Interest rates stir the pot

 

By Jake Vaughan for Progressive Gauge

At times the markets and the Federal interest rate setters become eEntangled in a feedback loop of consequence. Interest rates highly influence both bonds and equities, tho the influence is by no means symmetrically distributed upon the two asset classes.  Starting in the days of saxophonist Allan  Morton Friedman Rand Greenspan, the Wall St crowd won the day and ushered in a long period of a cowed Fed and low rates (for typical American savers) and great green gobs of liquidity for Their Crowd. 

That river may have run its course. Rates have gone from zero-plus-a-nip-slip percent to about 3 percent. That’s caused a lot of changes in estimate predictions for stocks and bonds. Oil and technology play out a battle against this backdrop daily. At war are bulls’ and bears’ bets on recession, inflation and rates.  If funds etc pick good businesses and intelligent levels of risk, then things should still workout over three or four years. But expect the going to be choppy. - B.B.