TwoFace's Blog : If FED raise rate...

It's less important to predict the reaction of Wall Street than it is to determine why the Fed would raise rates and if the rate raise is healthy, overdone or underdone, and what is driving inflation. If asset inflation (relative to USD) such as you mentioned stocks, bonds (and whether the bond is inflation protected or not), sugar, cotton, oil, etc, etc are demand based then rates should rise (as I believe they should raise rates earlier and ultimately let rates be market driven rather than government driven (but that's a different issue). A true Keynsian (which Bernanke seems to be) would attempt to keep rates as low as possible and instead attempt to raise tax revenue (which Congress would surely not like). So then perhaps the solution is to raise rates.

If history is our guide then rates will not be raised correctly and probably too late and we will see another asset bubble followed by another bust. My prediction is that the market will respond positively to a rate hike, but the initial reaction will be a quick selloff. No matter what we will get a rollercoaster ride as long as rates are artificially manipulated by the government.

As far as us compared to Japan, there are some similarities and many differences but if Japan tells us anything, it's that bear markets can last for a LONG time.

Welcome to P&P TwoFace!

Regarding raising rates, a step to increase rates would be a positive although there could be a brief negative initial reaction. If we are headed for something like Japan, then the FED won't be raising rates. So at some point we need to see the economy expand and compel the FED to begin raising rates. It would be good if the nominal increases in the interest rates consumer pays be smaller than the FED's discount rates increases.

Thur won't be any rate increases for the foreseeable future...in fackt...the Fed will take the discount rate to 0% within the next 12 mumphs. That's becuz the iron grip o'the great deflation will be taking over soon....in as little as 3 or 4 daze actually....depending on what the bulls decide to do. :-) Gold will fall to belowst $500 dollahs and ounce....Earl to belowst $20 dollahs per barrel...the U.S. dollah will become the werld's strongest currency in a flight to safety. The govmint will be able to continue to print money with no inflayshunary rammerfuscations becuz home vales that are 20 to 40% lower than they are now, tumbling commodititty prices, and stock values that are 50 to 90% lower than now will take a ton of U. S. dollahs out of the system. Whenst (not if) even AAPL stock is trading for $20 dollahs per share and nobody wants it the demand for the U.S. dollah will become even greater. I am the ONLY person on the planet who forsees the scenario I just outlined....but of course I am the only one who is "back from the future" *-) Therefore, whenst you see these truths transpire you won't hasta axe me how I knew. :-) 3J

As a sidenote: Historically and hysterically spekkin...periods of rising rates are actually GOOG for stocks. Periods of falling rates are actually bad for stocks....cept during the current time frame of course. But the current time period is not a period of "natural" market forces. Natural market forces will be taking over shortly tho *-) Just wanted to point out how fugged up thangs wuz :-)

Doomsday JOKER

JOKER, truly you jest! dated 11/2009 and predicts this to happen in next twelve months...

" ...Gold will fall to belowst $500 dollahs and ounce....Earl to belowst $20 dollahs per barrel...the U.S. dollah will become the werld's strongest currency in a flight to safety..."
"

It'll be "purty close" to a 12 mumph timeframe I'm wreckin. Physical gold is leading the gold stox...that's a negative divergence... so the gold stocks will begin getting trounced real soon and tumble in sympathy with the market indicies. USO still needs to trade thru 41.79 ...but it's intrusting how natgas is getting crushed. That "might" end up being the markets purrdickting a rollover into the abundant natgas sooplies in the U.S. (and everywhere else) as the "new alternative" sorce o'fuel. My take on natgas is a contrarian POV of course. Ifn you remember how thangs wuz in March with stox in general...it twas tuff to find buyers. It twasn't till AAPL hit $200+ until you found it cheep ....BSNBC too it tappears....gulp! :o Natgas can find no luv and it won't until it falls at least anudder 40% as measured by GAZ anyhoo,,,,UNG "slightly" less I guess. You'll see grossly overpigged natgas stocks like CHK hittin single diggies in less than 12 mumphs actually...so jot that down so ya doan fergit who sed it. *-) The U.S. dollah will simply become a safe haven whenst (not if) all 3 majer stock indimacies hit new 52 week lows....just as it twas befo. Nowadaze...in the era of compooterized trading.....thangs move much more quickly. The smart $$$ (corporate insiders) have been selling shares hand over fist into the rally. The ONLY moron still "doing his part" is ole Warren Buffoon. But like I sed....ole Warren is just a govmint shill. The evidunce o'that is too "obvious" to ignore. :-) 3J