Talk about a busy day, Friday November 21, 2014 marked a day of cross currents from around the world. With 75% of the globe either in recession or teetering on the edge, chiefs continue to push economies forward.
Surprise: China Lowers Rates
For the first time since 2012, China announced (surprisingly) a rate decrease in order to spur their economic growth. This is similar to with what the US has done to overcome the great 07-09 recession.
Global markets, caught off guard, smartly rallied, led by the emerging market/smaller economic countries. This makes sense as China is a great consumer of their goods and services.
Mario Draghi Continues to talk Interest rates lower in the European Union
For the very same reason, encouraging economic growth, Draghi the head of the European Union, on Friday also continued his push to jawbone rates lower. Lower rates act as a stimulus in most cases.
Draghi’s words were expected, however he emphasized in stronger terms, that he will coordinate a method to lower rates. His nemesis is multiple economies chugging along at differing speeds, all tied together via the Euro/common currency.
U.S. on the way out ?
Hoping not to jinx the situation, interestingly, the US is on a different page and has higher rates in it’s sights, if the economy continues to mend.
Our belief, while on an island with only a few fellow professionals, higher rates might just be the ticket, and not cause any major headwinds.
The good news, we all get to see how this works out, shortly, in the next few quarters.
Domestic capital markets are still frothy!
Have a Great Monday!
John A. Kvale CFA, CFP
PS Short week, but lot’s to say …http://www.jkfinancialinc.com http://www.street-cents.com 8222 Douglas Ave # 590 Dallas, TX 75225