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Sabtu, 15 Juni 2019

The Fed won't cut rates at its June meeting. Here's why - CNBC

Federal Reserve Chairman Jerome Powell holds a press conference following a two day Federal Open Market Committee policy meeting in Washington, January 30, 2019.

Leah Millis | Reuters

With pretty much everyone convinced that the Fed is going to be cutting interest rates at some point this year, the central bank faces one rather pressing question: Why wait?

After all, the market already is pricing in at least reductions this year and probably three. Though the Federal Open Market Committee meets next week, there is little expectation of a move then.

Not moving next week essentially comes down to three factors, according to Fed watchers: The looming G-20 summit at which the U.S. and China, at least theoretically, could reach a trade agreement; a desire not to be seen as overly influenced by the financial markets and President Donald Trump's hectoring; and the desire to avoid making December's rate hike look like a policy mistake.

"They don't want to be seen as cowing to any sort of pressure, be it political from the White House or from the market," said Lindsey Piegza, chief economist at Stifel. "The Fed is going to look at the data, they're going to look at what their models say. To them, it doesn't matter what the markets say."

'No cuts this year is hard to believe'

Wall Street, though, is clamoring for a cut.

Futures pricing Friday afternoon in the fed funds market showed a 21% chance of a move at the June 18-19 meeting, down from 30% earlier in the day on some stronger-than-expected economic data. The chance of a July cut remained at 85%, while the market was figuring a 61% probability for three moves in total by the end of the year.

As things stand currently among Chairman Jerome Powell and his fellow Fed officials, no moves are indicated. That is likely to change when FOMC members submit their economic projections at the June 18-19 meeting, which include the "dot plot" of individual members' expectations of where rates are headed over the next few years.

"I can't imagine what they are going to do with the dots," Jeffrey Gundlach, founder of DoubleLine Capital, said in a webcast Thursday. He noted the "big divergence" between the market and Fed projections and said, "No cuts this year is hard to believe."

In May, Gundlach recommended a straddle options trade that benefited from wide fluctuations in interest rates. The trade recently had netted a 22% gain.

Fed officials have been under intense pressure from more than the markets. Trump has been a continuous nemesis to the central bank, most recently repeating his demand for lower rates and saying he's "not happy with what [Powell has] done" as Fed chair.

Along the same lines, the Fed has its credibility to worry about.

Trump and a growing number of market participants view the December rate hike — the fourth of the year — as a policy mistake that came amid several pivots and missteps that caused Powell and other officials to change their public statements to assuage investors' nerves.

'A verbal intervention'

From October to March, the Fed went from being "a long way from neutral" on rates and with a balance sheet reduction on "autopilot," both in Powell's words, to adopting a "patient" stance on policy and finally laying out a timetable to end the balance sheet program by September. Officials also cut the forecast level of rate hikes from two to zero, and now are in the position of having to convey a likelihood of cuts, if that is the way the FOMC members see things unfolding.

"It's a difficult transition for the Fed now from two rate hikes this year to the pause and now moving closer and closer to rate cuts," said Quincy Krosby, chief market strategist at Prudential Financial.

Krosby points to two pivotal events recently that signaled yet another change in policy — remarks from Powell and Vice Chairman Richard Clarida earlier in June that set the groundwork for potential cuts. In Powell's case, it was a pledge to "act as appropriate to sustain the expansion" while for Clarida it was a vow to adapt policy to keep the economy "in a good place."

"You can't dismiss the comments from Powell and Clarida. That was orchestrated. They were laying the groundwork. That's what the Fed does," Krosby said. "It came across as verbal intervention and they didn't even have to do anything. The market reacted."

Indeed, stocks have been on a solid run lately, with the Dow Jones Industrial Average up more than 5% in June after a brutal May. That equity strength gives the Fed another pillar to rest on if it chooses not to cut this month, though that hasn't always been enough to stop easing in the past.

But if the market strength holds up and the U.S. and China come to a trade agreement, it at least could lower the level of expectations for cuts.

Tom Porcelli, chief U.S. economist at RBC, said a client survey showed that if a trade deal gets one, 85% of clients "would not react negatively to the Fed taking a pass" on a July rate cut.

