Feds Delay Raising Interest Rates (Markets Breath Sigh of Relief)
Initial reports indicated that the Federal Reserve intended to raise rates gradually throughout 2016. While this was welcome news to fans of minimizing inflation of the US dollar, it may have sounded like Chinese water torture to investors nervous about how Fed policy would affect their nest eggs. A slow, gradual rate increase could mean a constant barrage of tiny market retractions as money becomes more and more expensive due to increased interest rates.
Of course, others would argue it’s exceedingly easier for the market to handle a series of micro-corrections to Fed policy that will ease inflation, versus ripping the Band-Aid off in a single tear, potentially causing a massive economic ripple that could come back to US markets as an international financial typhoon. All of these concerns, at least for the moment, are reportedly inconsequential, as the Fed has decided to delay the start of economic Chinese water torture.
International Banking Security Standards Under Increased Scrutiny
According to reports, the central bank of Bangladesh, Bangladesh Bank, was hacked, and millions of dollars’ worth of fraudulent transfers were entered into the system. Approximately $101 million in fraudulent transfers were executed before the fraud was uncovered.
The weirdest part of the story lies in how the fraud was uncovered: The Telegraph reports that the bank heist was foiled by a hacker’s typo. If you’re going to electronically attempt to rob nearly a billion dollars from a bank, make sure you type “foundation” correctly on the electronic request (not “fandation”). The typo led regulators to flag the transaction and request further verification.
The amazing story of hackers infiltrating the Bangladesh Bank’s system utilizing malware, and then submitting 12 transfer requests to the Federal Reserve Bank of New York against BB’s accounts could have spelled a billion-dollar loss for the national bank of Bangladesh. The entire episode only highlights the importance of effectively learning how to work with business partners to improve security, efficiency and system reliability.
How will this impact stocks when markets open on Monday?
These mixed headlines in the financial market may dull the strong finish the market enjoyed this past Friday. The Dow closed up 1.3%, Standard and Poor's 500 gained 1.6% and Nasdaq closed up 1.9%. Just as political pundits debate Donald Trump’s net worth, the financial analysts are taking time to size up the impact that the European Central Bank’s measures to stop the financial bleeding within the Eurozone will have.
Oil also helped to bolster the resurgence of stocks last week, as the International Energy Agency announced that they believe oil prices may have finally bottomed out. While this isn’t great news for consumers worried about the cost to fill up at the pump, it’s potentially fantastic news for a world economy desperate for all the good news it can get to keep the economic recovery on track in the US and around the globe.