In a recent interview, Cathie Wood, the founder and CEO of Ark Invest, shared her bullish views on Bitcoin and why she prefers it over gold. She said that Bitcoin is digital gold and that it offers a better hedge against inflation and deflation than the traditional precious metal.
Wood explained that Bitcoin has a fixed supply of 21 million coins, unlike gold, which has a variable supply that depends on mining activity and demand. She also said that Bitcoin is more portable, divisible and secure than gold, thanks to its decentralized network and cryptography.
She added that Bitcoin is not only a store of value, but also a medium of exchange and a unit of account, which makes it more versatile and useful than gold. She said that Bitcoin is becoming more accepted and adopted by institutions, governments and individuals around the world, which increases its network effect and value proposition.
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Wood concluded that she would choose Bitcoin over gold “hands down” if she had to pick one asset to hold for the long term. She said that Bitcoin is digital gold and that it is a hedge against inflation AND deflation.
National Association of Realtors found guilty of colluding to keep home sales commissions artificially high, ordered to pay $1.8 billion in damages.
In a landmark ruling, a federal judge has found the National Association of Realtors (NAR) guilty of violating antitrust laws by conspiring to inflate commissions for home sales. The judge ordered the NAR to pay $1.8 billion in damages to a class of home sellers who sued the trade group for overcharging them.
The lawsuit, filed in 2019, alleged that the NAR and its affiliated multiple listing services (MLSs) required sellers to pay a fixed percentage of the sale price to both the listing and the buyer’s agents, regardless of the services they provided or the market conditions. The plaintiffs claimed that this arrangement prevented competition and innovation among real estate agents and resulted in higher costs for consumers.
The judge agreed with the plaintiffs and ruled that the NAR and its MLSs engaged in a “hub-and-spoke” conspiracy to fix commissions at an artificially high level. The judge found that the NAR’s rules and policies, such as the “best interest of the client” standard, the “clear cooperation” policy, and the “blanket unilateral offer of compensation”, were designed to maintain the status quo and discourage agents from offering lower commissions or alternative services.
The judge also rejected the NAR’s arguments that its practices benefited consumers by ensuring quality and professionalism in the industry, and that its commission structure was necessary to protect buyer’s agents from being cut out of the deal. The judge said that these claims were not supported by evidence, and that the NAR’s practices actually harmed consumers by reducing their choices and bargaining power.
The $1.8 billion in damages awarded to the plaintiffs represents 10% of the estimated commissions paid by home sellers who used an NAR-affiliated agent between 2015 and 2020. The judge said that this amount was appropriate to deter future antitrust violations by the NAR and its MLSs, and to compensate the victims of their unlawful conduct.
The NAR said that it was disappointed by the ruling, and that it planned to appeal. The trade group said that its rules and policies were lawful and beneficial, and that it was committed to advancing the interests of its members and consumers.
The ruling is a major victory for home sellers, who have long complained about the high commissions they have to pay when selling their homes. It is also a blow to the NAR, which is the largest trade association in the US, with more than 1.4 million members. The NAR has a powerful influence on the real estate industry, as well as on politics and policy.
The ruling could have significant implications for the future of the real estate market, as it could open the door for more competition and innovation among agents, and lower costs and more options for consumers. It could also lead to more lawsuits against the NAR and its MLSs, as well as other entities that participate in or facilitate their commission-fixing scheme.
Federal Reserve pauses interest rate hikes, remains at 5.25% – 5.50%
The Federal Reserve announced that it will keep the target range for the federal funds rate unchanged at 5.25% to 5.50%, citing mixed signals from the economy and inflationary pressures. This decision marks the third consecutive meeting where the Fed has paused its rate hike cycle, which began in December 2015 and raised the rate by a total of 2.25 percentage points.
The Fed’s statement acknowledged that the labor market has continued to strengthen, and that economic activity has been rising at a moderate rate. However, it also noted that household spending and business fixed investment have moderated, and that indicators of longer-term inflation expectations are little changed.
