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Friday 5 June 2015

Interest rate

Remember the statement I used to describe US Fed chairman Janet Yellen against interest rate?  If no, here it is "US Fed chairman Janet Yellen knows the consequence of raising interest rate." 

She knows that.  Yellen saw how market reacted when Fed stopped QE1 and QE2.  But this time when QE3 ended, things were fine.  Why?  Because someone took over the baton.  Japan, Europe....... started printing money when US QE3 ended.  So why is there a hurry for the US to raise their interest rate since everyone is printing money.  Having said that, rate increase is a matter of time.  The challenge is how to minimize the impact.

Early May, Janet Yellen warned that the US stock valuation were too high.  Few weeks later, she insisted the economic remains on track and the rate rise this year is on the cards.  What was she trying to do?  Yes, the "impact". 

Today we have IMF, warning the U.S. Federal Reserve should delay the rate hike until the first half of 2016 until there are signs of a pickup in wages and inflation. 

Fund manager, analysis......and so called experts had been predicting the raise of interest will kick off in somewhere second half 2014 to this year Q1, Q2 and now they said should be in Q3, Q4.......... Is predicting so important? 

Today market is mend for trade.  If you still thinking of invest buy and hold for 3 to 5 years.........well think twice.  I won't do that.  I know the day of rate rise will come.  But the actual timing I won't know, nobody knows.  So I trade what I see. 

The day will comes and I know the consequence.  I am watching what Fed has done before the announcement of rate increase take place.  And how the market respond before physical announcement / actual rate rise.  Just like gold and USD.  They were like 2 persons sitting at each end of the see-saw.  Gold weaken, USD strengthen.  Gold strength, USD weaken.  Knows the rules and join the game.  Enjoy the shows, enjoy ride and very important knowing when to get out.    

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