NEIL: IF YOU OWE MONEY THE COST
OF DEALING WITH THE ASSOCIATED
PROBLEMS WITH HIGHER INTEREST
RATE SNAKES IS MORE ONEROUS BUT
IF YOU ARE TRYING TO MAKE SOME
MONEY BUT NOT WORRIED ABOUT
DEBT BECAUSE YOU DON’T HAVE A
MORE FEW OF THEM AND TRYING TO
STOCK AWAY FROM THE THE YOU ARE
WASTING YOUR TIME PUTTING AWAY
A BANK CBO SAVINGS ACCOUNT,
RATES TICK OFF.
GREG, WE FORGET ABOUT THAT SIDE
OF THE EQUATION, DON’T WE?
>> WE HAVE BECAUSE RETURNS HAVE
BEEN SO LOW FOR SO LONG.
THINGS HAVE TURNED IN THE SENSE
THAT IN THE LAST THREE YEARS
THE SITUATION WAS THE RETURNS
ON SAVINGS FELL AND INFLATION
TOOK OFF AND WE ARE IN A
SITUATION WHERE IN THE COURSE
OF THE NEXT YEAR OR TWO,
HOPEFULLY EVENTUALLY INFLATION
COMES DOWN, MUCH BETTER
FORTUNES FOR SAVERS AS WHAT
THEY ENJOYED.
NEIL: WE WERE SHOWING SOME
RATES NORTH OF 2%, TWO YEARS
FROM NOW RATES COULD BE HIGHER
SO YOU MIGHT NOT LOCK INTO
SOMETHING LIKE THE 2% RATE.
AS FAR AS SAVINGS RATES ARE
CONCERNED, WE INCH HIGHER.
>> FIRST THING, YOU HAVE TO BE
LOOKING IN THE RIGHT PLACE, NOT
ALL BANKS ARE RAISING RATES AND
NOT AT THE SAME PACE, LARGER
BANKS IN A PILE OF DEPOSITS,
THEY ARE GOING TO RAISE RATES
SO IMPORTANT TO SHOP AROUND
ONLINE BANKS, SMALL COMMUNITY
BANKS.
TO ANSWER THE QUESTION, THE FED
IS AS AGGRESSIVE AS WE THINK
THEY ARE, IF YOU’RE GOING TO
PUSH THE FED FUNDS RATE NORTH
OF 3%, WE WILL SEE THIS
LEAPFROGGING AMONG BANKS TRYING
TO OUTDO EACH OTHER, I WOULD
CAUTION CONSIDER YOUR RETURNS
IN THE CONTEXT OF INFLATION.
RATES ARE GOING UP BUT THE
OTHER SIDE WE NEED TO SEE
INFLATION COME DOWN AS WELL.
NEIL: PEOPLE LOOK AT THIS AND
SAY THESE RATES CAN’T COMPETE
WITH WHAT PEOPLE THINK I COULD
GET IN THE STOCK MARKET.
DEPENDING WHERE THEY ARE, THE
BUCKETS THEY HAVE BEEN LOSING
MONEY, MAYBE THEY CHANGED THEIR
VIEW OF WHAT WE THINK WOULD BE
PALTRY RETURNS BECAUSE AT LEAST
THEY GET TO KEEP MORE OF WHAT
THEY HAVE VERSUS WHAT HAS BEEN
GOING ON IN THE STOCK MARKET,
THE PSYCHOLOGY CHANGE.
>> IT DOESN’T THAT IS ONE OF
THE THINGS, IT DOES TEND TO
BRING VALUATIONS ON STOCKS BACK
TO EARTH AND THAT IS WHAT WE
ARE EXPERIENCING SINCE THE
FIRST OF THE YEAR AS INTEREST
RATES ARE TAKING UP AND
VALUATION ON THOSE STOCKS NOT
AS GENEROUS, THEY LOOK AT THOSE
RISK-FREE RETURNS AND LOOK AT
THE MORE FAVORABLY THAN THEY
DID LAST YEAR WHEN THE MARKET
JUST WENT UP, NO DOWNSIDE
VOLATILITY AND INTEREST RATES
WERE MOVING UP.
NEIL: I WOULD BE INTERESTED IN
YOUR TAKE ON THE FEDERAL
RESERVE, COULD BE A FULL
PERCENTAGE POINT.
COULD BE A LOT MORE AGGRESSIVE
AND QUICKER AT DOING SO.
SO WHAT WOULD THE IMPACT OF
THAT BE IF THE FED MAKES IT
CLEAR INFLATION IS OUR WORRY
AND WE HOPE TO HANG ON AND
INFLATION IS THE WORRY,
EVERYONE HAS BECOME LOCAL.
>> I EXPECT THE FED WILL GET
MORE AGGRESSIVE NOT JUST TODAY
IN THE MONTHS AHEAD.
THAT’S THE NEWS ON INFLATION
LAST FRIDAY, THE CONSUMER PRICE
INDEX AND INFLATION
EXPECTATIONS OF CONSUMERS WAS A
NATIONAL DISASTER THAT HAS
FORCED THE FED’S HAND.
A MONTH AGO THEY SAID THEY WERE
NOT CONSIDERING A PERCENTAGE
HIKE.
THAT IS WHAT WE GET.
NEIL: WE WATCH CLOSELY.