Sunday August 16, 2015
N E X T !
by Tom Heneghan, International Intelligence Expert
UNITED States of America -
The
Final Nail in the Interest Rate Coffin?
Sunday, August 16, 2015
I have no doubt Janet Yellen’s head slammed the table in frustration last week. As China devalued the value of its yuan, Yellen’s job got much, much harder.
In fact, we’d argue the global economic picture has never been quite so muddled... and quite so dangerous.
What has us worried is the growing gap between monetary policies across the world.
We’re convinced the traditional idea of interest rates, at least in our investing lifetimes, is dead. As much as Yellen and her troops want to nudge rates higher and reload their ammo belt, divergent forces from across the globe are forcing them to move cautiously.
The news out of China last week is a perfect example.
As Beijing works to decouple its yuan from the rising dollar, it puts an even brighter spotlight on the rising dollar. The greenback is an oasis in a monetary desert.
It’s not good news for Yellen. After all, if she pushes rates higher, it will be the equivalent of pouring gas on an already hot fire. While most other economies are working to slash the value of their currencies, the Fed is ready to overtly strengthen the value of ours.
It’s dangerous.
Yes, 87% of our economy is domestic. But if you’ve paid attention to the recent earnings reports from the multinationals that have teased this bull market forward, you know a strong dollar is cutting into profits.
Everywhere we look, companies are griping about a strong dollar.
For example, Apple (Nasdaq: AAPL) shareholders should absolutely be concerned over what happened in Beijing last week. With China acting as the company’s second-largest market (after the Americas), the falling value of the yuan could instantly shave several percentage points from Apple’s profits.
It’s not good news for a market leader that’s already starting to sputter.
And Apple’s not alone.
Beer giant Molson Coors (NYSE: TAP) felt the pain of a strong dollar - its European sales dropped nearly 17% over the last three months.
Its stock is now in a downtrend, too.
And shares of Fossil (Nasdaq: FOSL) sank by over 8% between Tuesday and Wednesday as the company warned about the effects of the strong dollar.
For the folks at the Fed who are already worried about an anemic recovery, the strong dollar is an itchy thorn in the side. If they raise rates and send the dollar even higher... they’ll very likely send the value of many multinational companies lower.
They’ll kill the bull market. And they may strangle our recovery.
For that reason, we’re convinced the Fed won’t make any bold moves. We might see a token increase... but nothing more.
Even bigger, though, we’re convinced we’ve seen the death of interest rates as we know them. In our investing lifetimes, we’ll never see another period of “normal” interest rates.
Central banks across the globe have simply gotten themselves in a trap - a trap they can’t escape from without gnawing their own leg off.
What’s an investor to do?
You’ve accomplished the first step. You’re aware of the situation... and the dangers it poses.
From here, you must invest according to the threat. With interest rates remaining low, you’ll need to find safe dividend income. That means largely focusing on domestic companies.
Sectors that stand independent of the global economy will do well. Healthcare and technology are two standouts.
We’re not in panic mode. Far from it. After all, this situation has been building for over six years. But it is time to adjust.
It’s time to realize we may never see “normal” again.
Good investing,
Andrew
P.S. At this hour, the Central Bank of China and the Central Bank of Japan are totally exposed to as much as $7 TRILLION of ass backwards derivatives that will turn the ETF markets into a worldwide burial ground.
They are about to go hybrid in Hong Kong.
The International Monetary Fund (IMF) has warned German Chancellor Angela Merkel that the Deutsche Bank can not 'Bail-Out' itself and the nation of Greece using Spanish, Italian and Portuguese derivatives.
In closing, we can report that the U.S. Inspector General has reached out to U.S. Congressional investigators as well as U.S. Military courts reference major misconduct and obstruction of justice by FBI Division 5 as well as the FBI on the whole, along with its Director James Comey, in an attempt to destroy evidence and shield current Democratic presidential candidate, lifetime loser Hillary Rodham Clinton.
Reference: The U.S. State Department has also been linked to this criminality by the U.S. Inspector General.
We can also divulge that Hillary, along with her husband "Billary", are using various reporters at Bloomberg News to put out disinformation as well as threats and blackmail against possible future Democratic presidential candidates that would be a threat to Hillary receiving the Democratic presidential nomination.
Note: The threats are not directed against loser Joe Biden.
Stay tuned.
1 comment:
Has anyone else noticed that a woman seems to be in charge when an office or position gets flushed or tanks ? Condo-loser Rice, Janet Yellen, Hillary Clinton, Louis Lerner, Barbara Boxer, Diane Feinstein, Pelosi, etc. ? Coincidence ? Could we predict the next problem by simply looking for a woman in a political office ?
Just a thought. blueray
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