Not Hard to Figure Out

 

Sometimes it's not so hard predicting the future.

If, for example, you have reports like this --

"Fed's Fisher Says US Economy Has Too Much Liquidity" (CNBC)

The U.S. economy has moved from having too little liquidity to having more than enough, a top Federal Reserve policymaker said on Thursday.
"We've gone from too little liquidity to too much," said Richard Fisher, president of the Federal Reserve Bank of Dallas.

A steep retreat in oil prices suggests this liquidity and the speculative activity it generates — not just strong demand from emerging markets — are driving the market, Fisher said.

"What the correction indicates to me is that there's a lot of liquidity out there," Fisher told reporters after a speech. That puts him at odds with other top Fed officials, who have argued that the Fed's ultra-loose monetary policy cannot be blamed for driving up commodity costs.

Asked about the Fed's exit strategy, Fisher said investors should not prejudge the outcome based on minutes from the central bank's April meeting that hinted that many officials favor interest rate hikes rather than asset sales. --

and this --

"Companies Rush to Borrow" (Wall Street Journal)

Firms Fill Up on Debt Before Fed Closes Door on Easy Credit

U.S. companies are racing to fill up on borrowed money, amid worries that interest rates are set to rise once the Federal Reserve ends its support for financial markets next month.

Johnson & Johnson staged its biggest bond deal on record Tuesday. Texas Instruments Inc. raised debt for the first time in more than a decade Monday, and Google Inc. sold its first bond ever. Smaller companies like Great Plains Energy Inc. are also loading up on debt at some of the lowest interest rates ever.

All told, investment-grade companies sold $19 billion of bonds in the U.S. in the past two days, according to data provider Dealogic, setting the week up to be among the busiest so far this year. Bond sales in May have reached $56.7 billion—with two weeks left to go in the month—almost as much as the $59.6 billion sold in all of April.

Companies have already loaded up on debt over the past two years amid continued low interest rates. But in recent weeks, rates have moved down again, reaching their lowest level of the year. Making borrowing even more attractive right now: Many corporate treasurers expect interest rates may rise quickly once the Fed ends its $600 billion Treasury-bond buying program in June.
.
"Rates are so low it's hard to see them going much lower, but it's easy to imagine them going higher," said Kevin March, chief financial officer of Texas Instruments, which sold $3.5 billion of debt in its first offering since 1999. The money will help pay for its purchase of National Semiconductor Corp. Texas Instruments paid less than 1% for some two-year debt. At current rates, "You just shake your head and say, 'This is pretty amazing,'" he said. --

It's not so hard figuring out what's coming next.

Hopefully, you'll be more prepared than all those "investors" buying junk bonds, junk stocks, and junk real estate with reckless abandon -- and soon-to-be-expensive funny money.

http://feedproxy.google.com/~r/financialarmageddon/~3/NxCD6aQ3PkI/not-hard-to-figure-out.html