Though many express concern over rising interest rates and their potential impact on the market, Ralph Acampora told Financial Sense Newshour (see Ralph Acampora: Nervous Short-Term But Secular Bull Market Still Intact) that the idea "rising rates are bad for the market" is not all it's cracked up to be.
For example, looking over the past 10 years, yields on 10-year Treasuries rose dramatically with the market in late 1998 to early 2000. That was, of course, a phenomenally good time to be invested.
Yields also trended higher for the majority of the last bull market from 2003 to 2007.
More recently, 10-year rates and the stock market have seen a series of ups and downs, sometimes moving together and sometimes not, so it certainly doesn't appear as if there's a magic relationship between the two when it comes to making forecasts about the market.
Source: Bloomberg, Financial Sense® Wealth Management. Past performance is no guarantee of future results. All indexes are unmanaged and cannot be invested into directly
That being said, the legendary market technician told listeners that he does think there is a point where higher yields will start to slow growth and bring an end to the bull market. However, while many are focusing on 3%—10-year yields are currently at 2.81%—Acampora believes that it's likely far higher at 5%.
For that reason, Acampora said:
“I'm not looking for the end of this secular (long-term) bull market. We’ve got a couple of years left, theoretically. But we will have cyclical corrections or cyclical bear markets. Now, if we're in the process of a top … I'd say it'd be a cyclical (shorter-term) bear market within a secular bull market. … The fly in the ointment right now is what really happens with these talks, and what happens domestically and internationally with tariffs. If that works out, I think we’re going to get another run to the upside. I’ll leave the door open for that.”
When it comes to the latter part, as we showed yesterday (see Will the Trade War Derail the Longest Bull Market in History?), the answer will depend on what happens with interbank lending rates, yield spreads, and the reactions by businesses as reflected by the US jobs market, all of which are currently not flashing any warnings signs...yet.
Listen to this full interview with Ralph Acampora by clicking here. For more information about Financial Sense® Wealth Management and our current investment strategies, click here. For a free trial to our FS Insider podcast, click here.
