Study: equities bear markets don’t start when real interest rates are this low

Discussion in 'Index Futures' started by Troy Bombardia, May 13, 2018.

  1. Everyone seems preoccupied with the Fed raising interest rates. "Rate hikes will slow the economy and kill the equities bull market" they say.

    But here's the thing: the level of interest rates doesn't matter. The level of REAL (inflation-adjusted) interest rates is more important. Real rates are still too low to hurt the economy and stocks
    clacy likes this.
  2. mbondy


    Right, but we are coming off of historically low interest rates kept artificially via monetary policy, so the rulebook is being rewritten. Fundamentally, there are already enough catalysts to take the market down, interest rates notwithstanding; therefore, the question is not whether asset prices will decrease, but how fast will they fall?
    BONECRUSHER and comagnum like this.
  3. Rising interest rates make a competing asset class more competitive to stocks. As rates rise, it becomes less "painful" for investors to move money to safer assets during times of uncertainty. These investors can get now get some return on their safer investment.

    Overall, I believe there is enough potential remaining in the equity indexes for a test of all-time highs.
  4. clacy


    Real interest rates aren't talked about nearly enough, but then again most of the talking heads on CNBC are clowns.
  5. %%
    I mostly agree/good chart; except many do not adjust for inflation.Plenty of money got made in RE on 10% rates. I'm still bullish on tech stocks-its a bullmarket you know [200 day ma measure]Strange; many tech stock have no debt, but in a bear market they still get sold.LOL.

    Jim Rogers had a oil chart adjusted for inflation ,in his book, but i did not really get his point on that chart, except oil did not go up as much adjusted for inflation......:cool::cool:........................