Friday, February 06, 2004
Lost in Translation with Stocks....
Another Japan?
The continued stock fetish needs to be laid to rest. We are in a different era. For Bloomberg to devote an entire article on (Chet Currier’s, “Stock Market Can Survive a Rise in Interest Rates”) the notion that interest rates will eventually go up and it’s effect on the stock market is a waste of breath. Stock performance has little effect on the majority of Americans. Yes, their 401K probably look better these past few quarters, but it doesn’t mean a damn thing because they can’t touch it without penalty. With higher rates will emerge an entire class of Americans who suddenly can’t afford the house payment they committed to in the housing boom. This focus on stock performance also doesn’t take into account the disease of credit card debt plaguing Americans like an elephant in the room on crack that everyone pretends to ignore.
Job numbers for January again look embarrassingly low, but 112,000 better than December. Non-farm payroll for December? 1,000. That’s right, 1,000. Where was that in the news? (maybe because of the holidays and we have other reasons to be depressed). 1,000 is less people than a Hall and Oats concert in Des Moines. Granted, December is a slow month, but where’s the press on 1,000 jobs for the entire month of December?
What’s really at issue here with regard to the Fed Funds Rate is whether or not we are going to become another Japan. In an election year, FFR is no more or less prone to rising or falling. However, if rates go up, the effect on individuals Time Warner, Pfizer and Cisco stocks is the least of our worries. Corporations will always be able to manage their debt. That’s what stockholders are for. Everyday Americans. Well, that’s a different story.
Another Japan?
The continued stock fetish needs to be laid to rest. We are in a different era. For Bloomberg to devote an entire article on (Chet Currier’s, “Stock Market Can Survive a Rise in Interest Rates”) the notion that interest rates will eventually go up and it’s effect on the stock market is a waste of breath. Stock performance has little effect on the majority of Americans. Yes, their 401K probably look better these past few quarters, but it doesn’t mean a damn thing because they can’t touch it without penalty. With higher rates will emerge an entire class of Americans who suddenly can’t afford the house payment they committed to in the housing boom. This focus on stock performance also doesn’t take into account the disease of credit card debt plaguing Americans like an elephant in the room on crack that everyone pretends to ignore.
Job numbers for January again look embarrassingly low, but 112,000 better than December. Non-farm payroll for December? 1,000. That’s right, 1,000. Where was that in the news? (maybe because of the holidays and we have other reasons to be depressed). 1,000 is less people than a Hall and Oats concert in Des Moines. Granted, December is a slow month, but where’s the press on 1,000 jobs for the entire month of December?
What’s really at issue here with regard to the Fed Funds Rate is whether or not we are going to become another Japan. In an election year, FFR is no more or less prone to rising or falling. However, if rates go up, the effect on individuals Time Warner, Pfizer and Cisco stocks is the least of our worries. Corporations will always be able to manage their debt. That’s what stockholders are for. Everyday Americans. Well, that’s a different story.
# posted by DH @ 9:59 AM 
