We explore six impacts of higher interest rates on housing, capital projects, stock buybacks, excess returns for stocks, bonds, and other asset classes, and individual opportunity costs.
Topics covered include:
- Where current interest rates stand
- Central banker predictions for how long cash yields will stay this high
- Why housing is the least affordable since the early 1980s
- Why new apartment building construction has collapsed
- What has been the excess return for stocks, bonds, and other asset classes when interest rates are higher and lower
- Why there will be fewer stock buybacks and how that can impact earnings per share
- Which alternative investments do better when short-term interest rates are higher
- Why financial opportunity costs have increased and how that should impact our investment and other financial decisions.
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Show Notes
Summary of Economic Projections—The Federal Reserve)
The Apartment Market Is Hitting a Construction Lull by Will Parker—The Wall Street Journal)
30-Year Fixed Rate Mortgage Average in the United States—FRED Economic Data)
Americans Are Still Spending Like There’s No Tomorrow by Rachel Wolfe—The Wall Street Journal)
Honey, the Fed Shrunk the Equity Premium by Portfolio Solutions Group—AQR)
Companies ease off on share buybacks as rising interest rates push up costs by Nicholas Megaw—The Financial Times)
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435: Is It Better to Rent or Buy a House?)
448: Where Are Interest Rates Headed Next? Insights from the Jackson Hole Symposium)
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