people are talking a lot in the economic theme means that the current surge in the stock ceases at the time of starting to raise rates, interpreted that higher rates are a negative for stocks. Let's check what has been happening historically in the bags when after a rate cut cycle, returning again increases.
Fed rates we can see here , or in graphic form here. In this last link is also possible to download data in spreadsheet form.
In the top chart we see the level of Fed rate since 1954. The gray areas indicate periods of recession. In
August 1958 began a cycle of rate rises. It was at that time the Dow Jones by 500 points. A year later the Dow was nearly 700 points, bringing the beginning of a rate hike cycle is not meant falling stock. In 1963
begin another cycle of rate rises through 1970, with a stop along the way that accounted for the slight decreases in rates in 1967. It is difficult to determine exactly when rates started rising since the first three years of the 60 types ranging from 1-3% to start a very mild increase beyond those levels since August 1963. Upon initiation of rate hikes was the DJ on 700 points and held up consistently until mid-1965, taking a breather in the 900 points to go up and reach 1000 points in 1966. Nor was this time lows on the stock after the start of the rate hike cycle.
The next important cycle of rate increases began in March 1972. The rates come to exceed 13% July 1, 1974. There was then a bearish reaction immediate rate hike, but after 1973 all falls happen until late 1974, the Dow Jones falling more than 40% in full rate hike. Here he had to do much or all of the 1973 oil crisis , and its inflationary effects. We saw that the bags do not do too well when inflation rises.
begin in April 1977 a new cycle of rate hikes. The bags themselves down then, but not with rupture of a previous upward trend, but a continuation of the fall started a few months ago.
In March 1988 we see the beginning of another cycle of rising interest rates, short-lived. Again no stock reacted to the floor.
In 1994 we can identify the beginning of another cycle of rising interest rates while the stock continued to rise for years continuously to reach high for the year 2000, with the maximum interest rate hikes cycle.
The last cycle of increases that we observed was the one that began in 2004, and in this case resulted in rising stock then, and not falling.
I mean with all this that the stock will continue to rise after the rate hikes? No, not at all. The bags were already expensive in terms of price-earnings before beginning the mother of all rebounds, which can hardly be far cheaper. A significant correction could come at any moment, and if it coincided with a rise in interest rates, is this the explanation would be found to justify the fall. A rise in the stock brought about by injections of money groups, and an output of the recession caused by government assistance for the purchase of cars and houses can not be too reliable.
In general, rates to rise is not always detrimental to the stock question of moderate increases to keep inflation at desired levels. It is even a good thing, as we indicated that the economy is improving and that improvement rate increases made necessary to keep inflation in check.
moment we might find in a possible future rise in interest rates rather due to speculation fostered by the free money is artificially raising the price of raw materials and actions. Recovery is discounted "V" is not going to get, since it is merely an economic upturn due to the numerous government incentives. Recovery will cease once the stimuli are withdrawn. It is likely that it is leading to speculation that rising raw materials and the bags, take them down once it is clear the weakness of the recovery.
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