🧵Monetary Indicators "Don't fight the Fed"
Monetary conditions exert an enormous influence on stock prices.
The monetary climate - primarily the trend in interest rates & Federal Reserve policy - is the dominant factor in determining the stock market's major direction.
#Zweig
Monetary conditions exert an enormous influence on stock prices.
The monetary climate - primarily the trend in interest rates & Federal Reserve policy - is the dominant factor in determining the stock market's major direction.
#Zweig
2/ Falling interest rates reduce the competition on stock from other investments.
Costs to corporations fall as interest rates drop, thus reducing expenses when they borrow money.
As expenses fall, profits rise.
When interest rates drop, investors tend to bid prices higher.
Costs to corporations fall as interest rates drop, thus reducing expenses when they borrow money.
As expenses fall, profits rise.
When interest rates drop, investors tend to bid prices higher.
3/ The OPPOSITE effect occurs when interest rates rise.
Monetary indicators generally have their greatest impact on the bullish side & only moderate impact on the bearish side.
An investment strategy should never be determined on the basis of one indicator but PAY ATTENTION!
Monetary indicators generally have their greatest impact on the bullish side & only moderate impact on the bearish side.
An investment strategy should never be determined on the basis of one indicator but PAY ATTENTION!
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