Forget Goldilocks: bearish stories need to be taken seriously

Article Abstract:

US interest rates could be raised again as a way of depressing stock prices. This view may be pessimistic, but Federal Reserve chairman, Alan Greenspan, has made bearish comments about the price of assets. The US aims to avoid the situation that occurred in Japan where a bear market followed a too high rise in asset prices. Banks tend to act unwisely during an economic boom, which is one reason for seeking to prevent asset prices from rising too far. Inflation is generally subdued apart from asset prices, though higher energy and metal prices are feeding into some intermediate prices.

Economic policy, United States. Federal Reserve Board, Wall Street

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Seeking reasons to be cheerful in interest rate cuts

Article Abstract:

US investors hope that lower interest rates will help stock markets. Interest rate falls help protect corporate profits from a reduction in consumption and bank lending, but this has not been the case for Japan. There is hope that rate falls could help the US, where stock prices are affected by indecision, and concern about possible further revelations about banks' relations with hedge funds. It is likely that interest rates will continue to drop due to modest economic growth rates.

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Can history predict the future?

Article Abstract:

High US interest rates may not affect stock prices, if historical evidence is a useful pointer, as is examined in detail.

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