Yet, in reality this increase is far more.

Announced subtly by the FED’s email process (think press release)–no luncheon, no White House prepping, no hint of a change in the more formal policy of pumping the economy at the expense of restraint of the debt variety–no accompanying fanfare in other words.  Shoulda, woulda, coulda.

In reality the decision is a shot across the bow of the perpetual optimists who have been pushing a bull-market in stocks since last March.

For the first time since, oh gosh it seems like forever . . . though only about two years, a distinct change in policy is on the horizon.  The rays are there already now and the full blown light can’t be far away.

Don’t take this FED action as a simple adjustment. Reversal is more like it.  If the economy continues to grow at a rate anywhere close to that of last quarter’s 5.7%  (and while we will know that in early April–the FED knows it now) then more rates increases are coming.

They will be fast and furious too.  Have to be to give China and others who hold U.S. debt any reason to keep on buying.  So, I wasn’t surprised when in between other stories today I noticed that China had actually been net sellers of Treasury Notes in the last few months.  Ouch!

This is just a heads-up right now.  Time to consolidate profits, trim a little fat, start thinking about what higher rates might mean.  To you, me and about half of the rest of the world.

At least my savings account might earn more than .04% from now on.  Heck we’d have been better off to stuff our mattresses with the paper the FED has been printing!

The Sun is Gonna Shine Tomorrow (humm along as you sing that line).

thanks to flickr’s cosmic kitty for the photo

This is to be expected I suppose with the continuing weakness of the Dollar.  You sell the same, or perhaps a few more, number of products overseas at the same price in local currencies and you are going to get more $$ in return.  This is particularly true of the companies mentioned above because they have a big presence in countries like China, India and Brazil where last quarter’s (or 2009) GDP estimates are MUCH greater than those in the U.S.  For example, China’s economy is expected to grow at a rate of over 8% in 2009 (negative 2.4% for the U.S.) and Brazil’s GDP grew nearly 8% in the third quarter, or more than twice the GDP growth rate for the same period in the U.S.

Governments and people alike are spending in these countries.  And they are buying great consumer products made by American companies such as those I mention above.  Cause for joy?

Tack on to this a DOW that is well above 10,000 (even with a 100+ point loss in the last two days of last week).

Sounds pretty good doesn’t it?

Maybe so, but I am concerned about a few things . . . like Obama’s public satisfaction ratings dropping below the 50% level in two major polls this week.  I think that these polls are forward looking (6-12 months) just as much as the markets normally are (and here I feel I must remind you that they are still WAY below levels from two years ago).  Hold on here buckaroo!

Tack on to that a few other parcels of data such as the unemployment rate at post-depression highs, the real unemployment rate about 17.5% (adding in those job-hunters who have just quit looking or have taken part-time/underpaying jobs), almost ONE IN FIVE AMERICANS un- or under-employed, more than 120 banks have failed this year, lenders are being more restrictive, consumer confidence is low, and credit card companies are raising rates (in the face of record low rates from the FED) and they are adding all kinds of crazy fees for dumb little things (you know what I mean if you have read a CC statement lately).

This has been a good year as far as market equities go (since March 9’s low anyway) but after any kind of Santa Claus rally there is bound to be  a big dose of concern and dubiosity.

Ah huh, times are great for employers (who are still in business)  . . . they can hire the best talent out there on the cheap, and they are cutting costs in other ways too.

However, you and I know that this is not a great time for consumers or workers and it sure as heck isn’t a good time for government (spending our tax dollars for the next five years this year).

Truly, this is all a tough read economically right now.

If you read or hear about highly positive thoughts from economists in the next couple of weeks you had better check who they are working for (banks, lenders, GM, or others with TARP $$).

If you hear or read about highly positive vibes coming from any politician in the next couple of months you had better check who they are working for (and it ain’t you my friend!).

Two problems reign supreme  now: unemployment and public (the government’s) debt.

If President Obama and Congress don’t get a handle on BOTH of these pretty quick then you had better lock the barn doors and hide the chickens.

This isn’t a gloomy forecast . . . it is more of a warning of what could be ahead IF . . . . . .

And, IF you want change you had better be calling and writing your elected leaders to get to work on the two problems noted above.

It doesn’t take a genius to recognize this (I am sure you do) but our elected leaders are rarely genuises (as history has amply proven).

That means you know what to do even if they don’t!!

thanks to flickr’s danoxster for the photo