Interest Rates 02 (Nov 14 - Dec 24)

Re: Interest Rates 02 (Nov 14 - Dec 17)

Postby winston » Sun Jul 09, 2017 9:52 am

Influence of low interest rate environments on stock market returns

Billionaire Larry Robbins looked back at the important influence that low interest rate environments have on stock market returns.

He says “every time ONE of these (following) conditions has existed, the market has produced positive returns.”

Here they are:
1. When the 30-year bond yield begins the year below 4%, stocks go up 22.1%.
2. When investment grade bonds yield below 4%, stocks go up 16%.
3. When high yield bonds yield below 8%, stocks go up 11.6%.
4. When cash as a percent of asset for non-financials is above 10%, stocks go up 17.6%.
5. When the Fed tightens 0-75 basis points in the year, stocks go up 22%.
6. When oil falls more than 20%, stocks go up 27.5%.

His study showed that there has NEVER been a down year in stocks, when any ONE of the above conditions is met.

It worked in 2015. It worked in 2016. But now, not only does ONE of these conditions exist, ALL of these conditions exist. Yields are ultra-low, cash is high, the Fed is tightening and oil has fallen by more than 20% this year!

Source: Forbes
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: 118541
Joined: Wed May 07, 2008 9:28 am

Re: Interest Rates 02 (Nov 14 - Dec 17)

Postby winston » Wed Jul 12, 2017 7:09 am

Shift in the interest rate environment

It started a couple of weeks ago with the ECB setting expectations for an exit of QE, saying deflation is over.

Yellen followed at the Fed saying that things were good and that we won't see another financial crisis in our lifetimes.

The Bank of England piled on saying that the discussion about removing stimulus should come in the coming months.

So the coordinated message to telegraph a higher rate environment was clear. And it has continued with the rhetoric from Fed members.

On that note, Yellen will be back in front of cameras tomorrow for the semi-annual congressional testimony. Expect her to continue her trend of optimism about conditions and the tighter rate path.

Source: Forbes
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: 118541
Joined: Wed May 07, 2008 9:28 am

Re: Interest Rates 02 (Nov 14 - Dec 17)

Postby winston » Sat Aug 26, 2017 10:48 am

Negative interest rates have come to America

By Simon Black

Bank of America has $592.4 billion in deposits from retail customers, i.e. regular folks who bank at BOA.

And according to its annual report, BOA paid its retail depositors an average interest rate of 0.04% last year.

Yet at the same time, Bank of America charged those very same retail depositors $4.1 BILLION in fees.


Source: Sovereign Man

http://www.thetradingreport.com/2017/08 ... o-america/
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: 118541
Joined: Wed May 07, 2008 9:28 am

Re: Interest Rates 02 (Nov 14 - Dec 17)

Postby winston » Sun Aug 27, 2017 8:19 pm

The Yield Curve

A flattening yield curve generally tends to indicate that a slowdown lies ahead, and that’s exactly what we’ve been seeing over the last few years.

One does not immediately follow the other, however – on average, the yield curve inverts 16 months prior to an economic recession and 13 months before major stock-market corrections.

As you can see below, we are not quite to inversion yet – the blue line [today’s yield curve] is notably flatter than the orange line [the yield curve at the end of 2010].

If the yield curve starts to show signs of inverting, that could be a major warning signal.

Source: Zack's Research
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: 118541
Joined: Wed May 07, 2008 9:28 am

Re: Interest Rates 02 (Nov 14 - Dec 17)

Postby winston » Tue Oct 17, 2017 2:15 pm

US Treasury bond yields could be signalling trouble ahead

Dallas Fed Reserve President Robert Kaplan, has cautioned of a risk that the US yield curve could become inverted, where short-end yields are above longer-end ones, a development which in the past has boded ill for the US economy

“What I don’t want to see us do is raise rates so fast that we get an inverted yield curve because history has shown an inverted yield curve has tended to be a precursor to a recession”


“The lack of inflation premia suggests that bond yields are set to stay structurally lower for longer” .


Source: SCMP

http://www.scmp.com/business/companies/ ... uble-ahead
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: 118541
Joined: Wed May 07, 2008 9:28 am

Re: Interest Rates 02 (Nov 14 - Dec 17)

Postby winston » Tue Oct 17, 2017 2:15 pm

US Treasury bond yields could be signalling trouble ahead

Dallas Fed Reserve President Robert Kaplan, has cautioned of a risk that the US yield curve could become inverted, where short-end yields are above longer-end ones, a development which in the past has boded ill for the US economy

“What I don’t want to see us do is raise rates so fast that we get an inverted yield curve because history has shown an inverted yield curve has tended to be a precursor to a recession”


“The lack of inflation premia suggests that bond yields are set to stay structurally lower for longer” .


Source: SCMP

http://www.scmp.com/business/companies/ ... uble-ahead
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: 118541
Joined: Wed May 07, 2008 9:28 am

Re: Interest Rates 02 (Nov 14 - Dec 17)

Postby winston » Mon Nov 06, 2017 7:42 am

Rate rises and the market’s reaction

by Nicole Elliott

Last week Hong Kong tycoon Li Ka-shing’s CK Asset Holdings company sold a controlling stake in The Center for a record HK$40.2 billion for a single office building.

A reason this was possible is that interest rates around the globe are at record lows. Some suggest that the era of cheap money might be over as first the United States Federal Reserve, now the Bank of England, raised their key rates.

Bond traders see things differently, still favouring long-dated paper over shorter maturities – not what one would expect.

Yield curves are at their flattest in years, and the British two-year gilt yield fell from 51 basis points to 39, below the new bank rate raised from 25 to 50 basis points. Interesting!

Source: SCMP

http://www.scmp.com/business/markets/ar ... s-reaction
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: 118541
Joined: Wed May 07, 2008 9:28 am

Re: Interest Rates 02 (Nov 14 - Dec 17)

Postby winston » Tue Nov 07, 2017 7:57 am

Why the Fed is likely to raise interest rates faster than you think

The 2018 FOMC set-up could be one of the most hawkish set-ups in recent years.

Friday’s release of data showing US service industries – which make up the largest part of the US economy – expanded in October at their quickest pace since August 2005, is certainly another mark in that stronger-than-expected column.

If the Trump administration also manages to get Congress to approve a tax plan that is perceived to provide a substantive stimulus to the US economy, the Fed would also have to take that into account.


Source: SCMP

http://www.scmp.com/business/global-eco ... -you-think
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: 118541
Joined: Wed May 07, 2008 9:28 am

Re: Interest Rates 02 (Nov 14 - Dec 17)

Postby winston » Tue Nov 21, 2017 12:01 pm

The Yield Curve Hasn’t Been This Flat In 10 Years. Recession Ahead?

Whenever we see an inverted yield curve, a recession almost always follows, and that is why many analysts are deeply concerned that the yield curve is currently the flattest that it has been in about a decade.

Source: The Economic Collapse Blog

http://www.thetradingreport.com/2017/11 ... 1-91746477
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: 118541
Joined: Wed May 07, 2008 9:28 am

Re: Interest Rates 02 (Nov 14 - Dec 17)

Postby winston » Thu Nov 23, 2017 7:40 am

Stock market could tumble 15% if 10-year Treasury yield crosses this line

The U.S. equity market could shed 15% of its value if the 10-year Treasury yield hit 2.75%


Source: MarketWatch

https://www.marketwatch.com/story/stock ... 2017-11-22
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: 118541
Joined: Wed May 07, 2008 9:28 am

PreviousNext

Return to Other Investment Instruments & Ideas

Who is online

Users browsing this forum: No registered users and 11 guests