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https://www.cnbc.com/2019/06/14/three-reasons-why-the-fed-wont-cut-rates-at-its-june-meeting.html

2019-06-15 13:14:27Z
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The Fed won't cut rates at its June meeting. Here's why - CNBC

Federal Reserve Chairman Jerome Powell holds a press conference following a two day Federal Open Market Committee policy meeting in Washington, January 30, 2019.

Leah Millis | Reuters

With pretty much everyone convinced that the Fed is going to be cutting interest rates at some point this year, the central bank faces one rather pressing question: Why wait?

After all, the market already is pricing in at least reductions this year and probably three. Though the Federal Open Market Committee meets next week, there is little expectation of a move then.

'No cuts this year is hard to believe'

Wall Street, though, is clamoring for a cut.

In May, Gundlach recommended a straddle options trade that benefited from wide fluctuations in interest rates. The trade recently had netted a 22% gain.

Along the same lines, the Fed has its credibility to worry about.

'A verbal intervention'

But if the market strength holds up and the U.S. and China come to a trade agreement, it at least could lower the level of expectations for cuts.

Tom Porcelli, chief U.S. economist at RBC, said a client survey showed that if a trade deal gets one, 85% of clients "would not react negatively to the Fed taking a pass" on a July rate cut.

Let's block ads! (Why?)

https://www.cnbc.com/2019/06/14/three-reasons-why-the-fed-wont-cut-rates-at-its-june-meeting.html

2019-06-15 13:09:33Z
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Tired of #$%& passwords? Single Sign-on could be savior - USA TODAY

Jefferson Graham USA TODAY

Published 10:15 AM EDT Jun 15, 2019

The experience we know as password hell could be radically changed for the better within the next year and a half to three years.

Struggling to come up with long strings of complex capital and lower case letters, numbers and symbols? That's so yesterday.

That's the hope, anyway.

In a fascinating interview with Google product manager Mark Risher in The Verge this week, he laid out his vision for why those passwords we've been told to create don't actually help.

They have "no bearing on phishing, no bearing on password breaches, no bearing on password reuse," he said. "We think that it’s much more important to reduce the total number of passwords out there."

In other words, all that time you've been forced to spend trying to create tougher to crack passwords is a waste. At least that's the way he appears to see it.

I think all Talking Tech readers would agree that anything we could do to eliminate the constant typing of passwords during our daily hours would be most welcome.

But how to get there?

Google wants you to use its single sign-on feature, which still requires a password and has Google authenticate your identity, for a second layer of authority, via text messages or via the Google smartphone app.

Apple just announced its answer to Google's sign-in, with an alternative that will be introduced to the iPhone and iPad in the fall, as part of the iOS13 software upgrade. Google has an 85.% market share for its Android phone system, to 14.9% for Apple, according to market tracker IDC.

"Between the two of them, that's pretty much everyone's phone system," says Bob Rudis, the Chief Data Scientist for security firm Rapid 7. "So most everyone will get this by default over the next 18 to 36 months."

Facebook and Google have for years been offering consumers the ability to ditch having to recall their multiple passwords, and instead use their single sign-on system for gaining entry to websites. These tools don't even require the input of screen name and passwords, just a click of the "Sign in with" Facebook or Google tab.

Apple hopes to go a little deeper, by using the Face ID and Touch ID biometrics features of the iPhone and iPad to bypass those clicks. If a website or app asks for an e-mail address, Apple will "create a unique email address that forwards to your real one," the company says.

So how is single sign-on more secure, if Facebook is in charge? It's not, say security experts. "They’ve shown they can’t be trusted with our information," says Rudis.

Google, however, is more trustworthy and Apple the best of the trio, he adds, due to its public commitment to privacy.

Both are super convenient. Who wouldn't rather click a Facebook or Google icon instead of having to type in your name and password, once again?

But not everyone we spoke with was in agreement that we can let our back down and forget about tough passwords.

Even Google, on its website, recommends 8 characters minimum, and combinations of letters, numbers and symbols. Apple has the same requirements, with at least one number minimum. "You can also add extra characters and punctuation marks to make your password even stronger," the company says.

"You can also make the password more complex by making it longer with a phrase or series of words that you can easily remember, but no one else knows," says Facebook.

Andy Halverson, who runs IT for video firm Ooyala, looks to a password manager, and lets it create and remember the hard passwords, so he doesn't have to. He uses the password manager Dashlane, but there are many other popular ones, including Lastpass and 1Pass.

"I like single sign-on, but this is another tool, and really convenient," he says.

