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richc

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So if the Fed is saying that they'll raise rates when US unemployment falls to 6.5%, and they just said today that they expect unemployment to be 6.5% in the second half of next year, what does that say about when the Fed is going to start raising rates?

The pound is going to be in a world of pain when the US starts raising rates, at which point UK inflation will sky-rocket or the BoE will have to raise rates as well. I think things are going to be looking very different a year from now.

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So if the Fed is saying that they'll raise rates when US unemployment falls to 6.5%, and they just said today that they expect unemployment to be 6.5% in the second half of next year, what does that say about when the Fed is going to start raising rates?

The pound is going to be in a world of pain when the US starts raising rates, at which point UK inflation will sky-rocket or the BoE will have to raise rates as well. I think things are going to be looking very different a year from now.

They haven't said that at all.

He's re-iterated ad nauseam it's a thresh-hold not a target. So they may not raise rates even if it fell to 6.0%.

Irrespective he's said there's going to be a significant gap between the end of accomodation and starting to raise rates.

Moreover since they believe in the 'stock' principle and they're going to continue to hold and re-invest mortgage bonds on their b/sheet it'll continue to put pressure on longer rates.

I'd imagine you're looking into 2015 or even 2016 before rates start to rise.

There's belowe target inflation in the US, why will pound be in a world of pain or have rocketing inflation?

In any event it seems highly unlikely until we're well into the next parliament after 2015.

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Rates aren't going to go anywhere, he's talking b0110cks to make out he knows what he's doing and that there is a plan.

Here's a blog on the mess the various central bankers have made since Paul Volcker:

http://www.economist.com/blogs/buttonwood/2013/06/central-banks-and-markets

Here's a link from the blog:

http://www.ft.com/cms/s/0/7eeb6780-d823-11e2-b4a4-00144feab7de.html#axzz2WeUFzZuo

Basicaily, no happy end to QE.

Base rates might not be going up but the guess is that bond rates are.

Bond rates influence bank's borrowing costs more then base rates.

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Really ... the USA needs to create a massive amount of jobs just to stand still. As soon as they stop QE the economy will slow and contract and unemployment will rise.

Asset prices in the US were allowed to correct. They're now in a different world compared to the UK.

The economy in parts of the US is really buzzing right now, and, sure, some of it's QE, but not all of it. Given that energy prices have come down so much, that's giving a huge boost to multiple sectors throughout the economy.

This really is a turning point.

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Asset prices in the US were allowed to correct. They're now in a different world compared to the UK.

The economy in parts of the US is really buzzing right now, and, sure, some of it's QE, but not all of it. Given that energy prices have come down so much, that's giving a huge boost to multiple sectors throughout the economy.

This really is a turning point.

How many turning points where declared in the 1930's depression?

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I can't see IRs rising. There would have to be a massive crisis for that to happen and surely that would just be an excuse for them to keep printing?

Yields on US Treasuries and mortgage rates in the US are already rising.

If the US were to fall back into recession, it would have done it by now given the sharp cutbacks in Federal spending. That hasn't happened. Property prices are skyrocketing (up 20% in a year in California), the Fed is going to have to normalise rates.

I'm not arguing that everything is A-OK in the world, but things are picking up in the US.

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Yields on US Treasuries and mortgage rates in the US are already rising.

If the US were to fall back into recession, it would have done it by now given the sharp cutbacks in Federal spending. That hasn't happened. Property prices are skyrocketing (up 20% in a year in California), the Fed is going to have to normalise rates.

I'm not arguing that everything is A-OK in the world, but things are picking up in the US.

People find it hard here to analyse the consequences of US energy independence, which is a real biggie.

I think part of the problem is everytime a dispassionate discussion on shale is attempted the environmentalists immediately hijack it with a "shale is doomed" theme. People here buy into that because they want doom laden scenarios to pan out.

To me though shale is going to make a huge difference in the US. The 2nd gen infrastructure is already going in (cracking, raw material production). The 3rd gen (manufacturing plants to make use of the raw materials) is going to start up shortly. This is going to make a huge difference to the us economy and to coin some peoples terms on here it is "real" wealth (ie comes from digging stuff out of the ground and not selling piles of bricks to each other at ever increasing prices).

Interestingly I think that this is offers the best chance of a hpc, as a pick up in the US economy leads to hikes in rates which we have to follow. So there you have it, a developing orthogonality between the global doomsters (who want shale to fail and the US to plunge into an apolcalyptic depression) and what you might term the true hpc'er who actually wants the US economy to take off so rates will rise and house prices over here fall.

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sgs-emp.gif?hl=ad&t=1370609969

From that chart and the current trend it looks like it's going to be at least around 2017/18 before unemployment gets back to pre-collapse levels of about 5% even though they claim 6.5% is what they're aiming for (before considering rate rises) it's doubtful that the 6.5% level would trigger significant interest rate rises. Miniscule rises more like.

Timing also has to assume official inflation is still reasonable.

