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This Is What The World Looked Like The Last Time The Fed Hiked
Trying to remember what the world was like the last time the Fed hiked rates on June 29, 2006? Take a stroll down memory lane with DB's Jim Reid, for a quick reminder.
Taylor Hicks - Do I Make You Proud, Nelly Furtado - Maneater, Click and The Fast and the Furious : Tokyo Drift. It's fair to say that the week of the last Fed rate hike at the end of June 2006 won't go down in pop culture history. These were the number one songs and films of the day in the US and the UK respectively. I've seen neither film and just about know the Nelly Furtado song. Apparently Click is an Adam Sandler film about him discovering a remote control that allows him to pause, rewind or fast forward his own life before said remote control somehow takes over and does it for him - likely to disastrous consequences! I think I may have to be very bored to want to revisit this gap in my collection.
Looking at equity markets firstly, the S&P 500 level was 1273 back then which is some 770pts below where it is now. 10y Treasury yields were nearly 300bps higher and all the way up at 5.194%. The EUR/USD exchange rate was back at 1.267 which compares to 1.093 now. Meanwhile in commodity markets Gold was down at $600/oz which is over $450 lower than where it closed yesterday, while Oil was up above $73.
If we look at what asset prices did that day the Fed last raised, the S&P 500 closed up +2.16%, 10y Treasury yields dropped nearly 5bps, the US Dollar weakened nearly 1%, Oil rallied close to 2% while curiously Gold was the standout, rallying over 3% (following up with a near 3% rally the next day also).
Some more color from Bank of America:
- Back then US housing starts were booming (2¼ million per annum)
- stock market bubble was taking place in Saudi Arabia, another one was forming in China
- no one had heard of “Quantitative Easing”
- there was no such thing as the iPhone.
Where are we today?
Today, US housing starts are moribund (around 1 million per annum), the Saudis have just been downgraded (a devaluation of the Saudi riyal is one of BofAML’s noted “black swan” events in 2016), Chinese debt deflation has reduced China’s “growth” opportunity set to babies, tourists & capital outflows, central banks have purchased a remarkable $12,400,000,000,000 of financial assets since Bear Stearns, and the iPhone now powers retail sales.
But, as we showed previously, the biggest different is the following: back then total debt/GDP was 61%, with total debt just over $8 trillion. Now, it is 104%, with the total US debt just shy of $19 trillion.
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It's so long ago.. I can hardly remember.
The world's most powerful currency didn't even exist in 2006.
Yellen should drink a lot of Soap Bubble Liquid before the press meeting this afternoon.
It would be lovely to see her bubbling or foaming at the mouth (or other body orifices). ;-)
Looney
or pinch a clothes pin on his balls so he sounds remotely like a woman?
"So..."
Jews ruled then. Jews rule now. Jews ruined then. Jews ruin now
Nelly Furtado. Absolutely perfect.
http://images.fanpop.com/images/image_uploads/Nelly-Furtado-nelly-furtad...
And speaking of Canadians and Loonys.... The Canadian peso just took another hit on the splendid oil news.
I like most of Adam Sandler's movies, but Click is one of the worst movies I've ever seen.
Fair enough. Had he been Adam Johnson or Adam Smith, however, he'd be stocking groceries or peddling insurance somewhere in the Lower 48. Still, they're more respectable vocations than gifting the world with Don't Suck off the Zohan.
Yellen & Depends. A PhD. thesist title fro Wharton for 2018.
I bet Yellen leaves more than 20 brown streaks and 10 little yellow spots in her Depends today.
I’ll see your “20 browns” and raise another 15. ;-)
Looney
Who is the poor bastard that gets to verify that?!
No flocking way!
I'll be chanting, "Stroke! Stroke! Stroke!" And I HATE crew.
Here ya go Looney, and this was a long time ago...
https://www.youtube.com/watch?v=2aSJhb78R-o
Lumber, same reply to you, enjoy!
https://www.youtube.com/watch?v=X0TSDcPW2Kk
The thing about lying and talking out of both sides of your mouth is you eventually can't keep the charade going any longer. The day comes when it no longer works and the truth comes out. The truth always wins in the end. Today is that day for the Federal Reserve.
I really wish the best to everyone here at ZH, because we called it, we felt it, we KNEW it way back in 2009 / 2010. Soon, we will be proven right, it will be easy for all to see - it's going to be hard not to gloat, and it would be prudent not to. Will we be targets by hate filled sheeple who are jealous. They called us crazy, foolish, doomers, haters. I think we are just common scene thinkers who value truth, justice and facts.
When Janet has to reverse course and announce QE4 and the subsequent reversal of the so called, "tightening", watch out. The dollar is going to roll over hard and it won't be gradual. Good luck yellen and the sheeple, you sure are going to need it because your luck just ran out, that manipulation is about over. We knew it.
Being proven right about this is akin to opening a bottle of Heinz Ketchup in outer space and waiting for the contents to come out.
Explosive decompression happens a lot sooner than seven years, though the results will be just as messy, if less bloody.
Ah, no.
Gold's been around since creation, designed by God, manufactured in supernovas.
Unless you're talking about one the cheap conterfeits - paper or digital. In which case, you're baked.
EurGold are selling all of their 1oz silver coins for just €12!
These include:
1oz Silver Vienna Philharmonic 2015.
1oz Silver American Eagle 2015.
