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Hope is Not a Good Investment Strategy

According to the Bespoke Investment Group, every year, Wall Street analysts declare that the stock market will rise, and since 2000, the annual average forecast has been for a 9.5% gain.  The reality is that the market has only risen at a 3.9% rate over this time frame.  The 2008 forecast was for a market increase of 11%; the reality was -38%.  To say that Wall Street promotes the stock …Read More

Will the Fed Cause Another Recession?

The Fed raised the Federal Funds Rate by 25 basis points (a quarter of a percentage point) to 1.0%.  This is the anchor rate on the yield curve, and, most other rates respond to it, with shorter rates today responding more than longer rates.  It appears from their communications that they intend to hike rates several more times over the next 12-18 months. While I don’t see a recession over …Read More

Is Optimism a Key Ingredient in Economic Growth?

Most of the sentiment measuring surveys posted dramatically higher results after the election on optimism over what a Trump Administration might do for the economy. But, there is a big difference between hope and reality. Beginning in mid-December, the U.S. equity markets shifted into neutral, and have slowly drifted lower, perhaps waiting for the political changeover. The Fed is now in tightening mode. In my experience, the Fed tightens and …Read More

The Topsy-Turvy Economy

The financial markets are hooked on easy money, low interest rates, and growth via debt issuance. Yet, it has become obvious to some market players, economists, and maybe even the Federal Reserve’s Federal Open Market Committee (the rate setting cabal), that current monetary policy is now hurting, not helping, the economy. Of course, monetary historians know that monetary policy was never meant to act alone, or in a vacuum, as …Read More

The 1937 mistake – will Fed make it again?

The markets breathed a sigh of relief (up 164 followed by 99 Dow points) when, in the middle of September, the Fed decided not to raise the federal funds rate. The DJIA was as high as 18,538 on Sept. 6, but fell 504 points over the next six trading days, including three days in a row of significant gyrations (down 395, up 240, down 258). The past week continued the …Read More

Recognition shock

The wave of anti-establishment, anti-globalization sentiment, evident in the U.S. primary election cycle, manifest itself bigtime in the U.K. with its vote on Thursday, June 23rd, to exit the European Union (E.U.).  Wall Street hates uncertainty; that is why it loves the status quo.  In the days leading up to this historic British decision, the markets were so confident that the vote would be to “remain” in the E.U. that …Read More