However there are the midterm and Presidential elections in November 2014 and November 2016 respectively so there's a chance of a small rate rise as the midterm election approaches in 2014 - just to show that the economy appears to be getting better (it might even happen near the end of this financial year to really overshadow the "european" economies - including the UK economy).

If not at that stage there'll likely still be a lot of noise about an imminent rise which won't actually happen until say 2015/2016 before the Presidential election.

From the chart trend above it looks like they'll arrive at 6.5% unemployment sometime in 2015 or early 2016. Maybe that's why they've chosen the 6.5% figure.

Edited by billybong

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They haven't said that at all.

He's re-iterated ad nauseam it's a thresh-hold not a target. So they may not raise rates even if it fell to 6.0%.

Irrespective he's said there's going to be a significant gap between the end of accomodation and starting to raise rates.

Moreover since they believe in the 'stock' principle and they're going to continue to hold and re-invest mortgage bonds on their b/sheet it'll continue to put pressure on longer rates.

I'd imagine you're looking into 2015 or even 2016 before rates start to rise.

There's belowe target inflation in the US, why will pound be in a world of pain or have rocketing inflation?

In any event it seems highly unlikely until we're well into the next parliament after 2015.

I reckon they won't rise until 2018, which is just in time for my 5 year fix to end.

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People find it hard here to analyse the consequences of US energy independence, which is a real biggie.

Maybe because it is simply not possible. US gets more than half their hydrocarbon energy from Canada, and half that again from Saudi!

Fracking will yield some energy for perhaps a decade before its EROEI is unsustainable.

You've been smoking too much MSM.... energy 'independence' for the US is like saying YOU can live without oxygen.

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Maybe because it is simply not possible. US gets more than half their hydrocarbon energy from Canada, and half that again from Saudi!

Fracking will yield some energy for perhaps a decade before its EROEI is unsustainable.

You've been smoking too much MSM.... energy 'independence' for the US is like saying YOU can live without oxygen.

Yes. I've posted stuff like this before :

http://www.bbc.co.uk/news/business-20304848

http://www.bbc.co.uk/news/business-20957073

http://www.bbc.co.uk/news/business-22524597

If you're into boolean logic you believe in it or you don't.

Or maybe (if you remember Bod), it's neither right, nor wrong. But somewhere in between ...

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Incidentally from the unemployment charts it seems pretty clear that whenever US unemployment goes a bit below 5% there's a recession/depression but they still have the cheek to say these things are unexpected :rolleyes:

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Really ... the USA needs to create a massive amount of jobs just to stand still. As soon as they stop QE the economy will slow and contract and unemployment will rise.

I am not really sure. I would say that the US economy is getting stronger everyday and it seems to me in much better shape than EU:

- lower house prices

- cheap food

- lower regulation and taxation

- state spending relatively small

- flexible workforce

- house foreclosure and business bankruptcies

- cheap immigrating labor

- cheap shale gas / energies

- innovations

Edited by Damik

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So if the Fed is saying that they'll raise rates when US unemployment falls to 6.5%, and they just said today that they expect unemployment to be 6.5% in the second half of next year, what does that say about when the Fed is going to start raising rates?

The pound is going to be in a world of pain when the US starts raising rates, at which point UK inflation will sky-rocket or the BoE will have to raise rates as well. I think things are going to be looking very different a year from now.

With your join date you should know by now to stop reading whatever it was you was reading right at that point there.

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American infrastructure was built on 25 cent/gallon fuel, $2.50/barrel of crude.

America today is attempting to bash on with that same infrastructure on $3.70/gallon fuel, oil trading around $100/barrel of crude.

It is simply unsustainable to operate their mainly 1950's era infrastructure and economy, with 99.999% of all trade requiring hydrocarbon and its derivatives at current prices.

Something has to give. Like mom's and dad's giving their sons to the government to die in some sh1t desert to keep oil flowing. Also, like collapsing bridges and civil infrastructure.

It ain't perdy.

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I reckon they won't rise until 2018, which is just in time for my 5 year fix to end.

Predict this year when mine ends. The last time I switched it was about 6 weeks before the central bankers hit the panic button.

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American infrastructure was built on 25 cent/gallon fuel, $2.50/barrel of crude.

America today is attempting to bash on with that same infrastructure on $3.70/gallon fuel, oil trading around $100/barrel of crude.

It is simply unsustainable to operate their mainly 1950's era infrastructure and economy, with 99.999% of all trade requiring hydrocarbon and its derivatives at current prices.

Something has to give. Like mom's and dad's giving their sons to the government to die in some sh1t desert to keep oil flowing. Also, like collapsing bridges and civil infrastructure.

It ain't perdy.

But what you are saying doesn't factor in numerous things.

For example, how much more efficient is a 2010 car than a 1950s car ?

And more importantly, what is the average current MPG of a US car vs. a European car ? What is the scope for improvement and what will drive that improvement ?

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Predict this year when mine ends. The last time I switched it was about 6 weeks before the central bankers hit the panic button.

Christ, how big is your mortgage? :lol:

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  • 238 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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