Should you fear that the FED hikes rates?

Tomorrow we will see the end of a two days meeting from the FED. Some indicators seems to show strenght from the US economy such as the unemployment rate and total initial claims who both dropped. Will that be enough for the FED to hike rates?

Highly unlikely in my opinion. 

First, we can question the strenght of the economy. The big boys know this and that's why you hear the media still talking about a "recovery" 6 years after the recession. Some signals are more difficult to decode than others, like the ones sent by the bond market.

"The message from the bond market, supposedly, is that the world today is worse than it was than at any point during the Great Recession, which is nonsense," says Paulsen. 

-Yahoo Finance

Is it really nonsense? No one knows for sure, not even Paulsen. No one really knows what's the extent of the benefits and the dommages of the emergency measures the FED used and is still using.

Secondly, we have to think about the consequences of a rates hike. The US dollar would appreciate against other currencies making it more difficult for foreign investors to invest in the US. On top of the loss markets would inccur directly from the currency, investors would start to quickly get out from the stock market. Like Warren Buffet said: "Interest rates are like gravity for the stock market." The real question is not if people would survive another market crash. The real question is whether or not big businesses and the financial system would be able to absorb the shock. I don't think they would.

Finally, analysts are not expecting a rates hike tomorrow, but rather they want to see if Yellen will take out the word "patient" from her speech. If she does, it would mean a rates hike could be close. However, even if she removes that word, I think we won't see a rates hike this year. That being said, tomorrow could be a bloody day for the stock market if Yellen takes that route.