So are they going to raise the rate?!?!?!

[HawgWild]

What's the big deal? Is .25% really that bad? Didn't they say that the budget Sequestration of 2013 would be so onerous that no way Congress would let it come about, but it did and the sun came up the next day.

DoubleLine Capital founder Jeffrey Gundlach warned Friday that an interest-rate increase by the Federal Reserve could lead to more market turmoil after this week's massive selloff in high-yield debt.

In an interview with Reuters, Gundlach likened the selloff in high-yield debt to the 2007 financial meltdown, adding that if the Federal Reserve met Friday, it wouldn't raise interest rates.

"People are too long credit and the credit is melting down and the stock market is whistling through the graveyard. It is so similar to 2007, it's scary," said Gundlach, who oversees $80 billion at the Los Angeles-based DoubleLine Capital.

Market strategists widely expect the Fed to raise interest rates for the first time in nearly a decade when it meets next week.

[Old Tusk]

Any increase in the rate will draw liquidity out of the market. I've seen some rather large estimates of
liquidity draws for just a .25% increase. However, that assumes they truly raise the rate and don't do something else and call it tightening.

[BigBrandonAllenFan]

http://www.marketwatch.com/story/ignore-the-fed-when-it-comes-to-gold-2015-12-10

Opinion: Ignore the Fed when it comes to gold

The yellow metal moves in line with sentiment, not the central bank's monetary policy

It has been drilled into the public's mind that gold prices will drop if the Federal Reserve raises official interest rates. That has become the "latest and greatest" new perspective in the market.

But does anyone remember the last accepted view in the metals market and how that turned out? Yes, that one was about quantitative easing (QE) supposedly causing gold to skyrocket to the moon. How did that work out? Well, when you consider that gold and silver tanked not long after QE3 (the third round of economic stimulus) was announced, should we now consider the "Costanza approach" to market analysis I have been touting? That is, doing the exact opposite of what you think is right. Does it mean QE3 "caused" gold and silver to drop, since they fell when QE3 began?

Go back two years and consider what you would have thought if I had said QE3 would cause gold to decline. It would not make any sense, would it? I still don't think it makes any sense even though some see a correlation. I want to state this as clearly as possible: QE3 did not cause gold to fall in the same manner that QE would not cause gold to rise. QE is a non-factor when it comes to gold and, believe it or not, so is the Fed.


Read: The next question facing the Fed is whether there will be a rate hike in March

Yet, many still want to attribute Fed action as the driver of gold and silver. And, to all those who actually invest this way, I wish you luck, as you will need it, along with your "hope."

People continue to pore over Fed statements month after month to glean what they can about the direction of metals. Yet, not only has it been a useless endeavor, the market even made fools of those who attempted such "analysis."

A little over two years ago, I was warning against trying to use Fed statements to trade metals. Specifically, I noted that, as the Fed was publishing just about the exact same statement month after month (without changing commas in some instances), people were trying to figure out the price direction for metals.

But what was so interesting was that we would see 10%-15% moves in silver in both directions right after the Fed announcements. Yes, the exact same Fed announcement supposedly caused 15% price movements in silver in the exact opposite directions. One month, the statement would supposedly cause silver to rally 15%, and the next month the exact same statement would supposedly cause silver to drop 10%. Makes sense, right? Yet, many still continued to read those statements month after month, not even recognizing the folly in such useless endeavors.

Imagine the backlash I received when I began to publicly suggest shorting silver not long after the QE3 announcement was made. It was as if I were speaking a different language. One could even consider it akin to blasphemy. I mean, to consider trading against the Fed?! Yet, as we now know, silver lost over 50% of its value from that point in time, and it was clearly the correct call.

But people still did not learn their lesson. Even to this day, they continue to view Fed action as the major factor to consider when attempting to discern the direction of metals. It astounds me how investors never learn, and simply accept what is suggested to them by those writing articles, or those speaking on television, as gospel. Have we lost the ability to think critically? Have we lost the ability to question what we are told based upon actual facts? Or have we simply adopted the "Foghorn Leghorn perspective":

"Don't bother me with facts, son. I've already made up my mind."

So let's look at recent events. Again, many believe that the Fed raising rates will be the death knell for gold. But wait a second. This past week's jobs report was quite good, which increased the market's expectations that the Fed would go through with their intended rate increase. So gold must have dropped on Friday, right? Well, gold rallied over 2%, or $25, on Friday. So, it was not exactly what was expected based on the common conception of the metals driver. Is the "Costanza approach" starting to sound more appealing?

Now, I am not saying gold will or will not drop when the Fed makes its December announcement. We will follow the market-sentiment indications at the time to tell us what to expect. But I can assure you that the substance of the Fed's statement will not provide us dispositive clues as to the main direction for gold.

I know many of you think I sound like a broken record already, trying to explain that market sentiment is what drives metals, and it is not affected by exogenous events in the manner most believe. Those who have come over to the dark side with us have done quite well over the past number of years. Those who have been fighting us have not. So rather than continue to say the same thing over and over, I will simply post the perspective in R.N. Elliott's own words:

"The causes of these cyclical changes seem clearly to have their origin in the immutable natural law that governs all things, including the various moods of human behavior. Causes, therefore, tend to become relatively unimportant in the long-term progress of the cycle. This fundamental law cannot be subverted or set aside by statutes or restrictions. Current news and political developments are of only incidental importance, soon forgotten; their presumed influence on market trends is not as weighty as is commonly believed."

Just something to think about.

[HawgWild]

"The Federal Reserve hiked interest rates for the first time in nearly a decade on Wednesday, signaling faith that the U.S. economy had largely overcome the wounds of the 2007-2009 financial crisis."

Now that wasn't so bad, was it?