higher interest – Sendika12 http://sendika12.org/ Fri, 18 Mar 2022 21:20:56 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://sendika12.org/wp-content/uploads/2021/10/profile-120x120.png higher interest – Sendika12 http://sendika12.org/ 32 32 Bank Of Hawaii Stock: Poised To Benefit From Higher Interest Rates (NYSE: BOH) https://sendika12.org/bank-of-hawaii-stock-poised-to-benefit-from-higher-interest-rates-nyse-boh/ Fri, 18 Mar 2022 20:49:34 +0000 https://sendika12.org/bank-of-hawaii-stock-poised-to-benefit-from-higher-interest-rates-nyse-boh/ Art Bet / E+ via Getty Images As recently covered First Hawaiian (FHB), Bank of Hawaii (NYSE: BOH) stocks have been fairly flat since the last coverage. The valuation didn’t really look convincing at the time, and with the post-COVID recovery also looking a bit lackluster, I guess a quiet period here shouldn’t be so […]]]>

Art Bet / E+ via Getty Images

As recently covered First Hawaiian (FHB), Bank of Hawaii (NYSE: BOH) stocks have been fairly flat since the last coverage. The valuation didn’t really look convincing at the time, and with the post-COVID recovery also looking a bit lackluster, I guess a quiet period here shouldn’t be so surprising.

Graphic
Data by YCharts

Although the bank’s operating performance has been a bit sluggish, we are seeing at least some growth in core lending, and interest rate hikes have also been very much in evidence since the start of this week. This should serve the bank well as we move forward into 2022, although I was a bit concerned that increasingly pessimistic economic growth forecasts would put a damper on this part of the story.

These stocks still don’t look cheap on common bank valuation metrics like normalized PE and P/TBV, but again, they rarely do. While I wouldn’t rule out the quiet period here continuing in the short term, and there are other headwinds to consider, “more of the same” can work very well in the long term, with return to mid-single-digit core earnings growth and a dividend yield of 3.35% sufficient to generate acceptable returns for dividend investors.

Results still a little pedestrian

The reported numbers continue to look a little weak, with revenue nearly flat sequentially at $168.9 million in the fourth quarter. Within this, net interest income (“NII”) decreased by a shade sequentially on a reported basis, primarily due to lower interest income from the Paycheck Protection Program as these loans continue to decline in the balance sheet.

Bank of Hawaii quarterly net interest income

Bank of Hawaii Quarterly Net Interest Income (Bank of Hawaii Quarterly Earnings Release)

Non-interest expense also increased, rising more than 5% sequentially and 3% year-on-year to $101.7 million in the fourth quarter, driving the efficiency ratio above 60% for the quarter.

With revenue still sluggish and expenses rising, quarterly operating income before provision (“PPOP”) was also predictable, falling 6% sequentially to $67.3 million. And that was pretty much the story for 2021 as a whole – rather weak income, due to a combination of low interest rates and sluggish non-interest income, facing spending higher operating. Unsurprisingly, PPPP for the full year was also low, as expected, at $275 million versus $306.9 million in 2020.

Bank of Hawaii quarterly operating profit before provision

Bank of Hawaii PPPO (Bank of Hawaii quarterly earnings release, author’s calculations)

The provisioning, however, continued to be a boon to net income, with the releases contributing $9.7 million to pretax profit in the fourth quarter and $50.5 million for the whole of year. This contributed to annual EPS of $6.25, compared to $3.86 in 2020.

Ongoing core loan growth

Although the numbers released by the bank make the recovery here a little slow, we are at least seeing signs of underlying growth. Core loans (i.e. excluding PPP balances) rose again for one, rising 2.8% sequentially and 6.2% year-on-year in the fourth quarter to 12.1 billion. dollars. It was also the third consecutive quarter of accelerating core loan growth – with core loans posting sequential growth of 2.4% and 1% in Q3 and Q2 respectively.

This resulted in a slight increase in the “base” NII (i.e. excluding PPP interest income and certain one-time charges), which increased 2.2% sequentially to $121.5 million in the fourth trimester. With PPP loan balances down to just $126.8 million at the end of last year (about 1% of total end-of-period loans), this run-off should present only a modest headwind. in 2022.

The economic recovery is fairly well established at this point, having experienced a slight wobble due to the impact of the Omicron wave on the state’s tourism economy. COVID restrictions are easing to the point of non-existence for domestic visitors, while the resumption of international travel is expected to accelerate later in the year. The state’s housing market also continues to look very strong. All told, I expect core loan growth (and subsequent NII growth) to show through in the results released this year.

Ready to benefit from higher interest rates

Loan growth should be a boon for the NII this year, but the bank will also see an increase in interest rates now that the tightening has really begun. Fixed rate loans make up a large part of the mix here (around 65%), but the bank has a very sticky deposit base which will give it the ability to capture higher margins. Moreover, a current loan-to-deposit ratio of 60% combined with the ongoing maturing of loans/investment securities suggests that it will have no problem recycling capital into higher-yielding assets.

The bank’s standard sensitivity disclosure indicates an immediate 100 basis point hike in rates, resulting in an annual rise of about 7.9% in the NII, with a more gradual change of the same magnitude resulting in an increase of 3. 1% of the NII.

Perspectives

While I expect to see tangible improvement in the NII based on a combination of loan growth and higher interest rates, there are some headwinds to consider, at least in the short term.

