Why Stock Market Bulls Should Hope Interest Rates Don't Rise

Tyler Durden's picture

Submitted by Lance Roberts via STA Wealth Management,

 

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Zirpedge's picture

Savers are terrorists. Interest rates should be negative.

LawsofPhysics's picture

I was wondering what happened to you Ben.

dryam's picture

Everyone involved in paper wealth in any way, shape, or form should be worried about rising interest rates.

Rising interest rates equals game-over.  This is why rates will stay low for a lot longer than everyone is predicting.  

NotApplicable's picture

Silly people keep identifying a political economy as a market economy for some strange reason.

ZIRP will rule as long as the dollar does.

Bernoulli's picture

But can they really be held low?

tarsubil's picture

What if the last two stock implosions were to keep interest rates low? Interest rates have to stay down to keep the central masters in power and they make money if stocks go up or down. What if they are getting ready to do it again?

ArkansasAngie's picture

All them insolvent arsehats will be ... well ... insolvent.

Liquidity?

Screw'em

The Most Interesting Frog in the World's picture

Spend your fucking money or hang by your neck at City Hall, your choice!

Flakmeister's picture

Rising interest rates would result in a real Great Depression....

LawsofPhysics's picture

...and the death of fiat is going to be better?

good luck with that.

Flakmeister's picture

All paths are fraught with peril...

LawsofPhysics's picture

oh please let me have just a little bit of peril, there's only 350 of them...

Grande Tetons's picture

What about falling rates? No Sarc. 

Unknown Poster's picture

Rates fell after QE1 & 2 ended.

NotApplicable's picture

They've gotta flatten out that yield curve some more in order to 'buy' themselves a little more time, I reckon.

Or will they introduce 50 year bonds first????

ArkansasAngie's picture

It would indeed ... for some.  All those shats who have borrowed money thinking that inflation was going to save them ... well ... negative net worth is negative net worth.  

 

ejmoosa's picture

Or rising rates would attract funds that are now sitting idle.  Rates will only rise so far as those dollars satisfy the demand for them.

 

Those dollars are the market's way of setting the price based on supply and demand.

 

What good are low rates if there is no demand?  As we can see, there is No good.

 

For God's sake, can't we get back to letting the market place iron this out for us?  It really did work well, before all the meddlers got involved.

LawsofPhysics's picture

What garbarge is this? With the oligarchs in most contries doing whatever the fuck the want, the answer to how long this can continue (no rule of law/contracts etc.) is very clear.

It can and will continue until the bread, circuses, and oil can no longer actually be delivered.

Then and only then will things get very fucking real.

The_Ungrateful_Yid's picture

Nuclear powered subs with nuclear tipped MIRv warheads guaranfuckingtees it will continue until theres nothing left.

RaceToTheBottom's picture

Did you mean Nuclear Powered FED with Nuclear tipped ZIRPs warheads?

rlouis's picture

Interest rates won't go up until after the great reset - until then, nothing of significance.

Flakmeister's picture

And after that reset, nobody is going to be caring about interest rates...

Dr. Engali's picture

Does CNBS really have to push me a push an alert every fucking time somebody signs up for Zerocare? Here is an idea... send me an alert when somebody pays their bill.

 

BTW... Rates are never going up above 3.5% on the ten year.

 

Edit: It's been my prediction and I'll reiterate it now, we will see a one handle on the ten year before this is over with.

CrashisOptimistic's picture

Every Senate Democrat up for election is going to live or die on Obamacare, even though most want to talk about something else. Their strategists have concluded they can't change the subject so their only hope is to persuade the populace that it is a rousing success.

That will be the narrative for the next 6 mos.

LawsofPhysics's picture

if this is the case it sets all the dems up for that "it's the economy stupid" response by voters...

NotApplicable's picture

How about a two handle on the thiry?

BTW, I consider those CNBS alerts to be the best infotainment money can't buy. I can't count the number of times I've gotten one about the same time as I see a ZH post on the same subject... with the exact OPPOSITE interpretation.

As always, do it for teh LULZ.

LooseLee's picture

OK. I'm interested. At 1% on the 10yr, what do the NAS, DOW, S&P, and GOLD trade at? You are implying MASSIVE deflation, you know?

jubber's picture

forgot to mention the Zillions in debt....

fonzannoon's picture

The fed basically owns the long end of the curve. So yields can't explode higher. Everyone figured out last yr that at 3% on the 10yr the EM's started blowing up so that is the redline. so now everyone is piling into bonds. The fed's actually trying to force the long end up (big NFP) to stop everyone from piling in because they know there is a cap...and oh yeah negative gdp....

They need to just set the 10yr at 2.75% and the 30yr at 4% and execute anyone who tries to move it off those targets.

LawsofPhysics's picture

"They need to just set the 10yr at 2.75% and the 30yr at 4% and execute anyone who tries to move it off those targets." -

Okay, that's funny shit.

Grande Tetons's picture

He is a desparate man that is about to lose a sandwich. 

LawsofPhysics's picture

Very monty-python "ish"...

All liquidity is fungible.  Plenty in the hands of the PDs, and with treasure issuance down (smaller deficit, now matching taper) they have some room to relax for a while.

The real cost of energy over the next year will be what makes things interesting.

fonzannoon's picture

a virtual sandwich, whatever that is. i'm still torn on this one and would not put a real sandwich on it. There is a chance yellen is holding a flaming bag of shit.

Dr. Engali's picture

Ooh....ooh... what's the bet? I might want in on the action?

Dr. Engali's picture

Does he have another bet out there that I don't know about?

Grande Tetons's picture

NFP miss is the bet. I am on the miss side. 

pods's picture

Sounds plausible fonz.

What are your thoughts bout the Mexicans?

pods

fonzannoon's picture

"Leo the fart was a good man...a flatulent man"

(my favorite arnold quote)

the mexicans are a fine people pods. good hardworking people, family people. but would they not be better off being used as speed bumps? that is the question we all need to be asking.

CrashisOptimistic's picture

I'd say no.

Way too many member banks pressuring their local Fed governor to avoid killing housing.  Personally I can't think a few bps on the mortgage matters, but by now they are desperate and will demand the Fed not allow a single uptick in those mortgage rates.

So it's hard to rationalize a managed level higher by any amount at all.

The Most Interesting Frog in the World's picture

I thought Belgium owned the long end???

LooseLee's picture

You have just defined a 'COMMUNIST' organization, you know?

vote_libertarian_party's picture

"if interest rates are a reflection of economic growth, inflation and wages, as the first chart above suggests, then rates are likely "fairly valued.""

 

The big friggin other driver of interest rates is the supply/demand equilibrium.  As the Treasury has ramped up supply over the past 5 years it was equaled (exceeded?) by the demand from the Fed.  When the Fed pulls away their portion of the demand prices will drop.  Bonds will drop like a rock because there is no replacement for $100B per MONTH.

 

Except for Belgium of course...

TheRideNeverEnds's picture

Well interest rates are falling like a rock from the sky and the markets are milling about at all time highs.  The sum is super bullish; new highs are a given, dramatically higher highs at that.  There is no question that this market is going higher, none.  

useless_fact's picture

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AvoidingTaxation's picture

Just fix BY LAW an interest rate at 2% on the 30y bonds.

So easy.

FEMA camp for the dissenters.

buzzsaw99's picture

they don't need a law they have the fed

pitz's picture

You know how many billions, if not trillions of $$ that would basically be handing the pension funds, for doing nothing of value?