Conventional Wisdom (NOT)

[VJW]

Once Fed Hikes Stop, Markets Fall

(USATODAY) -Wall Street is betting big on stock prices heading higher once the Federal Reserve stops raising interest rates. But there's no guarantee it will be a winning bet, history shows.

For months, market strategists have been trumpeting the fact that stocks usually rise when the Fed ends its rate-increasing campaigns. Many pundits cite the expected end to the current "tightening cycle," perhaps as early as March, as the key catalyst that will boost stocks.

Going back to 1929, the Standard & Poor's 500 was actually lower six months after the last rate increase 71% of the time and down 64% of the time 12 months later, according to data that NDR compiled for USA TODAY.

http://www.usatoday.com/money/market...ops-usat_x.htm

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[VJW]

Speaking of the fed, perhaps Wall Street was better off with a fed chairman that they could not comprehend, instead of one they misunderstand:

STOCKS TURN LOWER ON REPORT BERNANKE FEELS 'MISUNDERSTOOD'

(MarketWatch) -- U.S. stocks turned lower Monday after a CNBC anchor said Federal Reserve Chairman Ben Bernanke had told her that the markets had misunderstood his congressional testimony, interpreting him as more dovish than he was on interest rates. Noted CNBC news anchor Maria Bartiromo announced on the air that she had a private conversation with Bernanke at a Washington dinner on Saturday and Bernanke told her that the media misunderstood his remarks. In testimony to Congress on Thursday, Bernanke said: "there is ... the possibility that if there is sufficient uncertainty, that we may chose to pause, simply to gain more information to learn better what the true risks are and how the economy is actually evolving." Bartiromo said that Bernanke told her that he was trying to create flexibility for the central bank and data would determine rate moves.

MARKET WATCH

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