{"id":7908,"date":"2019-01-28T20:26:40","date_gmt":"2019-01-28T20:26:40","guid":{"rendered":"http:\/\/zackspcg.com\/blog\/?p=7908"},"modified":"2022-02-26T13:07:23","modified_gmt":"2022-02-26T13:07:23","slug":"who-wins-with-fed-interest-rate-hikes","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/who-wins-with-fed-interest-rate-hikes\/","title":{"rendered":"Who wins with Fed interest rate hikes?"},"content":{"rendered":"

The Federal Reserve\u2019s decision to raise interest rates at the December 18-19 meeting last year was a source of contention for the equity markets. In fact, just about every rate increase last year (four total) was met with short-term volatility \u2013 a reckoning that the era of easy money was officially coming to a close.<\/p>\n

I\u2019ve argued many times in many columns that I do not believe the Fed has committed any monetary policy errors to date<\/em>. When the U.S. economy is growing at a firm clip, S&P 500 earnings are rising near +20%, and the unemployment rate is near a 50-year low, what do we really expect the Fed to do?<\/p>\n

Higher interest rates are warranted \u2013 particularly since the Fed is moving the fed funds rate from historically low levels. The idea that moving the fed funds rate to a ~3% neutral rate is somehow disruptive and dangerous is misguided, in my view. Think about it like a parent taking away their child\u2019s allowance once they become a senior in college. Three years in college is surely enough to possess the skills needed and the strong foundation to keep growing. The U.S. economy is the same way. Time to remove the punchbowl.<\/p>\n

For all the fear of rising rates, there\u2019s one sector that has benefited significantly in the near-term as a result: Financials.<\/p>\n

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