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The Federal Reserve interest rate hike: 5 key takeaways

Yahoo Finance

Janet Yellen

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Janet Yellen, Chairwoman of the Federal Reserve

The Federal Reserve just enacted several changes to monetary policy, raising the benchmark Federal Funds target rate for the first time since 2006. Here are the key takeaways:

1. The target for the overnight interest rate has been raised, and the Fed will aim for 0.25% to 0.50% in the Federal Funds market, which is only traded by banks and the Federal GSEs. Some analysts predicted the Fed would simply target 0.50% and not a range. Accordingly, this move by the Fed gives it flexibility to enact its monetary policy goals where interest rates are still close to the critical zero-bound.

2. The Fed will maintain the size of its $4.4 trillion balance sheet, which is largely composed of Treasury and mortgage-backed securities that are guaranteed by the U.S. government. When the bonds mature, they will be rolled over, meaning the Fed will buy new bonds to replace them. This move was expected, but had the Fed decided to let the bonds “roll off” its balance sheet when they matured, this would have spooked bond markets and spiked rates further.

3. Interest on reserves was raised from 0.25% to 0.50%. This determines the amount of interest the Fed pays banks to keep their money sterilized (out of the economy) and stashed at the Fed. The move was largely expected and helps establish a floor on short-term interest rates. Therefore, banks are encouraged to keep as much money at the Fed as possible to earn a risk-free 0.50% interest rate.

4. The lower bound of 0.25% for the benchmark rate will be effected by the Fed selling its securities to a select group of primary dealers and buying them back the next day. The Fed will use $2 trillion of its bonds in these operations and will limit participation to $30 billion per dealer. The operation is called a reverse repo (or repurchase) and has an overnight maturity, meaning the Fed will be monitoring and conducting these operations every day to maintain the target interest rate range. By selling low and buying high, the Fed puts pressure on rates to achieve its target range.

5. The Fed will conduct longer term operations to drain money as well, using a so-called “term deposit facility” it set up in 2010.  At the time, it believed a rate hike was imminent. As we now know, it took an additional five years to get to this point.

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There’ll assuredly be a more varied selection of character and vehicle portraits in the full game — this is just from the beta, which opens on Thursday for Xbox One, PlayStation 4 and PC owners. The game’s already looking great, though:

There have been dozens of “Star Wars” video games over the years, going back as far as the original Nintendo Entertainment System (and beyond, to the Atari 2600). Ever since the original “Star Wars” film secured the hearts and minds of millions of adoring fans the world over back in 1977, those same fans have wanted to play as their favorite characters from the space opera.

Those characters have never looked better than in 2015’s “Star Wars Battlefront,” a new game that takes everyone’s favorite pieces of the “Star Wars” universe and mashes them all together into a massive, online multiplayer love letter to fans of the sci-fi franchise. Here’s just one quick example of the game in action:

But beyond crazy on-screen action starring Darth Vader, the game’s got some of the most gorgeous “Star Wars” art we’ve ever seen. Join us below for a smattering of what we’ve seen thus far.

The very first screen that comes up when the game loads is a close-up shot of a storm trooper looking haggard:

The loading screens are where the game’s most gorgeous art appears. Like this amazing shot of bounty hunter / fan favorite Boba Fett:

Or this great shot of a standalone AT-ST, menacingly aimed at the player:

The ever-brooding Darth Vader is of course represented as well:

As well as this beautiful side shot of a TIE fighter:

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The 18-year-old CEO who wants to change the way you buy and sell online

screen390x390After Jihad Kawas graduated from high school in his native Beirut, last spring he moved, not to a university dorm, but to San Francisco to follow his dream of running his own tech start-up.

Now, less than a year later he is the recipient of a $100,000 fellowship named after and chosen by Silicon Valley backer Peter Thiel.

“I was here in New York watching [the HBO show Silicon Valley] and there was this character who was giving out $100,000 for people to drop out of school or college and work on their businesses,” Kawas told Yahoo Finance. “I thought it was a joke. Four months later, I was telling this joke to someone in San Francisco. He didn’t laugh. He told me, ‘That’s not a joke, that’s real.’ I applied, and I made it.”

Some 3,000 applicants vie for one of Thiel’s fellowships, and since becoming one himself, Kawas has met with the mega-backer on multiple occasions.

The idea that won him the money is his company, Saily. It just released the second version of its app that allows users to buy and sell goods with others geographically close to them.

“We took the problems that are happening on online classified sites, say like Craigslist … and we make it way more easier and simpler and more social for people to actually interact on this platform,” Kawas said.

Rather than the eBay model of packing up sold goods and heading to the post office, Saily uses GPS to sell to people nearby. Buyer and seller meet to exchange the goods, and Saily aims to make sure it is done safely. Kawas says that is key to his idea that the marketplace can double as a social network, bringing people together in the app, but also in the real world.

Generally speaking, the business is fraught with potential issues, as competitors like Craigslist have found out the hard way. Saily attempts to circumvent those issues with technology. According to the company, “Saily detects hot items with very low prices, understands the text in their descriptions, and aggregates multiple factors to help determine if the user is a scam or not. Saily is focused on having only real quality content on the platform, hence Google images are not permitted either.”

Kawas says the company has 140,000 registered users in the U.S. and is growing at a rate of 1,000 new users per day. He hopes to hit a million by the middle of next year. Transactions are free for both the buyer and seller, as money is handled outside the app. Kawas says that may be the key to monetization going forward. “Potentially we can make money through in-app transactions.” Citing Paypal and Venmo as examples, the growing payment space will be key for Kawas to take his project from a Silicon Valley learning experience to a big money maker that can attract funding from others like his current benefactor.

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