Jean Jacques Chenier on Interest Rates

06-24-09
The Fed as cornered itself.

Treasuries fell for the first time in four days, with yields on the 10-year note increasing six basis points, or 0.06 percentage point, to 3.69 percent at 4:58 p.m. in New York.

A further increase in long term interest rates may put such any recovery in jeopardy.

Of course we know what the Fed answer would be: they would print more money! That would just add fuel to the fire: interest rates are n ot climbing because of hope of recovery. They are climbing because everybody with alf a brain knows thta the Fed will NEVER withdraw the money it has printed in time.

Guess what will be the result on the Stock Market!

Jean Jacques Chenier, New York 24 June 2009

Jean Jacques Chenier Market commentary

Jean Jacques Chenier 06-20-2009
The current recession and aging population is contributing to larger fiscal deficits. Future obligations tell us these numbers are likely to grow. The only panacea is economic growth that can make these obligations affordable. There are only two ways to resolve the issue – increase revenues or cut expenditure. Both of these are not palpable and to any politician who wishes to get re-elected. It is easier to ignore the problem till such time that blows up and then find a scapegoat.
It is obvious that the Fed will not retrieve the money it has printed in time. It never has. The US will inflate its way out of recession ... for a while. At some point, of course it will trigger a dollar crisis and longe term interest rates will shoot higher stopping the recovery in its track.
For the time being the big question is the timing. It's too early to tell but I'll keep you posted.
Jean Jacques Chenier