Peter Cardillo Rates Quotations

There is no question that the State of the Union message last night was very strong and very positive. Obviously the economy continues to do very well. Inflation is low and interest rates are still very low.

With the price of oil moving up and the tension in the Middle East would suggest that the possibilities of a recession are increasing in terms of inflation, ... The Fed's number one target is to keep inflation under control. If energy prices continue to accelerate then the Fed doesn't need to raise interest rates because the economy is going to slow anyway.

Old economy stocks are feeling the pinch in fear that rates are going much higher.

One of the three things worrying the markets for weeks -- namely, interest rates -- has diminished, today, ... But the geopolitical incidents and higher oil prices -- which are connected -- have sent a chill through global markets, creating this buyer's strike, and we're following suit.

Obviously they (investors) are going to focus on the Fed but a rate cut is priced in. The focus will be on the economy and signs that the first batch of interest rates are finally taking hold.

If the dollar continues to fall, and we end up in a free fall, at one point the Fed will have to be more aggressive, ... They may have to respond by raising interest rates by half a point.

The selling in financials is an anticipation of lower earnings due to a slower economy, ... From the point of view of interest rates not going up, it's positive.

People realize we have an employment number, and if it shows accelerating wage pressure, that would rekindle the fear that the Fed may have to raise (interest rates by half a percentage point),

This is positive in the sense that central bankers believe the global economy is strong enough to raise rates to contain inflation.

It's quite obvious that the market has been rallying for the past four days, hoping for a 50-basis point rate hike by the Fed -- and they (the Fed) did (raise rates that much). This indicates they are ahead of the curve, but now reality sets in and we're in a trading range.

The retail sales are a real blow-out number. They show that economic activity is healthy but they will also ignite fears that the Fed will continue raising interest rates as it takes these numbers as a sign that the economy is still growing strongly.

The Fed's choice to hold rates steady was no big surprise. People may have been using that as an excuse to sell at the top of a trading range. And we're probably going to be in a bit of a trading range until we get some new economic data that makes people want to move one way or the other.

Inflation will stay low. Interest rates will turn lower. Corporate earnings will continue to grow. And I think we can see the Dow by the first quarter of 1999 above 10,000.

In technology, it's just a lack of serious buying. The market needs to be convinced that the Fed will not raise (interest) rates for the remainder of the year. This is all part of the summer doldrums, but we see cyclical stocks doing a little better here.

The earnings period has been pretty good so far, ... But its having a limited impact on stocks because the market is discounting higher interest rates in the months ahead.

The market now is trying to stabilize after having discounted higher inflation and interest rates and what most likely will be murky fourth-quarter outlooks.