Hugh Johnson Fed Quotations

If the Fed raises rates three times, they're not doing it just to have fun. Life is good.

I think what the half-point cut showed was that the Fed for the first time appears to be taking the situation very seriously. I think investors are also still mulling the move and thinking what is it the Fed knows that they don't know. Could it be worries about a double-dip and deflation? It's this uncertainty, among other factors, that's the reason why we're down today.

It was almost a sure bet that the Fed was going to raise rates in June. Now it's almost a sure bet, say 50-50 at least, that they won't move in June.

The biggest risk in 2006 is that the Fed will be seduced by worries about inflation into raising rates too high. A lot depends on what the 10-year does and while I would hope that they would take notice that it's going down in yield, the question is whether they will take it seriously or dismiss it.

It's a migration toward value as a reflection that investors believe the growth rates of earnings are slowing. It will continue until investors are convinced that the Fed will take its foot off the break, or reduce interest rates.

After seeing these reports, it's likely the Fed will...raise rates at the measured pace the market is used to.

The focus has been on earnings, and when you get something like Aetna, then that's going to help the market. But one of these days, that focus is going to shift to inflation and interest rates. And the Fed is going to have to get it absolutely right in order for this market to manage even small gains.

The conditions for the restarting of the bull market, or the start of a new bull market, which is how you should look at it, those conditions do not exist. Not yet, and that's why the markets went down yesterday despite what the Fed said,

The combination of a decline in oil prices, however slight, and some fairly upbeat comments (by Fed officials), may have led Fed watchers to conclude the Fed may raise interest rates at its meeting in May, and then stop.

It's a reasonably accepted conclusion that the Fed will raise rates in both June and August; that's what the market has discounted. I don't know if Friday's employment report will change that, no matter what it says.

This market is trying to rally. If the Fed reduces interest rates by 50 basis points, it will touch off a rally, but if we get a rally it will be guarded.