Forget about the long-term for a moment – there are some crazy challenges on the horizon. Think only about the short-term – the next 6-12 months, between now and the 2020 elections.
Yesterday, the Federal Reserve gave the green light for investors to position in RISK assets, by announcing to the world that it will not be raising interest rates.
Talk about a complete change of tune: in October the Fed said we’re a “long way from normal” in terms of rates, suggesting that they were preparing to raise interest rates. But then, after the stock market dropped 20%, there was talk of zero rate hikes or even rate cuts this year. So who’s really in control here: the Fed, or the stock market?
The FED is utterly confused right now. Less than 4 months ago, Chairman Powell told the world that America’s economy could withstand much higher interest rates, but the markets had other ideas.
When interest rates are artificially low, nothing can stand in the way of stocks, it appears.