Monday March 16, 2015 – Weekly Market Update

Today we are getting a nice rally in the markets
on fears that an interest rate hike may not
happen soon.

Well, the FOMC meets this week and all eyes will
be on the press conference to be held after the
meeting on Wednesday. At 2:00 Eastern, the Fed
will make their statement.

Quite frankly, to me the bigger question this week
is who will beat Kentucky for the NCAA title?

I say that with some sarcasm because I really
do not believe the Fed will raise rates anytime
soon.

In fact, Kentucky winning the NCAA title maybe
more of a sure thing than the Fed raising
interest rates.

Why?

There are a few reasons they most likely
will not raise them in June.

For one, the real estate market continues to limp
along.

If demand has not been created when we have the
lowest long term interest rates in history, what will
happen if the Fed does raise rates?

And now we have the oil market spiralling downhill.

But, to me the biggest factor is that people are
buying treasury bonds at these absurdly low
levels.

Usually you raise rates to spur on demand. But yet,
they don’t need to.

Especially when rates in Europe have gone negative.

Would you put your money in a European bond
with a guaranteed loss when you can buy US Treasury
bonds that pay 2.13% for 10 years?

You can read about the European rates here:
http://www.vox.com/2015/2/5/7981461/negative-interest-rates-

europe

or here:

http://www.businessinsider.com/negative-interest-rates-

threaten-european-bank-profits-2015-3

As I said before, there is no need for the Fed to raise
rates now.

Why do something that could do more harm than good.

But you never know.

Apparently the prospect of the Fed raising rates has
subsided as evidenced by the S & P 500 moving
up almost 28 points today.

And the S & P is almost back to 2,093. The question
now is will it hit the next level, which is 2,125.

My thoughts are it will.

But with this week’s meeting, you never know if something
will be said to derail that prospect.

You can generally expect added volatility after an FOMC
meeting, but the last few ones have been rather tepid.

Maybe this week will be different.

On another note, I want to mention that it was announced
that Apple will be added to the Dow Jones Industrial
Average.

When a company gets added to a major index, it is
generally considered bullish.

This is because funds that mimick the major indexes need
to buy their stock.

You may want to keep an eye on Apple to see if you can
get a decent entry.

I hope this has been helpful.

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