Rate Hike or Just HYPE

I walked down to an isolated hallway in my sleep. Twenty feet far, I saw 12 people cloaked red and blue stood in a circle. They were surrounding a coffin which looked very old. Slowly, a woman with her hair as white as snow moved forward and opened the box. From the box, stood a vampire. He looked very angry, well I would be pissed too if I stayed lifeless in a box, The woman brought him 25ml of blood and he was resurrected again. The celebration begun and everyone started dancing. The Beethoven’s symphony and red wine was floating in the air when the east wind blew up the curtains of the hall with sunlight passing through and sending the vampire back to the box.


Hello Jokers!!! 

After numerous, appearances of the Great White Yellen, I don’t know about US but my own interest in this is hiked. On 16th December, 2015, Fed is expected to lift off the cost of borrowing by 25 basis points for the first time in nearly 9 years. But, would it really happen? Janet Yellen could share this as a Life event on her Facebook wall. Her post could read as ” Finally did it, merry Christmas to all of you”. Ben Bernanke, Barack Obama and Mario Draghi liked it. Mark Carney could comment on the post which would read as “Why so soon?”

The hype was created during the last Fed meeting in October, 2015 about rate hike. Later on, however, continuous increase in the Non-Farm Payroll and a decline in the Unemployment rate around 5% put the Dec lift off on the table. The wages grew in the last quarter and the slack in the job market seemed to have finally gone. The Fed Chairperson Janet Yellen was quite confident in the last meeting about inflation reaching its target by 2016. Now last time we checked, the inflation was 0.2% (below the 2% target) courtesy Crude Oil but the core inflation which excludes the swinging energy and food prices was 1.3%.


The Christmas is the time to celebrate and the fed lift off might not be an  appropriate way to welcome Santa. It would be interesting for investors to see the impact of the Fed lift off on different asset classes.

Impact on Equities

The Standard and Poor’s 500 Index fell almost 3.8% last week. The US equities have been surprisingly upbeat in the last quarter even after Fed signalled about Doomsday December. The US economy has been in a “not so bad” phase since the stimulus measures. The economic recovery has been weak but better than Europe. There number of jobs created had been decent amidst of China and Europe slowdown. Since 2008 till date, Dow Jones has nearly doubled and the data proves that consumer spending has increased.

The current decline in equities could be the result of continuous falling energy prices (which hit 6 year low on Friday). There was a massive selling of Junk Bonds last week. Now, before you ask; junk bond is a high-risk high yielding security, typically issued by a company looking to raise capital quickly in order to finance a takeover.

The Third Avenue Fund which is the biggest US mutual fund since 2008 stopped withdrawals of its 789 million high yield credit fund last week which shows fear among the investors about the lift off, But this would not stop Fed from rate hike, it could prevent it from doing it on a faster pace.

So, the equities should remain stable if the fed increases rates by 25 basis points. The utility stocks might take a hit but financial stocks will be lucrative to trade. The wall street’s eye would also be on the USD 1.1 trillion dollar government -wide spending bill which is pending to be finalised by the lawmakers in Washington to avoid a shutdown. 

Impact on Gold & Silver

A general opinion formed about the precious metals these days would be a decline in the prices once the cost of borrowing increases. The most basic reason behind it could be a strengthening dollar. The US dollar had been highly overvalued and started negatively impacting the manufacturing output. The markets have already priced the rate-hike and thus with a gradual pace , the impact on dollar would not be too much. Also, the surge in dollar has been higher than anticipated because of the monetary easing programs in major economies like China, Japan, UK and Europe.

So, the impact on precious metals can be opposite to what is expected. In the most of the rate hike cycles since 1971, it is observed that during the start of the cycle precious metals most of the time surge. And as we know, that yellow metal has slipped down quite a lot in past few months on account of a possible rate hike.

Comments from the Joker

Well, the joker says that the rate hike would be expected but the words spoken in the press conference would be of utmost importance. The increase of more than 25 basis points can damage equities or any signal to increase the pace of rate hike can be brutal. However, Fed won’t repeat the mistakes ECB did in 2011. The fed expects to raise rates to 1.5% by the end of 2016. 

The joker believes it is fair enough, given the slowdown in China and depressing energy prices would take time to recover. China’s initiative to put stimulus tends to be working as the latest GDP figures picked up by 6.85% along with an improved industrial production and retail sales. Their possible announcement of tracking yuan against different currencies rather than only linking it with dollar could make yuan more weaker boosting up exports.