First, and like many banks, management expects a significant increase in annual operating expenses this year – somewhere in the 6% zone, as inflation ripples through wage growth and bank invests in technology. The latter should at least support future growth, but in the short term it will weigh somewhat on the PPPP and net profits.

Second, supply obviously won’t provide the same pop to the bottom line as last year. The bank’s allowance for credit losses is still about 30 basis points above immediate pre-COVID levels (1.29% vs. a “day 1” ACL of 0.99%), so there is room to maintain small impairment charges in the future, but vis-à-vis 2021 this line will obviously be a drag on net income and EPS this year.

Still a good choice for dividend investors

The immediate term might continue to be a little disappointing in terms of revenue, but that’s not something I see continuing in the medium term. On the one hand, the bank has always been very strong in terms of expense control, registering a CAGR of around 3% in the five years before COVID. Growth in operating expenses should moderate in 2023, returning to its historical trend thereafter. A corporate tax hike also seems out of place – something I was a bit cautious about last time.

With that, I expect annualized growth in the dividend per share of at least 5-6% over the next five years, consisting of the following:

  • Mid-single-digit annualized revenue growth, driven by mid-single-digit annualized loan growth, higher interest rates and modest non-interest revenue growth.
  • Operating expenses are expected to increase 6% in FY22, slow to 4% in FY23 and return to more moderate historical growth levels thereafter.
  • The above will lead to single-digit annualized PPOP growth – broadly in line with pre-COVID trends – with lower net income and EPS growth due to the normalization of provision levels from FY22, offset to a small extent by the cumulative effect of share buybacks (in the case of EPS).
  • The above will lead to EPS of around $7.40 by 2026, with a dividend payout ratio of around 50% – broadly in line with its historical level.

While not the most exciting outlook in the world, the above works out pretty well for income investors given the current yield of 3.35%. To buy.

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As the Fed begins raising interest rates, Americans should brace for pain https://sendika12.org/as-the-fed-begins-raising-interest-rates-americans-should-brace-for-pain/ Wed, 16 Mar 2022 00:39:13 +0000 https://sendika12.org/as-the-fed-begins-raising-interest-rates-americans-should-brace-for-pain/ Get the coronavirus nextThe next phase of our pandemic newsletter keeping you up to date with the latest developments as we enter a new normal. The Fed aims to lower inflation by reduce consumer spending and business owners who will find it more expensive to borrow. “The impact of a quarter-point hike is inconsequential, but […]]]>

The Fed aims to lower inflation by reduce consumer spending and business owners who will find it more expensive to borrow.

“The impact of a quarter-point hike is inconsequential, but the cumulative effect of six to ten interest rate hikes is a whole other ball game,” said Greg McBride, financial analyst in head of the financial information site Bankrate.com.

The consumer price index jumped 7.9% in February from a year earlier, the highest rate since 1982, after a spike in oil prices triggered by the invasion of Ukraine by Russia added to already rapidly rising prices caused by pandemic supply chain disruptions, pent up demand and government spending. High inflation is hitting American families and businesses hard, threatening the strong economic recovery from the pandemic.

Inflation is also a major political issue for President Biden, who said in his State of the Union address that “my top priority is to get prices under control.” Half of respondents in a Wall Street Journal poll released on Friday ranked inflation as the most important thing the president and Congress should tackle, double the second place of the war in Ukraine. And 63% of voters registered in the poll said they disapproved of Biden’s handling of inflation.

So there’s a lot at stake economically and politically as the Fed, the federal government’s main inflation fighter, takes its first step in what is going to be a months-long effort to try to rein in soaring oil prices. gas, groceries, cars, rent and other consumer expenses.

The Fed’s task is extremely difficult as it must determine how much to raise rates without slowing the economy to the point of falling into recession. The effort is inherent in the pain of average Americans, whom the Fed is trying to discourage from spending, said Kathy Bostjancic, chief U.S. financial economist at Oxford Economics, a global forecasting and analysis firm.

“You don’t want it to be a killer blow, but you definitely want it to pinch consumer spending,” she said of the interest rate hikes. “To slow it down, not turn it off completely.”

When the pandemic hit two years ago, the central bank cut its key federal funds rate to near zero to spur spending. This rate applies directly only to short-term loans between banks. But banks use it as a benchmark for personal and business loans, and it also affects longer-term loans, like mortgages.

In anticipation of Wednesday’s Fed hike, mortgage rates have already risen. The average 30-year fixed-rate loan was 4.42% on Tuesday, up more than 1 percentage point since the start of the year to the highest level since 2019, according to Mortgage News Daily.

Credit card interest rates will adjust within a billing statement or two of the Fed’s rate hike, McBride said. In the past, banks have also increased the interest rate they pay customers on their deposits. But the big banks are teeming with deposits and are unlikely to raise those rates much, if at all, he said. Federally insured online banks, which are more eager for customers, are a better bet to raise their interest rates on savings and checking accounts.

Stock prices are likely to fall because higher interest rates increase borrowing costs for businesses and make stocks a less attractive investment. Major equity indices have already fallen significantly in anticipation of Fed rate hikes, as well as in reaction to the war in Ukraine. McBride said investors should ride out the volatility and avoid panicking as stocks typically rise over the longer term.

