Timing of next rate hike makes no difference
by Mark Hulbert
Ready for today’s investment challenge? Give a plausible argument for why the stock market should have plunged earlier this week upon learning that the Fed may raise rates at its June meeting.
I seriously doubt you can come up with one; at least none of the economists I have spoken with in recent weeks was able to do so. On the contrary, each told me that the timing of the Fed’s rate increase is irrelevant.
Typical were the remarks of John Graham, a Duke University finance professor: “I am hard pressed to come up with any rational valuation model for equities in which the difference in three or six months in the timing of an increase has a material impact on stocks’ fair value.”