Bears were caught in the ringer — what a stretch! — when they were saved by the bell on Monday. Stocks should continue higher today, but the effect may be muted because Yellen is scheduled to bloviate and obfuscate on Wednesday. The investment world will be on pins and needles until then — until the momentous announcement is made that the Fed is going to do what it has been threatening to do for years. The question Fed-heads should be asking themselves is, What next? Here’s an exchange I had with Shawn Brown of Shawn Brown & Associates in the Rick’s Picks forum that may shed some light on this:
“You’ve been steadfast (correctly so) about the Fed’s inability to raise rates for years and years and years. With only a couple days left to change your mind, will you? Embracing a measly 25 BPS increase in the Fed Funds Rate surely won’t cause financial Armageddon 2.0, will it? It seems farcical that we’ve come to this, namely the smallest incremental raise tumbling the house of cards, again. This time though, if the house is about to be toppled, no TARP, TALF, Twist, or QE program will be large enough to fill the hole blown wide open by the quadrillion in derivatives that’s been transferred to the IOU column of US Taxpayers. Will the head in the sand crowd go quietly after realizing their kids’ kids’ kids life savings have been pledged to repay shady bets on flimsy credit backed securities? What about this seemingly remote possibility that they dovishly pass through the 25 BPS and massive capital flows crash onto US shores looking for a new home? The interest rate complex flattens dramatically along with CAP rates compressing in commercial real estate and equities enjoy a blow off top the world has never witnessed? This made for Hollywood ending has about 3 Delta but you’ve made fortunes owning those FAT Tails, haven’t you?” SB
&&&&&&
The whole will-they-or-won’t-they farce grew too stupid to care about, Shawn. I’m ready to concede that the Fed will at least attempt to walk the walk with a 25-basis-point hike before the year ends. But no one actually expects real, actual, ‘sincere’ tightening, and so the question becomes: What will they do next? My guess is that the Fed will segue into ‘will-they-or-won’t-they-do-it-again’, and that the stupid game will continue until the stock market crashes, mooting the question. RA
With a Dow/DuPont merger looking to be a slam dunk, let’s face the hard facts of life here.
The move from Oligarchy to Feudalism has begun!
Come on man, if ever there was a merger for the DC crew to play the Sherman Anti-Trust card on, this is it.
But the .01% have Carte Blanche to do whatever the hell they please.
The government that is supposed to represent us is simply bought off with a pitifully small bribe.
You and I count for less than nothing now.
We are now seen as Serfs and Chattel.
As property taxes perpetually rise, and real estate values for the average schmuck perpetually fall, in the long run any property not owned by one of the New Nobility will be owned by local governments via tax liens.
I see this already starting to play out in some of the old industrial towns in the North East.
So our Future is Feudal.
It’s a Done Deal.