tax rates will increase is that these are largely the way in which wealthy individuals stay wealthy. It is also one of the best ways for an American citizen to achieve independence. Warren Buffet recently spoke on the problems in our tax system that allowed him to pay a mere 17.7% in taxes while his secretary was taxed at 30%. I don’t disagree with Buffet’s view that the wealthy should burden a heavier share of the tax burden, when I’m in that position, I’ll be more than happy to pay my dues; the problem is with the suggested tax hikes hindering mine and others path to achieve financial success.

This wasn’t meant to be a posting pointing out a hole in a political platform but I’m a little torn on a few issues;Barak Obama wishes to have the tax cuts initiated by President Bush expire in 2010. This would effect over 1 million tax payers. This isn’t a bad thing at heart. The problem is with the likewise stressed issue of providing health care for the majority of the populace. It is a serious issue, one large medical issue or even a moderate one can send an uninsured and unprepared person into a financial tailspin.

I respect the hell out of Obama, I admire his sincerity and straightforward approach and find his passion in speaking something that our country greatly needs. The problem that I’m finding are the economic implications of trying to increase medical coverage while at the same time supporting a tax increase in small businesses; I’ll get to those other tax increase in a further posting.

A small business can be classified as a company with less than 500 employees. Over 92% of net new jobs in the US of A were created by small businesses between 1989 and 2003. NINETY TWO PERCENT OF NEW JOBS. The smallest of these companies, which are classified as having less than 20 employees, created 85% of these jobs. At the same time, companies with more than 500 employees eliminated more positions in 5 of the past 14 years/ 1002 showed 2.2 million job cuts, 2002 came up with another million. The less than 20 employee mom and pop operations have “always created more jobs than either meduim-sized small companies (20 to 500 employees) or large-sized companies (>500 employees). In 11 of the 14 years, these very small companies created more jobs than the other two categories…combined.”

SMALL BUSNISSES SUSTAIN OUR GROWTH!

They pay over 45 % of the payroll in the United States and they “produce 13 to 14 times more patents per emplyee than large patenting firms.”

SMALL BUSINESSES ARE RESPONSIBLE FOR INNOVATION!

Two more quick facts:
Of all federally regulated businesses, large businesses pay an average cost of $5,282/employee, small businesses pay $7,647. (45% more) SMALL BUSINESSES PAY MORE PER EMPLOYEE!

alt="Business openings vs closings" />
With a 90% average close rate, small businesses could use some help. SMALL BUSINESSES NEED HELP!

So hopefully, I’ve made a strong enough case to present the following facts.
1) Small businesses employ a large number of people
2) Small businesses sustain a large portion of our economic growth and development
3) Small business costs exceed those of large companies on a per employee cost

These facts lead me to believe that the suggested increase of taxes on small businesses is a horrible idea. So many of small businesses do not provide medical insurance for their employees. Health insurance is something that most employees should be able to expect, it can prevent massive issues. Health insurance cannot be an expected benefit of employment promoted by INCREASES in taxes.

Sure, many small business owners out there are collecting very healthy profit margins. You may wish to view their profit as something that should be heavily taxed but there are many small business owners out there that are working very hard just to stay in business and you know what? They deserve to be making a profit equal to that of the more successful small businesses! They are working hard, providing a benefit to society, employing out citizens. We should not critique a system that allows someone to take an idea, form a business, employ people, and make some money. If anything, taxes on small business should be lowered to promote the market entry of new competition. Tax hikes increase the barriers to market entry and hinder the promotion of efficiency and the free market our society would have us believe exists. If we promote barriers to success, investors, both domestic and foreign, will look elsewhere for economies that hold these values high and as such, will provide us the goods we desire to purchase while we sit back and keep raising taxes on a dwindling business base.

*Cough* China, India, Brazil, Mexico, South Korea, Germany, Hong Kong *Cough*

Coughing of Hong Kong. As I remember reading before going there as an abroad study, a small business in Hong Kong doesn’t pay taxes on its first $100,000 in profit. A quick look at their tax structure shows: A company pays a standard 17.5% rate on profits and non-Corporate businesses pay a 16% rate. Special concessionary rates allow: interest and capital gains on qualified instruments are taxed at 8%, trademark, copyrights and patents are taxed at a flat rate of 1.75%. Anyone that tries to tell you that Hong Kong isn’t a booming economy obviously hasn’t tried to board the ferry to cross Victoria Harbor in the early morning.

We should take the hint and look at models that have promoted economic booms, not increase small business taxes because we have a need for funds. I remember playing Sim City 2000 as a freshman in college and when I increased taxes in a cash crunch, my employment levels suffered and my crime rate went through the roof; I also ended up not getting the funds I needed because of macro decreases in the city’s revenue. Do you think the programmers of that game did that just for kicks or that just maybe, they had a reason for thinking that increases in taxes would somehow lend us to bad things? I’m pretty sure that game is what led to me passing micro-economics although Professor Bellinger was a great teacher so I’m sure its some of both.

