The Impact of Rising Interest Rates On Real Estate Will Be Dramatic

Rates have risen from a low around 1.6% for the 10-year treasury, to 2.75% recently, or by 72%.  This is a massive, massive move, resulting from the $80 billion+ that exited bond mutual funds and ETFs in June.  The impact on the real estate market, should rates not return to historic lows, and especially if they continue to rise, will be unprecedented.  In a recent article published on CNBC’s website,…

Bond Market Perspective Suggests Sacrificing Current Income May Be Best Strategy – Published in Noozhawk on Monday, July 8, 2013

With all of the action in the stock market, it’s been tempting to focus solely on equities and to ignore the bond market altogether. However, recent action in bonds has been dramatic, to say the least. More to the point, those investors who have historically been able to rely on bonds for current income are now faced with a dual dilemma: where to find yield, and what to do with…

Consumer Spending Is Key to Market Performance – Published in Noozhawk on Monday, July 1, 2013

While no one can predict what security markets will do in the future, we can glean some useful information from economic statistics. Consumer spending represents approximately 70 percent of total gross-domestic product, so it’s instructive to track and evaluate the trends in consumer spending and consumer sentiment to help gauge the possible impact consumer spending could have on corporate profits and the economy overall. Year-to-date the stock market (Standard & Poor’s…

Correction Only Just Beginning – June 27, 2013

With the stock market and bond market bounce of the past few sessions, some investors apparently believe the recent 7.5% correction in the S&P 500 and 6% correction in the Dow were “the correction,” and now the market is free to advance to higher highs.  Unfortunately I believe the correction has only just begun.  We have earned back about half of the correction to-date, or about 3% to 4% for…

What’s a Bond Investor To Do? Published in the Nerdwallet Blog June 18, 2013

With the looming end to QE3 (quantitative easing round 3) the Fed’s massive $85 billion per month bond buying program designed to hold long-term interest rates artificially low, fixed income investors, and particularly those dependent on the income generated from their portfolio for living expenses, face a formidable challenge – how to invest in a rising interest rate environment without losing their shirt. The theory behind the Fed’s bond buying…

Watch Employment Growth as Sign of Life for Economy and the Future of QE3 – Published In Noozhawk On Monday, June 10, 2013

The pace of job growth in the United States threatens to continue to delay economic improvement. At the same time, the Federal Reserve has established employment as the most important barometer it will use to determine when to begin tapering off quantitative easing, or QE3 — the Fed’s massive bond-buying program. We now face a seemingly impossible situation in which slow employment growth will prevent economic growth, while improving employment will force the Fed…

Fed In Catch-22 On Stimulus Tapering – May 30, 2013

The Fed is now in an impossible position with regard to tapering-off their massive stimulus program – QE3 (quantitative easing round 3).  If they continue to buy $85 billion each month in long-term bonds, they risk sparking inflation.  If they try to taper-off their buying, they risk stifling the economy and potentially crashing the stock market. Recent action in the Japanese stock market may be a bad omen for U.S….

Inventory Overhand Will Stifle Significant Real Estate Price Upside – Friday, May 24, 2013

A new report from Zillow shows that 25%, or 13 million out of about 52 million, of all mortgage-holders are upside down on their mortgages.  Another 9 million, or 17%, don’t have enough equity to be able to afford to sell their house and move.  While home prices have shown some upside in recent months, these 22 million or 42% of all mortgage-holders, a large number of whom would like…

Bad Omen – Japanese Market Crash a Sign of Things to Come in U.S. – May 23, 2013

Today’s 7.3%+ crash of the Japanese market (NIKKEI Index) should give U.S. investors pause.  The NIKKEI, which has been on a similar run as the U.S. markets, was trading well above 15,000 before today’;s trading, just as the Dow Jones Industrial Index is trading above 15,000.  Both markets have been driven by government policies intended to stimulate their respective economies, and in both cases these policies have not resulted in…

Fed Paints Itself into a Bright-Red Corner – Published in Noozhawk on Monday, May 20, 2013

For the past eight months, since Sept. 13, the Fed has pursued a sustained bond-buying program, the third round ofquantitative easing, or QE3. The purchase of $85 billion in long-term securities each month brings the total purchased during QE3 to date to about $700 billion (and counting). But stock market gains from the low of around 1,350 on the Standard & Poor’s 500(November 2012) of about 23.5 percent through Friday’s close raise questions…