While interest rates are not even in the same ballpark that they were back in the 1980s (15% was not unusual), or even 2007 (6-8%) rates are rising slowly but surely. Markets were shocked into convulsions last week by the Fed's testimony that the central bank would eventually begin to slow down the rate at which they have been purchasing assets, which is currently $85 billion a month.
Now that the market and investors have had a weekend to recover their nerves (not to mention wits), it is time to think about which companies and sectors will benefit either from rising rates or the uncertainty that will inevitably surround markets at least for the short term.
Financials are on area that have been beat up the last few years, and an increase in interest rates would certainly help their net interest margin and give them a little more breathing room as their loan portfolios continue to roll over - out of older loans that were issued at higher rates and into more current loans issued at today's very low rates.
Obviously the big name banks will benefit from a healthier economy and slightly higher rates: J.P. Morgan, Bank of America, Wells Fargo, and Citi are all names that come to mind initially?
I would love to hear what you guys have to say on this
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.