Market Talk – September 12, 2015

It was a mixed session for Asia yesterday after what has been a very volatile week. The talk remains as to what China’s next move would/should be and “if” the Fed were to move next week. Not just in Asia has this been the most awaited Fed decision in years but it has been the hot topic just about everywhere. It was a clearer picture for core European Stock Indices with all closing lower on the day with 1% declines. The US did open lower but has rallied back up.

Next week’s long-awaited Federal Reserve meeting may not spur a wild market reaction, even if the central bank hikes rates for the first time in almost a decade. Economists are about equally split on whether the long-awaited move will come, though futures market trades are pointing to at least one more month of the Fed delaying its 0.25 percentage point.

The key that is really important is the trend. There is no question our model has been pointing to 2015.75 as the change in trend for interest rates. The Fed has been backed into a corner for unless interest rates rise (“normalization”), retire funds are doomed. The Larry Summer approach is of course one that benefits banks, not the population. He envision punishing people for saving money with charging them a tax (negative interest rates) to keep hoarding cash.

Therefore, we are not looking a just a 0.25% hike in rates, we are looking at reality hitting the Fed in the face. Do they take the irresponsible approach of Larry Summers? Or perhaps they realize you cannot punish people for existing and trying to save for a rainy day. The Fed will raise interest rates for they have no choice. If not next week, they can do it at any meeting monthly and they can call an emergency meeting any time as well,