The Street is expecting it to be removed, at the Federal Open Market Committee (FOMC) this week.  This reflects the market’s expectation that the Fed will initially raise interest rates modestly in the second quarter (Q2) of next year.  If it is removed, it will put modest downward pressure on the market.

My bet is that the Fed will retain that magical phrase, because uncertainty has increased so much within the past week.  Few, if any, analysts predicted this collapse in oil prices.  Fewer, if any, analysts predicted the huge subsequent impact on Russia, where their currency is collapsing dramatically, along with their stock market (which is down a whopping 14% so far today).  Retaining the language will put upward pressure on the stock market.  However, with so much downward pressure, it may not even be noticed.

When most people think about market crashes, they think of the horrific, iconic 1929 crash.  Most can actually remember 1987, when the market dropped 24% in one day.  My expectation is that, if this continues, the crash will look more like 1997-98.  Remember Long-Term Capital Management, the collapse of the Thai baht, and chaos in Russia?  If so, then you must also remember that the stock market got over it and moved upward to new record highs within two years?

Some thought-leaders say that the Days of Globalization are over.  The United States is an economic fortress, comparatively speaking, to the rest of the world.  Yet, the troubles of the rest of the world continue to wash up on our shores, and that sure looks like globalization to me.

It is still unthinkable that the egocentric, egomaniac, ex-KGB, intensely nationalistic Russian president will take his country to war . . . but only barely unthinkable!  It might be the only way Putin can survive.  Otherwise, unlike the Fed, he does not have a “considerable period” before he disappears into history.