FED funds Rate

Fed Assets since 2008

The Fed’s New “Tightening” Plan Is Too Little, Too Late

We’ve been saying for a while that the FED’s been “behind the curve”. First they said inflation was “transitory” and nothing to worry about (while we said to start worrying).  Then they said they would start tightening “later”. And finally it begins, but it should have begun months ago, the inflation “genie” is out of the bottle and the FED is going to have a difficult time getting it back in. In today’s article, Ryan McMaken tells us how the FED’s actions are “too little too late”

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Stocks Up Rates Up

Do the FED’s Interest Rates Affect the Stock Market?

In anticipation of the September 25-26 Fed meeting, CNBC ran this headline (Sept. 21): “Record High Stocks Face Fed Rate Hike.” implying that the Fed’s interest rate decisions actually affect the stock market. Common wisdom says that “falling interest rates means higher stock prices, while rising interest rates means lower stock prices.” At first blush this might sound logical because rising interest rates makes fixed income investments more attractive because they pay more and have less risk than stocks. So some of the available capital will flow into bonds, etc. thus starving the stock market and putting downward pressure on prices.  In this article, Elliott Wave International contends that there is actually no consistent relationship between interest rates and the stock market and they present examples of how the exact opposite of what you would expect has happened.

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Mortgage Delinquency Rates Increase

In the following article Chris Vermeulen of The Gold and Oil Guy, looks at the current trend in Mortgage Delinquencies in an effort to determine whether the market is still bullish. He also looks at FED actions and how they affect the markets. According to Wikipedia the Federal Funds Rate is, “the interest rate at which depository institutions (banks and credit unions) lend reserve balances to other depository institutions overnight, on an uncollateralized basis.” ~ Tim McMahon, editor

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