Fed’s $4 Trillion Holdings Keep Boosting Growth Beyond End of QE – Interlinked Weekly Investment News – Oct. 24th, 2014

Divided SEC Adopts Mortgage Rule, Decries Lax Lending

In an unstable market, evaluating risk/reward potential is tantamount to keeping the markets stable, and growing. This month, the SEC took measures to do just that. They are trying to curb risky lending, and increase scrutiny on banks who lend frivolously to borrowers with poor financial history, or uncertain future financial outlooks.

The Securities and Exchange Commission approved the so-called “risk retention” rule by a 3-2 vote, while the U.S. Federal Reserve unanimously adopted it later in the day in a public board meeting. The rule requires banks to keep at least 5 percent of the risk on their books when they securitize loans. This “skin in the game” is aimed at aligning the bank’s interest with investors that buy the loans.

“Today could have been the day when the commission and its regulatory partners … stood strong, resisted political and special interest group pressure, and courageously seized this golden opportunity to address the failed federal housing policy that was one of the central causes of the financial crisis,” said Republican SEC Commissioner Daniel Gallagher.

Source: Reuters

 

Fed’s $4 Trillion Holdings Keep Boosting Growth Beyond End of QE

The Federal Reserve Bank is buying bonds, and it’s doing so at a record pace. In fact, since 2008, the FED has banked $4.48 trillion in bond-based balances, and is continuing its steady growth ever since then. And it’s in no position to stop anytime soon.

That will continue to keep a lid on borrowing costs, helping the Fed lift inflation closer to its target and providing support to a five-year expansion facing headwinds abroad, from war in the Mideast to slowing growth in Europe and China.

Holding bonds on the Fed’s balance sheet limits the supply of securities trading on the public markets, which helps keep prices up and yields lower than they otherwise would be. That provides stimulus to the economy just as a cut in the Fed’s benchmark interest rate would, according to Michael Gapen, a senior U.S. economist for Barclays Plc in New York and former Fed Board section chief in charge of monetary and financial markets analysis.

Source: Bloomberg

 

Amazon loses $170M on flopping phone, undermining results

The latest release by Amazon was anything but “fire.” The company that pioneered the reading tablet has taken a bit of a beating when it comes to the smartphone market. What was once heralded as an innovative new product has seen cold sales numbers, and frankly, hasn’t made any significant splash as a player in the ultra-competitive smartphone market.

After mediocre reviews – even on Amazon.com the Fire gets only 2 out of 5 stars – and rumors of poor sales, Amazon confirmed the problems in its third quarter earnings report on Thursday. The company announced a $170 million expense for “inventory evaluations and supplier commitment costs” related to the Fire phone. At the end of the quarter, the company said it still had $83 million of phone inventory on hand.

The hit caused Amazon to report an overall net income loss of $437 million, or 95 cents a share, for the quarter. Analysts had expected a loss of only 76 cents a share. Without the $170 million loss on the phone inventory, Amazon would have easily beaten expectations with a loss of around 59 cents a share, excluding the tax impact.

Source: Yahoo Finance

 

The Energy Shift: Deregulation and energy conservation lead the way

Energy deregulation is a hot topic these days. With the current state of energy delivery in the United States, finding a way to efficiently deliver energy, at a reasonable cost to the consumer has been a difficult task, but one that many lawmakers and businesses have been studying meticulously.

With an ever-growing population, advances in technology, and an increased demand for reliable energy, the debate for how our energy companies will compete for customers is heating up. Large, monopolistic energy companies have controlled the landscape until now. The Enron debacle delayed full blown deregulation in The United States. Regardless, many of the most populous states in the U.S. are now deregulated.

In a deregulated energy market, energy suppliers are urged to provide the latest energy efficient solutions to their customers if they want to differentiate themselves from the competition. Of course, large energy consuming commercial clients are the prize. There will be a few new players on the energy scene that are positioned to take advantage of “The Energy Shift”; so read on and find out who appears to be ready for the challenge.

Read more from about energy deregulation

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About Delray Wannemacher

Delray Wannemacher is President and CEO of Interlinked and its two subsidiaries InterlinkedTV and FSXinterlinked. Interlinked is a global multi-dimensional investment platform that connects investors, companies and partners by leveraging technology, media and physical events to achieve its goals. Delray has over 20 years of experience serving small and micro-cap companies, primarily in Internet, software, finance and communications. He works with startup companies, helping them achieve their goals as efficiently and effectively as possible. Delray has also successfully built four companies of his own.

View all posts by Delray Wannemacher

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