The Fed Rate Hike and the Stock Market

[william the wie]

Rate hicks usually cause both a market crash and an increase in the value of the currency experiencing the hike. Since the rest of the world with the exception of the UK is using some variant on QE to infinity and beyond what will be the stronger effect the flight to safety or greater discounting of future earnings?
.

 

[Dont Taz Me Bro]

Interest rates have been artificially low for a really long time. They need to rise.

 

[william the wie]

Interest rates have been artificially low for a really long time. They need to rise.

What does that have to do with the stock market forum that we are in?

 

[Toddsterpatriot]

Rate hicks usually cause both a market crash and an increase in the value of the currency experiencing the hike. Since the rest of the world with the exception of the UK is using some variant on QE to infinity and beyond what will be the stronger effect the flight to safety or greater discounting of future earnings?
.

Rate hicks usually cause both a market crash

That's a bold statement.

 

[Darkwind]

Rate hicks usually cause both a market crash and an increase in the value of the currency experiencing the hike. Since the rest of the world with the exception of the UK is using some variant on QE to infinity and beyond what will be the stronger effect the flight to safety or greater discounting of future earnings?
.

Depends upon three factors....

1. China. The quick cool down of their economy may trigger another monetary manipulation by their government....which will cause serious consternation in the debt markets (particularly those who have been buying US debt from them..

2. The rate of increase....Our own economy is limping along at a very anemic rate. If we get 2% for the year, I'd be surprised. (remember people, the market is NOT the economy)

3. Europe. Greece getting the bailout has eased some tension, but if China continues to sink, the Fed raise rates, and nations like Greece and Venezuela start burning the IMF's good will, its likely going to send everyone into a Bear market mentality.

 

[Zander]

In my opinion, the Stock market is crashing due to deflationary forces that have been forestalled by the use of QE and ZIRP and NIRP around the world. At some point the piper must be paid, There is no such thing as a free lunch!! TINSTAAFL!! This is just the beginning of the bear market. It's no longer a "buy the dip" market, it's now a "sell the rally" market. Go to cash or hold short.

As for rates increasing- IMHO that is already baked in the cake.

Currencies - As of today I am short the AUD. They will be hammered by the huge slowdown and commodity crisis in China. I will be going long the USD at some point in the extremely near future- looking to get in when the DXY gets to around 95.00 (closed at 95.36 today)

 

[Toddsterpatriot]

In my opinion, the Stock market is crashing due to deflationary forces that have been forestalled by the use of QE and ZIRP and NIRP around the world. At some point the piper must be paid, There is no such thing as a free lunch!! TINSTAAFL!! This is just the beginning of the bear market. It's no longer a "buy the dip" market, it's now a "sell the rally" market. Go to cash or hold short.

As for rates increasing- IMHO that is already baked in the cake.

Currencies - As of today I am short the AUD. They will be hammered by the huge slowdown and commodity crisis in China. I will be going long the USD at some point in the extremely near future- looking to get in when the DXY gets to around 95.00 (closed at 95.36 today)

There is no such thing as a free lunch!! TINSTAAFL!!

Close.
There ain't no such thing as a free lunch!! TANSTAAFL!!

 

[Zander]

In my opinion, the Stock market is crashing due to deflationary forces that have been forestalled by the use of QE and ZIRP and NIRP around the world. At some point the piper must be paid, There is no such thing as a free lunch!! TINSTAAFL!! This is just the beginning of the bear market. It's no longer a "buy the dip" market, it's now a "sell the rally" market. Go to cash or hold short.

As for rates increasing- IMHO that is already baked in the cake.

Currencies - As of today I am short the AUD. They will be hammered by the huge slowdown and commodity crisis in China. I will be going long the USD at some point in the extremely near future- looking to get in when the DXY gets to around 95.00 (closed at 95.36 today)

There is no such thing as a free lunch!! TINSTAAFL!!

Close.
There ain't no such thing as a free lunch!! TANSTAAFL!!

I was educated in private schools, AIN'T is not a word!

 

[william the wie]

I tend to avoid big one way bets either way Zander. There is six years of volatility to work out and there will be rip currents. Last word I got was that PA NG was selling at a profit for as little as $2/bbl equivalent. KMI and Philips 66 are building pipelines and so are other companies. Once they reach currently unserviced fields marginal costs drop like a rock. There is no reason to believe that deflation has any realistic limits but deflation estimates can and will be way off at times.