“We have already seen this film. After the dotcom meltdown, after the Great Recession and even just after the onset of the pandemic, markets fell by a third in early 2020 and have since rallied and hit new highs after new highs,” did he declare. “Don’t try to guess the market. Play the long game.

Treasury yields have also risen in anticipation of Fed rate hikes, and that’s a problem for the federal government as it must continue to fund its $30 trillion national debt.

Last July, when many economists thought high inflation would only last a few months, the Congressional Budget Office predicted the US government would pay $306 billion in debt interest this year. But that forecast was based on the Fed not raising interest rates until the middle of 2023.

If interest rates rise just 1 percentage point higher than projected over the next decade, Congress will have to find an additional $187 billion a year to pay the extra interest on the debt, according to an analysis by the Committee for a Responsible Federal Budget, a budget watchdog group.

Jason Furman, a Harvard economist who served as chairman of the White House Council of Economic Advisers during the Obama administration, said inflation wasn’t so bad when it came to the national debt. This could help ease the burden over time by reducing the amount of debt relative to the size of the economy.

Overall, Furman said he’s not concerned that gradual interest rate hikes will significantly disrupt the economy or the United States’ ability to service debt. He noted that the Congressional Budget Office expects the main Fed to 2.6% by 2031, which is still historically low.

“The era of super low interest rates is coming to an end, but we could be in the era of super low interest rates for a while,” Furman said.

But after the federal government doled out trillions of dollars in pandemic aid on top of its massive debt, any hike in interest rates could make it harder for Congress and the White House to fund national priorities and respond. to future emergencies.

“The Great Recession and the pandemic were absolutely times we should have borrowed. It was the right thing to do,” said Maya MacGuineas, chair of the Committee for a Responsible Federal Budget. But the federal government continued to run large budget deficits when the economy was relatively strong between these two efforts.

Now the inflated interest payments on the national debt will prevent Congress and the White House from providing fiscal stimulus if the Fed’s inflation-fighting efforts push the economy to the brink of recession, MacGuineas said.

“There was a kind of senseless naivety about people who were saying in recent years, ‘Don’t worry, we can borrow because interest rates will never go up,'” she said. “Never is a long time. And now, never is here.


Jim Puzzanghera can be contacted at jim.puzzanghera@globe.com. Follow him on Twitter: @JimPuzzanghera.

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Can rising interest rates really control inflation? https://sendika12.org/can-rising-interest-rates-really-control-inflation/ Sat, 05 Mar 2022 18:00:00 +0000 https://sendika12.org/can-rising-interest-rates-really-control-inflation/ Sun, Mar 6, 2022 12:00 a.m. Last updated on: Sun, Mar 6, 2022, 12:00 a.m. Treating inflation with high interest rates is like treating cancer with chemotherapy. You have to kill swathes of the economy to slow things down. Illustration: Collected “> Treating inflation with high interest rates is like treating cancer with chemotherapy. You […]]]>

Treating inflation with high interest rates is like treating cancer with chemotherapy. You have to kill swathes of the economy to slow things down. Illustration: Collected

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Treating inflation with high interest rates is like treating cancer with chemotherapy. You have to kill swaths of the economy to slow things down. Illustration: Collected

Russia’s military attack on Ukraine has unquestionably unbalanced the global economy. The newspapers are full of stories about the long-term impact of this war. Obviously, I share many of the dire predictions being made, but for this article I have chosen to address another equally burning and long-term issue: the role of rising interest rates. In simple terms, it revolves around the question, “How high should the interest rate rise to curb inflation?”

We know that the rate of interest determines the price of holding or lending money. Banks pay an interest rate on savings to attract depositors. Banks also receive an interest rate for money lent from their deposits. When interest rates are low, individuals and businesses tend to borrow more from banks, thereby increasing the money supply. As a result, inflation rises. On the other hand, higher interest rates tend to lower inflation.

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Although this is a very simplified version of the relationship, it highlights why interest rates and inflation tend to be inversely correlated.

Economists are increasingly concerned that the interest rate borrowers are paying will soon skyrocket and short-circuit the post-pandemic economic recovery. So why is the interest rate going up? How does it affect other macroeconomic variables, notably the price level? Can rising interest rates really curb inflation? I cannot answer all of these questions here for lack of space, but I hope to pique the interest of readers so that they can delve deeper into the puzzle over time.

A central bank can use changes in interest rates as a tool to fight inflation. It does this by fixing the commercial banks’ short-term borrowing rate – known as the repo rate in Bangladesh – and then these banks pass it on to consumers and businesses. This rate influences everything from credit card interest to mortgages and auto loans, making borrowing more expensive. On the other hand, it also increases savings and certificate of deposit (CD) rates and encourages saving.

In times of inflation, a central bank aims to make borrowing more expensive so that consumers delay their purchases, which dampens demand and controls prices. The biggest challenge is finding the right level so as not to raise it too high, which will stifle investment and hurt the poor.

As we see now, interest rates in countries around the world are rising after a lull in recent years. The Bank of England has started raising interest rates from historic pandemic lows and is under increasing pressure to raise the bank rate again. The US Federal Reserve is expected to begin raising the benchmark rate, known as the funds rate, at the next Board of Governors meeting on March 15-16. The European Common Bank may selectively raise rates, and there is no doubt that Asian countries will follow, although there may be a slight lag.