1oz Silver Canadian Maple Leaf 2015.
1oz Silver Perth Mint Kookaburra 2015.
https://www.eurgold.de/silver/silver-coins/
Silver 1oz Vienna Philharmonic 2015 Master Box (500pcs) - €7,859.69.
https://www.eurgold.de/silver/silver-coins/500-x-1oz-silver-vienna-philharmonic-2015-master-box/
Silver 1oz American Eagle 2015 Master Box (500pcs) - €7,949.17.
https://www.eurgold.de/silver/silver-coins/500-x-1oz-silver-american-eagle-2015-master-box/
Silver 1oz Canadian Maple Leaf 2015 Master Box (500pcs) - €7,775.52.
https://www.eurgold.de/silver/silver-coins/500-x-1oz-silver-canadian-maple-leaf-2015-master-box/
All major credit cards accepted. Sale ends 31st December 2015.
The troll on the hill
Is sitting perfectly still
Making it very easy
to sight my gun and go for the kill.
Ahh yes perceived normalcy, go back to sleep sheep!, borrow and spend dammit!
And I will, like there's no tomorrow...because...there isn't.
and I was a lot less cynical
I was doing GHB in Vegas in 2006
i was doing yo momma
2006 sucked.
But so did most every year before and since...
say what you want, I liked tokyo drift. Maybe not the main character but Sung Kangs character, "Han." And even though in real life the veilside rx7 was slow as fuck, it looked clean. Japan is a beautiful place and is home to some of the most talented drivers (for mountain/touge).
I had just graduated from high school...man the world was full of promise.
"They" say the amount of debt Our Gov. has doesnt matter, but if you want to raise rates and not fuck yourself I guess it might be starting matter?
I liked Nelly Furtaco.
Smelly Retardo.
I'd drink her bathwater
Sandler completes the balance in the Force.
As a side note. Watch the first 30 weconds of this video a few times to understand what the US is really doing in Syria. https://www.youtube.com/watch?v=99CI5rKXBjA You might have to see it a couple times to understand what it is saying.
the Great Satan ?
Obama is bombing Assad's army to assist ISIS in taking postions. Obama is still lying about everything. He alone has taken the US to war. He has put the US in direct conflict with Russian forces. It is ony a matter of time before a NATO jet get smoked and this escalates even further.
USA is also bombing Syrian infrastructure on purpose. Electricity generation plants, roads, etc. USA is on the wrong side of history here. Putin is smarter than that - not going to fire first. He'll get his revenege other ways and look like the victim and the good guy and cause NATO to implode.
G O O D. I am so sick of all the fvkin idiots in this country talking tough and suggesting we can whip Russia, China, Iran etc.combined.
When Russia really unleashes their shit, there are going to be plenty of Beltway Rats shitting their pants when they witness that shock and awe.
That debate last night made me realize we are going to WWIII and they are crazy as a shit house rat.
Humans-don't ya just love em?
Talk about side notes, I guess the last rate hike was about the same time POTUS released 100,000 Gov. Issue 1911s for sale to the public... See the link below, from Mid-South Shooters. P.S. Look at the date.
http://www.mssblog.com/2015/12/02/new-bill-will-release-100000-1911s-to-...
In all of this, no matter what the FED does, this is going from bad to worse in the US over the next 5 years.
Now I know why so many American have bought so many guns, tehy are planning mass suicide, and they are so dumb that think they will need more than one bullet hence the ammunition!!
I bet yellen will wish she had Sandler's remote control when all of this is done.
In the Fall of 2006 Channel introduced Black Nail polish; the biggest "rage" of the NYC fashion show. In November Borat hit theaters. Make America Great Again.
Yes, yes, quite the Golden Age for pop culture... and real estate <g>
I looked a lot better back then.....
.... so did your avatar
Great day to watch a country blow up from interest payments due on debt. This is like me charging 104% of my net income on my credit card. Holy shit has the world gone batshit crazy.
like comex paper to physical gold leverage (325:1) - it just doesn't matter
Sandler to Yellen. The Tribe rolls on.
Bigger question: What's the world going to look like 9 years from now ?
Well we will get to look at Adeles fat face instead of this Hicks guy.
Detriot everywhere
I don't know about that, Detriot has a little something special about it that not everyone can match.
You forgot to mention the private/corporate debt.
no rate hike
2006 sucked Ass. I'd never want to relive that shitty fucking year. Why is everybody hyped about interest rates being raised, dumb fucks
They had a monkey hammer back then, too.
Holy shit! Psy's Gangnam Style was in 2012 and that seems a long time ago.
Fed Throws net out (lowers rates)
Fed Rakes net in (Increases rates)
Each time fish are caught and value is sucked out of the economy and consolidated by the bank and the population is made slightly poorer.
ZH'ers VOTE UP for YES or DOWN for no hike.
In 2006 my cousin set me up on the hottest date of my life but turned out she was just a Real Estate Whore looking to sell me a $75K condo for $200K.
the music/movies look exactly the same as they look today... as if we're in the Matrix and it's forever 2003 instead of the late 90s
Tattoos started going mainstream in the early 90s. Twenty years later and it's still a "trend." So we still have that from 90s....
Back then I had a financial advisor and shit.
Tyler, can you compare the macros from that date to todays macros?
Nail Gun Futures UP
Hey!
Does anybody remember getting interest on their savings?
Was that a crazy idea or what?