Wednesday, January 14, 2015

Investment Issues:Fed Policy;China;Oil and Transport

The Fed hasn't learned the lessons of what they did 10 years ago,and I fear they're doing it again,said Stephen Roach,senior fellow at Yale University.Is a one percent rate hike going to restrain the economy?Absolutely not.If anything,the Fed is going to disappoint us in terms of how much it adjusts rates this year.They're in total denial that cheap money and an accommodative policy had anything to do with the train wreck of 08-09.The US really needs export growth as it contemplates the weakness of the American consumer.
I've been completely optimistic on China.It's slowed,but with a slowing that was implemented strategically.China's adamant about going to market-based systems.Defaults are a sign of health in this.
The Fed is fearful of doing its job as a steward of the real economy,Mr.Roach added.*
Volatility has to wring itself out,acording to Paul Schatz of Heritage Capital.The bulls have to make a new high here,or the Dow will slip below 17,000.We've been long TLT,the long Treasury bond etf,all of 2014,but we're getting close to taking some off the table.We're going to have oil in the 40s;eventually,we're going to have oil in the 60s.
If the historic trend following such a steep oil price decline is followed,CNBC floor reporter Bob Pisani pointed out,oil will be at 75.00 in the second half of the year.*
Actually,I think the decline in oil prices is going to help us,said CSX chairman and CEO Michael Ward.It's good for the consumer.We're seeing the volumes continue the same as they were before the decline.We fully pass on the lower fuel prices to our customers,based on the price of West Texas Intermediate crude.We were up about six percent in carloads.We see an uptick in virtually every market we serve.We expect to grow beyond the rate of the economy.There are some issues on the west coast now,but over time that may create more shipments through the east coast,the railroad executive explained.*
iShares 20+ Year Treasury Bond ETF(TLT),CSX Transportation(CSX)

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