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Commentary
Between the fourth quarter being seasonally strong and the third year of a Presidential election cycle being the strongest year in the four-year Presidential term, investors might be asking: aren’t higher interest rates and Fed key rate hikes going to derail the stock market? The answer is yes for dividend stocks without underlying earnings growth and for value stocks. However, the answer is no for growth stocks, which have beaten value stocks for 12 consecutive years.
In fact, the bond vigilantes have been increasing interest rates globally, and countries that have shrinking populations and/or are not able to fully assimilate new immigrants, like Japan, Britain, and France, are the real targets of the bond vigilantes, since their underlying government debt might only be fixed with more money printing (quantitative easing), as the Japanese yen has demonstrated. There is now a staggering $365 trillion in government debt worldwide….
Between the fourth quarter being seasonally strong and the third year of a Presidential election cycle being the strongest year in the four-year Presidential term, investors might be asking: aren’t higher interest rates and Fed key rate hikes going to derail the stock market? The answer is yes for dividend stocks without underlying earnings growth and for value stocks. However, the answer is no for growth stocks, which have beaten value stocks for 12 consecutive years.
In fact, the bond vigilantes have been increasing interest rates globally, and countries that have shrinking populations and/or are not able to fully assimilate new immigrants, like Japan, Britain, and France, are the real targets of the bond vigilantes, since their underlying government debt might only be fixed with more money printing (quantitative easing), as the Japanese yen has demonstrated. There is now a staggering $365 trillion in government debt worldwide….
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