Tags: Hyman | Fed | rates | dollar

Sean Hyman to Newsmax TV: Fed Likely to Wait Until Next Year to Raise Rates

By    |   Wednesday, 28 January 2015 12:43 PM

You can add Sean Hyman, editor of two Newsmax newsletters and a Moneynews Insider, to the list of those who expect the Federal Reserve to wait until next year to raise interest rates.

"I don't think they will" increase rates soon, the editor of the Ultimate Wealth Report and Absolute Profits, told the "America's Forum" program on Newsmax TV.

"With the strong dollar and a lot of these major companies blaming their softer earnings on the dollar, if they were to increase rates now, that could send the dollar even higher and make their earnings even worse in future quarters, which would take [stocks] down quite a bit," he said.

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"I don't think they're going to increase now. That would probably either be later this year or even more than likely early next year."

Hyman noted that the dollar's strength was a contributor to the 1987 stock crash. "It still haunts people when the dollar gets overly strong like this and multinational foreign earnings come in soft." The dollar has soared to multi-year highs against a range of currencies in recent weeks.

Another problem for the stock market now is that "price-earnings ratios are so high," Hyman explained. The trailing P/E ratio for the S&P 500 stood at 19.71 Friday, up from 18.20 a year earlier, according to Birinyi Associates.

"Investors are paying up for stocks, and they're getting toward the high end of what they historically trade at relative to their P/E ratios," he noted.

"If they want to go higher they certainly could, but institutional investors know that they're pushing their luck. They're quicker to hit the sell button, and that's why you're seeing a lot of instability and volatility right now."

The CBOE Volatility Index (VIX), which measures expected volatility for the S&P 500 index, has risen 23 percent since the S&P 500 hit a record high Dec. 29.

Meanwhile, oil prices have plunged 58 percent since late June. That move has mixed implications for the economy. "Of course lower oil prices produce lower gas prices, and that's been great for the consumer," he maintained.

But, "if you're an oil company or employed by an oil company, it's not been such a great day for you," Hyman pointed out. "It's been a number of rounds of layoffs, a lot of idling of oil rigs and things of that sort."

U.S. crude oil prices will like stabilize in the $40s, Hyman predicted. "They could go down into the $30s, but that's unlikely, and then they should trade sideways for a number of months before going higher."

While he expects oil to end the year in the $70 to $80 range, he notes, "We're certainly going to have $100 a barrel oil again."

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You can add Sean Hyman, editor of two Newsmax newsletters and a Moneynews Insider, to the list of those who expect the Federal Reserve to wait until next year to raise interest rates.
Hyman, Fed, rates, dollar
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2015-43-28
Wednesday, 28 January 2015 12:43 PM
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