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.

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.

Anticipation Is Worse Than Reality

We have seen this story before in the post crisis period. Bond yields start rising amid the swelling expectation that any of the following events are soon to take place: a long awaited sustained economic recovery, a sustained rise in inflationary pricing pressures, and/or a sustained rise in central bank interest rates. During each past episode, interest rate segments of capital markets struggle with the anticipation. But once the eventual reality finally sets in, these segments suddenly find themselves rallying and more than making up for any lost ground in the process. Today, investors once again find themselves experiencing the latest act in this repeated performance. And it is likely that events will play out similarly this time around too.

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

U.S. Stocks: Oh Behave!

The U.S. stock market continues to behave remarkably well. Such persistent resilience among U.S. stocks is notable for a bull market that recently entered its seventh year of largely uninterrupted gains since the quelling of the financial crisis in early 2009. And as long as the uptrend remains intact, investors are best served to respect it until warning signals emerge to confirm that definitive change in trend may actually be taking place. With this downside risk in mind, it should be noted that headwinds continue to accumulate for this market with each passing week, so investors are equally well served to avoid becoming complacent as we continue through 2015.

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


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