James Litton, the CEO of security firm Identity Automation doesn't think single sign-on achieves much. "If it's a horrible password, your security situation hasn't improved," he says.

He likes super long passwords, as many as 32 to 64 characters, but stored in a password manager. With a manager, you type in one master password, and the software logs you in.

"It's more difficult for a bad guy to pick words out of a dictionary for a hack attack if I go long," he says.

Meanwhile, for now, Rudis says a combination of long passwords and a password manager will lead to us "to that nirvana of being able to sign on with a single sign-on," everywhere.

It will take time. First, Apple will have to convince hundreds of thousands of websites to add its single sign-on system, which won't be easy. Apple, Google and Facebook have huge sales jobs ahead. For instance, while you can sign on to Barnes and Noble and Kroger with Google, that option isn't available on many top websites, including Target, Walmart, American Airlines, Verizon Wireless and Home Depot.

In other tech news this week

Elon Musk announced a new Tesla video game at the E3 conference: The racing game, "Beach Buggy Racing 2" will use the Tesla steering wheel, and will be able to be played in his car. Musk cautioned that the car has to be in park in order to play.

Speaking of games, the PlayStation game system went down briefly on Thursday, for about four hours, According to the PlayStation status indicator page, there were problems with account management, gaming and social, PlayStation Now, PlayStation Video, PlayStation Store, and PlayStation Music.

A leak of Google's next edition of the Pixel phone displayed online this week. After tech blogs got ahold of leaked images, Google did something unexpected: The search giant went to social media to post real photos of the next generation smartphone months in advance of its expected release. On Wednesday, Google dropped a rendering on Twitter with the caption, "Well, since there seems to be some interest, here you go! Wait 'til you see what ti can do. #Pixel4." Google traditionally introduces new hardware in the fall.

And ICYMI, I offered some killer photo tips on how to get better vacation photos with your smartphone. Do you know about the flashlight app trick for food, or timer trick for selfies? Check it out!

This week's Talking Tech podcasts

Hey Google, why are you tracking my every move?

New Auto Safety Features Can Make Car Insurance More Expensive - NPR

Enlarge this image

A photo demonstrates safety features in a Volvo XC40. Many new cars have optional features that can help prevent accidents. But those same features can also make repairs more expensive, boosting car insurance premiums. Volvo Car Group hide caption

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Volvo Car Group

Many new cars sold today can take preemptive action to help prevent crashes — hitting the brakes before a collision, steering around obstacles or alerting drivers to hazards in their blind spots.

Those safety features — collectively known as advanced driver-assistance systems, or ADAS — reduce the risk of crashes. It might seem logical to assume that as a result, they'd reduce the cost of car insurance.

But instead, these advanced safety features can actually drive premiums up. That's because when such cars do get in crashes, the repairs are more expensive — thanks to the suite of sensors and computers that make these features possible.

Scott Wallisch, an auto pricing director with American Family Insurance, says headlights are a good example.

"A lot of vehicles are moving towards adaptive headlights that kind of look around the corner at night, or are LED and they're very bright," he says.

The benefit is easy to see — it helps a driver see better and avoid hitting something. But: "If a headlight gets into an accident it used to be $200 to replace it," Wallisch says. "Now, it's $2,000 to replace that same headlight."

It's the same story for other safety features. If your car is watching your blind spot, the technology in your side mirrors may be pricier than it appears, and sensors that help your vehicle detect pedestrians bump up the cost of your bumper. Windshields, rear sensors ... the list goes on.

"At least thus far, the improvements in safety and accident avoidance hasn't been significant enough to overtake the increase in cost to repair vehicles," says Michael Klein, the president of personal insurance at Travelers. The increase in repair costs gets passed on to consumers, he says.

New cars tend to be pricier to insure anyway, and instead of providing a break to consumers, cutting-edge safety technology can raise costs.

But Klein emphasizes that this shouldn't dissuade anyone from choosing a safer vehicle.

"Not all the incentives are economic," he says. "If you have the opportunity to buy a vehicle that has features that should make it safer and make it less likely you're going to get into an accident, that ought [to] be worth something to you."

The general trend holds across the industry. Sandee Perfetto works at Verisk, a company that provides data analysis to the insurance industry, where she directs personal auto product development.

"We have seen an increase in auto insurance premiums," she says. "There may be a number of factors that that can be attributed to, but this is potentially one of them."

