Fed did as we expected

The Fed raised rates .25% and kept the language in their statement essentially inline as we predicted. If we had to lean one way we might say there was an ever so slight increase in their hawkish stance.

The following points should be noted:
* The Fed still sees robust underlying growth in productivity = dovish
* Aggregate spending despite higher energy prices appears to have strengthened = hawkish (the Fed is nervous that rising oil isn't slowing the economy as higher interest rates would)
* Core inflation has been relatively low = hawkish (could have said "well contained")
* The phrase measured pace was left in = even the Fed doesn't know what they mean by that anymore
* Pressures on inflation have stayed elevated = hawkish (this is the grandaddy of them all)

Remember, the main job of the Fed is to preempt inflation. All-in-all the Fed has given no indication that they are ready to pause. The market is liking the Fed's action today but we feel that this is a continuation of the relief rally. This rally can continue a little longer but we are skeptical of its sustainability.

___________________________________________________
The analysis, opinions and/or forecasts expressed on the Kcap Trading Blog (“KTB”) are for informational purposes only and should not be relied upon in making investment decisions. By using this site you agree that Kleiner Capital Management, LLC (“KCAP”) and its principals are not liable for any action you take or any decision you make in reliance on any content. Please be aware that there is no commitment by KCAP to update the KTB. Furthermore, there may be inconsistent timing and follow up (if any) of posts.
None of the information on KTB is considered individualized investment advice and should not be construed as a recommendation or solicitation to purchase any securities. Reliance on information provided on KTB in no way establishes an advisor-client relationship. Investors are encouraged to seek the advice of a qualified investment professional prior to investing funds.
Clients of KCAP, as well as the firm’s principals and other employees, may be invested in securities discussed at KTB. However, any mention of said securities is not intended to influence market conditions for the security to the benefit of KCAP clients and/or principals and employees. KCAP is not affiliated with any advertisers on this site and does not endorse any of their content. For additional information and disclosures, please visit www.kleinercapital.com.
The information on KTB has been furnished from sources we consider to be reliable, but no guarantee is made with respect to accuracy.
___________________________

Click Here To E-mail Comments