My ersonal guess onto the feds interest rate decition is at a round 1%.
There are several factors for this number. Many people are spuclating that it will stay the same and thAT the FED will not make anything to unstabalize the economy.
In fact the actual stage in which the economy is in is very stable, no matter what the “experts” on TV may try to suggest you, it is 90% of panicing and hoping to influence the deciders ideas and views towards the desired direction.
What is the desired direction?
At the moment we have a bubble forming up in the Stock markets. Due to very low interest rates it has become unwise to invest his money in banks or insurances, but the only alternative that is left is the stock market. Therefore we are seeing this new all-time-hights which are beeing broken and pushed on a regular basis. The truth is that the stock market is overblown at the moment, with most companies in USA with a KGV of 20+ years (simple math, if you buy the company then you need 20+ years of stable economy without crisises or reduction in rentability of the company - to pay the cost off by the surpluses the company is creating).
Any KGV above 15 years is simply unrealistic. Companies like facebook (with a KGV of 150 years) or Tesla with a KGV of 1.000.000.000 years are rare examples that usually do not survive the “next crisis” without majordamage to their immage, investors and their business model - if they survive at all (i would not place my bets on tesla beeing around in 10 more years).
Most people here probably never heard of a KGV, but you heard of the people who base their trading decition solely on the KGV of a company. Those people all called “Value Buyer” and the famous names are George Soros and Warren Buffet who employ many people who constantly look for divergences in the books of companies to place their trading decitions on the potential outcome of the profitability (the time you need to pay out the investment by the surpluses of the given company). <-those people buy massively in crisises and sell “slowly” (called distribution to the crowds) in stable/high times like we are seeing now.
The effects of the QE programms and the effects of the low Interest rates the last few years were a game changer, not changing the game in its nature but changing it in its duration. Whoever is in this business for longer knows that crises come on a regular basis. The cicles of economy, the cicles of hope/greed, the circles of boom and crash, the cicles of activity/growth and stagnation/inactivity are what “chart and Technical traders” call crash/ high, elliot waves long term patterns, swing highs and swing lows etc. etc.
In order to support my statement that a increase in interest rate from the FED is comming very soon and is unavoidable (and will be more then most people expect) i will post historical datas which show the true actual condition of USA and its economy. Not the crap people spread over news with trying to make panic or trying to get the uninformed people into stocks or funds.
Here we go:
Lets start with the building permits (indication of the real estate economy and the connecting economies like construction companies, supporters, faciliaters etc. etc.) real estate (especially in USA) is a huge chunk of the combined economical power of the country. The supporting and connected industries make up around 35% of the total economic output of the country. Therefore this is one of the key industries to determine if a country is expanding or stagnating.
As we can see the statuts of this indicator is approaching “pre-crisis-levels” and is therefore on a very good track.
Consumer credit - Selfexplainatory
approaching “pre-Crisis-levels” - actually- is already above the levels of pre-crisis. indicating that most of the population already used up their capacities to borrow money for personal expenditures (houses, cars, TVs, hollidays etc.) indicating a creation of bubble forming on a new “debt crisis”
- the logical next step is to reduce the avilability of loans to the population in order to prevent a bubble building and a overwhelming debt crisis which will harm the economy in the long run. This is beeing done by increasing minimum interest rates from the FED.
Core CPI - “Core Consumer Price Index” = INFLATION
is the basic number to meassure the inflation in a country. The target of the FED is at/around 2% inflation which the FED sees as healthy for the economy. As ylou can see, we are approaching this 2% target.
CPI - “Consumer Price Index” = Inflation
Already explained in the above, this index is spreading over more goods and aspects of the people consumption and the related prices.
As we can see it already exceeded 2% (set Target of the FED) and is showing signs that it will increase more (which the fed does not like)
Manufacturing intex (in this case “New York”) indicates the state of manufacturers and their capacity usages.
As we can see it is trending around 0. with a future probability of going up. This is one factor which could prevent the FED to rase the interest rates too high. In fact the usuall interest rate of the FED given a 30 years median average period os somewhere around 3%. If this indicator would be higher then my guess onto the interestrate raise of the FED would be more then the described 1%
