IMCV - Talk Now - Hope Later

• The central bank seems to be hoping for a repeat of the market we saw in 2003-2004, where stocks fell aggressively before the first interest rate increase of the cycle but were able to hold their own thereafter.
• The end game to this talk now and hope later strategy is to create the conditions for a slowing economy by engineering a meaningful, but not irreparable, fall in stock prices ahead of the actual interest rate increases.
• With the world drowning in debt, if the Fed goes too far, it may have more trouble on its hands than it may be able to resolve quickly, even if it eases aggressively and restarts the printing presses.

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