Back in November, I posted a series of blogs detailing three trading ideas for the end of Quantitative Easing. Since then, I’ve been asked about where to invest once the Fed decides to finally raise rates.
First off, I don’t think a rate hike is likely until late 2015 at the earliest. Europe is just now starting a round of QE in an effort to avoid deflation and promote economic growth. If the Fed hikes, interest rate differentials would cause a further rally in the greenback. That would hurt multinational companies, and potentially cause a reduction in job creation.
No one wants that.
The Fed manipulates interest rates in order to control inflation. With commodity prices in a prolonged downtrend, there is little reason to act any time soon.