Wednesday, December 16, 2015 – Fed Hawks Carrying a Wet Paper Towel as a Club Tomorrow?

Summary: At the end of the day, the Fed can talk all they want about how it is time to raise rates and start moving things back to normal. But the truth is, the last thing they want to do is upset the apple cart. Raising rates is for cooling down a hot economy and for fighting inflation. We have neither. Commodity prices are in a deflationary spiral, and a strong dollar would only add downside pressure to that group. How can they suddenly appear hawkish without scaring the markets to death? Simple. They can't. Whatever it is they do tomorrow, they will do it with an eye towards keeping the dollar in its current range, being friendly to stocks, and making sure the bond market doesn't collapse. I think everyone is looking for both bonds and stocks to collapse tomorrow. Which is why I think ultimately both of those markets will destroy shorts.