Everyone Done Freaking Out Yet?

Posted on Aug 1 2014 - 6:48pm by Sharpe Trade

Higher rates in the U.S. are eventually coming. I know it. You know it. They know it. We can all argue over exactly and precisely when it will happen. Will it be October 2014? Will it be a surprise? Will it come too later?  The first or second quarter of 2015?  Inflation expectations leading, and Yellen lagging? Static with seasonal impacts against further GDP revisions as “Taper” completes …

Blah blah blah.

I’m a guy that likes to keep it simple, and all I hear are the arguments over when not “if” we have higher rates.

How will it precisely impact the market? I can’t predict, because no one can predict. And anyone that tells you they can predict the future is either God, or a liar. Speaking of which, how did you like all of the bears thumping their chests yesterday jumping up and down claiming a gigantic victory because they’ve proclaiming a bear market since 2009, and we got a measly 2.5% downturn in the face of what had been a 7.55% year? Hey, congratulations guys. If you really enjoy celebrating mere static … hey … more power to you (No joke, saw a guy on YouTube come out of the blue, and act as if he’s been saying it forever … Who are you again pal?)

How will it impact the markets? As always, I try to guide my ship in a sane, Bayesian manner, and so with the data that I have in front of me? I will say that longer term I’m still bullish on the U.S., and bullish on the economy. I’m still called “stupid” or a “sheep” for that, and that’s good news. I’ll keep my BPS for consolation. I’m still looking for longs, but doing so like any sane professional would do … while controlling my risk. Medium term? Might get a bit stormy and bumpy as we saw yesterday, as every market participant tries to be the first guy through the door …

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