When fed hikes S&P 500 goes up!
Just remember, when the fed hikes the S&P 500 ( SPX , quote ) will go up! If we are in a place where the fed begins to hike rates, albeit this is different formally than removing stimulus than the economy is on better footing, commodities are rallying and they are just as worried about inflation as they are growth.[caption id="attachment_64360" align="alignright" width="300" caption="The Federal Reserve U.S. Treasury Department building in Washington D.C."] [/caption]
This is a great backdrop for markets and markets will not be buckling under as it happens.
The chart attached shows recent Fed hike history and the impact on the SPDR S&P 500 ETF ( SPY , quote ). Some periods are frothier than others and all of them need to be reviewed within the context of where global economy was at the time and where we were relative to the previous fire the Fed has put out. Meanwhile speaking of commodities, QE should be having a greater impact. It's not.
QE1 was bullish, QE2 = the top in Gold and led decline.
QE3 has proven to be the signal to sell commodities. In other words, "it's not working fellas".
Commodities are down 10% from QE3.
All signs point to them going lower from here.