Everyone and their mom is expecting long-term interest rates to rise now that the Fed is tapering its bond buying programs. I have a couple of problems with this line of thinking because, although it seems like reducing demand for a security (i.e. tapering QE) would result in a drop in price, when you really think about how quantitative easing works this makes no sense and, secondly, the market is telling us this makes no sense. Let me explain.
Read More »Kunstler: Positive Talk About U.S. Economy Is Nothing But Horse…!
It appears that the American economy — capital management division — has found the long-wished-for magic alternative energy source: horseshit. It is fueling the conversation all over the Web and over the senile mainstream media megaphones. [Let me explain.]
Read More »10 Ominous Warnings Of What Will Happen IF There Is An Extended U.S. Debt Default
If the debt ceiling deadline (approximately October 17th) passes without an agreement that would be extremely dangerous - and if the U.S. government is eventually forced to start delaying interest payments on U.S. debt (which could potentially happen as soon as November), that would be absolutely catastrophic.
Read More »We Think the Prognosis for Stocks Looks Good – Here’s Why (2K Views)
Stocks have generally performed very well in rising-rate environments but the current rate cycle is unlike any other of the past 40 years, keeping investors on edge. A lot will depend on how inflation behaves.
Read More »Fed’s Tapering Plans Will Be Delayed For These 5 Reasons (+2K Views)
The financial markets were in distress lately because of Fed Chairman Ben Bernanke's suggestion that the Fed might taper off its quantitative easing programs starting at the end of this year and ending in 2015. Here are five reasons why markets shouldn't worry too much about the Fed leaving the stage:
Read More »These 4 Indicators Say ” the immediate outlook doesn’t look good for gold” (+2K Views)
Below are the four most important factors that influence the price of gold indicators....If you understand and correctly interpret these four indicators, I guarantee you'll make more intelligent buy/sell decisions. More importantly, you'll make more profitable ones as well.
Read More »Rising Interest Rates Could Plunge Financial System Into a Crisis Worse Than 2008 – Here’s Why (+4K Views)
If yields on U.S. Treasury bonds keep rising, things are going to get very messy. What we are ultimately looking at is a sell-off very similar to 2008, only this time we will have to deal with rising interest rates at the same time. The conditions for a "perfect storm" are rapidly developing, and if something is not done we could eventually have a credit crunch unlike anything that we have ever seen before in modern times. Let me explain.
Read More »We Think Interest Rates are Making a Long-term Turn Upwards
We had previously speculated that the 30-year bond rate would continue downward to around 2% based upon a number of very long-term charts. Short-term charts, however, are showing strong technical evidence that interest rates may be turning up in the long term. Words: 267; Charts: 2
Read More »The Paradox of QE: If It Is Successful the Federal Reserve Will Fail & Plunge U.S. Into New Fiscal and Political Crises
[There is a major downside to] quantitative easing; it isn't free. There is a cost to the Fed's policy and the bill will be past due when the economy recovers and interest rates rise. Congress will then realize that the Federal Reserve System is the biggest financial black hole in the history of mankind [and that] the tab may be big enough to blow the Federal budget and plunge Washington into a new fiscal and political crisis. Words: 870
Read More »Soros Sees Interest Rates Soaring Soon – What Does That Mean for Bonds & Gold? (+2K Views)
The U.S. economy is picking up steam and the Fed’s quantitative-easing approach is helping and as a result investors should watch out for a possible spike in interest rates once growth is well under way (later this year) warns billionaire financier George Soros. It has been suggested that this would adversely affect bonds but not everyone agrees. Read on!
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