In my previous post, I ended with the words, “Beware the Ides of March.” Well, if Janet Yellen and her friends on the Federal Reserve are to be believed, the Fed will raise interest rates on that day, and maybe several times after that later this year. Which leaves us with the uncomfortable thought of what happens to the bull market in stocks – and bonds, for that matter, too – that has been running virtually without interruption since the Fed dropped rates to zero back in 2008. Can the bulls continue to run without that prop?
If there were still any lingering doubts that the Fed would raise rates at its meeting next week, Yellen pretty much put those to rest in her speech in San Francisco last Friday. “At our meeting later this month, the [Fed’s monetary policy] committee will evaluate whether employment and inflation are continuing to evolve in line with our expectations, in which case a further adjustment of the federal funds rate would likely be appropriate,” Yellen said, adding that “the economy has essentially met the employment portion of our mandate and inflation is moving closer to our 2% objective.” That speech followed similar comments from several other Fed officials during the week. Continue reading "The Ides of March Approach"