The Fed said it will continue to monitor global economic and financial developments and assess their implications for the economic outlook. It also reiterated that it expects that further gradual increases in the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near its symmetric 2 percent objective over the medium term.
The Fed’s decision was widely expected by market participants, who had priced in a zero percent chance of a rate hike at this meeting, according to the CME Group’s FedWatch Tool. However, some analysts had speculated that the Fed might signal a more hawkish stance for future meetings, given the recent uptick in inflation and wage growth.
The Fed’s projections for the federal funds rate, known as the dot plot, showed little change from the previous meeting in December. The median estimate for the end of 2019 remained at 6.00%, implying two more rate hikes this year. The median estimate for the end of 2020 also stayed at 6.25%, while the median estimate for the longer run edged down slightly to 6.00% from 6.13%.
The Fed’s economic projections were also largely unchanged, with only minor revisions to the growth, unemployment, and inflation forecasts. The Fed expects the economy to grow by 2.3% this year, down from 2.5% in December, and by 2.0% next year, unchanged from December. The unemployment rate is projected to fall to 3.5% by the end of 2019 and 2020, down from 3.7% and 3.6%, respectively, in December. The inflation rate is expected to rise to 1.9% this year and 2.0% next year, up from 1.8% and 1.9%, respectively, in December.
The Federal Reserve’s decision to keep the interest rate unchanged at 5.25% to 5.50% has implications for the economy, as the interest rate affects various aspects of economic activity. Here are some of the main effects of the interest rate on the economy:
The interest rate influences the cost of borrowing and saving. A higher interest rate makes borrowing more expensive and saving more attractive, while a lower interest rate makes borrowing cheaper and saving less rewarding. This affects the spending and saving decisions of households and businesses, which in turn affect the aggregate demand and supply in the economy.
The interest rate affects the exchange rate of the currency. A higher interest rate tends to appreciate the currency, as it attracts more foreign capital inflows, while a lower interest rate tends to depreciate the currency, as it discourages foreign capital inflows. This affects the competitiveness of exports and imports, which in turn affect the trade balance and the current account in the economy.
The interest rate affects the inflation rate of the economy. A higher interest rate tends to reduce inflation, as it lowers aggregate demand and increases the purchasing power of the currency, while a lower interest rate tends to increase inflation, as it boosts aggregate demand and reduces the purchasing power of the currency. This affects the price stability and the real value of income and wealth in the economy.
The Fed’s decision to pause its rate hike cycle reflects its assessment of the trade-offs between these effects, as well as its expectations for future economic conditions and inflation. The Fed aims to achieve its dual mandate of maximum employment and stable prices by adjusting the interest rate accordingly.
The Fed’s decision was not unanimous, as two members dissented in favor of a rate hike. Esther L. George, president of the Federal Reserve Bank of Kansas City, and Eric S. Rosengren, president of the Federal Reserve Bank of Boston, argued that a 25-basis-point increase in the target range for the federal funds rate was appropriate at this meeting. The Fed’s next meeting is scheduled for March 19-20, when it will also release a new set of economic projections and dot plot.
Interest rates are a critical tool used by the Federal Reserve to control inflation. When the Fed adjusts the interest rate, it influences the rate of inflation in the following ways:
Higher Interest Rates: Increasing the interest rate can help reduce inflation. This is because higher rates make borrowing more expensive, which can lead to reduced spending by consumers and businesses. With less money circulating in the economy, the demand for goods and services can decrease, leading to lower price increases or even price decreases in some cases.
Lower Interest Rates: Conversely, lowering the interest rate can lead to increased inflation. Lower rates make borrowing cheaper, encouraging spending and investment. This increased economic activity can result in more money chasing a limited number of goods and services, which can push prices up.
The Federal Reserve’s recent decision to maintain the interest rate between 5.25% and 5.50% indicates its current strategy to balance economic growth with its inflation targets. By pausing rate hikes, the Fed signals its cautious approach towards ensuring that inflation remains near its desired level without stifling economic expansion.