The #Fed has NEVER correctly forecast a recession.— Jim Rickards December 16, 2015
The Fed announced that it would increase its benchmark rate by one quarter of a percentage point. The major beneficiaries will be the banks and brokers, not people on Main Street. Runnymede believes the US and world economies will weaken in the quarters ahead. Our view is supported by Jim Rogers, a top investor, and Sam Zell, a real estate tycoon.
The Fed has a very different opinion. Who will be right?
“Right now as I look at the world, I’m not terribly optimistic. The American stock market has been in a bull market now 6 ½ years. In America we’ve had economic setbacks every 4 to 7 years since the beginning of the Republic and chances are we’re certainly getting closer to being due for some kind of correction, bear market even. And the next bear market is going to be worse than most of us have experienced because the debt is so much higher.
You know we had a problem in 2008 because of high debt, but since then debt worldwide has gone through the roof. I mean nobody has reduced their debt, no nation has reduced its debt since 2008 — the debt has gotten higher and higher. So the next time around we are going to have a very serious problem. What I’m saying is that I’m not racing around looking for markets. I’m afraid that the big picture is such that we are going to have more problems in the next year or two and being long most stocks or most investments is not going to be great.”
Source: Barron’s 10/15/15
Zell said this week in an interview on Bloomberg Television: ”Multinational companies are laying off workers, global trade is slowing and there’s a possibility China’s economy will falter," he said.
“There is a high probability that we are looking at a recession in the next 12 months,” Zell said on the “Bloomberg<GO>” program. “The strong dollar is having a tremendous impact on U.S. production and U.S. businesses.”
Source: Bloomberg 12/16/15
"I feel confident about the fundamentals,” Janet Yellen told reporters after the vote. "We have been concerned about the risks from the global economy. Those risks persist, but the U.S. economy has shown considerable strength."
“Americans should realize that the Fed’s decision today reflects our confidence in the U.S. economy,” Yellen said. “While things may be uneven across regions of the country and different industrial sectors, we see an economy that is on a path of sustainable improvement.”
Source: Federal Reserve
What are your thoughts on the US economy in 2016? Will the Fed continue to raise rates?