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Seth Golden posted an update 3 years, 8 months ago
4) What level of interest rates stresses the economy
and Equities? Interest rates always rise to some degree asthe economy revives, but the risk of a negative feedback
loop from higher financing costs to slower growth due to too much leverage isn’t even relevant when real rates are
negative. Indeed, business cycles don’t end until real ratesare much closer to the rate of real GDP growth (chart 8),
and Equity bull markets don’t end until the business cycledoes. So thinking transitively, the Equity bull market
shouldn’t be threatened until real rates are well intopositive territory.
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