However, policies vary, and Carmen Balber of Consumer Watchdog says it's crucial to shop around.

"Our research has shown that some auto insurance companies do give consumers discounts for having these safety features," she says, "but you may have to look around and they vary state by state."

Automatic emergency braking, where the car hits the brakes if it predicts a crash, is more likely to earn a car owner a discount, several experts said. But it's not guaranteed. And many other features aren't likely to save on insurance costs at all.

This could change in the future. The new technology could get cheaper over time, as it often does. Or as safety features get more common, they could reduce accidents more dramatically and change the cost-benefit analysis.

Insurers might simply need more time to understand just how effective the new safety features are. After all, insurers set rates now based on all the data they've collected from the past — that's how the entire industry works.

But some of these safety features are brand new, and there hasn't been much time to accumulate data.

Tom Karol, of the National Association of Mutual Insurance Companies, says the tech isn't just new — it's evolving. A feature might work one way this year, then get an update next year. And carmakers aren't always eager to share details about their proprietary technology.

"It's very difficult to get data on a moving target like that," he says.

Balber, of Consumer Watchdog, rejects the idea that the auto insurance industry needs more data on safety features.

"Insurance companies have the data that they need, if they chose to look for it, to determine if these safety features are actually reducing accidents," she says.

But Amy Bach, who runs United Policyholders, a nonprofit representing consumers, says she's not surprised to see insurers take their time assessing features. Historically the insurance industry has done a lot to promote safety, she says, but change doesn't happen quickly.

"Insurance ... it's about risk," she says. "Insurers tend to be cautious."

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https://www.npr.org/2019/06/15/728256381/why-safer-cars-dont-lead-to-cheaper-car-insurance-yet

2019-06-15 11:57:00Z
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Americans' Reliance on Social Security Is Near a Record High, Survey Shows - The Motley Fool

This coming August, we'll be celebrating Social Security's 84th anniversary since it was signed into law by Franklin Roosevelt. Over its nearly 84 years of existence, more than 79 of which have included payouts to retired workers, it's kept countless seniors, disabled workers, and survivors of deceased workers above the federal poverty level.

But as impressive as Social Security is as a program, one thing it was never intended to become was a primary source of income.

An elderly man counting a fanned pile of cash bills in his hands.

Image source: Getty Images.

Chances are that you're relying too much on Social Security

According to the Social Security Administration, average workers should see about 40% of their working wages replaced during retirement via a Social Security benefit, with perhaps a slightly higher percentage for lower-income workers, and a smaller percentage for the more well-to-do. This suggests that while Social Security will be there to assist seniors, they should have other sources of income, such as retirement accounts or a pension, that supersede their Social Security benefit in importance.

Yet, according to an annually released survey from national pollster Gallup, Americans' reliance on the program remains unmistakably high -- which, as you'll see, isn't a good thing.

The latest Gallup survey, which was conducted in early April, asked both current retirees and nonretirees how much they currently rely on, or respectively expect to rely on, Social Security income. Among current retirees, 57% consider it a "major source" of income, with 33% noting it's a "minor source." Meanwhile, 33% of nonretirees expect Social Security to be a "major source" of income, with 50% proclaiming it'll be a "minor source."

One way of viewing this data is by looking at it in the context of "respondents who'll need their Social Security income to make ends meet" versus "respondents who don't consider Social Security a necessary source of income." In Gallup's poll, a combined 90% of current retirees, and a combined 83% of nonretirees, will lean on Social Security in some capacity during retirement. For current retirees, this 90% reliance ties a 17-year high, and is unchanged from last year. As for nonretirees, their expected reliance on Social Security is just 1 percentage point below a 16-year high, and down 1 percentage point from 2018.

Two red dice next to a sliver of paper that reads, Will Your Social Security Be Enough?

Image source: Getty Images.

Big problems are right around the corner

Given that Social Security has been around for more than eight decades and is pretty much incapable of going bankrupt, this heavy reliance on the program may not seem like a big deal. But make no mistake: Big changes in the program look to be on their way, and an undue reliance on Social Security could come back to haunt seniors in relatively short order.

Every year, the Social Security Board of Trustees issues a report on the short-term (10-year) and long-term (75-year) outlook for the program. In the newest report, released in April, the Trustees forecast the beginning of annual net-cash outflows from Social Security in 2020, with these outflows growing with each passing year. By the time 2035 rolls around, the $2.9 trillion in surpluses that the program has built up since inception will be completely gone.

