Hi Kevin, just saw your post. The joy over an FOMC hike is odd. My opinions are that I don't see the need for a hike, but then (and this partially answers your question), I haven't pre-invested assuming it will happen. The argument that Greenspan will look silly if he dosen't is dumb. After all, the whole point of a warning, is to NOT have to act. Wayne Angel and his crew are in seventh heaven over the added profits their investments won't hurt the borrowing and working public.
The facts seem more that arbs will look stupid and lose their new positions if he dosen't. Heck, bank stocks rebounding on a pre-emptive strike against inflation! Not. They are rebounding because inflation is low and higher Fed rates will allow them to jack up the spread on loans and cards without a fear of official criticism.
I'm also thinking of the Japan/treasury connection. We may have had to concede a 1/4 point to their continued investment in bonds-payback with inflated Yen cycle.
With (or IF) funds inflows are continuing strong, then what this does is buy off the complainers in high places who aren't capitalizing on higher interest rates... thus allowing the market to resume its absorbtion of funds. In other words, it will look like the back door is protected.
This line of reasoning leads me to believe that if jobless claims pick up dramatically, if consumer confidence drops, and if commodities decline the market would get spooked and decline more easily than with a controlled inflation environment.
As usual this answer is a little elaborate, must be the comet and full moon.
What are you trading today?
Jim |
