Fed. Rate Hike Coming Soon.

The Federal Reserve has started floating the notion of higher nominal interest rates soon.  This has the consequence of strengthening the market expectations and shifting individuals out of their positions if they are lacking confidence.

The notion of a Fed. rate hike has caught many people by surprise, as many assumed that with Sovereign debt levels so high, the US will not normalize rates. Unfortunately this prediction will turn out to be untrue.

The level of debt in the US is substantial, but the US is still the global reserve currency.  The Fed. Reserve has most likely, to a large degree, been kept at bay on their interest rate hikes by politicians and foreign policy (foreign central banks, diplomats etc.) who are desperate to subvert the global economy for their interests.

Something which isn’t (yet) fully understood by the public is that the Federal Reserve is a private institution with a private mandate.  The mandate is mainly to banks and private shareholders. They have been playing ball with politicians for a while as everyone has to comply with politics to an extent.  The Fed. wants to hike rates desperately, and they know it is needed.

US equities set to shock to the up side:

This rate hike is going to cause significant volatility in the stock markets globally, and will likely cause the US markets to show weakness.  I propose, however, that US Equities will not crash (as many people predict) but will actually catch people with margin short positions out.

It may be 12 months out but there will be a tremendous short squeeze at some point.  That squeeze will break the back of the naysayers (in the equities space) and will usher in a frantic bull market as people scramble to take a piece of the yield.

US Dollar prophets of doom most likely to get their fingers burned:

Note, the US Equity weakness is also coinciding with doom and gloom about the US Dollar. We have the economic equivalent of the 2016 “Mayan End of Days” prophecy in the US Dollar space in 8 days.  Figures such as Peter Schiff, Ron Paul and Vladimir Putin have been proclaiming that the US Dollar will collapse.  If this is the case then we should all hiding out in caves, or in reinforced concrete bunkers with guns, food, water, and medicine.

Anyone claiming that the US Dollar is going to collapse without going off the grid is full of it.  It would be an absolute disaster for the global economy and would lead to bedlam. No international interests are aligned toward a US Dollar collapse, with exception of Russia (maybe).  There is serious need for a more sensible global reserve currency, but a scorched earth economic policy like actively pushing for a US Dollar collapse would be disasterous for everyone.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s