Interest Rates 02 (Nov 14 - Dec 24)

Interest Rates 02 (Nov 14 - Dec 24)

Postby winston » Thu Nov 13, 2014 8:46 pm

No Interest Rate Hike in 2015?

By Dr. Steve Sjuggerud

Everyone expects higher interest rates in 2015… Everyone, that is, except Jim Rickards.

Jim Rickards is an original thinker…

I've already shared with you in DailyWealth Jim's brilliant but out-of-the-mainstream view that DEFLATION – not inflation – is the financial storm that nobody is expecting. (I urge you to go back and read the DailyWealth I wrote about that, right here.)

Jim opened my eyes to that idea… and so far he has been right. Inflation, it turns out, is apparently much more difficult to ignite than governments around the world have expected. The threat of deflation looms.

Earlier this week, Jim offered up yet another well-researched but out-of-the-mainstream view…

Jim says it's very likely the Federal Reserve will NOT raise interest rates next year.

Jim spoke after me at our investment conference in the Dominican Republic earlier this week. He is a compelling speaker. (Go see him if you get the chance.)

Jim explained why he doesn't expect the Fed will raise interest rates in 2015. It all comes down to who makes the decisions to raise interest rates…

"Almost everything changes on January 1," Rickards explained…

"The President has vacancies to fill among Fed Governors, and he will most certainly put doves in. Also, two "super-hawks" – Fisher and Plosser – will no longer have a vote." (Doves are less likely to raise interest rates. Hawks are more likely to raise interest rates.)

Rickards says Janet Yellen – the head of the Federal Reserve – is dovish and won't be in any hurry to raise interest rates. So the list of voting members, according to Jim, is loaded with doves. This group, he says, won't raise interest rates.

I didn't believe Jim when I first heard him say that he thought the Fed wouldn't raise interest rates in 2015. But I like his explanation.

A year ago, Jim was the only man out there making a strong case that deflation was a REAL threat. It was a bold call. But so far, he has been right.

Now, Jim is making a bold call that the Fed might not raise interest rates in 2015.

It's another bold call… But he may just turn out to be right about this as well.

Everyone else says the Fed will raise interest rates in 2015. Jim Rickards isn't so sure of that…

You can agree or disagree with Jim Rickards' opinions – but don't dismiss them. Instead, soak them in. Learn both sides of the argument.

I love it when people are willing to stick their necks out with conviction. Jim Rickards is one of those people.

He could be right… or wrong… about a lot of things. Either way, he is thought-provoking… and therefore worth listening to. Deflation is a real threat, and the Fed might not raise interest rates in 2015 after all. I like this guy's thinking…

You should learn more about him. To learn more about Jim and his thought-provoking perspectives, I highly recommend you read his book, The Death of Money.

Source: Daily Wealth
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
User avatar
winston
Billionaire Boss
 
Posts: 118527
Joined: Wed May 07, 2008 9:28 am

Re: Interest Rates

Postby winston » Tue Dec 02, 2014 4:41 pm

TOL:-

Can you believe that European interest rates are so low ?

1. 10 year Italians @ 2.02%
2. 10 year Portuguese @ 2.83%
3. 10 year Spanish @ 1.84%

Where's that European Contagion that the "experts" have been talking about ?
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
User avatar
winston
Billionaire Boss
 
Posts: 118527
Joined: Wed May 07, 2008 9:28 am

Re: Interest Rates

Postby winston » Tue Dec 02, 2014 9:23 pm

2015 Prediction: LOWER Interest Rates Ahead By Dr. Steve Sjuggerud
Tuesday, December 2, 2014

"It seems to me almost unthinkable that U.S. interest rates could rise in any meaningful way," Jeff Gundlach said on CNBC last week.

Jeff Gundlach is "The New Bond King" according to Forbes.

To be crowned King of the bond world, you must know interest rates better than anyone else on the planet. Gundlach has earned his place.

By saying interest rates won't go up, Gundlach is going against, well, everyone…

"Entering 2014, everybody was negative… 68 out of 68 economists said [interest] rates would rise." Gundlach told CNBC. "And yet, there were all kinds of reasons to like Treasuries."

What reasons are there to like U.S. government bonds? And how could Gundlach possibly expect interest rates on U.S. government bonds to go lower?

It's simple… It's all about relative value…

Gundlach pointed out that interest rates on government bonds in Italy and Spain are around 2%, and interest rates in France are around 1%.

Which would you rather accept:
a) 1.8% interest from the Spanish government, or…
b) 2.2% interest from the U.S. government

Gundlach would take the U.S. government bonds – he sees U.S. government bonds as a better relative value.

It's not just government bonds… Gundlach says that, compared to U.S. corporate bonds and U.S. municipal bonds, U.S. government bonds are still "cheap."

What's Gundlach's outlook for the next two years? He explained it on CNBC:

I think that the surprise will be – and I don't know if it's 2015 or 2016 – I think the surprise will be how low a level the U.S. yield curve flattens at… I think the yield curve is going to flatten at a level previously thought unthinkable.

When you get what he is saying, it is a big prediction…

If the Federal Reserve raised interest rates from basically zero up to 1.50%, and if the interest rate on U.S. government bonds fell from 2.20% to 1.50%, then the yield curve would be totally "flat."

If the yield curve "flattened out" at 1.50%, then that really would be "unthinkable."

