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June 12, 2018 | The Silver Lining for Fed-Watchers

Rick Ackerman

Rick Ackerman is the editor of Rick’s Picks, an online service geared to traders of stocks, options, index futures and commodities. His detailed trading strategies have appeared since the early 1990s in Black Box Forecasts, a newsletter he founded that originally was geared to professional option traders. Barron’s once labeled him an “intrepid trader” in a headline that alluded to his key role in solving a notorious pill-tampering case. He received a $200,000 reward when a conviction resulted, and the story was retold on TV’s FBI: The Untold Story. His professional background includes 12 years as a market maker in the pits of the Pacific Coast Exchange, three as an investigator with renowned San Francisco private eye Hal Lipset, seven as a reporter and newspaper editor, three as a columnist for the Sunday San Francisco Examiner, and two decades as a contributor to publications ranging from Barron’s to The Antiquarian Bookman to Fleet Street Letter and Utne Reader.

The stock market was already brain-dead, but it’s no longer even twitching sporadically as traders prepare for what promises to be a less-than-momentous announcement from the FOMC on Wednesday. Wall Street is expecting a rate hike of 25 basis points, which would put the fed funds rate at 1.875%  That’s the exact midpoint of the target range of 1.75 to 2.00 percent, making it even less likely that the markets will react much.  Even so, we should never dismiss the possibility of a wacky response no matter how boring the news.  The ostensible excuses for the rate hike will be that employment is strong, inflation moderate and consumer spending lukewarm. However, the actual reason the Fed has been raising rates is to be in a position to lower them when the economy weakens. This seems unlikely to occur unless catalyzed by falling stock prices, which would create more urgent reasons for loosening than the Fed could handle. The silver lining for investors, at least as far as one could surmise from the financial pages, is that this bull market will last forever.

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June 12th, 2018

Posted In: Rick's Picks

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