ECONOMY With Dollar Rising, Fed May Spring December Surprise

Investors Business Daily ^ | 10/21/2016 | JED GRAHAM

[expat_panama]

As the Federal Reserve's long-awaited December rate hike approaches, the parallels with a year ago are both striking and a bit worrying.

The dollar is surging against other major currencies as the Fed gets set to tighten policy, even as other major central banks plan to keep their monetary spigots wide open for the foreseeable future.

Similar circumstances triggered a bout of global financial market turmoil at the start of 2016...

...strong dollar is a negative for U.S. multinationals...

...good news is that Fed policymakers also are on guard against a repeat of the global financial market turmoil...

...IBD'S TAKE: "Don't fight the Fed" is one of Wall Street's favorite rules of thumb, but it doesn't always work. The Fed started cutting rates in September 2007, 18 months before the stock market finally hit bottom. Visit IBD University to learn how to time stock purchases and when to sell, and read The Big Picture each day to stay on top of the market's trend.

The problem after the December 2015 hike was that the Fed signaled an intent to be proactive...

...Yellen's tone has shifted in a big way, emphasizing the asymmetric risk of raising rates too aggressively vs. going too slowly and letting inflation overshoot...

...with tighter U.S. financial conditions being a negative for the rest of the world, particularly emerging markets that have large amounts of dollar-dominated debt that becomes more difficult to service when the dollar rises.

Fed caution about how financial markets react to the December hike may also be warranted because of international developments, including the U.K.'s intent to formally begin Brexit talks with the European Union by the end of March and an Italian referendum ...

[Vaquero]

Depends on whose elected.

[ClearCase_guy]

The government will trash the economy if Trump wins.

[wastoute]

That has been my prediction. The Fed will punish us for electing Trump.

[Ken H]

Depends on whose elected.

Voters are choosing between a controlled demolition or a destructive implosion.

[2001convSVT]

“Depends on whose elected.”

Well said. One will take us off the cliff, into the abyss, and the other will get us to a late 1980’s, style recovery.

[expat_panama]

Good morning! 

Stocks are going back up --ok, up to where they were last week and in lower volume, but today's stock index futures are solidly optimistic.  Metals look good too --futures at +0.7% and gold/silver now sell at $2,269.69/$17.80.

This week's econ stats begin today:

9:00 AM Case-Shiller 20-city Index
9:00 AM FHFA Housing Price Index
10:00 AM Consumer Confidence

Lots of news out there:

Would Pres. Trump Bring on a Market Correction? - Adam Davidson, TNY
Stock Market Is Stuck In the Danger Zone - Michael Sincere, MarketWatch
Corporations Ignore Whistleblowers @Their Peril - Elizabeth Tippett,TNR
Does Fed Lead Banks on Rates, or Banks Lead Fed? - John Tamny, RCM
American Wages Are Rising at Last - David Cay Johnston, The Daily Beast
Obamacare's Ill, But Hasn't Entered Death Spiral - Jed Graham, Investor's
Obama Is Right About the TPP, Both Parties Wrong - James Capretta, NR
The Gap Between Economic Freedom and Practice - Reuven Brenner, AT
Republicans & Democrats Obnoxiously Get In Way - Wayne Crews, Forbes

[trebb]

The government will trash the economy if Trump wins.

And he will be in front of the People explaining exactly what is going on and who is responsible for it. It might increase any mandates he will have....

[jdsteel]

If US interest rates go up so will our dollar vs other currencies.

[ClearCase_guy]

That’s exactly what I think.

[Ken H]

I think the next 2 weeks will be the nastiest we’ve ever seen. Trump is a street fighter and he’s not afraid to get nastier than the dems.

[expat_panama]

That's what the title of the article suggested, and it makes sense because if U.S. rates go up then allll that money will come in for the big bux.  The problem is that it never happens that way:

 

In the past when rates stayed the same the exchange rate soared, and then kept soaring whiile rates went down, then when rates fell the exchdollar fell too and continued falling when the rates came back up. 

No connection.

[Aevery_Freeman]

Wow! Gold at $2,269.69 - Happy Day!

Just yanking your chain - no offense meant.

[expat_panama]

Wow! Gold at $2,269.69 - 

I meant "$1,269.69; but thanks --it's good to know that at least one person reads my posts ;)

[Diana in Wisconsin]

“Voters are choosing between a controlled demolition or a destructive implosion.”

Exactly. Just rip the band aid OFF and let’s get on with our lives!

[citizen]

“Depends on whose elected.”
Well said.

---

Yes, well said and correct.
But grammatically incorrect :)

I find myself being sloppy or auto-corrected into errors. I try to fight it but especially when typing on the phone it's easy to make errors.

VOTE TRUMP!!