Remember what happened last time the Fed tightened into a slow-down (DEC)?
"The market expects a relatively hawkish Fed today," writes Hedgeye CEO Keith McCullough in a note sent to subscribers this morning:
"Not surprisingly, USD is up (this wk) into the “relatively hawkish” #LateCycle Employment Fed statement – but how much USD (and rates) upside is there? Not much for now, as both the Japanese and European #BeliefSystem of FX devaluation continues to break-down, pressuring USD inasmuch as slowing housing and consumption data does."
So get ready ahead of a hawkish Fed Day:
"Right there with the Financials (XLF -6.0% YTD) as Best Ideas Shorts in 2016 YTD is the Russell 2000 (down -1.6% yesterday to -6.1% YTD) as both are much purer plays on the short side of the US economy slowing than the global one. I know that doesn’t fit the permabull narrative. But it does fit yesterday’s US Retail Sales and Housing (NAHB) data! #slowing."
Which gets us back to what happened after the December rate hike. Well, stocks tumbled and bond yields fell.