Life after Fed: Markets are back to concerns over hike timing, but it makes no sense - Analyst

“Now we will go back to the fretting about the Fed’s timing and the interim data, which will be sliced and diced,” said Liz Ann Sonders, chief investment officer at Charles Schwab in a note titled, “When Doves Cry.”

Though fewer and fewer seem to believe it, analysts generally agree with her that the easing of global tensions and wage improvements will likely bring on an increase by year end. Sonders highlighted that the odds traders assign to an increase in October dropped from 44% to 32% and from 64% to 56% in December, according to data compiled by Bloomberg.

Franklin Templeton’s Mark Mobius  noted that markets are now left in uncertainty. “We know that the markets dislike uncertainty, so we could also be left with continued volatility through year-end.”

Alan Sloan, a columnist for Washington Post, has noted that the Fed hysteria can be justified if you are a blogger or belong to some TV networks. But it makes no sense for average retail investors to pay attention to the endless predictions. "It also makes no sense to assume that the Fed is all-knowing and all-powerful, and that its smallest decisions have major long-term influence over the economy and the stock market."

If the Fed had raised short-term rates to a whopping 0.25 percent from the current zero, it would not make a major economic difference. Whatever impact a Fed rate rise might or might not have had on the stock market will be fleeting, Sloan says.

What matters to a retail investor with a time horizon of longer than a week isn’t what the Fed does, he adds, but it's how well the U.S. economy and U.S. companies do over the intermediate and long term.