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The Most Anticipated Decision On US Interest Rates By The Vaunted FED

The Fed's Open Market Committee is meeting today to decide whether it will go ahead and raise US interest rates or leave it unchanged...the US equity markets are of course anxiously awaiting the decision due Thursday, as this will decide the fate of the market's direction...

I am pretty sanguine about the Fed's decision and believe that it will raise US interest rate by a very small 25 basis point...

How will the markets react?

I believe that once the decision is announced, the markets will probably have a knee jerk reaction and drop...but the drop will be short lived...because the markets will realize that by raising the rate by a very modest 25 basis point, the Fed is actually signaling that the US economy is on a firm footing and that is a very good thing...Raising the rate will be a vote of confidence in the US economy and the US and Global markets will cheer and we should have a new bull run that continues into the Spring of 2016...

The interest rate raise will be offset by the precipitous drop in oil prices which by itself acts as a stimulus to the economy...readers of my blog may recall that last year I wrote a blog post just before the start of 2015 titled Market Predictions and Stock Tips for 2015 in which I offered the thesis that the drop in oil prices will act as another form of "Quantitative Easing" for the US economy. I continue to believe that this is still true and this OPEC inspired "quantitative easing" which I call QE3, will continue to act as fuel, in spite of the upcoming interest rate raise, which by the way, no matter how you slice it, will still be at historic lows...

In fact, if the Fed decides not to raise rates, then the markets may interpret that negatively, because that will signal that the US economy is still weak...which is certainly not the case!

Let's see how the events unfold...we don't have to wait long...

Best~

karim

DISCLAIMER: All postings made here are strictly for my personal record keeping and in no way, shape or form, am I even remotely suggesting others to follow my Buy and Sell moves. Trading options is definitely not for the faint of heart as one's portfolio can move up, or down, anywhere between 10%-30% during a single trading day. Feel free to follow my progress here, but PLEASE do not follow my moves. However, if, in spite of all my exhortations, should you decide to do so, be advised that you, and ONLY YOU will be responsible for any losses that you may suffer...In other words, the onus is strictly on you. On the other hand, if the move(s) result in a profit for you, I am open to discussing a split. ;-)

Disclosure: I am/we are long HALO XON, ZIOP.