1. China Hard Landing – Last week China decided to devalue their currency which brings into question the strength of the global economy.
2. Football – With football season kicking off, there are a lot of Fantasy Football lineups to be filled out. Paying attention to the draft is much more important than a 0.25% rise in short term interest rates.
3. Off The Highs – The market has been range bound almost the entire year. The S&P 500 recently had a couple of brief scares below 2100 but Janet (Yellen) is looking for 2150-2200 before a rate hike can even be put on the table (Update: $SPY just went below 200DMA). The US equity market is currently in the 3rd longest bull market ever. Janet will not settle for anything less than gold (which is now also worthless).
4. The Plague – With a couple of cases of people catching The Plague in California and Colorado, Janet doesn’t want to further sicken the market by raising interest rates. See last year’s Ebola scare.
5. Commodities and Inflation – Prices of most commodities have been hammered the past few years (still waiting to see this tax cut passed on to the consumer). This weakening of commodity prices could be bad news if it is a sign that global demand is also weakening. The Fed has also been keeping their eye on inflation (deflation), but we haven’t hit the magic 2% inflation target since 2012.
6. Donald Trump – With Donald Trump leading the polls and dominating the news, this gives Janet the perfect distraction to kick the can until after the 2016 election. An even better distraction would be for Janet to announce her plans to run for President. I’d vote for her, but only if she agrees to nominate me as Treasury Secretary.
7. IMF Warning – Back in June, the International Monetary Fund (IMF) warned about potential risks of a Fed tightening. At this point, the Fed’s only job is to fall in line and listen to what the IMF says. If they can “fix” Greece, I’d swallow my pride and listen to them too.
8. Addiction – We are addicted to free money (and fast food). Once an addict, always an addict. From the federalreserve.gov website: “Low interest rates help households and businesses finance new spending and help support the prices of many other assets, such as stocks and houses.” Key emphasis on stocks.
9. Labor Market – The Fed won’t raise interest rates because we haven’t hit our full unemployment (moving) target.
10. The Ghost of 1937 – I know it sounds super scary. Anyways, about 80 years ago the Fed tried to pull off an unsuccessful rate hike after the Great Depression causing another recession and a 50% market decline. Good enough for me. If it happened 80 years ago it MUST be exactly the same today because nothing has changed since then.
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Bonus: In case I’m wrong and the Fed does raise interest rates at least we know they can always lower them again when things turn to shit.
Courtesy: 330Ramp.com via Zerohedge
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