Fed Policy: Unsafe At Any Speed?

The Fed took the bait. On October 30, political activist Ralph Nader penned an open letter from “the Savers of America” to Chair Janet Yellen at the U.S. Federal Reserve to share his dissenting views on monetary policy. And on November 23, Ms. Yellen submitted her open letter response to Mr. Nader. A notable exchange to say the least that warrants a closer review, particularly the response from Chair Yellen.

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

Right Said Fed: Are Stocks Too Sexy?

The U.S. Federal Reserve got the market all frothed up on Wednesday following their latest Open Market Committee meeting. With stocks as measured by the S&P 500 Index having now risen by nearly +12% since their late September lows, the Fed seized on the opportunity to thrust the idea of an interest rate hike in December back on the table. After stumbling lower for the first 30 minutes after the Fed revelation, stocks exploded to the upside for the last hour and a half of trading to close on the highs of the day. Following such a resounding response to the latest Fed statement, are stocks now off to the races to the upside, or will investors still get the chance to see better entry points down the road from here?

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

Stocks: Once Predictive, Now Reactive

At one time not very long ago, the stock market was considered a predictor of the economy. Historically, one could reasonably expect to see the stock market beginning to move in anticipation of economic trends roughly six to nine months in advance. But in the years since the financial crisis, stocks have gone from a predictive mechanism to one that is now highly reactive to what is being fed to it on any given day. And the events that took place in stocks over the last two trading days showed how much this transformation from predictive to reactive is embedded in today’s market.

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

Friday’s Stock Sell-Off And The Fed’s Epic Fail

The U.S. Federal Reserve had four possible outcomes coming out of their latest FOMC meeting on Thursday. And it seems that the Fed may have ended up with the worst possible result.  Not only did the Fed potentially forgo their last reasonable opportunity to get off of the zero bound and squeeze in an interest rate increase for a future rainy economic day, but they may have also unwittingly sparked a new wave of downside stock market volatility that they have been so tediously careful to avoid over the last several years.  At least so far, the stock market has voted down the Fed’s latest decision. But now that the chatter and uncertainty about whether the Fed is going to raise interest rates is behind us at least for the next few weeks, what exactly can we reasonably expect from capital markets from here?

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

The Worst-Case Scenario For The Fed

In case you haven’t heard, the U.S. Federal Reserve is meeting this week to decide whether to raise interest rates off of the zero bound for the first time since the financial crisis several years ago. Whether the Fed is or isn’t going to raise interest rates by one quarter of one percentage point on Wednesday has become one of the most overly tortured topics for discussion in recent memory. But while the market impact should be relatively muted – if investors aren’t prepared for the fact that the Fed may raise interest rates by now, they never will be – the stakes for the Fed itself are actually fairly high. The Fed desperately wants to raise interest rates, not because the economy is so strong but so that they can have a policy buffer in preparation for the next recession. But after too many years of waiting and coddling the markets, they are now very late in seeking to make such a move. And a misstep on Thursday could effectively close the window on their ability to raise rates going forward.

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


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