LONDON, August 15, 2016 /PRNewswire/ --
All of Wall St is anxiously anticipating a rate hike this September. But Those who see what's really happening are predicting something very different
On September 20, the FOMC will be making a big decision regarding whether or not to raise interest rates in the US. If interest rates are raised, we can expect the USD to rise. If they are not, the USD will likely drop. And that's why everyone on Wall St is scrambling trying to figure out if there will be a rate hike in September. Powerhouse banks like Goldman Sachs seem to think so. They increased the odds of a September rate hike from 25% to 30% following an optimistic statement from The FOMC. But many forward thinking economists who have been closely tracking the Fed's behavior see a much more daunting outlook for the USD. And they are already opening Put positions on USD/EUR in anticipation of what's to come. One such nay sayer is Brian Finley, an economist with online brokerage Trade 24.
The Background
When the Fed came out saying "near term risks to the economic outlook have diminished", many financial pundits including Goldman Sachs interpreted the statement as a reason to open a call position on the USD. But Finley and several other forward-thinking economists like him, thought otherwise. That's because he has been tracking the behavior of the US economy rather than focusing on the Fed's 'vague statements'. He advised his clients at Trade 24 to open a call position on the EUR/USD. And only two days later, a weak GDP number caused the USD to plummet. His advice rewarded Trade 24's client's with a nice sized profit. And it's these type of forward thinking predictions that have made Trade 24 such a successful brokerage.
What's his Secret?
Finley doesn't consider himself any sort of financial guru, he just applies basic common sense when speculating on an asset. That's how he predicted major economic events like the Subprime mortgage crisis of 2008 and the Sterling's plummet following the Brexit vote. Regarding the optimism surrounding the upcoming FOMC meeting, Brian guffaws noting that "When the entire economy is falling apart all around us and the Fed hints at a rate hike, we need to take their statements with a grain of salt".
When asked to clarify what he meant regarding the US economy's "falling apart", the 38-year old analyst points to a lousy US food industry report, a poor durable goods report and an even worse homeownership rate in the US (not to mention a pathetic GDP).
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The True State of the US Economy
"It's hard to fathom how anyone in their right mind can be optimistic with regards to an upcoming rate hike: explains Finley. He cites recently released data showing that the homeownership rate in the US dropped to a staggering 62.9%. "That is the lowest homeownership rate since 1965! That's 51 years since homeownership rates in America have been this bad."
The economist also points to a recently released report on the health of the restaurant industry which Finley claims didn't look good. "Second-quarter sales have been horrible at restaurants. Even fast food franchises like McDonald's had a very weak second-quarter. But it's not just fast food, it's the entire restaurant industry that's showing a decline. American consumers are basically too broke to dine out. In fact, the last time we saw a quarter like this in the restaurant industry was in 2000 and in 2007". Connecting the dots, Brian continues "remember what happened right after 2000 and 2008? America had a recession. If this isn't an economic indicator of what's to come, I don't know what is!"
When asked about the fact that the US jobs report (NFP) beat expectations, Finley brushes it off explaining "you have to remember, the NFP isn't as good of an indicator of the health of the US economy as everybody thinks it is. It only takes into account those actively looking for jobs in the US. This means that if you have stopped looking for a job and have just remained unemployed, you are not counted in the unemployment rate. Furthermore, when it reports on newly created jobs, it includes part-time jobs. This means that if people leave their full time jobs for part time jobs, those part-time jobs are written down as an increase in employment, hardly an indication of economic strength."
Conclusion
Finley is confident in his September forecast regarding the Fed's rate hike decision. And he believes that clients who trade with his firm, will beat Wall Street again and collect profits like they did last time. To hear Finley's latest economic prediction, that he calls a 'bombshell', go to Trade 24 and open an online trading account. And he's putting his money where his mouth is by offering anyone who signs up by September 20,a bonus of up to $1,000! Now's your chance to capitalize. Open your online trading account today.
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