In an age where the credit card industry will send out 5 billion pre-approved credit card offers with a sum presentation of over $300,000 in credit to EVERY family in the United States of America, the land that is not so free anymore.

In a world where a cute little pug…A pug…a DOG…Clifford J. Dog, son of ‘Pugsy Malone,’ Social Security number 999-99-9999 can receive a credit card.

Let me say that again mainly so I can wrap my brain around it. A dog…got….a credit card? A dog…received…and was approved for…a credit card? I wonder what his FICO is…

In a society where you can casually ask someone “How’s it going” and they reply “Not very good” before disappearing for two days…write a note that says “I just can’t take this any more and you’ll be better off without me.” and killing themselves…ending their life, a 25 year marriage, six kids and an unspecified number of grandchildren over credit card debt.

Um…WTF MATE?

So if I understand correctly,
1) The average family will receive credit offers for a value equal to the average annual wages of 319 Chinese textile workers.
2) Anyone or for that matter, anything, can receive a credit card.
3) The power those little sheets of plastic have is enough to drive people to kill themselves.

How is this different from giving cigarettes to babies? At least if a baby becomes a smoker, s/he can quit. Once you’re on the credit card train…there’s no way out…or is there?

AHH—AHH—AHH—-BANKRUPCY-CHOOO!!!!!

Credit cards are evil, smoking is evil…the companies make a lot of money and that’s why I own MasterCard and Altria…am I evil? Crap…I think I am. I digress.

Credit isn’t an old thing, its been around since the biblical age. It may have even been around since the good old days of our good friend Mr. Neandrathal! Check out The Richest Man in Babylon if you have a chance, he edumacates you about finance in such a simplistic way that even my dog can understand. (Seriously, she even wrote a book review) One of the stories that George Clason tells us is about the money lender in the year…A REALLY LONG TIME AGO, LIKE TWO-THOUSAND YEARS OR SOMETHING…anyhow, the money lender was a businessman, he would lend money to ANYONE, just like Visa and Mastercard although I don’t recall the money lender talking about lending money to domesticated animals. In order for the moneylender to give you some cash, you’d have to provide a little something called collateral. Collateral is something that is used to secure the loan. You give the moneylender your jewels or something of value that he will possess and own until you return with the money he lent you plus interest. Then you get your stuff back. Pretty simple.

That was the rule. You want money, you provide collateral. Unless (here comes the curveball) you had a personal relationship with the moneylender. I’m not talking about friendship because its never a good idea to lend money to friends except in emergencies…life or death emergencies. I’m talking about a personal BUSINESS relationship. If you had proven to the moneylender time and time again that you could borrow money and pay it back on a reliable basis, he wouldn’t require the collateral. In this case, our biblical moneylender would require only one thing. A piece of rope with a knot tied in it. Not gold rope, not mir or whatever else was valuable back then, but rope rope…if that’s a word. Plain old dingy rope with a knot tied in it would serve as a physical manifestation of your word, your promise to pay him back. (I think all the moneylenders back then were men)

So, we’ve gone from a time where credit was something you worked for, something you earned to the point where credit comes to you and knocks on your door? Even thirty years ago, credit wasn’t easy to attain. In Maxed Out, another great finance film I’d recommend, the parents of two teenagers, who were driven to suicide over credit card debt, were asked why they hadn’t educated their children about credit. Their response was one of extremely bitter laughter, “Who the hell would give them a credit card? They were teenagers, never had a job, they didn’t have any money or any way to pay back a loan. Who would give them a credit card?”

Anyhow, this long ramble came from a pretty simple observation. I was out to dinner at a rather nice steak establishment when someone made the mistake of talking about finance within earshot of me. If you talk about finance around me, I’m going to listen, even if its not a conversation I’m involved in and I don’t even know the people having the discussion. That’s just who I am. The dumbass, noodles for brains, slippery minded, corn hole behind me was talking with his buddies about the fact that he is going through the bankruptcy process. He was pretty somber for a few minutes but was back to laughing about his problem after his moment of honesty.

While I think its a good idea to find the humor in things at all times, joking about his bankruptcy (so were his buddies) is down there with racism, sexism, and beating your wife. Its not something you should joke about because its pretty serious and causes a great deal of pain to many people. Maybe its just because I’m a finance dork and maybe I’m just being petty but here’s a question for you. Is a person or any race with the desire to have racist comments not something to be joked about just being petty? The answer to both of those questions is the same. Nope. How did our idiot friend turn out? No clue. He did, however, pay his share of the bill with a credit card. (I asked his server*) I hope he burns in hell. Seriously, if hell exists, I hope he burns in it.

