Happy Friday. friends! I’m keeping today’s Friday Roundup short and sweet in the hopes that many of you are already en route to the beach. Sadly I’ll be spending much of my long weekend in GMAT study mode, but I’m planning to make it out to enjoy the sunny weather at some point. Without further ado, here are a few things you should know about the week:
The Fed says, “HAGS* Low Interest Rates”
The Federal Reserve (the Fed) has been drawing out its decision on raising interest rates longer than a crying Bachelorette contestant. The notes from the most recent Fed meeting were released this week, and we finally got the update that… the Fed still hasn’t decided! But it might decide to raise them after June.
To give you some background – back after the recession started in 2008, the Fed lowered interest rates to try and spur economic growth. Lower interest rates means less incentive to store money in cash vs. going out and spending it in the economy, and gives more incentive to make investments in things like a house while you can get a low mortgage rate. But since nothing lasts forever, the plan was always to raise the rates back up once the economy rebounded.
The meeting notes just released showed that the Fed isn’t convinced we’re recovered enough yet to raise rates. Lots of economists thought that the drop in gas prices would have spurred consumer spending – but spending in the first quarter of the year was pretty weak. While that worried the Fed, it seems they’re thinking it was a temporary stall due to the arctic weather of last winter. So they’re planning to hold off on any rate hikes until after they can see how the economy fared in the second quarter – April to June. Most economists are thinking that after that data point comes out the Fed will raise rates in September. But until that’s confirmed, we’ll all be kept guessing.
Why does the rate hike affect you? Well the rates the Fed sets are basically the rates for the entire economy. So the Fed raising rates means you’ll see higher interest rates on everything from your savings account, to a new mortgage you take out, to your car loan, etc. Plus, when interest rates go up money tends to move out of the stock market (lowering prices, at least temporarily) and into the bond market.
*Bonus points if you remember this from middle school yearbook signings.
China’s (formerly) richest man lost a boat-load of money this week. $15 billion dollars, to be exact.
That man is the chairman of the Chinese solar company Hanergy (HNGSF), which suddenly plunged 47% in about an hour on Wednesday. Since the chairman owns 80% of the company, he also lost 80% of the $18.6 billion that disappeared from the company’s value.
The crazy part is no one really knows why the stock price plunged! The company halted trading of the stock after it claims there was an announcement “containing inside information.” Hmm.
Leading up to this, Hanergy’s share price had increased a whopping 625% over the past year. But along the way, questions were raised over possible market manipulation and the fact that so much of the company’s sales come from its parent organization. So maybe the sudden drop isn’t so surprising after all…
Bottom line is this appears to be a of “if it seems too good to be true, it probably is.”
Get $50 off ClassPass
Memorial Day is the weekend of fantastic sales and I have one to share with all of you! I’ve been using ClassPass for the past month and am obsessed. It gets me unlimited fitness classes, at studios all around DC, for $99 a month. The only drawback is I can only go to 3 classes at the same studio each month, but it’s worth it to be able to go to classes I would otherwise never be able to afford (i.e. they cost $25-$30 a pop – no thanks).
ClassPass is running a promotion where we each get $50 off the next month if you sign up through this link (affiliate link). ClassPass didn’t ask me to write this (though I realize I’m sounding very info-mercially), I just wanted to pass along the chance to save some extra cash.