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10-Yr T-Note vs. S&P 500 July 26, 2013

Posted by hslu in Economics, stocks.
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4/20/1981 –  9/17/1990

Bond vs Equity - 1981 to 1990

1/1/1990 –  7/1/2013

Bond vs Equity - 1990 to 2013

See link below for 1962 to 1983 data.

https://hslu.wordpress.com/2013/07/14/bond-vs-equity-1962-1983/

The conclusions stated in 1962 – 1983 blog stand. The question now is what will happen with the current rate increase. The difference this time is Bernanke is messing up the Bond and stock markets big time.

When the economy eventually turns the corner, the Bond market will give out early warning shots and the stock market will response one way or the other.

Well, don’t check in with Bernanke because he is just as in the dark as everyone else. He was very clear and precise as to when and what to do in May. But then he changed his mind the next day and said that he was wrong the day before. Starting today, he’d have to see the data before deciding what to do next.

So what’s it, Bernanke? To taper or not to taper?

The Fed made a mistake and they learned their lessons. We’ll just have to wait until the Fed makes the announcement on a Friday evening after market closes. It might be a long weekend.

Once taper starts, the Bond market and the stock market will be like “从此后  惊涛骇浪 烟也蒙蒙 雨也蒙蒙。” 虽然还达不到天崩地裂的程度但是小心一点还是应该的。

Watch what Bernanke does not what he says。Also pay attention to who will take over Bernanke’s position. Trial bloom will come out prior to the Jackson Hole meeting. The one who attends the Jackson meeting in Bernanke’s place could be the one. The Bond market will have a better idea.

I believe Bernanke told Obama in early April that, after 8 years, he has had enough and he’ll step down after his term expires on January 31, 2014.

Obama probably told Bernanke that he should skip the Jackson Hole meeting hence Bernanke’s announcement that he’ll not attend the Jackson Hole meeting; first time it has happened in 25 years.

I am going to stick my neck out and say that the new chairman won’t be any of the top two front runners: Yellen or Summers. Of course, this is purely speculation on my part. But I know that the one who is recommended by Krugman will be bad for the United States. We don’t need another liberal or Keynesian at the Fed. We already have Obama which is bad enough as is.

Of course, I don’t know who the new chairman going to be. We need someone with private sector experience who also has a firm grip on monetary policy and macro economics.

The FBI is doing the background check and rumors will come out soon after the drama at Jackson Hole dies down in late August.

 

Mr. Bernanke, was that allyou can do? August 30, 2010

Posted by hslu in Economics.
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On Friday in Jackson Hole, Bernanke outline three steps to aid the ailing US economy:

1. Buying mortgage securities and treasury bills to lower the interest rates on them.

How low is low? Until job market improves, no one wants to pile on more debt no matter what the rate is.

2. Timely disclosure of Fed’s policy meetings.

Are you kidding, Bernanke? This is your second weapon to revive the economy? How is this going to revive the economy? We know your message is biased like the Chinese saying:

“报喜不报忧”

“bao4 xi3 bu1 bao4 you1”

“Reporting good news but hide the bad.”

3. Reducing interest rate to zero that Fed pays banks for parking their money at the Fed.

The current rate paid to banks is 0.25%. Will bank withdraw that money and start lending?

The banks may withdraw the money at the Fed but they may not be able to lend because the business is not borrowing and consumer can not borrow.

The business will not borrow because they do not know what kind of tax they have to pay in the future and they do not know how the ehalth care reform will impact their business.

The consumer will not lend because they have already maxed out. We are saving and paying off credit card debts. Do not forget that the consumer owes more money on student loans than credit card debts.

let’s have a show of hands who is thinking about borrowing money from your local banks? I guess not.

Mr. Bernanke, if you have other tricks up your sleeve, please let us in on it. Thanks.If you don’t, please do not lie to us.

Many of my customers are short on money or  out of jobs.  A long time customer of our restaurant came yesterday and bought some food from us. He dated his check 8/31/2010, two days from yesterday, and said that he’ll come and pay the amount in cash when he gets his pay at the end of the month. This was the second time doing this in two months.

People are suffering out there, Mr. Bernanke. They need help fast.

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