Sweet Sixteen?

The Fed calmly raised rates another 25 bps on Wednesday afternoon, this for the 16th time in the last 16 meetings.  If someone was told that the Fed had raised rates 16 times in a row, that person would probably immediately ask if the Dow had gone negative but not in this environment.  In the twisted world of the current market, as long as the market knows what the Fed is about to do, the traders think that they don’t have to worry.  They may consider the Fed allowing the world to go about its business to be a good thing.  

In their statement, the Fed was sure to provide a way to pause but wanted to sound tough on inflation too.  The market didn’t really know which one to believe shortly after the announcement.  Predictably, the participants wanted to have the market go up and the Dow did go up a bit right after the announcement.  The NASDAQ had a bit more trouble led by the SOX, the Philadelphia Semi-Conductor Index.  The SOX by itself ended the day down about 2.5% and the NASDAQ Comp was down about 0.75%.  CSCO could be blamed for part of this and maybe partly the uncertainty that the Fed left in its statement.  As for the Dow, it managed another relative new high, that makes five days in a row.

The Dow had an unlikely hero today in GM.  The party in GM’s stock is almost comical with interest rates steadily rising and GM near bankruptcy.  But, the last few days the stock has jumped about 15% to about 26.50 after playing in the mud under 20 as little as a month ago.  For those of you who are arithmetically challenged, that’s over 30% in a month…Please, who’s buying this stock???

In other interest related news, the dollar wasn’t sure if it should believe the Fed was going to stop raising rates or not.  Initially, the dollar spiked but settled down during the day but in trading this evening, it is definitely higher.  One could speculate that it is Hoping for higher rates.  The precious metals were mixed today so they didn’t really know what to make of the Fed either.  So, don’t feel too bad if you (and I) don’t know what the Fed is trying to do.

What you should do is…

“Sell in May and GO AWAY” and Be careful out there.

Dow Industrials:  11,642.65  +2.88
RYVNX:   18.62
RYAIX:  22.06
TLT:  83.75
BEGBX:  13.49