How To Fight The Fed

It is an understandable concern for many investors wary from years of relentless monetary policy intervention into capital markets by the U.S. Federal Reserve. Many look around and see a global economic backdrop that is shaky at best, corporate earnings that are in steady decline and valuations that remain rich by historical standards. But they also have been conditioned over the past several years to expect whenever the market enters into any sustained period of volatility that the Fed will come rushing back in with more stimulus. This leads to the following conflict for some investors, which is that they may be inclined to lighten up on their stock allocation but are reluctant to do so amid the worry that the Fed will begin talking up a new stimulus program that will propel stocks to new heights. Two key points may be helpful in working to overcome this dilemma.

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Latest Gaze Into The Fed’s Crystal Ball

The Fed entered the New Year with a bold plan. Over the course of the next twelve months, the U.S. central bank was strongly suggesting its intent to carry out four quarter point interest rate hikes. But since the start of the year, the global economy has continued to sputter, the stock market has dropped like a stone and previously latent risk factors have suddenly surfaced to grab the attention of investors. Although the Fed continues to try and talk a good game about their determination to raise interest rates, what is the latest market read on what the Fed will actually do?

Please click on the link to read more of my article on Seeking Alpha.

What Have You NOT Done For Me Lately

It used to be a time not very long ago when the U.S. Federal Reserve was lavishly pampering investment markets. And if they weren’t flooding the financial system with massive liquidity injections from their daily Treasury purchases, they were out talking seeming all the time about how much more they were willing to do for the markets the moment trading turned lower into the red. But it seems that a critically important change for investment markets may have finally come to pass. The Fed is no longer providing stimulus to financial markets. Instead, they have finally raised interest rates for the first time since the financial crisis. Some contend the Fed will eventually return to their pampering ways, as the market turns more sour, while others contend that market neglect may finally be on the minds of Fed policy makers. Who’s right? And what are the implications for financial markets?

Please click on the link to read more of my article on Seeking Alpha.

Ben Spoke And We Went Into A Dream

Many investors are understandably concerned. After nearly seven years in the third longest bull market in history, the U.S. stock market is looking like it may finally be drawing toward a peak. Corporate earnings growth has turned lower, margins are compressing and the economic outlook remains sluggishly mixed at best. In the midst of this bumpy environment, the U.S. Federal Reserve is showing long overdue determination to finally lift interest rates off of the zero bound. And with the high yield corporate bond space under increasing stress and the commodities complex collapsing lower, the threat of a liquidation event suddenly rocking the stock market is rising. All of this raises the following worthwhile question to consider. How much are the markets artificially inflated? And if the stock market were to unwind, what are at least the initial excesses that would need to be worked off?

Please click on the link to read more of my article on Seeking Alpha.

The Path To Normalization

The U.S. Federal Reserve stands at the ready to raise interest rates for the first time since the calming of the financial crisis nearly seven years ago. And while we are left to wait until next week to see if the Fed will actually follow through on the rate hike for which they have so carefully prepared the markets over the last several weeks, it is worthwhile to begin considering what we can expect if and when this first rate hike is finally behind us. While there is certainly no shortage of expert opinions on the path that we will see the Fed take with interest rates over the coming year, it is worthwhile to explore what is being implied by the market itself and whether it is something on which investors can capitalize.

Please click on the link to read more of my article on Seeking Alpha.


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