central banks

3 Investment Lessons from the Game of Thrones

Note: Don't worry I won't be issuing any spoilers in this blog post.

Game of Thrones fans are reeling after another shocking season finale with plenty of deaths left in its wake. This will be a long winter for all of us as we wait for the new season in 2016. Maybe we should start a petition for two seasons per year!

Today I won't be recapping the finale, there are plenty of sites for that sort of thing. Instead I will be looking at 3 investment lessons that you can take away from watching the Game of Thrones. Let's have at it:

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IMF urges Fed to delay interest rate hike until 2016

The International Monetary Fund urged the Federal Reserve to wait until the first half of 2016 to start raising short-term interest rates because the U.S. economy remains subpar. This is an unprecedented event as I can't recall a time that the IMF has ever tried to influence Federal Reserve policy. The IMF predicted the economy will grow 2.4% this year, down from its April forecast of 3.1% and the second time it cut growth targets this year.

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The invisible hand of central bankers and government intervention

The financial markets are guided by supply and demand conditions for stocks and bonds. Historically, their fluctuations have been heavily influenced by business conditions and economic cycles. During the past 12-15 months something new and different has dominated the marketplace. Unorthodox governmental forces are the engine that drives the financial markets which seem totally insensitive to any negative economic developments.

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First Quarter 2015 in Review: International markets melt up

I'm not sure where the first three months of the year went, perhaps they are still buried in Boston's snow piles. Wherever the time disappeared to, the central bankers took center stage in the first quarter and their actions dominated financial markets. The European Central Bank joined the QE party to the tune of at least 1.1 trillion Euros to be spent over the next 18 months. The Bank of Japan continues their monetary experiment of Abenomics and there is increasing speculation that they will push the dial further on stimulus which could last for the next 3+ years. Meanwhile economists in the US speculate on when the Fed will make their first rate hike. We don't expect a rate hike anytime in 2015, and maybe not even in 2016, thanks to low levels of inflation and slowing GDP growth.

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Will the Fed raise rates in 2015? Don’t count on it

Yesterday, the Federal Reserve removed its “”patient”” language, as expected, but Fed Chair Janet Yellen delivered her best quote yet:

Just because we removed the word ‘patient' from the statement, doesn't mean we're going to be impatient.

With many investors still expecting a first rate increase in 2015 (perhaps in September), you shouldn't count on it. Why? It's actually quite simple. Yellen repeatedly tells the market that the Fed's decision is data dependent on whether it will raise rates or not. So if you look at the data, there is nothing in the data telling us that a rate increase will come in 2015 at all. Let's look at the numbers.

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