SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
From: redfrecknj4/21/2005 12:22:15 PM
  Read Replies (3) of 110194
 
Van Hoisington 1Q Outlook Out:

Has some extremely interesting secular comments about "normal" long-term interest rates among other things.

Some Highlights:

(1) Have noticed that managers of defined benefit pension plans have been buying in long Treasuries in anticipation of the Labor Dept. putting their foot down on unfunded liabilities.

(2) Reminds us that for the Index of Leading Economic Indicators(LEI), five of the seven non-financial indicators have been in decline for seven or more months, with the other two(weekly unemployment claims and building permits) showing signs of rolling over as well.

(3) One of the key financial indicators in the LEI, growth in M2, at just 1.9% annualized the last three months. This in turn is a reduction from '04's rate of 4.5%, which itself was the slowest M2 growth in nine years. They believe is a strong indicator that the demand for credit outside the Federal Government is slowing appreciably.

(4) Took a look at long-term interest rates from 1870-1950 and posited that the 3% average in long-term rates was normal in a true, intact global trading market. Their theory is that the high rates from 1950 on that crested in 1980 were due to the creation of the Iron and Bamboo Curtains, which effectively cut the world's productive capacity in half. The fall of those same curtains has created greater economies of scale in production and degrees of price competition that are more normal historically and will lower both inflation rates as well as inflationary expectations.

(5) They also add that even with the artifact of the '60s, '70s and '80s averaged in, the 135-year average for long rates just 4.2%.
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2026 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News