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Global Interest Rates (-Gravity)

June 18, 2019

Good Morning:


We have often compared interest rates to gravity.  At the present, gravity is being reduced (interest rates) and the result in the flotation of all asset prices.


Whether we like it or not, financial asset prices are now the tail that wags the proverbial dog.  The Federal Reserve, and its international colleagues, respond to the markets vs. the markets responding to them.


We crossed this bridge of no return some years ago, but the slowing of the present economic+profit cycle is revealing the true motives.

Net, net the Central Bankers (Fed etc.) are merely depreciating our currency(s) to float asset prices.    


Unfortunately, lower rates also perpetuate silly business models (think Lyft, Uber, Beyond Meat, Tesla etc.) that have no defined path to sustained profitability.

These companies are far more legitimate than the late 90's iterations, but providing goods/services that cost $1.00/unit and only collecting $0.90/unit still makes little sense to me.    


The 10 year US Treasury has fallen to 2.03% - as the similar bonds of Germany, France, Switzerland, Holland, Japan etc. all trade solidly Negative (guaranteed loss of principal).


As rates continue to fall asset prices will continue to float upwards. 


Bonds, Real Estate, Utilities, Gold and defensive stocks are our preferred vehicles.  


Thank you for your interest in Forest Capital and Sixty Guilders Research.




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Julien B. Booth

Principal & Portfolio Manager


Dana Christner

Operations Manager



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