Wednesday, September 9, 2015

Stock Market Volatility: Its More Than the Fed; Its "Stick it to the Man" Politics

The stock market has been trading nervously, to say the least, but it is more than next week's Fed meeting. In fact I believe that it would be far more bullish for the Fed to raise rates than to leave them alone. When historians look back at the current epoch they will not be concerned with whether or not the Fed raised interest rates in September 2015, but rather they will look at the very volatile politics we are now witnessing. Simply put the economy is not working for most of the electorate and its mood is to "stick it to the man."

It is not only the rise of the protectionists Donald Trump and Bernie Sanders in the U.S.; it also involves the imminent rise to power of Jeremy Corbyn, a wacko leftist, in the British Labor Party and the growing popularity of the the rightist Marine Le Pen in France. I would note that solving Greece's financial difficulties is a walk in the park compared to the challenge of the refugee crisis now facing the EU. Financial problems are more easy to deal with than cultural issues. The Eurozone can fail on the immigration issue.

In the U.S. the rise of Trump and Sanders means that passing of the Trans Pacific Partnership deal now being negotiated just might not pass when it comes up for an up and down vote. Don't count on the Republicans to pass it. They are squishy just like most politicians.

Thus it does not matter what the Fed does next week, volatile markets will be with us for awhile.

No comments:

Post a Comment