To summaries, the volatility in markets have increased and all eyes would be on the fact that FED should maintain a dovish outlook regarding the rate hike and increase it moderately by 25 basis points waiting for inflation to grow. If they resurrect the vampire too early, then the east wind might blew up the curtains again making way for the sunlight.

Will Fed finally raise the rates after almost a decade???

Will Yellen be more dovish about the future rate hike outlook???

Will Santa come with gifts or this time all the socks would stink???

To find out … Follow the TRADE JOKER                                        


Sources and References: The Economist, CNBC, Gulf News, Sydney Morning Herald, Reuters, Business insider, Chicago Tribune, The Globe and Mail, Malay Mail Online


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.

 

Related posts

88 Thoughts to “Rate Hike or Just HYPE”

  1. This is the correct site for anyone who needs to learn about this matter.
    You recognize so much its almost hard to argue with you (not that I actually would need… HaHa).
    You undoubtedly put a new spin on a topic thats been written about for years.
    Excellent stuff, simply great!

  2. Thank you for the auspicious writeup. It in fact was a amusement account it. Look advanced to far added agreeable from you! However, how could we communicate? lords mobile hacks 4u

    1. Yogesh Khairajani

      Thank you for your feedback. Please email me on yogeshkhairajani@gmail.com for any communication

  3. Hello to all, it’s actually a fastidious for me to go to see this web page, it contains helpful Information. lords mobile apk apps

  4. Awesome post.Much thanks again. Awesome.

  5. Thank you ever so for you post.Much thanks again. Much obliged.

  6. I really liked your blog.Really looking forward to read more. Keep writing.

  7. Appreciate you sharing, great blog post. Will read on…

  8. Wow, great article post.Really thank you! Fantastic.

  9. A round of applause for your article post.Much thanks again. Keep writing.

  10. Really informative blog post.Thanks Again. Really Cool.

  11. I am so grateful for your blog.Much thanks again. Want more.

  12. A round of applause for your article.Thanks Again. Want more.

  13. Muchos Gracias for your blog.Really thank you! Fantastic.

  14. I cannot thank you enough for the article post. Great.

  15. I really liked your blog article.Thanks Again. Fantastic.

  16. Wow, great article.Thanks Again. Keep writing.

  17. Enjoyed every bit of your post.Really looking forward to read more. Really Great.

  18. Im grateful for the article post.Thanks Again.

  19. We are looking for experienced people that are interested in from working their home on a part-time basis. If you want to earn $200 a day, and you don’t mind creating some short opinions up, this is the perfect opportunity for you!

  20. Really enjoyed this article post.Really thank you! Great.

  21. I just want to say I am new to blogs and actually liked this blog. Probably I’m likely to bookmark your blog . You amazingly come with excellent stories. With thanks for sharing with us your blog.

  22. Hi There! We are searching for experienced people that are interested in from working their home on a part-time basis. If you want to earn $200 a day, and you don’t mind creating some short opinions up, this might be perfect opportunity for you! Simply check out the link here NOW!

  23. Hi There! We are looking for some people that might be interested in from working their home on a full-time basis. If you want to earn $100 a day, and you don’t mind writing some short opinions up, this might be perfect opportunity for you! Simply check out the link here NOW!

  24. Hi There! We are looking for some people that are interested in from working their home on a full-time basis. If you want to earn $100 a day, and you don’t mind writing some short opinions up, this is the perfect opportunity for you! Simply click the link here NOW!

  25. Hi There! We are looking for some people that are interested in from working their home on a full-time basis. If you want to earn $100 a day, and you don’t mind creating some short opinions up, this is the perfect opportunity for you! Simply click the link here NOW!

  26. Hi There! We are searching for some people that are interested in from working their home on a part-time basis. If you want to earn $100 a day, and you don’t mind developing some short opinions up, this is the perfect opportunity for you! Simply click the link here NOW!

  27. I cannot thank you enough for the article.Thanks Again. Will read on…

  28. Thanks for sharing your thoughts about books.
    Regards

  29. Thank you ever so for you post.Really thank you! Fantastic.

  30. Muchos Gracias for your article post.Thanks Again. Keep writing.

  31. Really informative article post.Much thanks again. Keep writing.

  32. Thanks a lot for the blog post.Really looking forward to read more.

  33. Everybody loves everything you guys are usually up too. These kinds of clever work and exposure!
    Continue the good works guys I’ve you guys to blogroll.

