Author Topic: Fed Rate Rise  (Read 5588 times)

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Offline Basim Sheikh

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Fed Rate Rise
« Reply #-1 on: December 05, 2015, 04:10:40 PM »
USA is going to increase the interest rates on December 16, 2015. USA economy is expanding especially after yesterday's job data came out.... This will have good impact on USA market since economy booming is a good thing.... But this USA improvement will strengthen Dollar which means further pressure on Pak Ruppee which means Gora will not start buying until impact of USA dollar growth does not fully come on Rs OR shares come to a level where gora see it more attractive, safe and profitable than the devaulation risk (whichever comes first).

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Fed Rate Rise
« Reply #-1 on: December 05, 2015, 04:10:40 PM »

Offline Fahd

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Fed Rate Rise
« on: December 05, 2015, 05:19:20 PM »
USA is going to increase the interest rates on December 16, 2015. USA economy is expanding especially after yesterday's job data came out.... This will have good impact on USA market since economy booming is a good thing.... But this USA improvement will strengthen Dollar which means further pressure on Pak Ruppee which means Gora will not start buying until impact of USA dollar growth does not fully come on Rs OR shares come to a level where gora see it more attractive, safe and profitable than the devaulation risk (whichever comes first).
Good Analysis...

Offline Farzooq

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Fed Rate Rise
« Reply #1 on: December 05, 2015, 05:28:46 PM »
USA is going to increase the interest rates on December 16, 2015. USA economy is expanding especially after yesterday's job data came out.... This will have good impact on USA market since economy booming is a good thing.... But this USA improvement will strengthen Dollar which means further pressure on Pak Ruppee which means Gora will not start buying until impact of USA dollar growth does not fully come on Rs OR shares come to a level where gora see it more attractive, safe and profitable than the devaulation risk (whichever comes first).
Good Analysis...

Dollar will weaken after rate rise.
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Offline Basim Sheikh

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Fed Rate Rise
« Reply #2 on: December 05, 2015, 05:41:34 PM »
USA is going to increase the interest rates on December 16, 2015. USA economy is expanding especially after yesterday's job data came out.... This will have good impact on USA market since economy booming is a good thing.... But this USA improvement will strengthen Dollar which means further pressure on Pak Ruppee which means Gora will not start buying until impact of USA dollar growth does not fully come on Rs OR shares come to a level where gora see it more attractive, safe and profitable than the devaulation risk (whichever comes first).
Good Analysis...

Dollar will weaken after rate rise.

Farzooq bhai, Currency increase or decrease is directly proportional to interest rates----when interest rate increases, currency of that country also increases----As Higher interest rates tend to attract foreign investment, which is likely to increase the demand for a country's currency... The basic requirement is with increase in interest rates, economy is also booming---with the recent economic USA data, it clearly shows USA economy is booming----Combination of economy booming and increase in interest rates---always attracts foreign investments in that country----which ultimately increase the demand of that currency and therefore strengthen's their currency (dollar)

The USA currency appreciation is already building up in pak ruppees and other world's currencies---but after rate increase there will be additional increase of certain points.
« Last Edit: December 05, 2015, 05:45:42 PM by Basim Sheikh »

Offline alidxb

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Fed Rate Rise
« Reply #3 on: December 05, 2015, 06:09:25 PM »
USA is going to increase the interest rates on December 16, 2015. USA economy is expanding especially after yesterday's job data came out.... This will have good impact on USA market since economy booming is a good thing.... But this USA improvement will strengthen Dollar which means further pressure on Pak Ruppee which means Gora will not start buying until impact of USA dollar growth does not fully come on Rs OR shares come to a level where gora see it more attractive, safe and profitable than the devaulation risk (whichever comes first).
Foreign selling is not  due to only one reason as you perceive. Bad governance is another factor. NS smashed every one's hope for the improvement.  There is no change in our international perception & is at the same level where Zardari left.
For them, there is little space for further growth in our stocks which they got more than three/four years ago. Rupee devaluation has pushed them to take the quit. So they will continue selling even if KSE go below 30K.
In the long run, everything settles at the place it deserves.

