This week on the Big Picture, Jim and John dissect the latest statement from the Federal Reserve, and then look ahead, discussing if the Fed’s plans for raising rates in 2016 are realistic, given economic weakness, market turbulence, and a significant global slowdown in economic growth. Jim sees the Fed in a tough spot of its own making. If the Fed wanted to raise rates, it should have done so earlier in this economic cycle. Jim notes the irony in the Fed wanting to raise rates so it can lower them in the next financial crisis, without realizing its current actions are contributing to the next crisis. They also cover the chances of a recession this year, and list both the positive and the negative factors involved in potential outcomes for the economy this year. Jim also explains why the markets are so spooked by such a small interest rate increase, and says to watch stocks, corporate bond spreads and the dollar for early signs of trouble that could lead to financial tremors and monetary shockwaves.
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