Uncertainty vs. a strong dollar. Worries of Fed inaction vs. numbers coming down. Slow the economy now, before it gets so slow so much that you can't cut again.
Yeah, that's about the litany that runs through my head when I hear about the trade-offs and reasons for the coming rate hike. It won't mean that much, just a stronger dollar, a more-likely-than-not collapse of some foreign currency and a much-needed slowdown to an economy that is already slowing down.
Of course, I am being facetious -- it means a great deal, all of which is being ignored by a futures-led rally off the pajama traders who think that what's good for Europe is good for us. Their stocks go HIGHER on a stronger dollar and ours go lower, but the traders just don't get it, and I guess never will.
I now say, though, after last night's speech by Janet Yellen we must accept the consequences of a rate hike in the next few months and find ways to make money, even as they will be fewer and even more far between after the hike.
In some ways, as my friend and colleague Matt Horween points out, Yellen played this out in a pretty intelligent way by creating uncertainty last week, which led to a decline in the stock market and then an ability to say there will be a boost without worrying too much about the stock market's decline because of the craving for certainty.
So now the question is, what are the real benefits to a rate hike?
What does better?
What does worse?
And that's been the problem from the beginning. If we just care about employment, then what we will do is raise rates until employment softens. But everything else is softening already. Does anyone really think that employment won't turn down, too? The layoffs that are being announced right now, often because of the strong dollar or lower oil, will accelerate. The market will take care of things.
But it doesn't matter. I accept the hikes IF people accept that after an initial burst of happiness about "certainty," numbers have to come down for the international companies, and if you can own them through number cuts, you are stronger than I am.
I just wish that someone ¿ anyone -- would admit that there's nothing good to come of a rate hike in a slowing economy.
But apparently that no longer matters. The "it's time, we have no choice" crowd has won, and all I can say is, if you can't beat them join them.