Offline Basim Sheikh

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Fed Rate Rise
« Reply #4 on: December 05, 2015, 06:14:56 PM »
USA is going to increase the interest rates on December 16, 2015. USA economy is expanding especially after yesterday's job data came out.... This will have good impact on USA market since economy booming is a good thing.... But this USA improvement will strengthen Dollar which means further pressure on Pak Ruppee which means Gora will not start buying until impact of USA dollar growth does not fully come on Rs OR shares come to a level where gora see it more attractive, safe and profitable than the devaulation risk (whichever comes first).
Foreign selling is not  due to only one reason as you perceive. Bad governance is another factor. NS smashed every one's hope for the improvement.  There is no change in our international perception & is at the same level where Zardari left.
For them, there is little space for further growth in our stocks which they got more than three/four years ago. Rupee devaluation has pushed them to take the quit. So they will continue selling even if KSE go below 30K.

I totally agree with you.... But I am not talking specific to KSE market---I am talking about impact of dollar appreciation on markets....But my dear selling by foreigners due to ruppee devaluation is one of the strong reasons----Bad governance is always like this in Pakistan my dear----If this is the only reason why they have not gone in previous years??? But nevertheless all the factors you said are also playing  catalyst role----Gora is not selling becoz they do not want to come back to pakistan---- They are selling due to certains reasons (which we discussed) and will come back when either two of the reasons comes. (1) Impact of USA dollar growth fully come on Ruppee (2) Shares come to a level where gora see it more attractive, safe and profitable than the devaulation risk (whichever comes first).

Offline Farzooq

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Re: Fed Rate Rise
« Reply #5 on: December 05, 2015, 06:19:44 PM »
Markets are pricing in a rate hike in December 2015, then twice more in 2016. Assuming that the Fed acts in December, markets are pricing in June 2016 and December 2016 for a 25-bps hike each, bringing the 2016 year-end expected rate to 1.00%.

What Does History Say About The First Rate Hike And Stocks?

http://ciovaccocapital.com/wordpress/index.php/stock-market-us/what-does-history-say-about-the-first-rate-hike-and-stocks/

On the second point, there is almost universal belief that with the Fed hiking rates and the ECB (European Central Bank) likely to further increase their QE (quantitative easing) programme and negative interest rates, the US dollar will strengthen and equities broadly but especially in emerging markets (EM) will weaken. The outlook for other EM assets and global commodities will also be challenged in a world with a strengthening dollar. EM assets rarely do well in a strong dollar environment and many investors feel the biggest bubble in this cycle may actually be in EM debt. This is probably the single most crowded and consensus trade in the market today (strong dollar, weak euro, weak EM).

There is, however, also a contrary view out there. The bulls point to how asset prices moved in the three years post the Fed hiking rates in June 2004 and February 1994. They argue that these two episodes are the only ones relevant when considering the current cycle and environment. In both these cases the Fed moved after a long period of very low rates. In both cases Japanese and European monetary policy stayed easier than the US and their respective central banks moved much later.

Contrary to popular belief and current investor positioning, in both 1994 and 2004 the dollar weakened almost immediately after the first rate hike by the Fed. It stayed below its starting level all through the three years. A classic case of markets having fully priced in future expectations and peaking out before the fact, and the need to sell on the event itself.

Equity markets stayed broadly stable for the first 12 months post the hikes and then delivered strong positive performance across regions

http://www.business-standard.com/article/opinion/akash-prakash-preparing-for-the-december-hike-115112601268_1.html

However, the magnitude of the impact would depend on how quickly rates are increased, and the kind of expectations that economic agents form about the policy move. So far, the Fed has said that the rate hike would be slow and spread over a long time period, with the median rate increasing to ~3% by 2018. Regardless of whether the rate hike comes as a surprise or not, a rise in interest rates in a country like the U.S. is bound to exert an impact on the world economy.

http://www.forbes.com/sites/greatspeculations/2015/11/25/when-the-fed-raises-rates/

Already priced inn
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Offline Farzooq

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Re: Fed Rate Rise
« Reply #6 on: December 05, 2015, 06:22:17 PM »
I totally agree with you.... But I am not talking specific to KSE market---I am talking about impact of dollar appreciation on markets....But my dear selling by foreigners due to ruppee devaluation is one of the strong reasons----Bad governance is always like this in Pakistan my dear----If this is the only reason why they have not gone in previous years??? But nevertheless all the factors you said are also playing  catalyst role----Gora is not selling becoz they do not want to come back to pakistan---- They are selling due to certains reasons (which we discussed) and will come back when either two of the reasons comes. (1) Impact of USA dollar growth fully come on Ruppee (2) Shares come to a level where gora see it more attractive, safe and profitable than the devaulation risk (whichever comes first).

