by Summary:
Rate hikes increase interest income flows to the non-government. Furthermore, some of the fastest loan growth historically has been when interest rates are rising.
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Rate hikes increase interest income flows to the non-government. Furthermore, some of the fastest loan growth historically has been when interest rates are rising.
Topics:
Mike Norman considers the following as important:
This could be interesting, too:
Mike Norman writes Class
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| Rate hikes increase interest income flows to the non-government. Furthermore, some of the fastest loan growth historically has been when interest rates are rising. |
Of course they're tightenings Mike – have you ever heard of the Wu-Xia shadow rate? Come on man !
wy2fru
https://www.youtube.com/playlist?list=PLUgaESJcoS1AbePnjzQ1nJbnC9sJl4YtC
Mike do you think of the head & shoulders formation on ES futures (S&P 500), more downside coming ??
Down to a neat 4000!
@Munted Me yeah makes sense that would be a 17% correction from the high of 4818, would be a good buying opportunity
@Munted Me or could be a double bottom at the 4200 to 4250 area
I think the bottom is near. I think the market is pricing in this the worst of the situation in Ukraine. Think about it, Russia has no reason to escalate the situation, they are already in Ukraine. I would only be more worried if USA starts talking about sending troops in to support the Ukraine military on the front line. So far they are only talking about monetary sanctions. I think thats the only way we get the next leg down to 3850 that everyone is talking about. Its like you always say Mike, we can only make a decision once the facts change.
Thanks Mike for your insight great opinion
never sell good stocks
Here is some background to search. Germany halted Nord Stream 2 back in Nov 2021. Why has Germany halted Nord Stream 2?
A pipeline created to supply gas from Russia to Europe has suffered another setback.
Published On 17 Nov 202117 AlJazeera news.
They cancelled because nord stream replaces pipes that already exist and pump gas. They go through ucraine and the ucrainians lose money once nord stream goes online.
Putin said he will invade the Sun next, but he will do it at night so he doesn't burn his shoes hahahah…
If there's a nuclear war my guess is there will be a significant market correction which will be a fantastic buying opportunity.
You mean for the remaining algo's who care to continue on without 'us'?
Yep I just went short the dollar too
If there's a nuclear war I wouldn't hang around any large city, especially after rewatching the terminated 2 playground scene.
War coming unfortunately market getting killed glad I am staying short
wait mike i thought you said it was good news as they are "peacekeepers" LOL
"We" own the debt and "we are also the creditors. There are two groups of "we". "We" the average Americans own the debt. On the other hand, "we" the rich Americans are the creditors. Higher debt increases the wealth gap.
Depends on where you are putting it. In reality, there is no "high" or "low" debt in sovereign terms, there is just THE debt, and it is divided into cents and sent out. Printing more money just moves some of THE debt into new money, now you just ask: where does the money go? If you give it to poor people they own more of THE debt now, if you give it to rich people, they own more of THE debt now.
Dr Richard Werner has proved in his study that growth and interest rates are positively correlated, not negatively, like neoclassical economics claims. A video where Werner explains the correlation is on YT.
Where is the situation going?
For me, nowhere!
First, I must say I know nothing about geopolitics nor military, but I know a bit about management.
So, from this knowledge that I have, the situation will play out like this or very close.
To make things short, let me just say that with all the satellites the US and others have in space over past twenty years, everyone, especially the US, knows where everything is, what people are doing, where the fingers of everyone are at every second of each day. Who is eating what all times and etc.
This means if any one moves very aggressively first, it will get blocked at that instance before anything leaves any tube let alone the borders, as all the hot spots would have been marked years ago and watched every day.
This is what management calls planning among the other 3 main principles. Hence, this means everything has been standing by and ready to intercept years ago too. All in automatic mode, there is no thinking involved. Just a word go.
So, if anything, it will be all over before it starts.
I believe, things will get resolved using diplomatic and other channels, as they have mostly been.
All the solutions have been thought of years ago too, which is business as usual, at the end of the day.
So, I believe things will pan out like Mike' s macroeconomic analysis showed after all the mumbo jumbo, dust blowing and probably a big clearance sales.
I can propose an answer to your question, "Why are interest rate hikes considered a tightening?". Rate hikes are price increases. Increased prices across the board generate increased sales and corporate tax revenues, don't they? About interest rates vs public debt, although your argument seems logical, the data doesn't seem to support it, if you check the Fred charts.
To answer your question why its a tightening?
Rate hike is a tightening on asset prices. Private sector can borrow less on higher interest rates. The people and corporation who are obtaining loans don’t have income from bonds also, so no their credit worthiness does not go up. Yes pension funds and other savers in bonds will gain better credit wortiness, but the income stream from higher interest payments is a long term effect. In the short term asset valuations prices will be decompressed by a higher risk free rate.
1. If gov deficit spending is going up due to higher interest payments, then that extra cost is a part of the overall gov budget thus other expenses will be reduced or taxes raised in order to maintain a given level of deficit spending.
2. When you say loans have gone up during periods of rate hikes, well maybe the loan growth had gone even more up, had they not hiked rates? Maybe FED was hiking because loans kept going up.
More interested if youre still long TSLA… Did you short RSX goin in to the close on Friday?
Your claims at 4:00 is false. Rising yields cause bond prices to fall. The creditors actually lose money as interest rates rise.