As I sit here and contemplate what the Fed is likely to do I wonder what it must feel like to have the financial world in the palm of your hands. One wrong phrase during question time could wipe of a trillion dollars of value from the market. What a crazy situation the Fed has found themselves in, they have ultimate power to inflate or deflate the financial system, and not just for the US, but the wider world. The country is bankrupt and cost are going up every year. GDP is barely enough to cover the interest of what is outstanding. How can they justify a rate hike as much as they would like to do it. They have left it too late in my opinion and therefore they have to now wait till there is a sure sign of a recovery, not just data that is clearly subject to some market analysts massage.
I think we will not see a hike, as they just can’t afford to add to the debt burden by raising their own payments. I am no economist, just a trader, but I think the economy cannot handle a rate hike. Not until at least the Spring/summer of 2016. Either way, I suspect that we are about to see a rip roaring rally to new all time highs in time for Christmas. I wouldn’t bet the farm on it, but it’s just a hunch I have due to the fact that every man and his dog expects a crash to happen.
Historically at least a first raise in rates for some time tends to be bullish in the short term for the market. So the way I see it is, if they raise rates, we rally, if they don’t we rally. Make sense? Yeah, sure…this is the stock market, what did you expect!
At the time of this writing I happen to be long the market, so bring on the bulls!