Oh yeah, I remember I was #TeamSept big-time, and I was wrong about that. Still, I think on the whole this is good news - and I'm not gonna lie, it's fun to watch the Zero-Hedge-ists frantically moving the goalposts.
It's gone from "they'll never end QE3" to "they'll have to reverse the taper" to "they'll have to restart QE" to "they'll never be able to hike" to... I dunno, where are they going to move the goalposts to next? I feel like in a few years' time when Fed Funds is at 2-3% and they decide to cut 25bps it'll be "SEE WE TOLD YOU" and everyone else will be like "you've been wrong for the last 300bps, stfu".
There's always a certain set of doomers who just can't accept that it's not 2007 any more.
Moody's chief economist:
"Never before has the Fed hiked rates with the junk bond spread wider than 700 basis points, and that’s usually an indication that we’re in the later innings of this game.
Even if we go to the S&P 500, throw out all the energy companies that got hammered in the third quarter, the remaining companies in the S&P 500 showing year-to-year sales growth of less than 1%. I would think that the upside for interest rates going forward is quite limited." (Source: Moody's chief economist, John lonski)
Citi: US faces 65% probability of recession in 2016.
Billionaires
Sam zell- recession likely in 6-12 months
Carl Icahn- big bubble in us stocks
Nobel prized economist
Robert shiller- huge overvaluation
This hike is simply a gesture by the fed to instil confidence to the markets, if confidence in the fed is lost, so goes the us currency.
Your right, this ain't 2007 anymore. Never was there in history that we have a such a weak recovery on the back of unprecedented stimulus and ZIRP. Every four to eight years, there is always a correction, it's 7 years in this recovery cycle and the fed only did a trivial raise so late in the recovery cycle. Never once in our life time, the fed deliver a hike so late in the game. We are soon overdue for a correction and How will the fed react?
It is inconceivable to me why would anyone still believe in what the fed says esp since the last recession. they still predict stable growth in early 08 when the economy is already on the brink of recession in late 07. It's so plain obvious the fed will only talk the economy up for if they say anything negative. They r worried It may become a self fulfilling prophecy for market participants and business will tighten their belts and inadvertently turns into a recession.
Ps: Your a nice guy and the things u share here is great for starters, just that we may not see eye to eye on the macro outlook. I will let the debate on free markets ideology/ Keynes vs classical school of economic thought to rest since you have no answers to it. But how about these legit claims from professionals and ultra rich. What's your take, shiny things.