The novelty of this upward trend is that many central banks in North America and Europe have cut their respective interest rates to near-zero levels in an effort to meet the maximum stability targets for the economy. employment and prices. Unfortunately, inflation has recently spiked due to rising demand and supply chain bottlenecks. Central banks have now decided to curb aggregate demand and money supply to ease inflationary pressures.

The crucial question here is whether the observed movement in the two variables – interest rate and inflation – exhibits causality, or is it just coincidence? The question is immediately relevant: will the simple increase in the interest rate bring down the rate of inflation? Also, how high and how fast must the interest rate rise to have an impact on inflation? For example, if necessary, can the Fed raise interest rates to 5%, 10% or, as in the 1980s, 20%? Is it even calculable or predictable in advance? The answer to these questions is no.

Raghuram Rajan, former chief economist of the IMF and governor of the Reserve Bank of India, called interest rates a “brutal” tool in a situation where the real culprit is the creaky supply chain. The interest rate is a blunt tool also because aggregate price indices do not tell us precisely what prices are changing, for what reasons or to what effect.

“The government should take steps to protect the poorest through tougher price caps and direct financial support, while increasing investment in green projects to end our exposure to fossil fuel price volatility. and curbing demand from those who can afford it through wealth taxes,” Rajan said. adds.

Of course, it will take some time before any action taken by a central bank will have an impact on the economy and curb inflation. That’s why policymaking groups need to watch economic data carefully to decide how much and how often to raise rates.

And the biggest challenge is finding the optimal level of interest rate increases without plunging the economy into a slump. Treating inflation is like treating cancer with chemotherapy, as one expert once said. “You have to kill chunks of the economy to slow things down. It’s not nice treatment.”

Dr Abdullah Shibli is a senior research fellow at the US-based International Institute for Sustainable Development (ISDI).

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What are the interest rates? How do they work? https://sendika12.org/what-are-the-interest-rates-how-do-they-work/ Mon, 28 Feb 2022 20:29:13 +0000 https://sendika12.org/what-are-the-interest-rates-how-do-they-work/ Interest is the price you pay to borrow money. Stocksnap from Pixabay; Cloth What are the interest rates? Contents When people need to finance major purchases like a house or car, start a business, or pay school fees, they often turn to their bank for a loan. These loans can be short-term, lasting only a […]]]>

What are the interest rates?

When people need to finance major purchases like a house or car, start a business, or pay school fees, they often turn to their bank for a loan. These loans can be short-term, lasting only a few months, but they can also be longer-term, such as mortgages, which have terms of up to 30 years.

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As the Reserve Bank raises interest rates, vodka could be the answer https://sendika12.org/as-the-reserve-bank-raises-interest-rates-vodka-could-be-the-answer/ Sat, 26 Feb 2022 16:00:00 +0000 https://sendika12.org/as-the-reserve-bank-raises-interest-rates-vodka-could-be-the-answer/ Damien Grant is an Auckland business owner, member of the Taxpayers Union and regular opinion contributor for Stuff. OPINION: Imagine that you are the vodka commissar of the People’s Republic of Donbass. Your task is to ensure the distribution of vodka to the citizens of the nation. Your mandate is to reach an average level […]]]>

Damien Grant is an Auckland business owner, member of the Taxpayers Union and regular opinion contributor for Stuff.

OPINION: Imagine that you are the vodka commissar of the People’s Republic of Donbass.

Your task is to ensure the distribution of vodka to the citizens of the nation. Your mandate is to reach an average level of vodka consumption between 1 and 3 liters per adult annually.

Over the past year, however, there has been a malaise in the national psyche. In response, you decided to increase the availability of vodka to boost national morale. Voluntary pun.

Subsidized vodka for everyone! Consumption has increased and is now at 6 liters per person. It certainly lifted the nation’s mood, but the resulting rational exuberance proves disruptive. It’s time to bring down the level of consumption.

READ MORE:
* Adrian Orr suggests the Reserve Bank is ‘incredibly worried’ about inflation
* The Reserve Bank raises the official exchange rate by 25 basis points and now sees the rate climbing to around 3.4%
* Adrian Orr says Reserve Bank has ‘small role’ in unsustainable house prices

Alas, you discover a problem. In the past, vodka consumption was evenly distributed. Today, most consumption is concentrated among a small percentage of the population, as some citizens have reacted aggressively to the supply of cheap alcohol.

You accelerate a resolution by liquidating those who have consumed too much. It’s a bit drastic, and as a result, you can expect to be fired as the state seeks to restore faith in the vodka market.

Reserve Bank Governor Adrian Orr.  Reserve Bank Governor Adrian Orr's approach to monetary policy leaves him no leeway now that we are facing a crisis, says Damien Grant.

Robert Kitchin / Stuff

Reserve Bank Governor Adrian Orr. Reserve Bank Governor Adrian Orr’s approach to monetary policy leaves him no leeway now that we are facing a crisis, says Damien Grant.

Now you might be wondering, that was a great story, but what does that have to do with Adrian Orr?

When Don Brash – not to be confused with Donbass, but the literary allusion was too tempting – was tasked with reducing inflation, nearly 74% of the population owned their homes. Today, that figure is at least 10% lower.

Brash managed to defeat inflation by reducing the purchasing power of those with floating mortgages. This pain was spread over no less than half of all households. A drop in demand followed and reduced spending put downward pressure on prices.

Orr faces a different set of facts.