In short, Gundlach is predicting that the Fed will raise interest rates… but that long-term interest rates will basically NOT go up much at all… they could even go DOWN.

You may disagree… But don't dismiss the possibility of lower rates… If you are betting on higher long-term interest rates, please realize that you are betting against the New Bond King… I wouldn't want to bet against him about bonds in 2015…

Source: Daily Wealth
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
User avatar
winston
Billionaire Boss
 
Posts: 118527
Joined: Wed May 07, 2008 9:28 am

Re: Interest Rates

Postby winston » Sat Dec 06, 2014 6:42 am

What interest rates could be saying about stocks and the economy now by Mike “Mish” Shedlock

A week ago Fed Governor Dudley announced “U.S. Economic Outlook Looks Brighter.” My response was Ring! Ring! Goes the Bell.

Today, Curve Watcher’s Anonymous offers a few charts that show the bond market ringing a bell in disbelief of Dudley.

Yield Curve as of November 28, 2014

Curve Analysis

The yield curve flattened, then inverted prior to the last recession.
The yield curve steepened well ahead of the end of the recession.
Since then, the yield curve has steepened twice and flattened twice.
What’s Next?

Starting at the beginning of 2014, short-term yields (2-year and 5-year) have risen while long-term (30-year and 10-year) have declined.

In a strengthening economy, yields on the long end of the curve typically rise faster than yields on the short end.

Those waiting for the typical recession indicator (an inverted yield curve where short-term bonds yield more than long-term bonds) may as well be waiting for Godot with the Fed holding 3-month rates near zero percent.

Nonetheless, expectations of a major Fed tightening cycle are pretty much the norm. If the Fed hikes (which I doubt), then I fully expect to see action similar to the first yield-curve flattening box in the above chart. If the Fed continues to hike, expect a quick inversion.

Regardless, the bond market does not believe this happy talk from the economic cheerleaders, and neither do I.

30-Year Yield Minus 5-Year Yield

10-Year Yield Minus 5-Year Yield

10-Year Yield Minus 2-Year Yield

The first chart shows two incidents since 2010, where declines in yield reversed. However, both occasions ended when the Fed stepped on the gas.

If the Fed does so again, will the stock market respond the same way?

Feelin’ lucky?

Source: Global Economic Trend Analysis

http://thecrux.com/what-interest-rates- ... 37gMXBU%3D
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
User avatar
winston
Billionaire Boss
 
Posts: 118527
Joined: Wed May 07, 2008 9:28 am

Re: Interest Rates

Postby winston » Mon Dec 08, 2014 6:55 am

Why the Fed Won’t Raise Interest Rates in 2015

by Alexander Green

Source: Investment U

http://www.investmentu.com/article/deta ... ITXX9KUd1Y
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
User avatar
winston
Billionaire Boss
 
Posts: 118527
Joined: Wed May 07, 2008 9:28 am

Re: Interest Rates

Postby winston » Mon Dec 08, 2014 6:55 am

Why the Fed Won’t Raise Interest Rates in 2015 by Alexander Green

The global economy is soft. Commodity prices are down. The dollar is up. Wage pressures are almost nonexistent. And inflation is MIA. So why would the Fed start raising rates?


Source: Investment U

http://www.investmentu.com/article/deta ... ITXX9KUd1Y
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
User avatar
winston
Billionaire Boss
 
Posts: 118527
Joined: Wed May 07, 2008 9:28 am

Re: Interest Rates

Postby winston » Tue Dec 09, 2014 8:53 am

This could be the most important piece on interest rates you’ll read all year

Source: Bloomberg

http://thecrux.com/surprising-data-show ... 37gMXBU%3D
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
User avatar
winston
Billionaire Boss
 
Posts: 118527
Joined: Wed May 07, 2008 9:28 am

Re: Interest Rates

Postby winston » Mon Dec 15, 2014 7:02 pm

TOL:-

10 year Italians at 2.02% versus 10 year US at 2.18% ?

Italians better US now ?

What have I missed ?

No more European Contagion ?
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
User avatar
winston
Billionaire Boss
 
Posts: 118527
Joined: Wed May 07, 2008 9:28 am

Re: Interest Rates

Postby winston » Wed Dec 24, 2014 6:47 am

Interest rates and stocks… This chart reveals a surprising connection by Tom McClellan

There is a significant lag between changes in the yield curve and its effects on the stock market. The recent data show that the lag is 22 months at the moment, although it has been a different amount of time in the past.


If the Fed ever does allow short term interest rates to rise, and if the FOMC is foolish enough to invert the yield curve again, then we can look ahead to seeing an important bottom for stock prices about 22 months later. For now, however, it is still a bull market.


Source: Chart in Focus

http://thecrux.com/interest-rates-and-s ... onnection/
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
User avatar
winston
Billionaire Boss
 
Posts: 118527
Joined: Wed May 07, 2008 9:28 am

Re: Interest Rates

Postby winston » Sat Dec 27, 2014 3:44 pm

What If Rates Finally Rise?

Since 1955, stock valuations fell during initial rate hikes and mostly continued until the Fed finished the job.

http://online.barrons.com/articles/what ... jemb_mag_h
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
User avatar
winston
Billionaire Boss
 
Posts: 118527
Joined: Wed May 07, 2008 9:28 am

Next

Return to Other Investment Instruments & Ideas

Who is online

Users browsing this forum: No registered users and 11 guests

cron