But Credit Suisse says that after a 32-year bull market in bonds, the recent fall in bond prices is likely to prove to be more than a mere correction. And that's at least partly because inflation might really, truly, be back. Inflation expectations have risen 35 basis points in the U.S. and 50 basis points in Europe since the beginning of the year. Oil prices have risen back up above $60 a barrel after declining to a low of $48.55 in January. Credit Suisse analysts think the increase in inflation expectations indicates that investors believe healthier demand is driving the oil price rally, which would in turn portend stronger global growth.
Dow Ending a Down Week on a Positive NoteThe Dow managed to finish a down week on a positive note; the Dow Jones was up about 55 points - 24,270-ish is where we closed. Although intra-day, we were up better than 250 points, so most fo the losses came toward the end of the day, as the Dow was not able to hold on to all those gains. It held on to ...…
The theme of investing in a rising interest rate environment is not new; in fact, it has been overhyped in years past, most notable during the taper tantrum. But Goldberg said there has been so much literature from asset management companies stating case for bonds in a low interest rate environment they now should find it harder to justify bonds when the interest rate environment changes.
A bear market is traditionally defined as a period of negative returns in the broader market to the magnitude of between 15-20%, or more. During this type of market, most stocks see their share prices fall, often substantially. There are several strategies investors employ when they believe that this market is about to occur or is occurring, and they typically depend on the investor's risk tolerance, investment time horizon and objectives.
2. Should I choose to move and rent, the growing differential (between value and cost) becomes my growing rental income year in year out. And, this rental income goes up even if there is NO appreciation in the house’s value (the house, and rent the house can generate, merely moves up and keeps up with inflation; the real values stay flat). If I were to add the likely stream of increasing amounts on rental payments to my previous return calculation, I would get well over 5% annual returns previously mentioned.
We now have confirmation that the trade war between the U.S. and China is going to be a protracted one, given that neither side is willing to back down. China has declined any further talks because it refuses to negotiate under the threat of further tariffs, or as it puts it, with a knife at its throat. At the same time, Trump is clearly intent on pressing ahead with tariffs on all of China's exports to the U.S., regardless of rising opposition at home.
In 2005, Congressman Ron Paul (R-Texas) said section 404 of the Sarbanes-Oxley Act (2002) which requires chief executive officers to certify the accuracy of financial statements caused capital flight away from the U.S. stock market. Later in 2008, Paul said that the government bailouts of badly run corporations was rewarding bad behavior and punishing good behavior, and that it prevented resources from being allocated away from inefficient uses to more productive uses, and that this lowered the overall amount of wealth across the entire economy.
The west line theory states that the shipping center of the world moves in a westward direction slowly over the centuries. It started in the mid east and has moved west through the Mediterranean, Europe, North America and now sits over Asia. A shipping center usually implies a production center as well giving that area great wealth. The U.S. was the previous shipping and production center in the world. We now find ourselves on the back end of prosperity and all that it entails.
On this episode of Money For the Rest of Us, David Stein walks you through the complex idea of a bond bear market. He explains that a market consisting of losses of 20% or more are considered a bear market type loss and that this type of loss is possible even in the bond market. David states that “It’s important to understand what drives interest rates, how high they could get, and what the ramifications of that are.” Be sure to listen to this full episode to fully understand this idea and to hear some of David’s suggestions for investing in a rising interest rate environment.