MEMBER'S LOGINX
| Invalid Username / Password | ||||||||
| Invalid Captcha | ||||||||
|
||||||||
| Sign Up | Forgot Password? | ||||||||
India's Third Giant Leap
This Could be One of the Biggest Opportunities for Investors
- Home
- Todays Market
- Indian Stock Market News September 14, 2015
The US Fed is in a catch-22 situation Mon, 14 Sep Pre-Open
September 2015 has turned out to be a tumultuous month for the markets. The main concern is the decision by the US Fed about a possible interest rate hike. They could take this decision on the 17th of this month. Whatever the Fed does, it will have far reaching consequences.
As it may be a major market event, a little perspective is in order. US interest rates have been near zero since the global financial crisis of 2008. Nearly seven years have passed. In the meantime, a massive amount of money was pumped in by the Fed via QE. The Fed's balance sheet has ballooned to about US$ 4.5 trillion today. In fact, the last rate hike by the Fed was about 9 years ago!
So much cheap credit over such a long period should have done its job. The US economy should have come roaring back from the depths of the 2008 crisis. But that is not what has happened. Banks did not use the easy money conditions to give out loans. The reason? They did not find too many credit-worthy borrowers. US businesses too could not find many profitable investments. At the same time, US consumers took cut back on their debt fueled spending. Consequently, the US economic growth has remained tepid.
More than six years in to the so called 'recovery', the US Fed faces a catch-22 situation. They have stated publicly that interest rates should probably rise this year. However, the chances of a 0.25% rate hike on the 17th are about 50-50 we believe.
The Fed is in an unenviable position. Their policies are largely responsible for the rise in US asset prices. At the same time, they are aware that the recovery is fragile. If they raise rates, this weak recovery could be threatened. However, if they don't raise rates they risk their own credibility.
They will have to bite the bullet sooner rather than later. September 17th could be the day that the US interest rate hike cycle restarts. If so, expect turbulence in global markets. Whatever the impact of this minor rate hike on the US economy may be, market sentiment could take a big hit.
However, long term investors need not lose sleep. It is exactly such events that provide opportunities to buy great businesses at good prices. If the Indian markets were to fall significantly due to this event, we at Equitymaster will be quite happy to recommend solid stocks for the long term.
For information on how to pick stocks that have the potential to deliver big returns, download our special report now!
Read the latest Market Commentary
Indian Share Market Update: Top Gainers and Losers
ABOUT EQUITYMASTER
Since 1996, Equitymaster has been the source for honest and credible opinions on investing in India. With solid research and in-depth analysis Equitymaster is dedicated towards making its readers- smarter, more confident and richer every day. Here's why hundreds of thousands of readers spread across more than 70 countries Trust Equitymaster.
PREMIUM PRODUCTS
QUICK LINKS
POPULAR TOPICS
- Multibagger Penny Stocks
- Basics of Value Investing
- Benjamin Graham
- How to Invest in Gold
- How to Invest in Silver
- Best Stocks to Buy Today
- Best Small-cap Stocks to Buy
- Best Bluechip Stocks to Buy
- Guide to Penny Stocks
- How to Invest in the Share Market
- Warren Buffett - The Value Investor
- Pick the Best Multibagger Stocks
TRENDING TOPICS
Copyright © Equitymaster Research Private Limited (formerly Equitymaster Agora Research Private Limited).
Whitelist | Refer | Terms | Privacy | Contact | About | Sitemap
Equitymaster Research Private Limited (formerly Equitymaster Agora Research Private Limited) (Research Analyst)
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Email: info@equitymaster.com. Website: www.equitymaster.com.
CIN:U74999MH2007PTC175407
Name of the Compliance & Grievance Officer: Ms Sonal Ramachandran
Telephone: +91-22-61434003 | Email: compliance@equitymaster.com
LEGAL DISCLAIMER:
Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.
All rights reserved. Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.
Equitymaster Research Private Limited (formerly Equitymaster Agora Research Private Limited) (Research Analyst) bearing Registration No. INH000000537 (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA, Canada or the European Union countries, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.
Equitymaster requests your view! Post a comment on "The US Fed is in a catch-22 situation". Click here!
Comments are moderated by Equitymaster, in accordance with the Terms of Use, and may not appear
on this article until they have been reviewed and deemed appropriate for posting.
In the meantime, you may want to share this article with your friends!