Don’t fight the Fed

Now if only the ECB and JCB would get off zero.  Good article from CNBC.

Unless something dramatic happens, the Federal Reserve won’t be hiking interest rates again until well into 2018, according to current market predictions.

Fed funds futures — contracts that indicate where the market thinks the central bank’s benchmark rate will be — point to no further moves until at least next June, and possibly a good deal later. Futures indicate that the Fed will approve just one increase between now and the end of next year.

“The reason for that is they are not getting anywhere close to their inflation target,” said Art Hogan, chief market strategist at Wunderlich Securities. “It’s that sort of secular change that we’ve seen in inflation. We’re just not going to get to 2 percent anytime soon. It keeps them at bay from being more aggressive on rates.”

federal reserve | will gold | 100 capital partners

Federal Reserve

If the current trend holds, 2017 will mark yet another year that the Fed said it would raise rates on a consistent basis but then backed off. Should the futures market have it right, 2018 would mark an even further departure from intentions.

The most recent projections from Fed officials show anticipation of one more rate hike this year, three in 2018 and then three or four more in 2019 to bring the funds rate to around 3 percent from its current 1.16 percent [1 percent to 1.25 percent target range].

The Fed has hiked twice this year but whiffed on its projections for 2016, when it was supposed to move four times but instead approved just one increase.


See the entire article written by Jeff Cox by clicking here.

Making $12 Billion

Still significantly undervalued with fundamentals and macro environment improving quarterly.  Write OTM covered calls, over them, to create additional income.  With the premium and dividend create a positive carry.

Warren Buffett’s bet on Bank of America Corp. is about to pay off with a roughly $12 billion windfall.

Warren Buffett Bloomberg Will Gold 100Capital Partners Denver ColoradoThe billionaire plans to exercise warrants obtained six years ago in a vote of confidence in Bank of America while its shares were tumbling amid multibillion-dollar probes tied to the housing meltdown. The cash infusion helped the bank put to rest doubts about whether it had enough capital, and its shares have more than tripled since then.

In the 2011 deal, Buffett’s Berkshire Hathaway Inc. invested $5 billion in Bank of America in exchange for preferred stock and the right to buy 700 million common shares, a stake now worth $17 billion. Berkshire said in a statement Friday that it would convert its preferred shares into common stock once the Charlotte, North Carolina-based bank increases its dividend, now planned for the beginning of the third quarter.

Buffett laid out his thinking for the conversion, which will make him the company’s biggest shareholder, in a February letter to investors, saying that the decision would come down to simple math: The preferred investment pays $300 million a year in dividends, so it makes sense to convert that into common stock if those shares began earning more.

See the entire article by clicking here.

Written by Noah Buhayar and Katherine Chiglinsky