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In the News This Week

The release of the minutes from the Fed’s January meeting showed that more officials leaned toward holding rates at zero “for a longer time”. “Many” policymakers believe that hiking rates prematurely will hurt the economy: “many participants indicated that their assessment of the balance of risks associated with the timing of the beginning of policy normalization had inclined them toward keeping the federal funds rate at its effective lower bound for a longer time”.

Home builders slowed the pace of construction in January, with housing starts slipping 2% to an annual rate of 1.07 million units. Even with the decline, the annual pace of construction has topped 1 million for five months in a row…the last time that happened was 2008.

Home builder confidence dipped in February, with the NAHB Housing Market Index dropping two points to a reading of 55. Components measuring current sales and buyer traffic both fell, while the gauge of sales expectations over the next six months held steady. Even with February’s decline, “overall, builder sentiment remains fairly solid, with this slight downturn largely attributable to the unusually high snow levels across much of the nation”.

Conflicts of interest with brokers cost investors as much as $17 billion every year, according to an internal White House memo leaked to the press. Jay Furman, chairman of Obama’s Council of Economic Advisers, wrote the January 13th memo, stating that “academic research has clearly established that conflicts of interest affect financial advisors’ behavior and that advisors often act opportunistically to the detriment of their clients”. He also noted that investors lose 5 to 10 percent of their long-term savings because of conflicted advice.

Industrial production rebounded in January, edging up .2% after declining in December, while output over the past four months was revised downs slightly. Even with revisions, production still gained 4.3% annually in the fourth quarter.

The Chinese New Year, which kicked off this week, dwarfs Thanksgiving in the US, according to data released by Bloomberg. About 2.8 billion trips will be taken in China, compared to 46.3 million trips taken by Americans for Thanksgiving, projected by AAA. While Americans spent $50 billion over the four-day Thanksgiving weekend, spending for the Chinese New Year was double that amount last year at 610.7 billion yuan (almost $100 billion). Last year, 32 million watched the Thanksgiving football game, while the broadcast on the eve of the lunar New Year drew in between 700 to 800 million viewers.


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