Posted by kdadmin on March 15th, 2015.
I thought it a bit patronizing to issue a Friday the 13th blog post. The market did a good enough job for me. It essentially screamed, “AAAAAHHHHHHHHHH!!!!!!” with true Jason horror movie fanfare, dropped 13 points and stepped in a glut of “what if the Fed” nonsensical rhetoric.
The Federal Reserve has said that it is likely it will raise interest rates to a small (0.25%) degree this summer. How is this hard to understand? I mean, what does the Fed stand to gain by deviating from its long standing directive? The Fed is not like the Swiss National Bank, who recently dropped parity with the Euro and wiped out traders and brokerage firms around the world. The dollar is THE currency standard at present. It is not negatively affected, directly, by the devaluation of the Euro in the ECB’s version of our QE program.
So why would the Fed jeopardize that by making erratic moves? #russia anyone? Remember how Russia changed its rates over and over again last winter? What message did that send? Right. “We’re scared & don’t really know what to do.” Is that really the message the Fed wants to send? Hell no!
So, why has the market dropped by 80 points off it’s high a couple of weeks ago? Fear.
And what are we waiting for before we buy back in? Extreme fear.
Sit tight, people. First quarter earnings season is right around the corner. Remember the January, 2015 insanity? How about the October, 2014 ordeal? What have each of those earnings seasons had? A catalyst. Something uncommon that made everyone lose their minds. October had Ebola. January had falling oil prices. What fun will April bring? We’ll just have to wait and see. But fears about the Fed’s interest rate change is front runner.