Support My Efforts By Visiting The Advertisers

Disclaimer

This is a personal blog. The opinions expressed here represent my own, not those of my employer and is not intended to malign any religion, ethnic group, club, organization, company, or individual.

The End To Free Money

>> Friday, February 5, 2010

After the re-appointment of Mr Ben Bernanke, many are trying to predict the most anticipated Fed interest rate hike in history. This will spell the end of free money which is touted as the source of asset bubbles in Asia. If this is truly the case, the bubble might face bursting once interest rates increase. It is good to prepare investment positions before that happens.

The signals from history to look out for:

1. Unemployment: Once unemployment peaks, the Fed usually waits at least a year before raising rates.

2. Factory Utilization: Factory utilization needs to rebound to around 80%.

3. Wages: Wages have fell at their fastest pace in 25 years. A pronounced rebound is needed before there is extra money in consumers' hands for a rate hike.

4. Unwinding Special Facilities: After introducing nearly half a dozen "special liquidity facilities" for the financial crisis. It only makes sense to unwind them first. Four of them expired on February 1. And the program aimed at purchasing mortgage-backed securities will end in two phases - on March 31 and June 30.

5. Draining Cash: Extra liquidity will need to be taken out of the system first. So look out for newly introduced term deposits and reverse repurchase agreements and the Fed selling some of its long-term securities outright to accomplish this.

6. Policy Statement: About a month before raising rates, the Fed will remove the phrases that have been used in its statements throughout the crisis - "exceptionally low" and "extended period."

1 comments:

Blogger July 27, 2017 at 7:30 AM  

You can make $20 for a 20 minute survey!

Guess what? This is exactly what big companies are paying for. They need to know what their customer base needs and wants. So big companies pay millions of dollars per month to the average person. In return, the average person, like myself, answers some questions and gives them their opinion.

Disclaimer

Privacy

The owner of this blog does not share personal information with third-parties nor does the owner store information is collected about your visit for use other than to analyze content performance through the use of cookies, which you can turn off at anytime by modifying your Internet browser’s settings. The owner is not responsible for the republishing of the content found on this blog on other Web sites or media without permission.

Blog Comments

The owner of this blog reserves the right to edit or delete any comments submitted to this blog without notice due to;

1. Comments deemed to be spam or questionable spam
2. Comments including profanity
3. Comments containing language or concepts that could be deemed offensive
4. Comments that attack a person individually

Terms and Conditions

All content provided on this blog is for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site. The owner will not be liable for any errors or omissions in this information nor for the availability of this information. The owner will not be liable for any losses, injuries, or damages from the display or use of this information.

This policy is subject to change at anytime.

About This Blog

To promote the education of individuals for the need to have a healthy lifestyle and wealth management through proper financial planning, particularly in investments.




Top Blogs


Awards

There was an error in this gadget

Top Sites

  © Blogger templates Sunset by Ourblogtemplates.com 2008

Back to TOP