Someone who bought a house before 2016 enjoyed at least a doubling of the value of their property and, thanks to historically low interest rates, a large part of the repayments would have gone to reducing the principal.

Those who have bought in the past few years will have paid dearly and borrowed so much that many of them are now walking stooping. As Orr increases the cost of borrowing, it’s those unfortunate few who are going to be liquidated, while the rest of us are largely unaffected.

It is possible that the rise in interest rates will not have a short-term effect on businesses either. For most companies, servicing debt is only a small part of their total expenses and although a rise in rates will reduce new investment, this effect will take years to trickle down to demand.

The era of cheap interest rates is about to end and with it the fortunes of those who once enjoyed “cheap rates”.

Kavinda Herath/Stuff

The era of cheap interest rates is about to end and with it the fortunes of those who once enjoyed “cheap rates”.

Perhaps the Reserve Bank understands this and can explain why the OCR hike was only a nominal 0.25% instead of the 0.5% some were expecting. Or maybe it was another misstep in a long series of missteps.

More importantly, the bank announced that it would not renew the large-scale asset purchases it made at the start of the pandemic.

The assumption, at least mine, was that these debts would be rolled over, meaning they were never to be repaid until inflation reduced their face value to the price of a single Ukrainian hryvnia.

Orr put the Treasury under pressure. The maturities of these loans are staggered over the coming decades, with the tail ending in 2041. However, seven and a half billion are due in April next year and five billion in May 2024.

In order to meet these repayments, Grant Robertson, and perhaps Simon Bridges after him, will have to either raise taxes, cut spending, or borrow on the open market. This is a problem because large budget deficits are expected in the years to come.

This means that the Crown will have to borrow not only to cover its current deficit, but also for the $53 billion owed to the central bank.

As the Treasury seeks funding, it will pay market rates for its sovereign debt. As a result, New Zealand is going to experience higher interest rates for longer and the cost of this is going to be spread unevenly among those who responded to the incentives created by the bank.

Asked last Thursday by Epsom MP David Seymour, Orr blithely replied that “we don’t target house prices, we target consumer price inflation”.

“We lowered interest rates to achieve what we had done. Whether people want to use this to buy and sell assets is the choice between them and the financial institutions.

The problem, Governor, is that these individuals responded to the incentives created by your institution and now they are the ones who will pay the price for what is widely perceived as a massive mistake.

National revenue spokesman Andrew Bayly suggested the RBNZ's approach to quantitative easing was among the most aggressive in the OECD.

ROBERT KITCHIN/Stuff

National revenue spokesman Andrew Bayly suggested the RBNZ’s approach to quantitative easing was among the most aggressive in the OECD.

Opposition spokesman Andrew Bayly quizzed the governor on how we appear to be the second most aggressive country in the OECD on quantitative easing, but again Orr dodged responsibility , highlighting the dire economic situation he faced in March 2020.

It does not make sense. Orr began easing monetary conditions in May 2019, nearly a year before the pandemic hit, leaving him with little room to react in a crisis. There is near consensus that he overreacted when the crisis hit.

Economic consultancy Infometrics echoes the views of most commentators when advising its corporate clients: “Our view is that the Reserve Bank has lost control of inflation, with real costs climbing. soaring (and) rising inflation expectations…”

In his monetary policy statement, Orr did not even acknowledge that his quantitative easing policy is responsible for the price spike in the non-tradable sector; goods and services produced and sold in New Zealand.

An effective central bank is a credible bank that has the confidence of the market.

This governor appears unable or unwilling to admit past mistakes and hampers the bank’s ability to fulfill its regulatory function. He should resign.

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Affordable debt consolidation https://sendika12.org/affordable-debt-consolidation/ Wed, 16 Feb 2022 23:09:09 +0000 https://sendika12.org/affordable-debt-consolidation/ Credit card spending has increased in the United States due to financial constraints caused by COVID-19. Texas leads the pack behind California for states with the highest increase in credit card debt, according to a Sept. 21 study by WalletHub. And low mortgage interest rates haven’t translated into low credit card interest rates. Surprisingly, the […]]]>

Credit card spending has increased in the United States due to financial constraints caused by COVID-19. Texas leads the pack behind California for states with the highest increase in credit card debt, according to a Sept. 21 study by WalletHub. And low mortgage interest rates haven’t translated into low credit card interest rates. Surprisingly, the median interest rate on all credit cards in the Investopedia Card Database for October 2021 is 19.49%.

These high interest rates can create financial hardship for people who have significant credit card debt. High payments can make it impossible to cover rising living expenses. Debtors who have fallen behind face relentless collection calls and sometimes debt collection lawsuits. Fortunately, there are solutions to this crippling debt. Let’s look at the most common options.

Secured or unsecured debt consolidation loans:

Unsecured debt consolidation loans involve taking out a low interest loan to pay off higher interest credit card debt. Since these loans have no collateral that the lender can seize or repossess, they require high credit scores and excellent debt-to-income ratios to reduce their risk. Most secured debt consolidation loans use home equity as collateral. In Texas, your home must be maintained at less than 80% when using equity, so not all of the equity is available through a refinance or 2nd mortgage . However, if you have sufficient equity, the credit score requirements are lower than for an unsecured loan because your home is collateral.

