Wall street crash Monday!
Wall street crash Monday!
Next week is going to be rocky, to say the least.
Read my prediction for Wall Street at the end of my post ...
This is HUGE !!!
The Discount Interest Rate is gonna go up - especially if Fitch and/or Moodys follow suit.
Cost to borrow cash, mortgage interest, credit card interest, and MOST IMPORTANT ... interest on receivables sold to factoring companies are gonna go up. This is because they base their interest rates on the Discount Interest Rate.
FYI: Factoring companies work as middlemen. They buy your accounts receivables or invoices, pay you an advance and then reimburse you for the remainder of the bill, minus a 4 percent to 5 percent fee, once the total bill is paid.
Factoring companies are EXTREMELY important to the economy. They keep small businesses running smoothly as they maintain cash flow at a constant rate.
Most businesses run on a 2-3 perecent net plus 30, meaning they get 2-3 percent of the value of the receivable from its customer up front, but has to wait 30 days for the balance. In the interim, they still have to buy supplies, equipment, meet payroll, etc. Factoring companies solve this problem. When the cost of factoring goes up - businesses USUALLY LAYOFF people. This leads to higher unemployment.
As for Wall Street on Monday - DOWN 250 to 300 ...