  34. “I’ve been surfing online more than 3 hours today, yet I never found any interesting article like yours. It is pretty worth enough for me. Personally, if all webmasters and bloggers made good content as you did, the internet will be much more useful than ever before.”

  35. It’s a plseaure to find someone who can think so clearly

  36. Hello! I recently desired to ask if you ever have any trouble with hackers?
    My last blog (wordpress) was hacked and I finished up losing several
    weeks of perseverance because of no backup.
    Do you possess any methods to protect against hackers?

  37. Really appreciate you sharing this blog.Thanks Again. Keep writing.

  38. I just want to mention I’m beginner to blogging and honestly savored this web page. Probably I’m likely to bookmark your blog post . You surely have awesome stories. Thanks for revealing your blog site.

  39. I simply need to notify you that I am new to writing a blog and completely adored your report. Quite possibly I am prone to bookmark your blog post . You seriously have impressive article material. Love it for sharing with us all of your internet site webpage

  40. You’ll find it mostly not possible to come across well-aware viewers on this matter, although you seem like you fully grasp which you’re revealing! Appreciation

  41. I allow this do it is actually trait for 24 hrs without reconsidering this allowing it to load in and grow after being actually rolled up, as was proposed.

  42. Unbelievably motivating advice that you have said, a big heads up for posting.

  43. Hullo here, just started to be aware about your blog through Bing, and discovered that it is really useful. I’ll take pleasure in should you carry on these.

  44. Remarkably insightful elements you’ll have stated, thanks so much for adding.

  45. Hello there, just got receptive to your blog site through Google, and realized that it is genuinely useful. I’ll be grateful for in the event you persist this informative article.

  46. I simply intend to notify you that I am new to writing a blog and utterly loved your write-up. Very possible I am probably to save your blog post . You truly have memorable article material. Be Grateful For it for telling with us all of your web webpage

  47. For latestnewestmost recentmost up-to-datehottest newsinformation you have to visitgo to seepay a visitpay a quick visit internetwebworld wide webworld-wide-webthe web and on internetwebworld-wide-webthe web I found this websiteweb sitesiteweb page as a bestmost excellentfinest websiteweb sitesiteweb page for latestnewestmost recentmost up-to-datehottest updates.

  48. I’m not that much of a online reader to be honest but your sites really nice, keep it up! I’ll go ahead and bookmark your website to come back later on. Cheers

  49. Hey here, just started to be aware of your website through Google, and found that it is truly educational. I will like should you decide continue on these.

  50. I simply hope to inform you you that I am new to blogging and pretty much enjoyed your work. Most likely I am prone to bookmark your blog post . You certainly have magnificent article material. Delight In it for expressing with us your current web report

  51. It’s awesomeremarkableamazing to visitgo to seepay a visitpay a quick visit this websiteweb sitesiteweb page and reading the views of all friendsmatescolleagues regardingconcerningabouton the topic of this articlepostpiece of writingparagraph, while I am also keeneagerzealous of getting experienceknowledgefamiliarityknow-how.

  52. Surprisingly intriguing information that you have said, a big heads up for setting up.

  53. greatwonderfulfantasticmagnificentexcellent issuespoints altogether, you justsimply wongainedreceived a logoemblembrand newa new reader. What maymightcouldwould you suggestrecommend in regards toabout your postsubmitpublishput up that youthat you simplythat you just made a fewsome days agoin the past? Any surepositivecertain?

  54. I simply want to share it with you that I am new to writing and utterly cherished your website. More than likely I am most likely to bookmark your blog post . You really have outstanding article information. Be Thankful For it for giving out with us your main web information

  55. It really is almost not possible to come across well-aware users on this issue, however, you come across as like you realize those things you’re indicating! Thanks

  56. Really stimulating elements that you have said, warm regards for publishing.

  57. Hello there, just got conscious of your website through Bing, and realized that it is very beneficial. I will take pleasure in should you carry on this approach.

  58. It truly is nearly impossible to see well-informed men or women on this subject, however you look like you fully understand which you’re talking about! Excellent

  59. I would like to thnkx for the efforts you’ve put in writing this website. I am hoping the same high-grade site post from you in the upcoming also. Actually your creative writing skills has encouraged me to get my own site now. Actually the blogging is spreading its wings fast. Your write up is a great example of it.

