Overnight, The Saudis decided to ignite a price war which was the catalyst for oil prices crashing, stock futures imploding, and bond yields going through the floor, as reported by Bloomberg, Sunday, March 8, 2020. This was on top of last weeks dramatic drop in interest rates as exemplified by the 10-year Treasury yield dropping below 0.5% for the first time and 30-day Libor collapsing to below 1%,
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Gary Carmell
Posted in Advice, Economy, Interest Rates, Investing, Trends, Uncategorized, Wealth
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“The spectacular rise in interest rates during the 1970’s and early 1980’s pushed many long-term market rates on prime credits up to levels never before approached, much less reached, in modern history. A long view, provided by this history, shows that recent peak yields were far above the highest prime long-term rates reported in the United States since 1800,
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Gary Carmell
Posted in Economy, Interest Rates, Investing, News, Stock History, Trends, Wealth
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Not surprisingly, the Fed pulled the trigger and raised short-term interest rates by 0.25% for the first time since last December. I thought I would convey what I think are the most pertinent variables to be monitoring in the wake of the Fed tightening. I’m calling this blog post “See and Wait” as I will be showing many charts and opine on some of the ramifications but we will have to wait to see how it unfolds in the real economy.
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2020 has started off with some geopolitical fireworks that have carried over to financial markets as the headline below attests.
This is another good example of why having a hedge with U.S. Treasuries (and maybe a little gold as well) can be helpful to provide a counterweight to risk assets that inevitably take a mild beating,
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I make a concerted effort to avoid each day rolling into another without any distinction. I never want to look back on my life and have nothing stand out. I think this is one of the reasons I blog each week. It helps me reflect on my life and gives me the opportunity to bring forth those experiences,
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It’s been said that markets go up like escalators and drop like elevators. There is also Newton’s Third Law which states that for every action there is an equal and opposite reaction. This is where the Fed comes into play when markets drop like elevators.
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Gary Carmell
Posted in Economy, Interest Rates, News, Trends, Uncategorized, Wealth
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Last week were engaged in our annual planning process. As part of this, we come up with key assumptions regarding the operating environment for the next three years or so. Interest rates, of course, are a huge variable in our business and dominated much of the discussion.
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I must admit that I was struggling to find the motivation to do this week’s post after three straight weeks of travel and a particularly busy seven days that included late-night business dinners for a number of them. Woe is me. I only bring it up because all of us face those times when we don’t want to do something and yet after we do it we inevitably feel better about having taken on the challenge.
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The market didn’t react very well to Jerome Powell’s characterization of Wednesday’s interest rate reduction as a “mid-cycle adjustment.” Investors took that to be a bearish easing of monetary policy. The stock market dropped, the bond market took a future interest rate reduction off of the table,
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There has been some criticism of Fed chairman Powell as he has gone from saying this in early October 2018:
To telegraphing this on July 10th:
Those who are upset by his dovish turn are irked because they feel like he is kowtowing to the market and Trump who is forcing his hand despite record high stock market averages,
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