Interest rate hikes almost done......

[NUKE_CLEVELAND]

The fed seems to be thinking that the tightening cycle is about over and the markets are soaring as a result. This despite $71 a barrel oil.

 

http://www.thestreet.com/markets/marketstory/10279701.html

 

 

Seems that after what is expected to be a blowout 1st quarter for growth that it will moderate into a steady and sustainable rate. Im thinking that the markets are setup for a repeat of the bull cycle that started in 1995 after the last fed tightening campaign ended.

[bmags]

goodnews.

[jasonxctf]

that $71 oil cost will lead to some serious tightening across the board and will hinder the fear of substantial growth.

[Balta1701]

that $71 oil cost will lead to some serious tightening across the board and will hinder the fear of substantial growth.

The wild card in any projection right now is going to be housing prices. A huge fraction of the growth we've seen in the past few years has been due to Americans taking equity out as the prices of their homes increase. The housing sector as a part of the economy has basically made up for the collapse of manufacturing in terms of providing jobs that pay well, and the lack of any savings remaining for the average U.S. consumer means that the only $ that is left available is in home equity.

 

If housing prices stagnate, then that will dominate almost everything else in the market, even if oil were to drop. If housing prices continue to rise, then the economy will be able to absorb the next oil shock as well as it has endured the shock from $20 to $70.

[bmags]

you guys are smarter than me on this stuff so i'll just step back

[NorthSideSox72]

The wild card in any projection right now is going to be housing prices.  A huge fraction of the growth we've seen in the past few years has been due to Americans taking equity out as the prices of their homes increase.  The housing sector as a part of the economy has basically made up for the collapse of manufacturing in terms of providing jobs that pay well, and the lack of any savings remaining for the average U.S. consumer means that the only $ that is left available is in home equity.

 

If housing prices stagnate, then that will dominate almost everything else in the market, even if oil were to drop.  If housing prices continue to rise, then the economy will be able to absorb the next oil shock as well as it has endured the shock from $20 to $70.

Housing has already started to slow to flat or below, regionally, in the West and the South. Midwest and Northeast are still steadily growing. But the hug boom on housing is over, at the large scale level (all housing markets are local markets of course, so I am talking aggregated levels here).

 

Therefore, something else needs to sustain the growth. My fear is that $71 a barrel oil isn't a top - its a stop. It will approach $100 this year, probably even go over here and there. Then it will rest back, and play around just below that level (at $80-$120 a barrel, various new sources of oil become viable). The market for oil will stay where it won't immediately prompt those new markets, but some will still open. Not enough to lower the price, though.

 

So as much as I like this market right now, I am not as optimistic as others for the full year.

[Balta1701]

Housing has already started to slow to flat or below, regionally, in the West and the South.  Midwest and Northeast are still steadily growing.  But the hug boom on housing is over, at the large scale level (all housing markets are local markets of course, so I am talking aggregated levels here).

 

Therefore, something else needs to sustain the growth.  My fear is that $71 a barrel oil isn't a top - its a stop.  It will approach $100 this year, probably even go over here and there.  Then it will rest back, and play around just below that level (at $80-$120 a barrel, various new sources of oil become viable).  The market for oil will stay where it won't immediately prompt those new markets, but some will still open.  Not enough to lower the price, though.

 

So as much as I like this market right now, I am not as optimistic as others for the full year.

But...on the other hand...housing started to slow exactly when you'd expect it would start to slow; when interest rates were rising. Higher interest rates should slow down the growth of housing prices. But...if interest rates hold steady, it's possible that housing prices could resume moving upwards as people feel more secure in ARM's again.

[Soxfest]

71 dollars a barrel .......what a bunch if crap!

[kapkomet]

71 dollars a barrel .......what a bunch if crap!

Welcome to econ 101, supply and demand.

[NorthSideSox72]

71 dollars a barrel .......what a bunch if crap!

By this time next year, you will be ecstatic to see the price that low.

[retro1983hat]

I need to sell my house. So hopefully interest rates will not increase anymore for awhile.

[EvilMonkey]

About damn time! My SBA loan interest rate is tied to Prime, and every time it goes up, so does my loan payment. I am paying almost $1500 more this month than I did a year ago.