 

[Zander]

I tend to avoid big one way bets either way Zander. There is six years of volatility to work out and there will be rip currents. Last word I got was that PA NG was selling at a profit for as little as $2/bbl equivalent. KMI and Philips 66 are building pipelines and so are other companies. Once they reach currently unserviced fields marginal costs drop like a rock. There is no reason to believe that deflation has any realistic limits but deflation estimates can and will be way off at times.

I prefer Plain All American Pipeline (PAA) over KMI, but both are excellent "long term" plays.

 

[william the wie]

In my opinion, the Stock market is crashing due to deflationary forces that have been forestalled by the use of QE and ZIRP and NIRP around the world. At some point the piper must be paid, There is no such thing as a free lunch!! TINSTAAFL!! This is just the beginning of the bear market. It's no longer a "buy the dip" market, it's now a "sell the rally" market. Go to cash or hold short.

As for rates increasing- IMHO that is already baked in the cake.

Currencies - As of today I am short the AUD. They will be hammered by the huge slowdown and commodity crisis in China. I will be going long the USD at some point in the extremely near future- looking to get in when the DXY gets to around 95.00 (closed at 95.36 today)

There is no such thing as a free lunch!! TINSTAAFL!!

Close.
There ain't no such thing as a free lunch!! TANSTAAFL!!

I was educated in private schools, AIN'T is not a word!

In my opinion, the Stock market is crashing due to deflationary forces that have been forestalled by the use of QE and ZIRP and NIRP around the world. At some point the piper must be paid, There is no such thing as a free lunch!! TINSTAAFL!! This is just the beginning of the bear market. It's no longer a "buy the dip" market, it's now a "sell the rally" market. Go to cash or hold short.

As for rates increasing- IMHO that is already baked in the cake.

Currencies - As of today I am short the AUD. They will be hammered by the huge slowdown and commodity crisis in China. I will be going long the USD at some point in the extremely near future- looking to get in when the DXY gets to around 95.00 (closed at 95.36 today)

There is no such thing as a free lunch!! TINSTAAFL!!

Close.
There ain't no such thing as a free lunch!! TANSTAAFL!!

I was educated in private schools, AIN'T is not a word!

That is in dispute. Take the term English, it means Aengle (Frisian in modern terms) as spoken by Germans to Scandinavians or the reverse. Ain't as a borrowing from the Danelaw half of Britain is just as attested as is is. That Saxon superiority in speaking a Dutch dialect badly is a very feeble reed.

 

[william the wie]

I tend to avoid big one way bets either way Zander. There is six years of volatility to work out and there will be rip currents. Last word I got was that PA NG was selling at a profit for as little as $2/bbl equivalent. KMI and Philips 66 are building pipelines and so are other companies. Once they reach currently unserviced fields marginal costs drop like a rock. There is no reason to believe that deflation has any realistic limits but deflation estimates can and will be way off at times.

I prefer Plain All American Pipeline (PAA) over KMI, but both are excellent "long term" plays.

Indeed yes.

 

[william the wie]

Right now I'm in cash. Once or twice a week I run the same screens on Yahoo. I think I'm going to have to lower my sights from 90% correspondence in successive screens to 70 or 80% in order to trigger my hedge.

 

[Toddsterpatriot]

In my opinion, the Stock market is crashing due to deflationary forces that have been forestalled by the use of QE and ZIRP and NIRP around the world. At some point the piper must be paid, There is no such thing as a free lunch!! TINSTAAFL!! This is just the beginning of the bear market. It's no longer a "buy the dip" market, it's now a "sell the rally" market. Go to cash or hold short.

As for rates increasing- IMHO that is already baked in the cake.

Currencies - As of today I am short the AUD. They will be hammered by the huge slowdown and commodity crisis in China. I will be going long the USD at some point in the extremely near future- looking to get in when the DXY gets to around 95.00 (closed at 95.36 today)

There is no such thing as a free lunch!! TINSTAAFL!!

Close.
There ain't no such thing as a free lunch!! TANSTAAFL!!

I was educated in private schools, AIN'T is not a word!

The phrase and the acronym are central to Robert Heinlein's 1966 science-fiction novel The Moon Is a Harsh Mistress, which helped popularize it.