Account Information

  • My Account

    Manage all your subscriptions, update your address, email preferences and change your password.

  • Help Center

    Get answers to common service questions, ask the analyst or contact our customer service department.

  • My Stock Talk Profile

    Update your stock talk name and/or picture.


How To Collect Your Share of My Million Dollar Giveaway

How To Collect Your Share of My Million Dollar GiveawayWe recently kicked off the most outrageous initiative in the history of investment research. It’s called the Income Millionaire Project. And the goal is simple: create 1,000 income millionaires. That’s a $1 billion goal! No one has ever tried it before, but that doesn’t bother me. I’m so sure you can use this program to make a million bucks… I’ll pay you $1,000 to start your journey. Go here for details.


Fed Hints at December Rate Hike

By Jim Pearce on November 5, 2015

During her congressional testimony on Nov. 4, Federal Reserve Chairperson Janet Yellen suggested a December rate hike is likely following the release of a strong jobs report earlier in the week. Noting that recent economic strength brings the threat of inflation back into the equation, Yellen qualified her remarks by stipulating that an employment-based rate hike would make sense “if the incoming information supports that expectation” between now and then.

It looks like the bond market isn’t waiting around for confirmation, as the yield on the two-year Treasury note immediately surged to its highest level since 2011. However, in absolute terms that still leaves its yield less than 1%, well below its long-term historical average. Over the past 35 years the average yield on the two-year note is a whopping 5.75%, but that figure is skewed by the high interest rates of the 1980s.

Although the Fed does not have an official policy of targeting yields on Treasury securities, it keeps a close eye on the yield curve as the U.S. economy enters and exits inflection points throughout an economic cycle. My guess is they are okay with the two-year note anywhere below 1% in the current environment, and below 3% for the ten-year note. The thirty-year bond is less problematic since it acts as more of a lagging indicator and is not normally used by lenders to set borrowing rates.

Those rates may sound high to anyone on the paying end of an adjustable rate loan who has become accustomed to an artificially low “ZIRP,” or zero interest rate policy, for the past few years as the global economy deleveraged to recover from the “Great Recession.” But now that the jobs and housing markets have improved to the point that they appear capable of standing on their own two feet, the Fed is prepared to begin the process of gradually shortening the crutches that have been supporting them.

The stock market’s immediate response to Yellen’s comments was fairly muted, as a small rate hike was already baked into interest rate assumptions for 2016. In fact, most highly leveraged securities such as REITs experienced a substantial decline in the first half of this year once it became apparent the Fed would most likely abandon its ZIRP in 2015. And virtually every energy MLP had already seen a steep drop in value during the past year due to plummeting oil prices that ravaged the entire energy sector, so a tiny uptick in borrowing costs is the least of their worries.

In terms of GDP, it’s unlikely that an incremental rise in short term rates will hurt the credit-dependent housing and automobile industries, since wage growth is expected to grow by a comparable amount now that the unemployment rate has declined to 5.1%. If that does not happen, then the Fed would be wise to withhold further hikes until wages catch up. But if wage growth gathers steam in 2016, then we’ll probably see a series of quarterly rate increases of comparable magnitude.

Implementing the first rate hike in the month of December is a canny move, as the stock market will be distracted by several other elements that are just as significant in the short term. Mutual fund managers will be going through their annual rite of “window dressing” to rid their portfolios of unwanted losers, while institutional money managers will already be focusing on year-end earnings reports to prepare for 2016. By the time the rest of us get back to our desks in January, we may not have noticed the rate hike at all.

You might also enjoy…


Forget Buy and Hold. Here’s how to retire faster…

I’m not a fan of “buy and hold.” Gurus like to tell you that patience is the key, but I call horse puckey.

We’ve discovered an investing technique that consistently pays out easy-to-repeat profits.

One that’s proven to beat the market 2,082% in head-to-head testing.

And one that’s generated over 488 winners since 2011.

This method is so powerful, in fact, some of the investors we’ve let use it reported back to us saying they’ve made $71,425… $82,371… and even as much as $151,000 in a single year thanks to this “trick.”

That’s how powerful this investing technique is!

What what exactly is this mysterious method? I’ve put all the details together here.

Stock Talk — Post a comment Comment Guidelines

Our Stock Talk section is reserved for productive dialogue pertaining to the content and portfolio recommendations of this service. We reserve the right to remove any comments we feel do not benefit other readers. If you have a general investment comment not related to this article, please post to our Stock Talk page. If you have a personal question about your subscription or need technical help, please contact our customer service team. And if you have any success stories to share with our analysts, they’re always happy to hear them. Note that we may use your kind words in our promotional materials. Thank you.

You must be logged in to post to Stock Talk OR create an account.

Create a new Investing Daily account

  • - OR -

* Investing Daily will use any information you provide in a manner consistent with our Privacy Policy. Your email address is used for account verification and will remain private.