SPDR S&P 500 (SPY)

[imiloa]

many folks have asserted the rate hike is already priced in.
as posted before, i feel the drops and pops on the labor news the last couple weeks proves it is not priced in.

two basic thoughts there:

1. while it seems very likely to happen in sept,
it's not yet a certainty, and many traders are quite happy to magnify the potential of the outcome they desire from crumbs of potential.

eg: a hold 'em player betting aggressively in hopes of drawing the inside straight on the river.


2. given the breadth of carry trade debt in the market currently,
i feel the rate hike will have a stronger downside effect on the market than 207.
esp given the market P/E is now 26.24% after the july earnings reports.
ie: P/E is higher because earnings dropped this qtr.
http://www.multpl.com/shiller-pe/

fed rate hike will further impact earnings due to increased cost of debt.