As car as the whole credit card industry, keep giving out loaded guns, credit cards, and cigarettes to babies, dogs, rabbits, and even inannimate objects!

My credit card application in the name of my dog, cell phone, and table lamp goes in this afternoon. I’m thinking that it must be a coincidence but they all have the same Social Security number Anyone want to on how likely they are to be accepted? I’m banking on 100%

Man I love Wednesdays!

*I didn’t actually ask his server if he paid with a credit card though I did think about it!
Additional Information:
Middle Class and Maxed Out

Bill Gate’s Charitable Vistas
By Robert Barro

Bill Gates is worth $56,000,000,000. FIFTY SIX BILLION!
“Bill Gates is the richest man in the world, helped create a revolutionary computer software company, and earlier this month, collected an honorary degree from Harvard University. But he may not understand the vital role wealth creating plays in society. - By any reasonable calculation Microsoft has been a boon for society and the value of its software greatly exceeds the likely value of Mr. Gate’s philanthropic efforts.”
Is the role that Bill Gates will play as a full-time philanthropist one that will create value in the world? Yes!

Is it the greatest good? That’s a good question.

Robert Barro presents the following facts:
Microsoft’s social value can be broken up as follows:
-Market value of stock is ~287 billion dollars.
-2006 revenue was 44 billion dollars
-Microsoft’s products create consumer value via increased productivity

The argument that comes about is whether or not the Bill and Melinda Gates Foundation will be able to achieve the solution to problems in society or simply be a ’supplement to the much larger existing programs of aid and debt relief that have been carried out for many years by international organizations and governments.” If this statement holds true, we may see the transition from a world innovator one who does what they can to solve the world’s insolvable problems. Barro’s argument is tweaked when remarking that Warren Buffet’s gift to the Gates foundation is more justified because Buffet made his fortune as an investor, not as the innovator of new world-changing products.

Barros’s point is well taken. Perhaps Gate’s move to a charitable lifestyle will produce less immediate value to society. My stance has less to do with the maximum benefit to society and more to do with how his actions will change the world view. If a man or woman can emerge from relative nothingness to become the worlds richest man and then give it all up to be a run a charity full time, it sets an example. Problems in today’s society, financial, social, or of any matter, may not be solvable within a generation but they are solvable over time.

If the mental mindset of today’s upper echelon can be moved towards one of self-success and that of society in general, the hope is that these movements would create momentum that was not responsive to the actions of individuals such as Bill Gates and Warren Buffet because it would have the support of the majority. Simply put, I believe that the actions of Bill Gates are the beginning of a much larger movement. That is my hope. Then again, perhaps Gate’s should stay at the helm of Microsoft and simply outsource the allocation of his charity to another individual. Either way, I believe we benefit from his contributions to the world.

“We must be the change we wish to see in the world.” -Gandhi

Bond Yields Surge; Hope For Rate Cut Dies Sudden Death
BY DONALD H. GOLD

What hope is out there for individuals stuck, and those yet to be trapped, in the Adjustable Rate Mortgage (ARM) trap? How much cash will continue to flood into the market providing money for company expansion and R&D if bond yields continue to look more attractive?

“At 5.3%, the 10-Year note’s yield has soared 52 basis points since May 17.”
“A move to 5.5% wouldn’t surprise [me]”
“Even the Bank of China, which steers the biggest emerging market, has raised interest rates. A rate hike last week from the Bank of New Zealand underscored that the conversation shouldn’t be about rate cuts.”
“Previously, buyers like China had sent bonds flying. In effect, those countries were a source of cheap credit.”

In order to attract continued investment in US debt, we must increase our interest rates. One reason historical interest rates are on the rise is the fact that our relative currency value is falling. In order to keep investors for our weakening dollar, a more attractive yield must exist. As the emerging markets continue to grow at rates that have often been referred to as ‘unsustainable’ or ‘headed for a big drop’ continue to provide a much higher profit potential for a disproportionate amount of risk, (As long as you’re on the bullet train for a few minutes, it doesn’t matter if it heads backwards a little) money will continue to head away from investment in our debt unless we pay a premium.

As Hays says “The stock market loves to climb a wall of worry.”

If interest rates continue to climb, its generally a sign that our economic growth is getting a little ahead of itself. If the Fed gives our ‘leash’ a little slack, overall markets will continue to increase in value despite recent correction action in the past week. Once we see two consecutive drops in interest rates, (a sign that the Fed wants to direct more investment in the market) watch out for a recession in the United States and continue to keep your head to the ground for increased international exposure.