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Stock Market and Interest Rate charts

Stock Market and Interest Rate charts. Stock market indexes. Dow Jones Industrial Average List http://money.cnn.com/data/dow30/ S&P 500 Complete list http://nyjobsource.com/sandp1.html NASDAQ http://en.wikipedia.org/wiki/Nasdaq_Composite http://en.wikipedia.org/wiki/NASDAQ

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Stock Market and Interest Rate charts

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  1. Stock Market and Interest Rate charts

  2. Stock market indexes • Dow Jones Industrial Average List http://money.cnn.com/data/dow30/ • S&P 500 Complete list http://nyjobsource.com/sandp1.html • NASDAQ http://en.wikipedia.org/wiki/Nasdaq_Composite http://en.wikipedia.org/wiki/NASDAQ http://www.allstocks.com/NASDAQ/

  3. Long term S&P 500

  4. Long-term View of the DJIA

  5. S&P 500 price, earnings, div. (quarterly data)

  6. S&P 500 Price, Dividends, EPS (annual data) Price and earnings move together, dividends are lagging

  7. Stock Price=earnings x Multiple • Multiple = price to earnings ratio • High multiples are sensible only if earnings are going to grow rapidly

  8. S&P 500 P/E and P/D multiples

  9. Trailing, Forward, Operating Earnings

  10. P/E ratio Average since 1988 about 19, longer term average 15.9

  11. Dot com bubble

  12. USA TODAY Internet 100 9/29/00

  13. Interest rate slides

  14. The Federal Reserve “targets” the federal funds rate.

  15. Treasury Interest Rates

  16. Prime Rate Constant at 3.25% since Jan. 2009

  17. Inflation

  18. Inflation

  19. US Tax Rates

  20. US Tax Rates

  21. Yield to Maturity (yield curve)

  22. Dividend Payout

  23. Interest Rate: Forward and Futures • Have looked at historical interest rates for perspective • Yield curve is forward looking and contains implicit rates for future years • Interest rate futures are traded on CME group exchanges and provide market expectations • Interest rates are relatively low in 2012 • Cannot “lock in” today’s low rate – can only lock in forward or futures rates

  24. Forward interest rates • Hypothetical interest rates available • Fixed for one year @ 3% • Fixed for two years @ 4% • Fixed for three years @ 5% • The cost for the first year is 3%. • The two year loan costs 8% over two years, of which • 3% is the first year cost, • leaving 5% as the implied forward rate for the second year. • If you take the three year fixed period, the cost for three years is 15% • subtracting 3% for the first year and 5% for the second year, leaves 7% as the cost in the third year. • Thus, 5% and 7% are the year two and three forward rates.

  25. More Accurate Forward Rate Calculation (accounts for compounding) • irj = interest rate from time i to time j. • one year rate ; 0r1 = 3% -- given • two year cost: (1.04)2 = (1.03)(1+1r2) 1r2 = 5.01% • three year cost: (1.05)3 = (1.03)(1.0501)(1+2r3) 2r3 = 7.029%

  26. Farm Credit Services of Mid-America rates as of 2/4/2011

  27. Interest Rate Futures • CME group • Treasuries of different maturities and Eurodollar Futures • Eurodollar futures are on 3 month LIBOR interest rates • London Interbank Offered Rate • Traded many months into the future • Prices quoted as 100 minus the percentage interest rate • 5% interest would be quoted as a Eurodollar futures price of 95. • http://www.cmegroup.com/trading/interest-rates/

  28. Eurodollar Futures 3 month LIBOR futures 9/4/2012

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