When the market is overvalued, as it is now, rising interest rates can have a much more severe impact as the market quickly eliminates its’ overvaluation as it did in 1961 and 1987.
The current rally is being driven by the liquidity the Fed has flooded the system with over the past year. But in 2010, if the economy is rebounding, and particularly if growth is stronger than expected, the Fed will be under intense pressure to drain this liquidity. Some Fed spokesmen are already warnings that rates could rise rapidly over the next year.
Stock Markets When EPS Growth Turns Positive – Spencer, Angry Bear
Stock Market when EPS Growth Turns Positive
When the market is overvalued, as it is now, rising interest rates can have a much more severe impact as the market quickly eliminates its’ overvaluation as it did in 1961 and 1987.
The current rally is being driven by the liquidity the Fed has flooded the system with over the past year. But in 2010, if the economy is rebounding, and particularly if growth is stronger than expected, the Fed will be under intense pressure to drain this liquidity. Some Fed spokesmen are already warnings that rates could rise rapidly over the next year.
Stock Markets When EPS Growth Turns Positive – Spencer, Angry Bear