Of course, it is simplified. This topic is worthy of a library. Even a career. And Nobel prize!

And increase of 0.25% for many borrowers is affordable. Banks & US Treasury were the primary beneficiaries. For those borrowing at 4% will pay 4.25%. Compare 4.25% (USD) to 22% (KES). Even with the risk of depreciation, I'd take that bet.

Or Kenya's USD Eurobond. Someone who can borrow in the US at 4% has the ability to buy the bond at 5.5% & arbitrage.

@vvs I don't think the fed is going to hike the rate anytime soon. Infact I would aver that a negative interest regime/reducing the rates and or another bout of QE is more likely.

The QE binge was executed by the fed in collusion with the BoJ, BoE and the ECB. It was crafted such that at any one point one of them would be easing. Going by the most recent proclamations/actions of both the ECB and BoJ, a fed rate hike is very unlikely as it would betray the spirit of that agreement.

Most of Europe is also in a negative interest regime so a hike in rates by the fed would trigger a very huge capital outflow from that region. Basically, the current situation is like back in the 1920's when the fed reduced /delayed a hike to help Europe whose economies were on the ropes only for themselves to be caught naked in 1929.

A rate hike would also be the storied straw that broke the camels back for junk bonds as @hisah has intimated. In essence, most carry trades/arbitrages would be caught in no man's land. The snow ball effect in that scenario would be extremely nasty as it would set in motion a chain of sovereign debt defaults.

The US economy is also very shaky. Reduction of the rates back in the GFC period was meant to prevent it from flat-lining. So far it has failed to provide the much needed stimulus. A look at the Q3 corporate performance indicates an economy in the early stages of a recession. A rate hike will only serve to accelerate it probably into a depression. Furthermore, the US is juggling a couple of bubbles brought forth by the easing programs/ zero rates. If they do hike, a lot of industries will be in trouble including but not limited to the stock market.

An extremely muscular dollar(thanks to a fed hike) will be catastrophic currency wise in the present deflationary conditions. I would expect all currencies that are still on the dollar peg to depeg forthwith. Of particular interest would be the yuan. A steroid fueled mad dash to the pits would ensue.

In my opinion, the Fed is just posturing/pretending to hold all the trump cards but I don't think they are in control onwards.

When social mood waxes positive, as reflected by persistently rising stock prices, voters desire to retain the leader who symbolizes their upbeat feelings and who they presume helped cause the conditions attending them. When the social mood becomes more negative, as reflected by persistently falling stock prices, voters decide to throw out the incumbent who symbolizes their downbeat feelings and who they presume helped cause the conditions attending them. The political policies of the incumbent and his challenger are irrelevant to this dynamic. The key is a desire for change per se, not any particular type of change. The standard presumption has no explanation for reconciling the relationship between these phenomena.

—The Elliott Wave Theorist, November 1999, reprinted in Pioneering Studies of Socionomics
(For charts and further commentary backing up this case, please see The Wave Principle of Human Social Behavior, pp.273-281 and Pioneering Studies in Socionomics, pp.57-58.)

load guyz....load heavily.....next week NSE will rebound.....harvest massively...!

@hisah. I've started hunting bargains on select stocks on a monthly basis in small quantities as per my buy list, even I feel like the drop is not yet over esp when I see saf, equity, BAT. Barely moved. This bear may last a long time, so I'm planting over a long time, not one time event.

The stocks I really desire are the ones that are barely moving, I'll keep my powder dry for them

The eagerly hyped Fed rate hike is pegged on several factors as clearly outlined in the chairs press conference after the Oct FOMC meeting this includes but not limited to global factors, inflation, employment statistics etc etc.

From the wazua knowledge base how will these factors determine the Fed rate hike and/or its impact;
1. The recent US co's earnings reports are majorly below the analysts expectations signifyings possible challenges in the US economy itself, thus effects on inflations and/or employments,
2. Abe's japan & Jinping's china being the largest bondholders in the US markets,wont the Fed not look at the possibility of the 2 (among others) reactions should the rate hike affect the bond market as @hisah puts it,
3. The rates comparability of US & KE cannot have the same impact as the economy sizes are 2 uncomparables hence there is still a high possibility of capital outflows should the FOMC largely vote to hike the rate,

My 2 cents

The time to get in is when it has bottomed out.

When do you think the bulls are going to takeover?

I give the market 5 years to break the 6200 resistance. PROJECT 2020.

if the economic situation is exactly what the noise coming up portrays I wait to see how companies will thrive in a falling economy