The Most Powerful Weapon

Much to the dismay of the market, the Fed repeated its mantra that "some further policy firming may be needed." The end result left the "one and done" crowd moving toward the exit door in disappointment.

While the bulls are currently disappointed, they still have the most powerful weapon on their side - the "expectation" that the Fed will stop raising rates someday along with the common perception that the markets will soar in response. Even though I think that expectation is misguided, the fact of the matter is that higher rates have not sent equities tumbling. At least not yet.

Higher interest rates may very well be a ticking time bomb for obvious reasons (along with a host of issues like bird flu, dirty bombs, U.S. debt, housing bubble, etc.), but as the record will clearly show, the S&P 500 is up +14% since June 2004 when the Fed started lifting rates. Given Wall Street's disposition to sell investors on U.S. equities, you'd think they would point that out more.

For the rest of us, the very best thing about today is that we don't have to keep hearing about what the Fed is going to do next (even though some won't be able to stop themselves). If I could magically turn off all of the Fedspeak that dominates everyone's attention, I would do so in a heart beat. After all, I've never really made a dime listing to or predicting what the Fed will do next. I seriously doubt there are many who have with any consistency.

Let's hope tomorrow the herd gets back to work and focuses themselves on more important things. I know I will.