In this week's Off the Cuff podcast, Chris and Mish discuss:
- Rising Interest Rates
- The big game-changer
- To Taper or Not?
- Hard to see the Fed delivering on the threat
- Gold
- Finally looking brighter again
- The Markets
- Be very, very concerned
For those who have been bored by the sameness of the markets this summer, things are finally getting interesting again.
Having returned from his honeymoon travels, Mish looks at U.S. interest rates with a fresh eye. While still low historically, they're MUCH higher than they were just a few years ago. As a result, bond prices are softening, mortgage applications are declining fast, and big players are beginning to liquidate bond holdings at high volume. As Mish says: "It's all about the direction" of the interest-rate move. If we are entering a secular era of raising rates, it will have huge negative impact on economic growth and financial asset prices.
Despite the latest jawboning from Bernanke and the pundits, Chris and Mish find that it will be hard for the Fed to truly deliver on the threat of a taper. It's simply too far in to its bet on forced liquidity. And removing too much of that money from the system will cause it to seize up as fast as a heroin addict attempting to stop cold turkey.
by cmartenson