Interest Rates/Bonds have been in the driver’s seat for some time now, especially after Bernanke’s almost promise to remove the punch bowl and then U-Turn and keep.
Bonds are Getting Jiggy
There is a saying that when everyone expects something to happen, it will not. This occurs because everyone being ready for something to happen means they are on the same side of the financial fence, preventing the expected happening.
In the most unexpected fashion possible, interest rates are now going lower, bonds higher, part due to a weak employment number this week, but we mostly think because, like ourselves, everyone in the financial community was expecting them to rise. Go Figure!
As rates go down it gives equity markets a push ever higher. With an expected earnings growth rate of about 5% this year, equity markets have far overstated their fundamentals. Now with rates going lower, this too can lead to further positive movement for capital markets. Reminding myself here, when everyone expects something….it usually does not happen.
No matter, it has been a very fun, and uniquely crazy year.
THAT GLOW IN DALLAS is Donald “The Brain” lighting up 8222 Douglas, as he has been in town for a couple of days and will stay over the weekend before heading back to Houston.
Speaking of weekends…. we have one upon us, enjoy yours and thanks for reading our work. Next Week is Halloween (a Family Favorite) … Next Friday may garner a picture of the Kvale family costumes … if they are not too spooky !
Have a great day and a super weekend !
John Kvale CFA, CFP
8222 Douglas Ave # 590
Dallas, TX 75225