Ken Tower Fed Quotations

Unless we get a negative surprise on a piece of economic data that's really out of the ordinary, then it's going to be a subdued week with the Fed meeting right around the corner.

I think the question the market is struggling with is whether we are concerned about inflation and too strong an economy, or if the Fed is raising interest rates too much and cooling things off. So we have a little pause in the market today as it tries to work this question out.

I think there is a wait-and-see attitude about next week's Fed meeting. Investors are thinking that perhaps the recent weaker-than-expected employment report means that the Fed is near the end of its rate-hiking cycle, but I don't think that's the case.

At this moment the Fed would like to stop raising rates. But if the employment cost index shows too much wage inflation, then the inflation hawks will make it hard for them to stop.

You have to be a little nervous about this number. This is going to do nothing but make us focus more on next week's Fed meeting as investors keep searching about inflation clues.

The recent stock rally was fueled by the idea that the Fed is nearly done and I am concerned that such a hope could be in trouble. If the economy is growing faster than investors are expecting, that could be a problem.

The Fed is going to have a hard time stopping their increases if the economy seems to be gaining strength. I think the Fed will have a very hard time talking down the inflation hawks if the data comes in stronger than expected.

The Fed is going to have a hard time stopping their (rate) increases if the economy seems to be gaining strength.

A new Fed chairman is an unknown and as such offers nervous investors an excuse to sell.

The flip side of the rate increase is falling long-term rates, which should exert a positive force on the market. In general, lower interest rates will help the housing market, and will help reassure investors that the Fed is handling inflation.

For many, the bullish case for next year is partly dependent on the Fed stopping its rate hiking. But historically, the Fed stopping isn't necessarily bullish for stocks. It's when the Fed lowers rates that it's bullish.