Game On!

We got our 1/4 point rate hike from the Fed and it seems it’s Game On for higher interest rates, barring a dramatic downturn in the economy. The markets are acting like it’s pretty much what was expected from the Fed, including their language on expected tightening in the labor market and increased inflation.

The stock market has had a nice run since the election and the bond market a significant drop. All, it seems, in anticipation of more economic activity and the tighter labor market the Fed describes.

We could get a “sell the news” reaction in stocks, which might be welcome by many after such a steep run, but it’s hard to see a correction turning into a rout. True, stock valuations are full, but the new administration’s business friendly policies have a tailwind in the improving economy and 2017 earnings will benefit from easy comparisons in many industries.

#fed #inflation #labormarket #economy

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