It's interesting to see all the attempts to game whether rates are raised and what the impact will be.
It seems to me that a lot of the CNBC pundits want the Fed to raise rates for basically Neo-Fisherian reasons best I can tell. '
http://lastmenandovermen.blogspot.com/2015/07/neo-fisherism-rbcs-brilliant-trojan.html
There's this sense that it's not normal to have ZIRP for so long. But can you really determine what's 'normal' abstracted from the actual economic and monetary context?
Inflation is beneath target so what is the impetus to raise rates?
Some in the Fed have said that they think the below target inflation is due to a supply shock, to a temporary drop in commodity prices. Still with the market so unsure wouldn't you rather wait to see inflation rise than just presume it will and possibly be dead wrong?
As for partisans, Democrats want the Fed not to raise rates.
http://www.politico.com/story/2015/09/janet-yellen-fed-interest-rate-hike-liberal-backlach-213571
The IMF doesn't want a hike until 2016.
http://money.cnn.com/2015/06/04/news/economy/imf-federal-reserve-rate-hike-2016/
But Republicans have bullied Yellen on not raising them already.
http://www.nytimes.com/2015/02/26/business/economy/house-republicans-press-janet-yellen-on-stimulus-campaign.html?_r=0
Obviously you can point out that Republicans have a better chance to beat Hillary in 2016 if the Fed raises rates as it could slow the economy while Democrats are better off with the reverse.
You could argue that the IMF is the tiebreaker in favor of the Dems.
But this is not exactly good optics for the GOP to be actively trying to slow the economy to win an election.
P.S. I have again bought some call options in Bank of America-ie a bet that BAC rises. I just think that it''s got its huge penalty to the DOJ paid off and it turned a profit last quarter, and that now the wind should be at its back.
The stock has also been very undervalued-because of the long term uncertainty it was under with DOJ.
It has gotten a slew of upgrades recently and I can't believe it doesn't' deserve to be higher than $16 dollars. If you have observed it the last few years, $15 is always its absolute bottom and it was there a couple of weeks ago. I don't see how it doesn't at least get back to $18 again.
I'm pretty sure in the long view I'm right but timing is a bitch as always and I've certainly gotten that wrong a lot.
A question is how it responds if the Fed
1. Raises rates
2. Doesn't raise rates.
There is a narrative, that all the bank stocks will be hurt if the Fed doesn't raise rates as they stand to gain from a hike.
I don't know. I mean if Yellen raises rates and the markets tank, are the bank stocks going to rise anyway or will they be dragged down with the rest?
I actually think that Karen Finerman may be right and that BAC will rise whether rates rise or not.
http://www.cnbc.com/2015/09/15/3-bank-stocks-to-watch-ahead-of-fed-meeting.html
I do worry though that if rates were raised and the larger market tanks it might get dragged down with the rest. However, technically I think it's more likely that it rises as it has very little room to fall as $15 is rock solid support.
P.S.S. I can't see the Fed raising rates with the market so fragile. We will finally know tomorrow.
It seems to me that a lot of the CNBC pundits want the Fed to raise rates for basically Neo-Fisherian reasons best I can tell. '
http://lastmenandovermen.blogspot.com/2015/07/neo-fisherism-rbcs-brilliant-trojan.html
There's this sense that it's not normal to have ZIRP for so long. But can you really determine what's 'normal' abstracted from the actual economic and monetary context?
Inflation is beneath target so what is the impetus to raise rates?
Some in the Fed have said that they think the below target inflation is due to a supply shock, to a temporary drop in commodity prices. Still with the market so unsure wouldn't you rather wait to see inflation rise than just presume it will and possibly be dead wrong?
As for partisans, Democrats want the Fed not to raise rates.
http://www.politico.com/story/2015/09/janet-yellen-fed-interest-rate-hike-liberal-backlach-213571
The IMF doesn't want a hike until 2016.
http://money.cnn.com/2015/06/04/news/economy/imf-federal-reserve-rate-hike-2016/
But Republicans have bullied Yellen on not raising them already.
http://www.nytimes.com/2015/02/26/business/economy/house-republicans-press-janet-yellen-on-stimulus-campaign.html?_r=0
Obviously you can point out that Republicans have a better chance to beat Hillary in 2016 if the Fed raises rates as it could slow the economy while Democrats are better off with the reverse.
You could argue that the IMF is the tiebreaker in favor of the Dems.
But this is not exactly good optics for the GOP to be actively trying to slow the economy to win an election.
P.S. I have again bought some call options in Bank of America-ie a bet that BAC rises. I just think that it''s got its huge penalty to the DOJ paid off and it turned a profit last quarter, and that now the wind should be at its back.
The stock has also been very undervalued-because of the long term uncertainty it was under with DOJ.
It has gotten a slew of upgrades recently and I can't believe it doesn't' deserve to be higher than $16 dollars. If you have observed it the last few years, $15 is always its absolute bottom and it was there a couple of weeks ago. I don't see how it doesn't at least get back to $18 again.
I'm pretty sure in the long view I'm right but timing is a bitch as always and I've certainly gotten that wrong a lot.
A question is how it responds if the Fed
1. Raises rates
2. Doesn't raise rates.
There is a narrative, that all the bank stocks will be hurt if the Fed doesn't raise rates as they stand to gain from a hike.
I don't know. I mean if Yellen raises rates and the markets tank, are the bank stocks going to rise anyway or will they be dragged down with the rest?
I actually think that Karen Finerman may be right and that BAC will rise whether rates rise or not.
http://www.cnbc.com/2015/09/15/3-bank-stocks-to-watch-ahead-of-fed-meeting.html
I do worry though that if rates were raised and the larger market tanks it might get dragged down with the rest. However, technically I think it's more likely that it rises as it has very little room to fall as $15 is rock solid support.
P.S.S. I can't see the Fed raising rates with the market so fragile. We will finally know tomorrow.
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