FED Rate is hiked by 0.25% now, Three more next year

FED Hiked 0.25% today, Mortgage rate jumped slightly after that

Today’s Best-Execution Rates

30YR FIXED - 4.25-4.375%
FHA/VA - 4.0%
15 YEAR FIXED - 3.375-3.5%
5 YEAR ARMS - 3.0 - 3.5% depending on the lender

http://www.cnbc.com/2016/12/14/fed-surprises-with-three-rate-hikes-next-year--and-could-need-more.html

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The average forecast for next year was 2.5 hikes, so 50% of the market thought 2 and 50% thought 3. It’s really meaningless though. This year’s forecast was 4, and we got 1.

Yes, Economy is not strong enough to increase the rates often. This is the main reason, we have got one when they planned 4. Same way, they plan 3 next year, but we may end up in 2 or 1. It depends on how economy is ready to face the rate pressure.

The public might have taken the Fed a little more seriously this time because they believe there will be fiscal stimulus under a Trump presidency to prompt more rate hikes in 2017.

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That fiscal stimulus is not what many think. Trump’s infrastructure plan is basically a tax cut for contractors and utility companies. No new government dollars will be spent. It’s anyone’s guess whether private companies will find the urge to spend the tax money saved, and whether they will spend on “infrastructure”. Hillary’s plan would have government money directly spent on new projects.

I don’t think the Fed can hike rates 3 times next year. Economy is not growing so hot it warrants a massive rate hike ramp. Most likely just 1 or 2.

Under promise over deliver principle. Intend for 1 or 2, say 3.

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Obama spent $400k per job created/saved on his $800B stimulus bill. That was a lot of hoopla over nothing. Trump’s is $1T over 10 years which is $100B/yr. That’s not even a blip on the radar for our economy.

Meanwhile, every $80k of GDP growth creates 1 job. If we get tax cuts followed by 4%+ growth similar to the other 4 times we’ve cut taxes, then we’d create roughly 27M jobs over 3 years. That’s 750,000/mo which dwarfs the ~200,000 we’re averaging now.

Or it can show up as profit for companies.

The nature of our growth is not going to suddenly change because we have a new president. The growth rate may change, yes. But if we are producing X number of jobs with a >3% growth rate, I find it hard to believe we will suddenly create 4X number of jobs with one more percentage point of growth.

Trump basic idea is to bring back jobs to USA, bring back economic supremacy to USA. IMO, he is different from other Rep as others are focused on sectors that directly/indirectly benefits them. Trump main core object is stopping job migration outside. He understood the core reason for job migration

He is firm on corporate tax reduction as US is the one of the top 3 high corporate tax countries in the world.If he reduces to 15%, no company will be ready to put up office at tax haven countries ! This will hurt UK,Ireland and Euro.

I am still not clear how he can reduce job migration to China, India and Mexico which is tough to do as these countries are highly populated that is the reason for low cost by lower wages.

He will continue to have fiscal stimulus, money printing and those are really challenging the future economy of US.

What Obama has done is to bring back the country from disaster. Great Depression was extreme collapse of US Economy.

Trump does not have that kind of challenges Obama faced. In fact, Trump is going to ride the good economical recovery Obama has created.

The one similarity with both of them that they are firm in their ideas, do not listen to anyone except themselves !

$80k of GDP per 1 job has been pretty accurate over the last couple of decades. GDP growth hasn’t consistently been that strong. We’re running sub 2% average.

On any case, mortgage rates are going up. Next two or three years, FED is going to increase the rates unless economy falls down.

With trump cutting taxes, financial stimulus (money printing) is mandatory. This will cause further inflation.

Next year, I feel more people are going compete with whatever home is available as we may not have this teasing rates at 4% any more. Rates may reach around 5% to 6% level easily.

Real estate Investment in good bay area location is still better.

Can anyone find when we cut tax rates and tax revenue decreased? Hint: when we cut rates actual tax revenue increases. The only times tax revenue has fallen is during recession.

Does rent increase as mortgage rate and Fed rate are going up?

Likely…

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Rent increases with wages going up. In Cali wages are going up 50% in 6 years for min wage earners and many others making less than $20/hr…Inflation is coming no matter what true cause…A little is good for real estate prices, but a lot is good for nobody…

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Rates shouldn’t increase until AFTER wages increase. Remember, we just had the best wages report in years. Now we finally got a rate increase. Go figure.

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Interest rate is artificially low, it’s lower than inflation rate. I think Fed can certainly raise rate by 0.75% next year to make fed rate catch up inflation.

How soon could Congress approve and implement tax cut? Will the corporates and individuals be able to enjoy tax in 2018?

I hope they go after tax reform first. I’m worried they’ll start with healthcare. I think it’ll be difficult to reach a consensus on healthcare. Obama wasted 2 years on it, and it cost his party in mid-term elections. Maybe they can start small and allow insurers to compete across state lines. Drug prices are insane. There’s no reason they need to increase prices by 10-20% a year after a drug is approved. The R&D is done. The increase is probably funding more and more marketing. I’d love to see reform around prescription drug marketing and sales practices. There’s a reason the US consumes 80% of the world’s drugs.

What can I do, doctor keeps recommending new drugs to consume. Taking 7 drugs per day :frowning: