I keep coming back to this because I think it's interesting and at some point we'll likely understand why.
If I were the F_E_D and I held the same views that their policy has shown them to hold I'd have a different view of things. I do not share their views/policy, I believe their actions amount to corruption , free money for banks via stealth bailouts in the wide open through QE and the total debasement of the value of savings that the responsible people of the US have responsibly built up, they have been punished while wild, irresponsible speculators have been rewarded. However, I do believe that everything reverts back to the mean eventually.
However if I did share their views, the last thing I'd be considering right now is a rate hike. Macro economic data for the US has fallen off dramatically since Q3 2014 and especially through 2015, the perceived improvements in the economy which are ridiculous, just see Yellen's answer this week to the U6 unemployment rate question in the Senate in which she essentially says unemployment is a lot worse than the headline number, but the U6 metric (there are 6 metrics from U1 to U6) is not used as a headline print, it is however the most comprehensive version of reality and it's horrible.
The F_E_D hasn't been even close on their inflation forecasts which they need to see rise toward their long term comfort zone of 2%. This all leads me to believe that policy normalization has nothing to do with the economy and in fact will hurt it.
If there's no home borrowing and no Cap-Ex spending by corporations at ZIRP, why in the world would we imagine that home loans or Cap-Ex spending would pick up at higher rates of interest? The only spending that seems to be consistent is share buybacks to lift share prices and allow CEO's to collect bonuses while those same CEO's are engaged in a trend of insider sales.
If you don't get what I'm trying to point out, it is that there's very little good reason according to F_E_D values, policy and metrics to raise rates anytime in the foreseeable future, however I believe there's something else beyond "We have sat on ZIRP too long". I believe there's something they are more afraid of than damaging the economy. Perhaps they see the next recession coming and realize they are at max measures and need to create some ability to respond. Maybe this is a self-preservation thing, as many of you may or may not know, the F_E_D is not a Federal organization any more than "First Federal Bank of Texas", they are a quasi-corp/government oversight to a minimal degree with share-holders and all. The easiest way to put it in today's terms (because how the F_E_D got their powers is a very interesting history lesson and one that is shady beyond belief) might be that the US Congress who by the constitution is the only body meant to print money, has delegated the task and exclusive rights to print money to Bank of America. In return, there's minimal oversight by the government, thus all of the political bills like "Audit the F_E_D" because our own Congress who delegated this task doesn't have the legal authority to audit them which is amazing as everyone in America can be audited including the government, but not the F_E_D. There's some quid-pro-quo as the F_E_D remits money back to the Treasury, I believe Yellen said $500bn since the economic crisis started, but of course for the most powerful, unsupervised organization in the world, the potential for ill-gotten gains is astounding. For gosh sakes, the F_E_D gave banks inside information they traded on in 2012 and the investigation being carried out by the F_E_D, not an impartial party, has still punished no one and Congress can't even get an update on the investigation years later!
In any case the point simply being, they have some reason for needing to hike rates that I do not believe for a minute has anything to do with the economy having sufficiently recovered (in terms of F_E_D policy, not my own beliefs) and this morning's data conveniently gave the F_E_D 2 things they need to hike rates by their own definition, that's what has happened today.
Intraday though, it has been a bit dull for signals, although some are starting to pop up.
Other than damage that has already been done recently such as...
Today's intraday action hasn't been that exciting...
The Q's, while making some price gains, haven't had an especially interesting intraday charts as they approach intraday resistance.
However, that may be starting to change. The SPY would be the least exciting of those changes, but it is a change...
As for the IWM, this is where it gets interesting...
I've been going through potential asset/trade set-ups, but I think I'm going to need to pay a bit more attention to the broader market over the next couple of hours.
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