Fed Raises Quarter Point

Friends 

The Fed did indeed raise the Fed Funds rate a quarter of a point today. That takes the rate to 1.25% -1.50%. In addition, the outlook for next year is 3 quarter point rates hikes that would take the Fed Funds rate to 2%-2.25% by the end of 2018. By the end of 2020 they see a Fed Funds rate another point higher to sit at 3%- 3.25%. Of course, you know what they say about best laid plans. On the inflation front, the Fed is estimating a 1.9% inflation rate for next year and about 2% for the following few years. Again, take Fed predictions with a grain of salt. They’ve been wrong a time or two in the past. Nevertheless, if the Fed is correct, a stronger economy with muted inflation (thus modest interest rate increases) could set the stage for further stock price advances over the next couple of years. I advise you to take that last surmising statement with a very large grain of salt. 

As for today’s price action, stocks were mixed. By the close, the Dow Jones Industrial Average was up 80 points to close at 24,585. The S&P 500 was down 1 point to finish the day at 2,662. Gold was up $15 (take that Bitcoin) to trade at $1,257 per ounce, while oil was down $.49 to trade at $56.65 per barrel WTI. 

With the Fed announcement behind us, now traders’ attention will turn to the tax plan. I’ll leave it at that for the time being. 

Have a nice evening everyone. 

Copyright 2016 Carlton, Hofferkamp & Jenks Wealth Management, LLC. All Rights Reserved.

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