Oil, Interest Rates and Stocks Tumbling
By: Tim McPartland,
This morning interest rates (on the 10 year treasury) are tumbling with rates trading at 2.09% overnight. It apears that crude oil is leading interest rates around as crude is threatening to fall to its lowest levels in 5 or 6 years–under $40/barrel. And as has been the norm this week the Shanghai market fell by almost 4% last night. SP500 futures have been off overnight by 1/2 to 1%.
Yesterdays FED minutes were somewhat of a non event with the FOMC releasing minutes from the July meeting–I have heard it characterized as ‘dovish’ and I have heard it chatacterized as ‘hawkish’. We don’t really care how the ‘experts’ frame the minutes as we have our own opinion and we will be as accurate as the ‘experts’ (meaning not very accurate). As is normal no one really knows what it really meant. What we know is the FED wants rates higher and we think they will move in September. It is time to get the FED Funds rate higher so people can quit being fixated by this near meaningless move. We believe the rate hike will simply flatten the yield curve with little to no affect on long term rates–the market will set these rates.
We are eyeing the purchase of Stag Industrial (ticker:STAG) a solid REIT that has been trading near its 52 week low and sports a 7.21% current yield. If it falls today we will initiate a small position today in the 2015 Blended Income Portfolio.