Dont Expect a Normal Reaction to an Abnormal Situation Video Blog

Published: Aug. 11, 2015, 12:19 a.m.

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\\n\\t* On Friday we finally got the Non-Farm Payroll numbers for July
\\n\\t* The consensus is that this reports indicates that an interest rate hike is inevitable
\\n\\t* This is the rate hike that everybody has been expecting and this report see
\\n\\t* The report is weak, relative to previous months, but slightly ahead of the consensus
\\n\\t* It seems like we are going in the wrong direction
\\n\\t* Labor Force Participation Rate is stagnant at the lowest in decades
\\n\\t* Q2 GDP was much lower than expected
\\n\\t* the Atlanta GDP Now Forecast for Q3 at 1% - a third of the official forecast
\\n\\t* If the Fed was not willing to raise rates last year, when the economy grew at 5%, why would they raise rates now?
\\n\\t* The Fed may have backed themselves into a corner where they have to raise rates
\\n\\t* If so, Yellen has already prepared the market for a tiny raise
\\n\\t* They recognize that the market is fragile
\\n\\t* It would be a more credible move for the Fed to not raise rates at all
\\n\\t* The market\'s reaction to the jobs data and the "certainty" that rates are going up
\\n\\t* The dollar sold off somewhat
\\n\\t* Gold rose slightly
\\n\\t* Higher interest rages are expected to be bullish for the dollar - Why didn\'t the dollar rise?
\\n\\t* The old adage, "Buy on the rumor, sell on the fact"
\\n\\t* If the Fed raises rates in September, it will be the most highly anticipated rate hike ever
\\n\\t* If the market buys on the anticipation of a rate hike, the actual rate hike will be the sell signal
\\n\\t* The market is telling us it has gained all that it is going to gain from any future rate hike
\\n\\t* The Fed will deliver much less in the way of rate hike than the market expects
\\n\\t* The reaction in the stock market was more interesting - The market was down again
\\n\\t* The longest losing streak in the Dow in about 4 years
\\n\\t* The fact that the U.S stock market is still falling indicates whereas the currency markets may have factored in a rate hike, the equity markets have not
\\n\\t* I have been hearing the refrain,"There is no reason to fear a rate hike!"
\\n\\t* This is a very naive to look at the market because there is no historical precedent for interest rates to stay low for so long
\\n\\t* These are not "normal" times
\\n\\t* More importantly, the market only expects a rate hike if the economy get better
\\n\\t* But now the data shows that the economy is continuing to slow down
\\n\\t* The crowd that believes a rate hike will not harm the economy should reassess their thinking
\\n\\t* Corporate earnings, already under pressure will be further weakened by an interest rate hike
\\n\\t* The consumer is barely surviving with rates at zero
\\n\\t* 2015 is probably going to be the weakest year of the entire so-called recovery
\\n\\t* If the Fed really begins to raise interest rates, what is going to happen in 2016?
\\n\\t* We will be in a bear market, the real estate market will drop and a recession will follow
\\n\\t* The Fed\'s only medicine at that point will be QE
\\n\\t* The truth is, the economy did not need the first round of QE and it nees QE4 even less
\\n\\t* This is going to be the mother of all money drops and all the people who have been saying,"The Fed was right!" are taking a premature victory lap
\\n\\t* Hopefully it will shock the Keynesians into abandoning central banking and central planning
\\n\\t* And finally embracing a real market recovery based on free market principles
\\n\\t* Those of us who have seen the writing on the wall will be rewarded in the investment front
\\n\\t* For having the fortitude to maintain our positions and not throw in a winning hand
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