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Obama’s Fed Stifles Trump Market Rally And Economic Recovery Plans

Federal Reserve officials, amid signs that the U.S. economy soon could shed its long period of stagnation, approved the first interest rate hike in a year Wednesday and said it foresees three more increases next year. 

This is only the second time in a decade that the Fed has raised rates, which it kept at near zero throughout the Obama presidency. 

Fed HikeAs a result, stocks had their worst day in two months after the Federal Reserve surprised investors by increasing its forecast for rate hikes next year. 

Asian markets were also broadly down Thursday after the U.S. Federal Reserve indicated a faster pace of interest-rate increases than previously expected. 

“We were certainly surprised by the Fed move,” said Tim Condon, head of research for Asia at ING. 

Overnight, the Federal Reserve raised the federal-funds rate by a quarter of a percentage point to between 0.50% and 0.75%, and said it expected to raise short-term rates next year by an additional 0.75 percentage point, spread over three rate increases. 

Markets had expected a 0.50 percentage-point increase in 2017 over two rate rises. 

Rising U.S. rates increase funding costs for Asian companies in dollars, a stronger dollar also makes US exports less competitive, however, on the up side it pulls money from regional markets to the States. 

After pumping-up the economy with near-zero interest rates for the entire Obama presidency, we here at CHQ have expected that Obama’s Federal Reserve would not be friendly to Donald Trump’s plans for an economic growth agenda. 

And the numbers appear to bear us out.  

Since the beginning of November, the yield on the 10-year Treasury note (TMUBMUSD10Y, +2.27%) has climbed 180 basis points to 2.5%. The spike began at the same time as Donald Trump’s election. 

Bankrate.com documents that for the seventh week in a row, and the 10th time in 11 weeks, mortgage rates have gone up. Mortgage rates haven't had a down week since early September. 

Over the past 52 weeks, the 30-year fixed has averaged 3.78 percent. This week's rate is 0.40 percentage points higher than the 52-week average. 

Higher rates make mortgages more expensive, deterring home sales and stifling the crucial housing sector – a key segment of the market for the kind of well-paying blue collar jobs Donald Trump plans to stimulate. 

Higher rates will also make Trump’s infrastructure rebuilding plans much more expensive. 

As Trump’s Chief Strategist Steve Bannon said a while back, jobs can come from rebuilding physical infrastructure. “With negative interest rates throughout the world, it’s the greatest opportunity to rebuild everything. Shipyards, ironworks — get them all jacked up,” Bannon told the Hollywood Reporter. 

That plan just got more expensive, and will get more expensive still if Obama’s Federal Reserve chief Janet Yellen remains in charge of monetary policy and continues to raise interest rates.

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Political Fed

Why we put our economic well-being in the hands of a political institution is beyond me. The Fed is political. Our justice system is political. FCC, EPA, IRS, CIA, al infinitum....all are political.

And we go merrily along as if it isn't so.

BO's parting shot via the Feds and Yellen

Although this will be a bitter pill, the rates have been held down for all the wrong reasons thus the recovery if anyone financial wishes to call it that has been at best tepid. Time to right the ship and Obama thinks this will be a big problem. Actually although it is being done by Obama to punish the nation and Trump and his administration as his parting nasty gift, the effect will be to get the economy back on its feet the right way. The national economic growth will come back much higher properly managed by a real finance guy. No more flat 2% or lower after the trash is washed out of the process.

So for the speculators in the markets and the home buyers who got too much house recently as in the last couple of years with a variable loan are swept away, things should get healthier and if I were Trump, Yellen would be replaced ASAP with someone not playing games with our economy for Obama. Put her on the curb, she is a political appointee not a real economist or financial person or this would have happened at least four to six years ago preferably six years ago.

So painful though it will be which should be blamed on Obama and Yellen, Trump will use it to get interest rates where the market really is and stop bankrupting the country to maintain something that should have been stopped in Obama's first term. Yellen is definitely a traitor and has played games with our economy for her democrat party and Obama to the detriment of this country.