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Fed Leans To Move As Markets Sleep

“History doesn't repeat itself, but it does rhyme.”

― Mark Twain

If a participant in a time machine was looking back in history and comparing the events of financial markets from 2016 to 2015, they probably would not be able to tell one from another, especially if they were comparing the actions of the Federal Reserve.

you might recall way back when, about 12 months prior, our inflation, oops, deflation fighting heroes (nobody knows which one these days), were debating on when they should raise interest rates. Should lift off take place in September, or December? Fast forward one year, during a policy speech in late August at posh Jackson Hole, Wyoming, Mrs. Yellen and her deputy, Vice Chair of the Federal Reserve Stanley Fischer, commented the case for additional tightening was strengthening.

It seems on the proportional scale of importance of the dual mandate, improved employment totals the last two months have more significance than piddling inflation figures. Fed fund futures show a quarter point raise moving to over 40% in September and over 60% for December. A key difference between last year and this year is, in case you forgot, this little event called an election. We all know the Fed never takes into account politics when it makes its policy decisions. Of course it doesn’t, why would anyone think such a thing

In any event, markets continue to slumber on after the policy speech. Participants make the comparison between allocating capital to the United States, which saw second quarter GDP come in at a slow 1.1%, or other parts of the globe, where negative nominal interest rates are the central banks' prescription to fight the commodity bust and slack demand.

Very much like the similarity with Fed policy, in the markets, Carl Icahn and Bill Ackman picked up their disagreement about who is doing what with Herbalife (HLF), just like a few years ago. Bill says Carl will sell, Carl says Bill is wrong, he loves his position (even bought more yesterday).

Disclosure: Y H & C Investments, Yale Bock, and the family of Yale Bock own positions in securities mentioned in the blog post. Investing in stocks can lead to the complete loss of your capital. As always, on any company mentioned here, past performance is not a guarantee of future returns. Investing involves risk of losses on invested capital. One should research any investment and make sure it is suitable with your objectives, risk...