Understand that there's a big difference between not having any asset reserves and not having any revenue. Social Security will still be generating plenty of revenue each year as a result of its 12.4% payroll tax on earned income, as well as the taxation of Social Security benefits. This is what ensures that Social Security can never go bankrupt or just disappear.

But the program's absence of excess capital would mean that across-the-board benefit cuts are necessary to keep the program solvent for a long period of time. The Trustees have forecast the need for an up to 23% reduction in retired-worker benefits by 2035 if no additional revenue is raised by Congress, or expenditure cuts made.

As of May, the average retired worker was taking home almost $1,470 a month. But a 23% haircut to this average payout would reduce it dangerously close to the federal poverty level, in 2019 dollars.

A mature man closely examining material that's on his laptop.

Image source: Getty Images.

Know your options

The fact is, Americans can't rely on Congress to bail them out. This means the onus of a healthy retirement is on each of us. Thankfully, there are steps to take to improve our financial standing.

The easiest way to reduce your reliance on Social Security is by taking advantage of the retirement and investing tools available to you. This might include a 401(k) plan through your employer -- particularly handy if there's a company match option -- or setting up an Individual Retirement Account (IRA), which can offer up-front or back-end tax benefits, depending on which method works best for your tax situation and current income.

It also helps to enter retirement with little or no debt and an ample emergency savings fund for those just-in-case moments. Having money saved up for a rainy day will ensure that you're not waiting on the edge of your seat for that next Social Security benefit check to be deposited.

But just as important is understanding your Social Security claiming options. Although there is no perfect claiming strategy, there are certainly clues that can assist in your claiming decision. Ensuring that you understand your options -- which may include waiting years before taking benefits, undoing a claim, or maximizing household income via spousal benefits and/or child benefits -- can help get the most out of Social Security. By knowing your options, even a potential 23% haircut to your payout doesn't have to be devastating.

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https://www.fool.com/retirement/2019/06/15/americans-reliance-on-social-security-is-near-a-re.aspx

2019-06-15 10:06:00Z
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Tips for Spotting a U.S. Recession Before It Becomes Official - Bloomberg

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Tips for Spotting a U.S. Recession Before It Becomes Official Bloomberg

As the U.S. nears a record-long expansion in July, the conversation is increasingly turning to when it will all end.

https://www.bloomberg.com/news/articles/2019-06-15/tips-for-spotting-a-u-s-recession-before-it-becomes-official

2019-06-15 09:00:00Z
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Jumat, 14 Juni 2019

Chewy soars more than 70% in IPO - CNN

Shares of Chewy, which was bought by retailer PetSmart in 2017 for nearly $3.4 billion, soared nearly 80% to about $39 in early trading Friday. The company was valued at more than $15 billion following the stock sale.

Chewy priced its initial public offering Thursday at $22 a share. That was above the expected range.

The company raised $1 billion from the stock sale and now trades on the New York Stock Exchange under the ticker symbol CHWY.

PetSmart remains the majority owner of Chewy, with a 70% stake in the company and 77% controlling interest.

These companies could save the IPO market

Chewy is growing rapidly, despite competitive threats from Amazon (AMZN) as well as food giant General Mills (GIS) -- which recently acquired pet food seller Blue Buffalo.

Sales soared 68% last year to more than $3.5 billion. But the company is still losing money. It reported a net loss of $268 million in 2018, following a $338 million loss a year earlier.

Chewy is the latest high-profile unicorn IPO to launch with a smash, following in the footsteps of gig economy network Fiverr on Thursday and cybersecurity firm CrowdStrike (CRWD) earlier this week.

Beyond Meat (BYND), video conferencing company Zoom (ZM) and software firm PagerDuty (PD) have all surged since going public as well, a sign that the broader IPO market is still in solid shape despite the struggles of Uber (UBER) and Lyft (LYFT).

Chewy will be hoping that it is the next Beyond Meat and not another flop like Uber.

The company may also have to deal with unfavorable comparisons to Pets.com, one of the highest profile disasters of the dot-com bubble era in the late 1990s and early 2000.

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https://www.cnn.com/2019/06/14/investing/chewy-ipo/index.html

2019-06-14 15:35:00Z
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