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Western Asset Mortgage Capital Corporation Message Board

  • jackhilr jackhilr Aug 20, 2014 2:27 PM Flag

    Fed head fake about improving labor market

    Fed speak poses optimism about improving labor trends, but the data so not support, with wages not rising, and full time jobs being converted to part time w/o benefits. Retail, including auto sales stalled and falling, with housing recovery also stalled-- new part time job holders do not qualify for mortgages if they even wanted to risk buying a house. Labor participation rate continues near historic low, but the Fed wants to discourage the carry trade, so they make some puff talk about improving job market.

    Raising interest rates will increase the gov cost of servicing the debt approaching $18 T, and raise the value of the dollar, thus hurting export competition and jobs.

    Sentiment: Strong Buy

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    • nickspinner Aug 20, 2014 7:19 PM Flag

      Quite so. With ObaMao at the helm, only death and destruction can result -- not to Islamic State, but to the American economy and moral fiber.

    • Housing has improved greatly recently. Your problem is you copied the talking points from Romney's campaign. Full time jobs have risen by 2 million in the past year. We are growing at a 2 to 3% annual rate. Not great but not nearly as bad as you describe. Wages will begin to rise once we get unemployment lower. The real problem is that the Fed may overreact to the good news and tighten too quickly.

    • Fact is the government is buying up less bonds/mo and that number has to go to zero. Yes, the government doesn't want rates to go up before some of that debt can run off their books, but inflation tells all. Inflation is increasing and is underreported. Looks like a crash-boom-crash economy.

      • 2 Replies to yes_free_will
      • fed reinvesting the interest amounts to nearly 20 billion a year - they barely mention this - I wonder why?

        so there will be 18 to 22billion a month from this once its all said and done assuming they continue to reinvest it as they said they are and will

      • Weak economies yet threaten deflation which is worse and less manageble than moderate inflation. The EC and Japan are back to deflation, The Fed appropriately wants inflation on the order of 2% or a bit higher--that is a stated and real goal. Yellen and Ben have both argued that the Fed raised rates too soon after the Great Depression and doomed recovery for decades. So, Yellen is not about to raise rates while the economy is weak, labor participation is historically low, and the middle class (buying power) is being hollowed out by conversion of full time jobs to part time at low wage.

        Sentiment: Strong Buy

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