It's Obvious the Federal Reserve Still Wants to Send Stock Prices Ripping Higher

 | Mar 15, 2017 | 2:47 PM EDT
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With a Trump stimulus plan of some sorts lurking, the Federal Reserve seems just fine doing its part to keep the stock market red-hot.

At least that is the overarching takeaway in the early going from the Fed's latest decision on interest rates. While jacking up rates to a still accommodative level, the Fed said it still sees "gradual" adjustments in Fed policy moving forward. For those that have started to take some money off the table amid concerns of a stronger pace of rate hikes this year, this statement should nudge them to put their profits back to work in the market.

Some other early analysis:

  • It was good to see the market respond favorably to a rate hike decision and comments from Yellen during her presser. Although moves in coming sessions will be more telling as to the market's mood, a pullback on the news would have begun to raise concerns on the post-election rally.
  • In light of the ongoing easy policy of the Fed, it may be time to buy some inflation protected bonds or shares of companies that pay rich dividends (that counteract inflation). This Fed seems OK with letting inflation bury its tentacles in the economy, so it's best to be prepared now.
  • How the stock market and labor markets are doing suggest Yellen could be asked to stay on as Fed Chair by Trump. The president has never been too kind on the Fed (or Yellen), but she is the evil the market knows and trusts -- and which continues to guide policy that the market understands.

In short, we don't need a Rex Tillerson type at the Fed -- closed off from reality.

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