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Off The Cuff: Repercussions Of Rising Rates

Rising interest rates are the big story right now
Thursday, December 1, 2016, 9:54 PM
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In this week's Off The Cuff podcast, Chris and Mish Shedlock discuss:

  • A Bottom For Miners?
    • Mish thinks this may be a good purchasing window
  • Hit To Housing
    • Rising interest rates are kryptonite to home prices
  • Vanishing Jobs
    • Trump can't replace the jobs lost to automation
  • The Year Of The Iconoclast
    • Anti-establishment platforms gather steam around the world

After years and years of declining/0% interest rates, the trend may be reversing. Market interest rates have risen faster over the past month than in decades.

Chris and Mish see this as having implications that will ripple through all asset classes. As Mish warns:

I’m watching interest rates just rise and rise. And the thing here is everyone’s betting on this massive inflationary scenario under Trump. I’m not sure I get it. Now, long term, we can all look at this and say, “Yeah, he’s going to take less money in in taxes, he’s going to waste more on infrastructure, he wants to increase military spending.” Of those, the only one I agree with is lowering taxes but the analysis is negative, negative, negative from Congressional CBO and all the people who figure this stuff out.

So we’ve got this surge in interest rates and money pouring into the dollar. The dollar’s going higher. I look at all of this and I think, “Hmm, a surge in interest rates. Ah, it’s likely to affect an ugly market.” The rising US dollar impacts exports in a negative fashion. The stock market is incredibly overvalued. And we know what generally happens when interest rates rise: I’m looking at a potential deflationary bust. Especially when we factor in Trump’s trade policies that might very well cause a global trade war.

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