Tuesday, December 22, 2015
Small Fed Move and Big Questions | Agweb.com
Small Fed Move and Big Questions | Agweb.com: Well, the Fed finally bumped up interest rates from their 0-.025% short term rate band to 0.5%. This was 7 years in the making. They had to be patient, as an early move, or too aggressive move, has in the past screwed up budding recoveries. Now that the hike is a certainty, instead of a very well advertised possiblilty, the markets are free to complete their interpretations of what it means. The stock market threw a tantrum (as we anticipated). The speculators like the leverage of cheap money and now the cost of business could be starting to go up. There are studies which show corporate earnings pulling back a little after Fed rate hike cycles begin, so the equities might just be lower the P in the P/E to match new expectations.