Devaluation is +ve for most of the sectors and kse so no worries. Let the foreigners sell and go.
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Offline Farzooq

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Re: Fed Rate Rise
« Reply #7 on: December 05, 2015, 06:25:55 PM »
Financial Markets
How will investors react to higher US interest rates?
How are currency traders positioning themselves in the anticipation of rate rises?
What investments are most sensitive to interest rate rises?
How does the recent China turmoil affect the Fed’s decision?


http://ig.ft.com/sites/when-rates-rise/#faq
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Offline Basim Sheikh

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Re: Fed Rate Rise
« Reply #8 on: December 05, 2015, 06:30:35 PM »
Markets are pricing in a rate hike in December 2015, then twice more in 2016. Assuming that the Fed acts in December, markets are pricing in June 2016 and December 2016 for a 25-bps hike each, bringing the 2016 year-end expected rate to 1.00%.

What Does History Say About The First Rate Hike And Stocks?

http://ciovaccocapital.com/wordpress/index.php/stock-market-us/what-does-history-say-about-the-first-rate-hike-and-stocks/

On the second point, there is almost universal belief that with the Fed hiking rates and the ECB (European Central Bank) likely to further increase their QE (quantitative easing) programme and negative interest rates, the US dollar will strengthen and equities broadly but especially in emerging markets (EM) will weaken. The outlook for other EM assets and global commodities will also be challenged in a world with a strengthening dollar. EM assets rarely do well in a strong dollar environment and many investors feel the biggest bubble in this cycle may actually be in EM debt. This is probably the single most crowded and consensus trade in the market today (strong dollar, weak euro, weak EM).

There is, however, also a contrary view out there. The bulls point to how asset prices moved in the three years post the Fed hiking rates in June 2004 and February 1994. They argue that these two episodes are the only ones relevant when considering the current cycle and environment. In both these cases the Fed moved after a long period of very low rates. In both cases Japanese and European monetary policy stayed easier than the US and their respective central banks moved much later.

Contrary to popular belief and current investor positioning, in both 1994 and 2004 the dollar weakened almost immediately after the first rate hike by the Fed. It stayed below its starting level all through the three years. A classic case of markets having fully priced in future expectations and peaking out before the fact, and the need to sell on the event itself.

Equity markets stayed broadly stable for the first 12 months post the hikes and then delivered strong positive performance across regions

http://www.business-standard.com/article/opinion/akash-prakash-preparing-for-the-december-hike-115112601268_1.html

However, the magnitude of the impact would depend on how quickly rates are increased, and the kind of expectations that economic agents form about the policy move. So far, the Fed has said that the rate hike would be slow and spread over a long time period, with the median rate increasing to ~3% by 2018. Regardless of whether the rate hike comes as a surprise or not, a rise in interest rates in a country like the U.S. is bound to exert an impact on the world economy.

http://www.forbes.com/sites/greatspeculations/2015/11/25/when-the-fed-raises-rates/

Already priced inn

I agree but in my opinion ek or round lagna hai KSE ka downside ka----You are right ke it is already priced in----But I think it will see some pressure in the December--Either next week or the week after but in my opinion ek baar temporary pressure ai ga (may be I am wrong)

Offline stuka

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Re: Fed Rate Rise
« Reply #9 on: December 05, 2015, 06:47:23 PM »
Why US markets rallied although Job data Gave strong job report. everyone was saying todays data will determine the market move. why 2 % jump if rate increase is considered so far negative

