Fed Day Is Here

Today is the day. After nearly 10 years, the Federal Reserve is set to raise interest rates later today (here’s my post on the last rate hike). The announcement will come at 2 pm. Wall Street and the Fed have almost continuously overestimated the need for interest rates to rise. But this time, it’s real. According to the futures market, however, there’s still some room for doubt.

I’ll put it as easily as I can. The Fed said it won’t raise rates until X happens. X happened. So that’s why I expect rates to go up.

Here’s the effective Fed funds rates for the last seven years. It’s averaged 0.128%. That means you’ve made less than 1% combined.

Bear in mind that rates aren’t going up much. Interest rates will still be below the rate of inflation. In fact, they’ll be below inflation for quite some time. Perhaps two more years.

The government reported today that industrial production fell 0.6% last month. I think it’s accurate to say that the manufacturing sector has been in a mini-recession for the last several months.

By the way, it’s one of the biggest myths you hear that “America doesn’t make anything anymore.” That’s flatly untrue. In reality, America is a manufacturing powerhouse. The difference is that fewer people do it.

Yesterday, the stock market finally delivered back-to-back gains. This is our first two-day winning streak since the beginning of November. That’s one of the longest such cold streaks in history.

Also, after today’s closing bell, Oracle will report earnings.

Posted by on December 16th, 2015 at 12:03 pm


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.