Much of the current positive stock market momentum in US stock markets is due to the Federal Reserve signalling in January 2024 that it intends to lower interest rates levels by targeting the Federal Funds Rate mainly on the view that 'inflation is transitory'.
Lower interest rates will make margin loans to invest in stocks cheaper. Lower interest rates will enhance investing in low or mid sized technology companies by channeling US pension fund money to venture capital funds in Silicon Valley or throughout the USA. Lower interest rates will make disbursing corporate loans by banks to small, medium and large sized companies cheaper, which will give a boost to the US and by extension the global economy, which will be transferred into higher profits for publicly listed companies and ultimately higher stocks prices.
There will be four cuts of the Federal Funds Rate or interest rates due to political pressures surrounding the US Presidential elections and less on lower inflationary pressures, according to Wolfteam Ltd.'s macroeconomic view and projections.
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