Daily Note – Tick Tock

Tick TockSummary

United States: Looking for an early Fed move
United States: Consumer confidence hits a new high
United States: UPS Earnings suggest further business investment
United Kingdom: Mortgage approvals move higher



Good morning,

The current bull market that began in March 2009 is now longer than the previous bull market of 2002-07. This is quite short by historical standards. The bull market that followed the 1987 crash continued right up until the tech bubble burst in 2000.

There is one crucial difference between this bull-run and the rest, however. The Fed funds rate is extremely low for this stage of the economic cycle. During the previous interest rate cycle, Fed funds peaked at 5.25% in June 2006, and at 6.5% in May 2000 before that.

The current boom followed one of the most severe crises in history therefore it wouldn’t be surprising if it continued for much longer than average. But it will end and when it does end, the Fed would like to have room to cut interest rates to stimulate the economy before being faced with the “zero lower bound”. This means interest rates must rise in the intervening period. The question now is whether the market can withstand this. The “taper tantrums” the markets have thrown in recent times haven’t given much reason to hope so.

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Global Macro-Daily Note 30th July 2014


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