It's funny how people can think so differently.
Yes indeed, your very given reasons (i.e.: increased rates affecting foreign markets), were my own reasons of my "secret thinking", they would NOT raise rates. This, because I am convinced that excessively higher rates will kill any kind of recovery in LatAm. For Asia, I do not know much about those markets to say one way or the other, but I would not be surprised if it is similar.
In my thinking, the fear for the FED, (or should I say Uncle Al), was that they would get blasted for being too lenient by the hawks, within and outside...
As for the CPI absent inflation.... I am wondering if the components of the same should be revised to reflect a different picture.
On the one hand, I know that Real Estate has been strong in some areas. Both from the replacement cost AND from the leasing market, points of view, especially in selected locations.... (Washington State, Nevada, Arizona, as examples). Overall cost of living has been going up considerably more than in others... (which btw, it makes a case to replace the CPI with some kind of local index, when pricing leasing rate escalators... more and more lately.)
i.e.: Housing, fuel, (although, imh oil will retrace), some labor costs, not to mention that everyone seem to be happily employed....
Yet, it seems to me that overall costs for business at large have been somehow "tamed".... Would that have anything to do with "improved efficiency in productivity ? "... or "improved productivity" ? ... due to high tech... Uncle AL said so the other day, so it must be true....
Well, maybe but I may be off in my "definitions".
I wonder....
*Warning* The content of the following has a shade of black helicopter conspiracy theory....
If, the CPI structure would have something to do with increment of Social Security payments to beneficiaries, current and in the future ?
So if it is tamed, then no considerable increments.
To boot... I am sure that "the powers that be", are glad to see the gains in the stock market, not to mention the broadening of the participants, hence, the retiring population will be happier, not so 'damned picky about the waste in the government', not to mention that the payments to retirees, (should they really screw up), become less critical....
Of course, Uncle Al is sure to put a scare here and there, (as we have witnessed), so such gains do not get exuberant.... But I am sure these powers will not want to kill the market, scare it yes, but not kill it.
If an excessive increase in US rates is implemented, I would assume that make the US dollar stronger.... and it seems to me according to some ideas expressed here, that nobody really wants a stronger US Dollar....
I know that if that happens, more people will continue to view that the US priced assets are a far better bet, once you input the so called risk/reward considerations... from the point of view of currency exchange, (weak currency -vs- US Dollar).
At this point, after all the recent squawking about reasoning a rate increase, I think they would really look foolish if they did not increase them... at least a little. It will give them the impression they are still in control <g>.....
After all, this is all about "perceived" realities, not reality per se.
On the lighter side of things.....
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