Friday, 6 February 2015

Warren Buffet may be right that interest rate might not rise this year!!!

Dear Friends,

I saw an article in marketwatch.com that says that Warren Buffet thinks interest rate might not rise this year.

Article:
http://www.marketwatch.com/story/jack-welch-says-it-would-be-crazy-for-fed-to-raise-rates-2015-02-04?dist=lcountdown

In this article he mentions a few things which I think is right. Summary below:

1) The whole world is now in the state of having loose monetary policy ie. printing money. 

Japan has printed its QE2 last december after it drop into recession. My point of view is with Mr Abe re-elected, there is always a chance of another QE3 in the future.

China has printed money quietly last june through what they called a mini stimulus programme.
http://www.wsj.com/articles/SB10001424052702303847804579477060004679726.
To date, it is still a mystery as to how much money the government actually printed! I couldn't find a single article that points to the government announcing the printing of money. But it is of course a known fact among institutions that funds is injected that caused China stock market to turn from bear to bull.

The last major economy, Europe announced through ECB cheif Mario Draghi that Europe will print money continuously every single month until next year september. HEY! Doesn't that sound like US QE3 whereby they printed money continuously to fuel the stock market! It works for US, and Europe is now copying it!

The result is 3 of the 4 largest economy are still printing!

2) With everybody printing money and US doesn't, it is only right that US dollar is the only currency that is appreciating like crazy. Ha, no wonder USD came out of its 13 years slump and went on a bull run last july.

3) It would be crazy or unthinkable for Janet Yellen to increase interest rate as that will only fuels the rise of US dollar which will cause exports to tumble and lose whatever tinge of competitiveness it has (ha, i really wonder how much more..).

But anyway Warren Buffet does have a point. If inflation and housing prices are controlled, why would US be so stupid to kick its own economical legs! There would be a nail in the head after 3 wonderful QEs that saved US!


After reading this article, I realised that it might be true that interest rate does have no reason to rise this summer, which is the tentative date that most FED members have indicate and set these few months. And no doubt they will be listening to Warren Buffet and Jack Welch words, and those influential entrepreneurs before doing something drastic.

And if all this come true, there is only one result. 2015 will still be a bullish year! DOW 20000 might not be so far afterall!

Why should you be worried when Warren Doesn't?

Heck, just buy! Waren Buffet gives me more confidence that the market might be running and can't drop much at least until April, the month where Apple i-watch is sold in the market.

To date, I believe the hype and product launch excitement might cause the market to sustain itself.

Any small drop will be a buying chance!

Rgds
Daniel
www.danielloh.com




958访谈9月21日:展望2017年股市与经济:美国联储局都不看好美国经济?

·         美国联储局都不看好美国经济? 道琼斯昨晚闭市在 22412 点,涨了 41 点。 昨晚最大的新闻就是联储局的会议。联储局的主席耶伦讲了几样事情: 1)   第一: 联储局保持利率不变 , 但耶伦也表示今年还会加息一次。 这其实和原本的预测一样...