Debt management plan with credit counseling:

A credit counseling program can offer some of the benefits of a debt consolidation loan, including the need to make one monthly payment and lower interest rates. There is no need to take out a new loan since the rates on your existing debts are reduced, so good credit scores are not required, but you must afford the monthly payments. However, this is considered a “hard” program, so if you want to take on more debt (and have the ability to pay for it), then this is not a program you should consider. Based on your current interest

rate, the monthly payment is likely to be lower than your combined minimum payments, and these programs are designed to pay off the debt in about five years or less.

Debt Negotiation for Debt Relief

Debt negotiation, also known as debt settlement, is another common way to resolve crippling credit card debt and personal loans. This is a hardship program, and similar to credit counseling, it is not an option if you plan to apply for more debt before completing the program. These programs are usually structured to last around 24 to 48 months, depending on your monthly budget and negotiated amounts. Monthly program payments can cost less than half of minimum payments. A reputable program will not charge trading fees until a debt is settled.

The savings are the result of not making monthly payments to your creditors. Instead, money is deposited in an FDIC-insured special purpose account while debts are negotiated and settled for less than the total balances, one at a time. The program is ideal for those who are about to fall behind or those who have already fallen behind, as failure to make minimum payments will negatively affect a credit score. However, it can be a great alternative to bankruptcy, and since the program can be completed much faster than most other options, you can also start rebuilding your credit score quickly. All debt negotiation programs are not created equal. Debt Redemption trading fees are often 20-40% lower than foreign firms. They also have special resources to help Texans who have been sued by a creditor or debt collector.

Chapter 7 or 13 Bankruptcy:

Bankruptcy may be the shortest and cheapest way to settle a debt if you can qualify for Chapter 7. Many people with large incomes or non-exempt assets have issues that prevent Chapter 7 filing and Chapter 13 might be the only form of bankruptcy available. In some cases Chapter 13 will be more expensive than a debt negotiation program, and in other cases it will be less expensive. If you are considering this option, consultation with a Texas bankruptcy attorney is necessary. Debt Buyback does not provide legal advice.

Get Free Debt Relief Consolidation

Affordable Debt Consolidation in San Antonio, TX also has several offices in the Lone Star State to help Texans struggling with crippling debt. If you’re considering debt consolidation loans, credit counseling, or debt settlement, a Texas Debt Specialist can provide you with a free, no-obligation phone or office consultation. We can also refer to Texas bankruptcy attorneys when needed. Learn about your options for resolving your debt today so you can start living your debt-free life. Call 800-816-1003 or visit https://affordabledebtconsolidation.com

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]]> Snapshot of Q4 bank results Bank fortunes improve as interest rates rise https://sendika12.org/snapshot-of-q4-bank-results-bank-fortunes-improve-as-interest-rates-rise/ Mon, 14 Feb 2022 16:11:00 +0000 https://sendika12.org/snapshot-of-q4-bank-results-bank-fortunes-improve-as-interest-rates-rise/ UK bank results will start this week. NatWest will be the first of Britain’s big banks to come under the microscope, as HSBC, Britain’s biggest bank, Lloyds and Barclays report next week. The results come as the banking sector has had a strong start to 2022. The FTSE 350 banking sector is up 15% so […]]]>

UK bank results will start this week. NatWest will be the first of Britain’s big banks to come under the microscope, as HSBC, Britain’s biggest bank, Lloyds and Barclays report next week.

The results come as the banking sector has had a strong start to 2022. The FTSE 350 banking sector is up 15% so far this year, outperforming the wider market. The FTSE 100 rose just 1.5% over the same period. Looking at the sector’s performance since December, the banking sector is trading down 20% against a 6.5% rise in the FTSE100.

The sharp rise in the stock price has come since the BoE began raising interest rates in December, followed quickly by another hike in February. The higher interest rate environment, along with expectations of further rate hikes to come and a rebound in loan demand should keep major UK lenders buoyant and optimistic in outlook.

The Big Four are expected to report total profits of £34billion, with Lloyds and Barclays planning to report their highest earnings in decades.

Here’s what to look out for:

Net interest income

Overall, banks should show signs of improving earnings, thanks to rising net interest income. Higher interest rates mean higher borrowing costs, widening the gap between what banks pay depositors and how much they charge borrowers.

Demand for loans is expected to be strong as the strong recovery from the COVID crisis means customers are confident enough to take on debt and spend well, helping to generate strong income for UK banks. The UK labor market is strong and the UK economy recorded robust growth of 1% quarter-on-quarter in the fourth quarter. The housing market has remained strong which will support high street lenders such as Lloyds.

Reserves for loan losses

The release of reserves, set aside for bad debts that never materialized during the pandemic, has been released throughout the past year, boosting bank profits. The release of these bad debt reserves is not expected to continue in 2022.

Costs

Costs will be more targeted than usual as UK inflation hit a 30-year high of 5.1% in December. Everything from the cost of paper to wages has gone up. The costs of IT upgrades and digitization could be a focus.

Share buybacks and dividends

The removal of restrictions preventing UK banks from distributing capital distributions is also positive for banks. During the pandemic, the BoE imposed restrictions on the repayment capacity of banks in order to protect their capital. With this restriction no longer in place, the focus will be firmly on dividends and share buyback programs.