Offline Basim Sheikh

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Re: Fed Rate Rise
« Reply #10 on: December 05, 2015, 06:51:32 PM »
Why US markets rallied although Job data Gave strong job report. everyone was saying todays data will determine the market move. why 2 % jump if rate increase is considered so far negative

As per the last 2 months job data, USA economy is strengthing---Strengthening of economy is an excellent thing---Ho sakta hai ke rate hike ka temporary impact USA per bhi ai magar it would be for quite small number of days

Offline Value-Investor

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Re: Fed Rate Rise
« Reply #11 on: December 05, 2015, 07:48:13 PM »
Why US markets rallied although Job data Gave strong job report. everyone was saying todays data will determine the market move. why 2 % jump if rate increase is considered so far negative

As per the last 2 months job data, USA economy is strengthing---Strengthening of economy is an excellent thing---Ho sakta hai ke rate hike ka temporary impact USA per bhi ai magar it would be for quite small number of days

The market is dirt cheap and u guys r still trying to time the marker!!
All of us wasting our precious time by trying to time the market despite the fact that everyone knows market can not be timed!!
If anyone of u have empirical evidence on market timing than let me know please!!

Offline SBM

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Re: Fed Rate Rise
« Reply #12 on: December 05, 2015, 08:02:07 PM »
Why US markets rallied although Job data Gave strong job report. everyone was saying todays data will determine the market move. why 2 % jump if rate increase is considered so far negative

As per the last 2 months job data, USA economy is strengthing---Strengthening of economy is an excellent thing---Ho sakta hai ke rate hike ka temporary impact USA per bhi ai magar it would be for quite small number of days

The market is dirt cheap and u guys r still trying to time the marker!!
All of us wasting our precious time by trying to time the market despite the fact that everyone knows market can not be timed!!
If anyone of u have empirical evidence on market timing than let me know please!!

Aqeel bhai .. itni bari empirical evidence agar apko nazar nhi ati tu hum kia karin  :laugh:
I hate waking up.

Offline Value-Investor

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Re: Fed Rate Rise
« Reply #13 on: December 06, 2015, 12:29:12 AM »
Why US markets rallied although Job data Gave strong job report. everyone was saying todays data will determine the market move. why 2 % jump if rate increase is considered so far negative

As per the last 2 months job data, USA economy is strengthing---Strengthening of economy is an excellent thing---Ho sakta hai ke rate hike ka temporary impact USA per bhi ai magar it would be for quite small number of days

The market is dirt cheap and u guys r still trying to time the marker!!
All of us wasting our precious time by trying to time the market despite the fact that everyone knows market can not be timed!!
If anyone of u have empirical evidence on market timing than let me know please!!

Aqeel bhai .. itni bari empirical evidence agar apko nazar nhi ati tu hum kia karin  :laugh:

Boss I personally know Aqeel Bhaie!! Even he is also confused with regards to market timing! U never know when he is bullish or bearish!!!

Offline Just Another Guy

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Re: Fed Rate Rise
« Reply #14 on: December 06, 2015, 03:27:25 AM »
USD is at the tail end of its bullish sentiments. Reasons?

1) buy on rumour sell on news is old tried and tested formulae. Prices move mostly in anticipation and markets have been expecting it for a long time so much of the increase in rates has already been priced in

2) historical data points to above being true

3) with around 67% of s&p 500 companies' revenue coming from outside USA and with rest of the world continuously devaluing to prop up exports, US dollar if continue to rise will hurt US large corporations badly.

4) yes there can be one more downturn at kse but with most of the world stinking Pakistan can offer good returns. And foreign money can return quickly if our stupid government will learn the demerits of inflated currency. But what to expect from those who come to power to grow their own assets rather than grow the economy.

5) the systematic risk of world entering into a recession has increased with time so keep a close eye to the newsflow

6) instead of looking at index as a whole, concentrate on cherry picking


Offline stuka

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Re: Fed Rate Rise
« Reply #15 on: December 06, 2015, 03:31:14 PM »
I AM HEARING FROM DIFFERENT PERSONS THAT GORA SELLING DUE TO PAK RS DEVALUATION AND THEY WILL COME BACK WHEN PAK RUPEE STABILIZES.
ONE QUESTION COMES TO MIND THAT THEY DONT HEDGE AGAINST POSSIBLE CURRENCY DEVALUATION AT THE TIME OF INVESTMENT??? YA BS PARHATAY HE HAIN HEDGING AGAINST RISK K BARAY MAI.

