Flying Below The Radar

Members of the U.S. Federal Reserve have gathered for their latest Federal Open Market Committee meeting this week. The fact that this meeting is not followed by a press conference makes it a sleeper, but it is still worth watching for the important signals that come out of this latest gathering of what are arguably some of the most influential and powerful people in the world. What can we reasonably expect and how might the markets react?

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Setting The Record Straight: Stocks, Bonds And The Fed

A common narrative is regularly repeated when it comes to capital markets. The Fed is raising interest rates and tightening monetary policy, which is definitively bad for bonds but should be good for stocks. This may very well be the outcome as the Fed continues to accelerate its tightening cycle and other global central banks get on board. But history suggests that an entirely different outcome is more likely. In the end, how this all plays out over the next few years will depend on two key factors in the underlying economy.

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No, This Fed Is A Hawk In Dove’s Clothing

The Fed is being misunderstood. Many investors continue to cling to the belief that the Fed still has their back. But that thinking is so 2016. The Fed is not a dove in hawk’s clothing as one author recently proclaimed. Instead, the Fed is a hawk in dove’s clothing. And this identity distinction has important implication for stock investor portfolios going forward.

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Remember Them?

Investors must be exhausted by the daily theatrics on the fiscal policy side. For what was once a headline dominating event in the latest Federal Open Market Committee (FOMC) meeting, this week has seemingly been relegated to being an afterthought. But the latest Fed gathering on June 13-14 that is immediately followed with a press conference on Wednesday afternoon is worth watching particularly closely. For not only is the Fed almost certain to snatch its second quarter point rate hike in 2017 and third in the past six months, perhaps more importantly it is expected to lay out the course for some important monetary policy changes in the coming months.

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The Fed Weathervane

Another day, another parade of speakers from the U.S. Federal Reserve headed to the podium. While their commentary is increasingly falling on deaf ears for the market, thanks to their seemingly boundless propensity to over-hint and under-deliver during the post-crisis period, not to mention the news competing for the headlines out of Washington, it is arguably more worthwhile than ever to pay close attention to what they are saying now that they are finally backing up their words with actual action on interest rates. With this in mind, it is also important to establish a baseline against which the path of future rate increases may be compared going forward.

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