Young Research & Publishing Inc.

Investment Research Since 1978

Disclosure

  • About Us
    • Contributors
    • Archives
    • Dick Young’s Safe America
    • The Final Richard C. Young’s Intelligence Report
    • You’ve Read The Last Issue of Intelligence Report, Now What?
    • Dick Young’s Research Key: Anecdotal Evidence Gathering
    • Crisis at Vanguard
  • Investment Analysis
    • Bonds
    • Currencies and Gold
    • Dividend Investing
    • ETFs & Funds
    • Investment Strategy
    • Retirement Investing
    • Stocks
    • The Efficient Frontier
  • Investment Counsel
  • Dynamic Maximizers®
  • Retirement Compounders®
  • Free Email Signup

Wall Street vs. Main Street: Who’s on your side?

September 17, 2015 By Jeremy Jones, CFA

Will they or won’t they is the question weighing on the minds of many investors this week? In question is a Fed rate hike. Economists and strategists are divided. Financial markets say the odds are against a rate hike tomorrow.

If it is a question of if the economic data, higher rates are clearly justified. Even by the Fed’s own low standards, the economic data justifies a step away from emergency monetary policy. Unemployment is at the Fed’s target and while headline inflation is temporarily subdued due to falling oil prices and a strong dollar, the underlying trend of inflation remains near the Fed’s 2% target.

A hike tomorrow should be a done deal, but the fly in the ointment is apparently the recent stock market correction, the first of its kind in almost four years.

Though you wouldn’t know it based on the media coverage, the Fed’s mandate is not to prop up prices after every stock market correction (an event that historically has occurred about once every year). The Fed’s statutory mandate is to promote maximum employment, low inflation, and moderate long-term interest rates (the latter of which is often ignored by Yellen & Co).

The folk out arguing for yet another delay in the normalization of monetary policy aren’t thinking about Main Street. They aren’t thinking about you or the millions of other retired investors who have saved responsibly for decades only to be punished with zero percent interest rates. Nope, these folks have other motivations, many of which are likely focused on Wall Street’s bottom line.

When the likes of Lloyd Blankfein, Chairman and CEO of Goldman Sachs, Christine Lagarde, Managing Director of the IMF, Kaushik Basu, World Bank Chief Economist,  Larry Summers, Former U.S. Treasury Secretary, Paul Krugman, NY Times Economics Columnist all publicly come out in favor of further delay, you can be confident it is not to the benefit of Main Street America.

Savers, conservative investors, and those in or nearing retirement have paid for the sins of Wall Street long enough. It is long past time for Yellen & Co., to start normalizing interest rates.

UPDATE (9-17-15)

The Keynesian cabal’s recent calls for the Fed to stand down (see links above) apparently swayed Yellen & Co., away from making an infinitesimal increase in interest rates for the first time in almost a decade. The justification for the delay from Yellen was light on substance (global uncertainties were cited) and a clear indication to market participants that the Yellen Fed like the Bernanke Fed before it, remains a slave to Wall Street.

What are the implications of the delay in the Fed rate hike for you? Ironically, it may mean greater financial volatility and a more bearish outlook for risk assets. During her press conference, Yellen signaled that the Fed’s economic outlook hadn’t changed significantly and that most members of the policy setting committee still expected the first interest rate hike to occur this year. Until and unless that changes, the prospect of higher rates may keep a lid on stock market gains. I say may, of course, because a prediction of short-term stock price movements (even our own 😉 ) is nothing more than an educated guess.

Share this:

  • Email
  • Twitter
  • Facebook

You Might Also Like:

  • Is Musk Losing Wall Street?
  • The Most Crowded Trade on Wall Street
  • China Asks Wall Street How to Reform its Laws
  • Author
  • Recent Posts
Jeremy Jones, CFA
Jeremy Jones, CFA, CFP® is the Director of Research at Young Research & Publishing Inc., and the Chief Investment Officer at Richard C. Young & Co., Ltd. Richard C. Young & Co., Ltd. was ranked #5 in CNBC's 2021 Financial Advisor Top 100. Jeremy is also a contributing editor of youngresearch.com.
Latest posts by Jeremy Jones, CFA (see all)
  • PARTY’S OVER: Covid Booze Binge Coming to an End? - July 7, 2022
  • Avoid This Serious Tax Mistake in Retirement - July 6, 2022
  • Could Car Dealers Get Flooded with Cars Mid-Recession? - July 5, 2022

Search Young Research

Most Popular

  • Even Without Food and Gas, Inflation is Soaring
  • Avoid This Serious Tax Mistake in Retirement
  • Could Car Dealers Get Flooded with Cars Mid-Recession?
  • Red States Churning Out Jobs While Blue States Lag Behind
  • Time to Save, Troubles Dining Out, and Intelligence on Yellowstone
  • Here’s Why You Need a 15-Year Retirement Investment Plan
  • Vanguard Wellesley (VWINX) vs. Wellington (VWELX): Which Fund is Best?
  • Despite Inflation, Best Year Ever for Vacation Demand
  • The Power of a Compound Interest Table
  • “Talk to Me, Goose!” Time Flies in Top Gun: Maverick

Don’t Miss

Default Risk Among the Many Concerns with Annuities

Risk and Reward: An Efficient Frontier

How to be a Billionaire: Proven Strategies from the Titans of Wealth

Could this Be the Vanguard GNMA Winning Edge?

Cryptocosm and Life After Google

Warning: Avoid Mutual Fund Year End Distributions

Is Gold a Good Long-term Investment?

How to Invest in Gold

Vanguard Wellington (VWELX): The Original Balanced Fund

What is the Best Gold ETF for Investing and Trading?

Procter & Gamble (PG) Stock: The Only True Dividend King

The Dividend King of the North

You’ll Love This if You’re Dreaming of an Active Retirement Life

RSS The Latest at Richardcyoung.com

  • Dollar Strengthens as “Least Bad” Currency Today
  • Biden’s Economic Illiteracy and Shameless Demagoguery
  • “Shooter! Run!”
  • FOOD SHORTAGE: Drought in Italy Leaves Farmers High and Dry
  • BANKRUPTCY: Airline Restructures as Exhausted Pilots Demand Relief
  • BIDEN OUT OF TOUCH: Will America See Recession, or Worse?
  • Your Average Joe – a Man Out of Touch
  • “Talk to Me, Goose!” Time Flies in Top Gun: Maverick
  • The Dangers of Politicizing the Federal Reserve
  • FOOD SHORTAGE: Four Reasons Farms Are Suffering

About Us

  • About Young Research
  • Archives
  • Contributors

Our Partners

  • Richard C. Young & Co.
  • Richardcyoung.com

Copyright © 2022 | Terms & Conditions

loading Cancel
Post was not sent - check your email addresses!
Email check failed, please try again
Sorry, your blog cannot share posts by email.