Amazing. There continues to be a huge amount of news coming out of Washington D.C. Politicians are giving interviews by the second. Analyst and commentators continue to talk. The total number of words now spoken on the subject of Obamacare, the government shut down, possible default, the debt ceiling limit and the government budget now equals somewhere north of fifty million words and it is growing at a torrid pace. However; in all of the fifty million words, arranged in various phrases and sentences, nowhere can you find an accurate description of the real issue facing the current and future … read more
The markets continue to debate the pros and cons of the Federal Reserve Banks quantitative easing program. The short term thinking is a “tapering” off of the program will cause interest rates to go up and that might kill the anemic economic recovery. Worries over the Fed slowing its purchases of Treasury Bonds has resulted in 10 year bonds increasing in rate from 1.75% to 2.85%. The concerns are also resulting in some volatility in the currency, commodity and stock markets.
We put the concerns over the quantitative easing debate in the same camp as some of the past “worries of … read more
In recent weeks the markets have re-acted violently to the prospect of the Federal Reserve Bank slowing down on quantitative easing. This is causing the ‘crash’ of the bond market that we have expected. Investors are attempting to sell low yield investments at a time when no one is interested in buying. This bond market crash is also taking a toll on the stock market. This knee jerk re-action is a little overdone. Interest rates going from 1.75% to 3% is hardly a catastrophe for corporate profits or the slow growth economy. P/E ratios have for some time discounted a … read more
Since our last written comment in March the markets are indeed higher. Money continues to flow into U.S. investments from around the world. Central Bank easing is also a major factor. This week the Central Bank of Europe cut rates from 1.5% to 1%. This tends to send European investors in search of better yields elsewhere. We continue to be constructively short term bullish on stock prices.
The question we ask ourselves is, how long can the Central Bankers of the world keep up with this massive injection of liquidity? When will the Federal Reserve Bank of the U.S. (Ben Bernanke) … read more