EKS--
I'd say that if we get a single rate hike of 25 basis points it won't make much difference one way or the other. But then, we rarely get a single one, so say we get two, for a total of 50 basis points. Not so good for large caps and for the market generally. And I wouldn't count on it to bring the dollar down; on the contrary, it'd probably strengthen or at least maintain at these levels. The tech sector, though, tends to be less interest-rate sensitive than many others, and sooner or later people will remember what they forget every six months or so: that its growth rate is impressive, and will continue to be.
I recently read something in a news article that hadn't occurred to me: Uncle Alan's between a rock and a hard place because absolutely the last thing he wants to see is a market correction 1987 style. This would force him to lower rates in the immediate aftermath, which might later on provoke a recession. But if he raises now, will it simply calm things down, or will it be the straw that broke the camel's back?
Well, you got me. But I think he'd feel much better about making a move if he had a couple of good solid inflation indicators to point to. And he hasn't got 'em. Given that, we'll be churning around till something happens. And when the traders (and MMs) are nervous, they sell techs, and anything else that looks to them to be overbought.
Yes, I agree that the brokerages and other businesses in the financial sector will suffer if rates go up, and perhaps even if they don't. Frankly I'd like to see a little "sector rotation" that doesn't involve the techs for once. I'd also like to see irresponsible analysts brought to heel by the industy. They're getting way out of hand, and doing a disservice to the people they supposedly work for. Forget the small investor: can you imagine how you'd feel if you were a fund manager who'd picked up several million shares of, say, Cisco at its high on your brokerage house's "strong buy" recommendation, only to see it tank following successive downgrades? In my view the whole system needs to be rethought. See the guy from Prudential who yesterday raised his target price for AMD from $40 to $90? Crazy.
Sorry, I'm going on and on. What'll happen today? Haven't got the foggiest. Maybe we'll belatedly feel happy about the Beige Book, or maybe we'll get hysterical about tomorrow's PPI. Or maybe both.
Janice |
