The worst is behind us in Jesus name

Most economists and financial analysts believe that central banks set interest rates.

For more than two decades, Elliott Wave International has tracked the relationship between interest rates set by the marketplace and interest rates set by the U.S. Federal Reserve and found that it’s actually the other way around—the market leads, and the Fed follows.

The latest Federal Reserve rate decision on December 19 brought the usual breathless anticipation. Confusion reigned as the U.S. president as well as a former Fed board member publicly urged the U.S. central bank not to raise rates and many wondered if the Fed would “rescue” investors with a surprise decision to leave them unchanged. The Fed, however, did what it almost always does: it brought its rate in line with market rates.

The Fed increased its federal funds rate a quarter-point from 2.25% to 2.50%. As shown by the dashed line in Figure 1, the Fed’s move followed a rise in the six-month U.S. Treasury bill yield from 2.36% to 2.56% and an increase in the three-month U.S. Treasury bill yield from 2.18% to 2.42% since the prior Fed rate hike on September 26. So, market rates remain nearly undefeated when it comes to predicting what the Fed’s actions will be.




Figure 2, a longer term version of the same relationship, is from The Socionomic Theory of Finance by Robert Prechter. It shows the federal funds rate as set by the Fed and the market-set three-month U.S. Treasury bill yield back to early 2000.

This history shows that the T-bill market moves first and the Fed’s interest-rate changes follow. As a result, no one monitoring the Fed’s decisions can predict when T-bill rates will change, but anyone monitoring the T-bill rate can predict when the Fed’s rates will change.

We demonstrated this ability in August 2007 by predicting that the Fed was on the cusp of lowering its federal funds rate dramatically. Figure 2 shows the timing and its aftermath.

I would be cautious. The worst is yet to come. The NSE 20 share index is yet to find a bottom. And now you get news of the re-emergence of violent gangs e.g mungiki and the clashes starting in Likoni.

There's also a possibility of terrorist attacks

Am just trying to show the link between the stock market (as a barometer of social mood) and social actions.

Is the market looking up, chartists what do you say

Is the market looking up, chartists what do you say

Market has been consolidating for the last three months or so. This is after erasing the whole 2017 rally and puncturing the Feb 2017 low of 2789. Generally, I don't expect 2019 to be good for EM/FMs but there are always some exceptions.