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Moulins near major public works loan refinancings https://sendika12.org/moulins-near-major-public-works-loan-refinancings/ Sat, 12 Feb 2022 02:06:36 +0000 https://sendika12.org/moulins-near-major-public-works-loan-refinancings/ Construction on the Buffalo Meadows Subdivision in Mills September 14, 2021 (Gregory Hirst, Oil City) CASPER, Wyo.—The city of Mills is nearing a major refinancing and loan consolidation on two public works projects through the sale of city water revenue bonds. On Tuesday, Feb. 8, the board approved the second of three readings of an […]]]>

Construction on the Buffalo Meadows Subdivision in Mills September 14, 2021 (Gregory Hirst, Oil City)

CASPER, Wyo.—The city of Mills is nearing a major refinancing and loan consolidation on two public works projects through the sale of city water revenue bonds.

On Tuesday, Feb. 8, the board approved the second of three readings of an order to issue water tax bonds to the U.S. Department of Agriculture and Rural Development for a total amount of $4,765,600.

The fixed interest of 1.75% carried by the bond allows Mills to effectively refinance two separate loans at higher interest rates. One was the First State Bank Interim Construction Loan for the construction of water lines to the new 87-lot Buffalo Meadows Subdivision.

Mills Mayor Seth Coleman did not have exact amounts available Tuesday, but told Oil City News that Mills had paid about 6.5% interest on the construction loan.

With the sale of the bonds, Mills will also be able to repay the loan from the State of Wyoming for funds the city had obtained for the purchase of its current utility building on Chamberlain Road. Interest on that loan was about 5.7%, Coleman estimated.

The ordinance can be found from page 23 of the January 25 council meeting packet, when its first reading was approved.

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5 banks that pay “strong buy” dividends – 24/7 Wall St. https://sendika12.org/5-banks-that-pay-strong-buy-dividends-24-7-wall-st/ Fri, 11 Feb 2022 12:10:24 +0000 https://sendika12.org/5-banks-that-pay-strong-buy-dividends-24-7-wall-st/ Invest February 11, 2022 7:10 a.m. The stock market is on a roll as interest rates soar because a huge increase would be dangerous for certain sectors. The Federal Reserve will begin raising rates in March and accelerate the tapering of the quantitative easing program faster than expected. After a horrific Consumer Price Index report […]]]>

Invest

The stock market is on a roll as interest rates soar because a huge increase would be dangerous for certain sectors. The Federal Reserve will begin raising rates in March and accelerate the tapering of the quantitative easing program faster than expected. After a horrific Consumer Price Index report for January, the question will remain as to how much the initial rate hike will be, as well as how many will follow.

One industry that loves higher interest rates is banking. When interest rates are higher, banks make more money by profiting from the difference between the interest they pay to customers and the interest they earn by investing.

We scoured our 24/7 research database on Wall St. for Buy-rated bank stocks that also pay the highest dividends. When you combine the benefits of rising interest rates and an economy that opens up and improves, the banking sector could be on the verge of an outsized total return. It is important to remember that no single analyst report should be used as the sole basis for any buy or sell decision.

Citigroup

This top banking stock has rallied nicely from lows, but looks set to rise in 2022, and it’s still trading well below the 52-week high. Citigroup Inc. (NYSE: C) is a leading global diversified financial services company that provides consumers, businesses and governments with a broad range of financial products and services.

Citigroup offers services such as consumer banking and credit, corporate and investment banking, securities brokerage, transaction services and wealth management. It operates and does business in more than 160 countries and jurisdictions in North America, Latin America, Asia and elsewhere.

Trading at a still very cheap price of 8.98 times estimated 2022 earnings, the stock looks very reasonable in what remains a volatile stock market and in a sector that has lagged significantly behind.

Investors in Citigroup shares receive a dividend of 3.02%. Oppenheimer’s $114 price target is a Wall Street high. The consensus target price is $78.89 and the shares closed Thursday trading at $67.50.

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Raising interest rates is fucking the workers https://sendika12.org/raising-interest-rates-is-fucking-the-workers/ Wed, 09 Feb 2022 20:12:27 +0000 https://sendika12.org/raising-interest-rates-is-fucking-the-workers/ With inflation above 5% for the first time since the financial crisis, policymakers are perplexed. The orthodox response to high inflation is to raise interest rates. The increase in the cost of borrowing is supposed to reduce spending and investment, thereby reducing the pressure on resources that can drive up prices when the economy is […]]]>

With inflation above 5% for the first time since the financial crisis, policymakers are perplexed. The orthodox response to high inflation is to raise interest rates. The increase in the cost of borrowing is supposed to reduce spending and investment, thereby reducing the pressure on resources that can drive up prices when the economy is growing rapidly.

But inflation is not always caused by high rates of economic growth colliding with limited resources. It can be caused by anything that generates a sudden imbalance between demand and supply for a particular product. Today, these raw materials are fossil fuels.

Rising oil and natural gas prices – a legacy of a pandemic in which economic activity, and therefore fuel consumption, fell to very low levels leading to a reduction in supply – are impacting on the prices of almost all other commodities. This domino effect has been particularly evident in the food sector due to the important role of fertilizers derived from natural gas.

The result has been a particularly sharp rise in inflation of imports of food, fuel and other consumer goods into the UK – exacerbated by disruptions to supply chains also caused by the pandemic. This type of inflation mainly affects the poor, and almost 5 million people are now struggling to feed themselves in the UK due to rising prices.

This unusual situation raises an important question: what are policymakers supposed to do when inflation is high, but growth and investment are weak?

