Hello monkeys,
Just as you all know, the possibility of an interest rate hike in March is very, very likely, and news just showed up about the two-day Federal Open Market Committee on Tuesday. Article
The Fed will release a statement on Wednesday, along with new economic projections, at 2 p.m. Eastern Time, followed a half-hour later by a news conference hosted by Fed Chairwoman Janet Yellen.
How will the markets react to this in the short run? I read on Investopedia that the market is likely to tank, but how likely? Especially as this article mentions that the financial sector will certainly benefit off of this rate hike.
My takeaway on this: Buy underpriced banking stocks right now, and short overpriced non-banking stocks. Sounds like a plan?
If the central bank strikes a hawkish tone, it could trigger a selloff in the market although Pavlik expects Fed Chairwoman Janet Yellen to keep her comments positive to avoid upsetting the market.
This is also I feel an interesting point to discuss; a tradeoff between the truth and keeping the market stable.
Meanwhile, President Donald Trump is expected to present his preliminary budget request to the Congress on Thursday, outlining his administration’s priorities. It will serve as a crucial test for whether the euphoria that propelled stocks to record territory in anticipation of tax reforms and ramped up fiscal spending under Trump is warranted.However, if his budget proposal fails to meet the market’s expectations, it could spark a major unwinding in positions, leading to a sharp drop in prices.
“Thursday could be the day the instant speed of markets crashes into the glacial speed of government,” said Cieszynski.
As reality settles in, inflated optimism is also expected to eventually wear off as investors come to terms with the complex work of rolling out tax cuts and implementing fiscal stimulus.
So what do you monkeys think? Can Thursday be the day that this bull run comes crashing down? With interest rate hikes and the above budget request coming in this week, it's certainly going to be a very, very interesting one. Source: Article
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