  60. Thank you a bunch for sharing this with all folks you actually know what you are speaking approximately! Bookmarked. Please additionally seek advice from my site =). We can have a link trade arrangement among us!

  61. You really make it seem so easy with your presentation however I find this topic to be actually one thing that I believe I would never understand. It seems too complicated and extremely huge for me. I am looking ahead in your subsequent post, I¡¦ll attempt to get the cling of it!

  62. It¡¦s really a cool and useful piece of info. I am satisfied that you just shared this helpful information with us. Please stay us up to date like this. Thanks for sharing.

  63. Wow! Thank you! I continually needed to write on my site something like that. Can I take a fragment of your post to my blog?

  64. Hi, i think that i saw you visited my website so i came to “return the favor”.I am trying to find things to enhance my web site!I suppose its ok to use some of your ideas!!

  65. I simply couldn’t go away your website prior to suggesting that I actually loved the standard info a person supply in your guests? Is going to be again continuously to check up on new posts

  66. I was just looking for this info for some time. After six hours of continuous Googleing, finally I got it in your site. I wonder what is the lack of Google strategy that don’t rank this kind of informative sites in top of the list. Usually the top websites are full of garbage.

  67. Thanks for sharing superb informations. Your website is very cool. I am impressed by the details that you have on this blog. It reveals how nicely you understand this subject. Bookmarked this website page, will come back for extra articles. You, my pal, ROCK! I found just the information I already searched all over the place and just could not come across. What an ideal web-site.

  68. Hello There. I found your blog using msn. This is a really well written article. I will be sure to bookmark it and return to read more of your useful information. Thanks for the post. I will certainly return.

  69. Seriously enlightening suggestions that you have remarked, thank you so much for submitting.

  70. Nice post. I was checking constantly this blog and I am impressed! Extremely helpful info specifically the last part 🙂 I care for such info much. I was looking for this particular information for a long time. Thank you and best of luck.

  71. I just need to show you that I am new to online blogging and really valued your write-up. Probably I am probably to bookmark your blog post . You simply have fantastic article content. Truly Appreciate it for expressing with us your own web page

  72. I was just looking for this info for some time. After 6 hours of continuous Googleing, finally I got it in your website. I wonder what’s the lack of Google strategy that don’t rank this kind of informative web sites in top of the list. Usually the top websites are full of garbage.

  73. I loved as much as you’ll receive carried out right here. The sketch is attractive, your authored material stylish. nonetheless, you command get bought an nervousness over that you wish be delivering the following. unwell unquestionably come more formerly again as exactly the same nearly a lot often inside case you shield this hike.

  74. Well I truly enjoyed studying it. This subject procured by you is very effective for good planning.

  75. I am not positive the place you are getting your info, but great topic. I must spend some time studying more or understanding more. Thanks for excellent info I was on the lookout for this info for my mission.

  76. It is actually mostly extremely difficult to find well-updated parties on this subject, fortunately you come across as like you understand those things you’re writing on! Appreciation

  77. I am always invstigating online for ideas that can facilitate me. Thx!

  78. Wow, awesome weblog layout! How lengthy have you ever been running a blog for? you made blogging look easy. The total look of your web site is magnificent, let alone the content!

  79. I truly appreciate this post. I¡¦ve been looking all over for this! Thank goodness I found it on Bing. You’ve made my day! Thx again

  80. Hello There. I found your blog using msn. This is a very well written article. I’ll be sure to bookmark it and return to read more of your useful info. Thanks for the post. I will certainly return.

  81. Hiya here, just got alert to your website through Search engines like google, and discovered that it is pretty useful. I’ll be grateful should you decide keep up such.

  82. I carry on listening to the news broadcast talk about receiving boundless online grant applications so I have been looking around for the most excellent site to get one. Could you tell me please, where could i acquire some?

  83. Heya i’mi am for the first time here. I came acrossfound this board and I find It trulyreally useful & it helped me out a lotmuch. I hope to give something back and helpaid others like you helpedaided me.

  84. whoah this weblog is wonderful i really like studying your articles. Stay up the great paintings! You understand, many individuals are looking round for this info, you can help them greatly.

  85. Hi, Neat post. There is an issue with your web site in internet explorer, may check this¡K IE still is the marketplace chief and a huge component to people will leave out your wonderful writing because of this problem.

  86. wonderful points altogether, you just gained a emblem new reader. What might you recommend about your post that you made some days in the past? Any certain?

Leave a Comment