Similar questions were asked in the 1970s, just at the dawn of the neoliberal revolution. In the UK, growth and investment were weak but inflation was high, again due to higher energy prices resulting from the formation of the Organization of the Petroleum Exporting Countries ( OPEC).

The breakdown of the relationship between employment and inflation that occurred during this period is now considered the death knell of the Keynesian consensus. Since inflation was not fueled by strong demand, it could not simply be solved by cutting government spending, raising interest rates, or negotiating wage moderation with the unions. The problem was energy.

Naturally, this fact gave workers in the energy sector much more power. Miners in particular organized themselves during this period to obtain wage increases and stem the decline of their industry.

At the same time, neoliberal economists have sought to use the “stagflation crisis” as an opportunity to destroy the last vestiges of the social democratic accord. They argued that inflation was fueled by irresponsible governments pumping too much money into the economy and failing to confront overly militant trade unionists demanding higher wages.

Divergent interpretations of the crisis led to an epic confrontation between capital and labor that culminated in the Winter of Discontent, the introduction of a three-day week and, ultimately, the election of Margaret Thatcher .

Thatcher immediately set out to institutionalize the neoliberal view of inflation by drastically raising interest rates. Neoliberals argued that inflation was “always and everywhere a monetary phenomenon”: in other words, when prices rose, it was because governments had lost control of the money supply. Raising interest rates—along with cutting government spending—would discourage borrowing and therefore limit money supply growth.

This theory never worked in practice. Thanks to financial deregulation, borrowing under Thatcher grew faster than at any time in history. But the drastic rise in interest rates was never intended to reduce the money supply – it was meant to create a recession that would discipline organized labor.

Monetarism quietly fell out of favor among central bankers during the 1980s as it became clear that there was no easy way to use interest rates to control the money supply. But Thatcher’s interest rate shock – echoed by the Volcker shock that took place in the United States – is remembered as a necessary and decisive step to stem the “wage-price spiral” of the 1970s.

Thatcher may have ended the slump of the 1970s, but she did it by plunging millions into poverty and creating an economy that worked for a small elite in southern England. Much of the political and economic turmoil we are experiencing today can be traced back to decisions made under his government.

In addition, inflation ended up falling in the long term due to the stabilization of oil prices, which would have happened anyway with the normalization of OPEC’s role in global energy markets.

Thatcher’s singular achievement was not in figuring out how to use monetary policy to bring inflation down; it was about figuring out how to use monetary policy to discipline the working class. Today, his descendants are trying to do the exact same thing.

Proponents of higher interest rates know that the problem we face is not the overheating of the economy, but the fallout from the shock of rising energy prices. Making borrowing more expensive will only further constrain a stagnant economy, dampening consumption and investment – ​​and therefore wages and job creation.

But just like in the 1980s, capital must discipline labor in order to protect profits. Some workers have had lots of paid time off or spent more time working from home and don’t want to return to the dismal working conditions of the pre-pandemic years.

Others have been less fortunate, spending recent years earning meager wages in dangerous conditions. But many of these workers are organizing – we are seeing an uptick in union membership and activity that could begin to reverse a decades-long decline.

We are unlikely to see Thatcher-style monetary shock therapy again. Apart from anything else, the unions remain in such a weak position that a dramatic hike in interest rates (as opposed to the one recently announced) is an unnecessary tactic given the chaos it would cause.

But the right is already trying to spread a narrative that blames workers for the current rise in inflation to justify a disciplinary response from the state. Just look at the Governor of the Bank of England’s plea for wage moderation (which has been rightly ridiculed since it emerged he was earning over half a million pounds a year).

One of the few ‘problems’ that the British economy insists on not the face is inflated salaries. British workers have experienced the longest period of wage stagnation since the 1800s. And while there have been post-pandemic wage increases in some sectors associated with shortages, these have been limited and are likely to be temporary, as workers respond by filling in the gaps.

The latest analysis from the Trades Union Congress (TUC) shows that weekly wages are now £3 lower than at the time of the financial crash of 2008. The general trajectory of wages after the pandemic is not yet clear, but early indicators suggest that wage growth – especially in lower-paying sectors – is returning to pre-pandemic levels.

In this context, the rise in interest rates will have two effects. First, it will increase the impact of inflation on poorer households by making their borrowing more expensive. In fact, it threatens to push millions of families into debt.

Second, it will discourage investment in an economy where business investment was already dangerously low before the pandemic began. This will translate into fewer jobs, lower productivity and lower long-term wage growth.

In other words, higher interest rates will mean an even lower standard of living for the millions already badly hit by high inflation. Moreover, they will not have an impact on inflation until energy prices fall, which will only happen with an increase in supply.

Rather than raising interest rates, we should argue for short-term price controls and public support for the supply of long-term necessities – perhaps through something like a national food service.

Investing in renewable energy is essential for many reasons: keeping prices low, maintaining energy security, decarbonizing, creating jobs and recovering from the pandemic.

Inflation is always political – inflation itself and the response to it benefits some groups and harms others. We cannot allow the right to get away with blaming workers for a set of problems caused by capital.

After all, we wouldn’t be facing this problem if previous governments had taken the need to invest in renewable energy sources seriously. And energy companies like Exxon Mobil and BP are posting windfall profits due to rising oil and natural gas prices.

Workers have borne the cost of every crisis for at least the past fifty years – they cannot and will not have to bear all the costs of this one.

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