KB SE DEVALUE HNA SHRU HUA HA APNA RUPEE. YE KN SI UNCERTAIN BAAT HA. HIGH RISK CURRENCY HA APPRECIATE TO HNAY SE RAHI DEVALUE HE HNA HA.

Offline Basim Sheikh

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Re: Fed Rate Rise
« Reply #16 on: December 06, 2015, 03:45:34 PM »
I AM HEARING FROM DIFFERENT PERSONS THAT GORA SELLING DUE TO PAK RS DEVALUATION AND THEY WILL COME BACK WHEN PAK RUPEE STABILIZES.
ONE QUESTION COMES TO MIND THAT THEY DONT HEDGE AGAINST POSSIBLE CURRENCY DEVALUATION AT THE TIME OF INVESTMENT??? YA BS PARHATAY HE HAIN HEDGING AGAINST RISK K BARAY MAI.

KB SE DEVALUE HNA SHRU HUA HA APNA RUPEE. YE KN SI UNCERTAIN BAAT HA. HIGH RISK CURRENCY HA APPRECIATE TO HNAY SE RAHI DEVALUE HE HNA HA.

Its not all about devalution. There are reasons like USA market is becoming more attractive and positive, devaluation of all other currencies compared to Dollar, KSE is extremely highly priced in the last 4-5 years etc. They are not only selling in pakistan, in fact they have been selling in all countries especially all emerging/frontier markets for the last many months.

Offline SBM

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Re: Fed Rate Rise
« Reply #17 on: December 06, 2015, 04:21:39 PM »
Why US markets rallied although Job data Gave strong job report. everyone was saying todays data will determine the market move. why 2 % jump if rate increase is considered so far negative

As per the last 2 months job data, USA economy is strengthing---Strengthening of economy is an excellent thing---Ho sakta hai ke rate hike ka temporary impact USA per bhi ai magar it would be for quite small number of days

The market is dirt cheap and u guys r still trying to time the marker!!
All of us wasting our precious time by trying to time the market despite the fact that everyone knows market can not be timed!!
If anyone of u have empirical evidence on market timing than let me know please!!

Aqeel bhai .. itni bari empirical evidence agar apko nazar nhi ati tu hum kia karin  :laugh:

Boss I personally know Aqeel Bhaie!! Even he is also confused with regards to market timing! U never know when he is bullish or bearish!!!

phir kia karein ?
aqeel bhai tu ameer hotay ja rahay hain
hamari ghurbat ka ilaaj bataein
I hate waking up.

Offline stuka

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Re: Fed Rate Rise
« Reply #18 on: December 06, 2015, 05:31:11 PM »
I AM HEARING FROM DIFFERENT PERSONS THAT GORA SELLING DUE TO PAK RS DEVALUATION AND THEY WILL COME BACK WHEN PAK RUPEE STABILIZES.
ONE QUESTION COMES TO MIND THAT THEY DONT HEDGE AGAINST POSSIBLE CURRENCY DEVALUATION AT THE TIME OF INVESTMENT??? YA BS PARHATAY HE HAIN HEDGING AGAINST RISK K BARAY MAI.

KB SE DEVALUE HNA SHRU HUA HA APNA RUPEE. YE KN SI UNCERTAIN BAAT HA. HIGH RISK CURRENCY HA APPRECIATE TO HNAY SE RAHI DEVALUE HE HNA HA.

Its not all about devalution. There are reasons like USA market is becoming more attractive and positive, devaluation of all other currencies compared to Dollar, KSE is extremely highly priced in the last 4-5 years etc. They are not only selling in pakistan, in fact they have been selling in all countries especially all emerging/frontier markets for the last many months.

 basim sheikh: in these case gora wants 2 options---wait for ruppe to stabilize at some point or shares come to a level which comensate ruppe devaluation. core condition by you for coming back of gora.


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